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Exhibit 10.3
U.S. SECURITY AGREEMENT
among
VIDEO UPDATE, INC.,
VARIOUS U.S. SUBSIDIARIES OF VIDEO UPDATE, INC.
and
BANQUE PARIBAS,
as Collateral Agent
Dated as of March 6, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I SECURITY INTERESTS.......................................... 3
1.1. Grant of Security Interests................................. 3
1.2. Power of Attorney........................................... 4
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS................................................... 4
2.1. Necessary Filings........................................... 4
2.2. No Liens.................................................... 4
2.3. Other Financing Statements.................................. 5
2.4. Chief Executive Office; Records............................. 5
2.5. Location of Inventory and Equipment......................... 6
2.6. Trade Names; Change of Name................................. 6
2.7. Recourse.................................................... 7
ARTICLE III SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CONCENTRATION
ACCOUNT..................................................... 7
3.1. Additional Representations and Warranties................... 7
3.2. Maintenance of Records...................................... 7
3.3. Direction to Account Debtors; Contracting Parties; etc...... 8
3.4. Modification of Terms; etc.................................. 8
3.5. Collection.................................................. 9
3.6. Instruments................................................. 9
3.7. Concentration Account....................................... 9
3.8. Further Actions............................................. 10
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS.................... 11
4.1. Additional Representations and Warranties................... 11
4.2. Licenses and Assignments.................................... 11
4.3. Infringements............................................... 11
4.4. Preservation of Marks....................................... 12
4.5. Maintenance of Registration................................. 12
4.6. Future Registered Marks..................................... 12
4.7. Remedies.................................................... 12
ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS,
COPYRIGHTS AND TRADE SECRETS................................ 13
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5.1. Additional Representations and Warranties................... 13
5.2. Licenses and Assignments.................................... 14
5.3. Infringements............................................... 14
5.4. Maintenance of Patents and Copyrights....................... 14
5.5. Prosecution of Patent Application........................... 14
5.6. Other Patents and Copyrights................................ 14
5.7. Remedies.................................................... 14
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL........................ 15
6.1. Protection of Collateral Agent's Security................... 15
6.2. Warehouse Receipts Non-negotiable........................... 16
6.3. Further Actions............................................. 16
6.4. Financing Statements........................................ 16
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT
OF DEFAULT.................................................. 16
7.1. Remedies; Obtaining the Collateral Upon Default............. 16
7.2. Remedies; Disposition of the Collateral..................... 18
7.3. Waiver of Claims............................................ 19
7.4. Application of Proceeds..................................... 20
7.5. Remedies Cumulative......................................... 22
7.6. Discontinuance of Proceedings............................... 22
ARTICLE VIII INDEMNITY................................................... 23
8.1. Indemnity................................................... 23
8.2. Indemnity Obligations Secured by Collateral; Survival....... 24
ARTICLE IX DEFINITIONS................................................. 25
ARTICLE X MISCELLANEOUS............................................... 30
10.1. Notices..................................................... 30
10.2. Waiver; Amendment........................................... 31
10.3. Obligations Absolute........................................ 31
10.4. Successors and Assigns...................................... 31
10.5. Headings Descriptive........................................ 32
10.6. Severability................................................ 32
10.7. Governing Law............................................... 32
10.8. Assignor's Duties........................................... 32
10.9. Termination; Release........................................ 32
10.10. Counterparts................................................ 33
10.11. The Collateral Agent........................................ 33
10.12. Limited Obligations......................................... 33
(ii)
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ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Receivables and Contract Rights Locations
ANNEX C Schedule of Inventory and Equipment Locations
ANNEX D Trade and Fictitious Names
ANNEX E List of Marks
ANNEX F List of Patents and Applications
ANNEX G List of Copyrights and Applications
ANNEX H Assignment of Security Interest in United States Trademarks and Patents
ANNEX I Assignment of Security Interest in United States Copyrights
ANNEX J Concentration Account Consent Letter
(iii)
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March 6, 1998 (as amended,
modified or supplemented from time to time, the "Agreement"), among each of the
undersigned (each, an "Assignor" and together with any other entity that becomes
a party hereto pursuant to Section 10.13, the "Assignors") and BANQUE PARIBAS,
as Collateral Agent (the "Collateral Agent"), for the benefit of (x) the Banks
(as defined below) and the Agent (as defined below) under, and any other lender
from time to time party to the Credit Agreement hereinafter referred to (such
Banks, the Agent, the Collateral Agent and the other lenders, if any, are
hereinafter called the "Bank Creditors") and (y) if Banque Paribas in its
individual capacity, any Bank or a syndicate of financial institutions organized
by Banque Paribas or any such Bank or an affiliate of Banque Paribas or such
Bank enter into one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values and/or (iii) other types of hedging agreements from time to
time (collectively, the "Interest Rate Protection or Other Hedging Agreements"),
with, or guaranteed by, the Borrower, Banque Paribas, any Bank, a syndicate of
financial institutions organized by Banque Paribas or such Bank, any such
financial institution or any affiliate of any such person (even if any such
person subsequently ceases to be a Bank under the Credit Agreement for any
reason), together with such Bank's or affiliate's successors and assigns
(collectively, the "Other Creditors" and, together with the Bank Creditors, are
herein called the "Secured Creditors"). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement shall be used herein as
therein defined.
W I T N E S S E T H :
WHEREAS, Video Update, Inc. (the "Borrower"), various
financial institutions from time to time party thereto (the "Banks") and Banque
Paribas, as Agent (the "Agent"), have entered into a Credit Agreement, dated as
of March 6, 1998, providing for the making of Loans and the issuance of, and
participation in, Letters of Credit as contemplated therein (as used herein, the
term "Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced,
restated, supplemented, restructured or refinanced from time to time, and
including any agreement extending the maturity of, refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers thereunder
that are Subsidiaries of the Borrower and whose obligations are guaranteed by
the Borrower thereunder or any increase in the amount borrowed) all or any
portion of, the Indebtedness under such agreement or any successor agreements;
provided, that with respect to any agreement
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providing for the refinancing of Indebtedness under the Credit Agreement, such
agreement shall only be treated as, or as part of, the Credit Agreement
hereunder if (i) either (A) all obligations under the Credit Agreement being
refinanced shall be paid in full at the time of such refinancing, and all
commitments and letters of credit issued pursuant to the refinanced Credit
Agreement shall have terminated in accordance with their terms or (B) the
Required Banks shall have consented in writing to the refinancing Indebtedness
being treated, along with their Indebtedness, as Indebtedness pursuant to the
Credit Agreement, (ii) the refinancing Indebtedness shall be permitted to be
incurred under the Credit Agreement being refinanced (if such Credit Agreement
is to remain outstanding) and (iii) a notice to the effect that the refinancing
Indebtedness shall be treated as issued under the Credit Agreement shall be
delivered by the Borrower to the Collateral Agent);
WHEREAS, pursuant to the Subsidiaries Guaranty, each
Subsidiary of the Borrower has jointly and severally guaranteed to the Secured
Creditors the payment when due of all obligations and liabilities of the
Borrower under or with respect to the Credit Documents and each Interest Rate
Protection or Other Hedging Agreement with one or more Other Creditors;
WHEREAS, the Borrower desires to incur Loans and to have
Letters of Credit issued for its account pursuant to the Credit Agreement;
WHEREAS, the Borrower may at any time and from time to time
enter into one or more Interest Rate Protection or Other Hedging Agreements with
one or more Other Creditors;
WHEREAS, it is a condition precedent to the above-described
extensions of credit that each of the Assignors shall have executed and
delivered this Agreement to the Collateral Agent; and
WHEREAS, each Assignor desires to execute and deliver this
Agreement to satisfy the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to
each Assignor, the receipt and sufficiency of which are hereby acknowledged,
each Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
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ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of the Obligations,
each Assignor does hereby assign and transfer unto the Collateral Agent, and
does hereby grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest of first priority in, all of the
right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired: (i)
each and every Receivable, (ii) all Contracts, together with all Contract Rights
arising thereunder, (iii) all Inventory, (iv) the Cash Collateral Account and
any other cash collateral account established for such Assignor and all moneys,
securities and instruments deposited or required to be deposited in such Cash
Collateral Account and any such other cash collateral account, (v) all
Equipment, (vi) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of such Assignor symbolized
by the Marks, (vii) all Patents and Copyrights, (viii) all computer programs of
such Assignor and all intellectual property rights therein and all other
proprietary information of such Assignor, including, but not limited to, Trade
Secret Rights, (ix) (1) the Concentration Account, (2) all moneys, checks,
drafts, securities and instruments deposited or required to be deposited in the
Concentration Account, (3) all investments and all certificates and instruments,
if any, from time to time representing or evidencing such investments and (4)
all interest, dividends, cash, investments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the foregoing items listed under subclauses (1) through (3), (x)
(1) the Concentration Account Consent Letter and each other agreement from time
to time entered into by such Assignor with the Concentration Account Bank and
all rights of such Assignor under the Concentration Account Consent Letter and
each other agreement from time to time entered into by such Assignor with the
Concentration Account Bank with respect to the Concentration Account, (xi) all
other Goods, General Intangibles, Chattel Paper, Documents and Instruments
(other than the Pledged Securities) and (xii) all Proceeds and products of any
and all of the foregoing (all of the above, collectively, the "Collateral"),
provided, however, that if any Contract prohibits, or requires the consent for
(in accordance with the terms thereof after giving effect to any applicable
laws), the granting of a security interest therein, or in the event the granting
of a security interest in any Contract shall violate applicable law, then the
security interest granted hereby shall be limited to the extent (and only to the
extent) necessary so that such Contract may not be so violated or no such
violation of law shall exist, as the case may be.
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in
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connection therewith and to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem to be necessary or advisable to
protect the interests of the Secured Creditors, which appointment as attorney is
coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by such Assignor to the Collateral Agent hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral constitutes a perfected security interest therein prior to the rights
of all other Persons therein and subject to no other Liens (other than Permitted
Liens) and is entitled to all the rights, priorities and benefits afforded by
the Uniform Commercial Code or other relevant law as enacted in any relevant
jurisdiction to perfected security interests.
2.2. No Liens. Such Assignor is, and as to Collateral acquired
by it from time to time after the date hereof such Assignor will be, the owner
of all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens), and such
Assignor shall defend the Collateral against all claims and demands of all
Persons (other than Persons claiming by, through or under the Collateral Agent)
at any time claiming the same or any interest therein adverse to the Collateral
Agent.
2.3. Other Financing Statements. After giving effect to the
filing of certain UCC-3 termination statements, which filing will be (or has
been) made within 3 Business Days following the Initial Borrowing Date, there is
no financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than Permitted Liens), and so long as the Total
Commitment has not been terminated or any Letter of Credit or Note remains
outstanding or any of the Obligations remain unpaid or any Interest Rate
Protection or Other Hedging Agreement remains in effect or any Obligations are
owed with respect thereto, such Assignor will not execute or authorize to be
filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Assignor
or as permitted by the Credit Agreement.
2.4. Chief Executive Office; Records. The chief executive
office of such Assignor is located at the address or addresses indicated on
Annex A hereto. Such Assignor will not move its chief executive office except to
such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. The originals of all documents evidencing all
Receivables and Contract Rights of such Assignor and the only original books of
account and records of such Assignor relating thereto are, and will con-
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tinue to be, kept at such chief executive office or at such other locations as
are set forth on Annex B hereto or at such other locations as such Assignor may
establish in accordance with the last sentence of this Section 2.4. All
Receivables and Contract Rights of such Assignor are, and will continue to be,
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from, the office locations described above or such
new location established in accordance with the last sentence of this Section
2.4. No Assignor shall establish new locations for such offices until (i) it
shall have given to the Collateral Agent not less than 30 days' prior written
notice of its intention to do so, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may request, (ii) with respect to such new location, it shall have taken all
action, satisfactory to the Collateral Agent, to maintain the security interest
of the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect, (iii) at the reasonable
request of the Collateral Agent, it shall have furnished an opinion of counsel
acceptable to the Collateral Agent to the effect that all financing or
continuation statements and amendments or supplements thereto have been filed in
the appropriate filing office or offices, and (iv) the Collateral Agent shall
have received evidence that all other actions (including, without limitation,
the payment of all filing fees and taxes, if any, payable in connection with
such filings) have been taken, in order to perfect (and maintain the perfection
and priority of) the first priority security interest granted hereby.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex C hereto. Each Assignor agrees that all Inventory and
Equipment now held or subsequently acquired by it shall be kept at (or shall be
in transport to) any one of the locations shown on Annex C hereto or such new
location as such Assignor may establish in accordance with the last sentence of
this Section 2.5. Any Assignor may establish a new location for Inventory and
Equipment only if (i) it shall have given to the Collateral Agent not less than
30 days' prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may request, (ii) with respect to such new location, it shall
have taken all action satisfactory to the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the reasonable request of the Collateral Agent, it shall have furnished an
opinion of counsel acceptable to the Collateral Agent to the effect that all
financing or continuation statements and amendments or supplements thereto have
been filed in the appropriate filing office or offices, and (iv) the Collateral
Agent shall have received evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and maintain
the perfection and priority of) the first priority security interest granted
hereby.
2.6. Trade Names; Change of Name. No Assignor has or operates
in any jurisdiction under, or previously has had or has operated in any
jurisdiction within the five year period preceding the date of this Agreement
under, any trade names, fictitious names or other names except its legal name
and such other trade or fictitious names as are listed on Annex D hereto. No
Assignor shall change its legal name or assume or operate in any jurisdiction
under any trade, fictitious or other name except those names listed on Annex D
hereto and new names established in accordance with the last sentence of this
Section 2.6.
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No Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than 30 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may request, (ii) with respect to such new name, it shall have
taken all action requested by the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect, (iii) at the
reasonable request of the Collateral Agent, it shall have furnished an opinion
of counsel acceptable to the Collateral Agent to the effect that all financing
or continuation statements and amendments or supplements thereto have been filed
in the appropriate filing office or offices, and (iv) the Collateral Agent shall
have received evidence that all other actions (including, without limitation,
the payment of all filing fees and taxes, if any, payable in connection with
such filings) have been taken, in order to perfect (and maintain the perfection
and priority of) the first priority security interest granted hereby.
2.7. Recourse. This Agreement is made with full recourse to
each Assignor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
other Credit Documents, in the Interest Rate Protection or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS;
CONCENTRATION ACCOUNT
3.1. Additional Representations and Warranties. As of the time
when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto are genuine and in all respects what they purport to
be, and that all papers and documents relating thereto (i) will represent the
genuine, legal, valid and binding obligation of the account debtor evidencing
indebtedness unpaid and owed by the respective account debtor arising out of the
performance of labor or services or the sale or lease and delivery of the
inventory, materials, equipment or merchandise listed therein, or both, (ii)
will be the only original writings evidencing and embodying such obligation of
the account debtor named therein (other than copies created for general
accounting purposes), (iii) will evidence true and valid obligations,
enforceable in accordance with their respective terms, except to the extent that
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by equity principles (regardless of whether enforcement is sought in equity or
at law), and (iv) will be in compliance in all material respects and will
conform with all applicable federal, state and local laws and applicable laws of
any relevant foreign jurisdiction.
3.2. Maintenance of Records. Each Assignor will keep and
maintain at its own cost and expense satisfactory and complete records of its
Receivables and Contracts,
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including, but not limited to, originals or copies of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Agent for inspection, at such Assignor's
own cost and expense, at any and all reasonable times during normal business
hours and, so long as no Event of Default has occurred or is continuing, upon
prior notice to the chief financial officer or other authorized officer of such
Assignor. Upon the occurrence and during the continuance of an Event of Default
and at the request of the Collateral Agent, such Assignor shall, at its own cost
and expense, deliver all tangible evidence of its Receivables and Contract
Rights (including, without limitation, all documents evidencing the Receivables
and all Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor) and, if the Collateral Agent so directs, such Assignor shall
legend, in form and manner satisfactory to the Collateral Agent, the Receivables
and the Contracts, as well as books, records and documents of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3. Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, and if
the Collateral Agent so directs any Assignor, to the extent permitted by
applicable law, such Assignor agrees (x) to cause all payments on account of the
Receivables and Contracts to be made directly to the Cash Collateral Account,
(y) that the Collateral Agent may, at its option, directly notify the obligors
with respect to any Receivables and/or under any Contracts to make payments with
respect thereto as provided in preceding clause (x), and (z) that the Collateral
Agent may enforce collection of any such Receivables and Contracts and may
adjust, settle or compromise the amount of payment thereof, in the same manner
and to the same extent as such Assignor. Without notice to or assent by any
Assignor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account which application shall be
effected in the manner provided in Section 7.4 of this Agreement. The costs and
expenses (including attorneys' fees) of collection, whether incurred by an
Assignor or the Collateral Agent, shall be borne by the Assignors.
3.4. Modification of Terms, etc. No Assignor shall rescind or
cancel any indebtedness evidenced by any Receivable, or modify any term thereof
or make any adjustment with respect thereto, or extend or renew the same, or
compromise or settle any material dispute, claim, suit or legal proceeding
relating thereto, or sell any Receivable, or interest therein, without the prior
written consent of the Collateral Agent, except as permitted by Section 3.5. No
Assignor shall rescind or cancel any indebtedness evidenced by any Contract, or
modify any term thereof or make any adjustment with respect thereto, or extend
or renew the same, or compromise or settle any material dispute, claim, suit or
legal proceeding relating thereto, or sell any Contract, or interest therein,
without the prior written consent of the Collateral Agent, except (i) as
permitted by Section 3.5 and (ii) to the extent that the aggregate cost to the
Borrower and its Subsidiaries of any such recission, cancellation, modification,
adjustment, extension, compromise, settlement or sale is not reasonably likely
to have a material adverse effect on the performance, business, property,
assets, nature of assets, liabilities, condition (financial or otherwise) or
prospects of the
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Borrower and its Subsidiaries taken as a whole. Each Assignor will duly fulfill
all obligations on its part to be fulfilled under or in connection with the
Receivables and will do nothing to impair the rights of the Collateral Agent in
the Receivables, except as permitted by Section 3.5.
3.5. Collection. Each Assignor shall endeavor in accordance
with reasonable business practices to cause to be collected from the account
debtor named in each of its Receivables or obligor under any of its Contracts,
as and when due (including, without limitation, amounts, services or products
which are delinquent, such amounts, services or products to be collected in
accordance with generally accepted lawful collection procedures) any and all
amounts, services or products owing under or on account of such Receivable or
Contract, and apply forthwith upon receipt thereof all such amounts, services or
products as are so collected to the outstanding balance of such Receivable or
under such Contract, except that, prior to the occurrence of an Event of
Default, any Assignor may allow in the ordinary course of business as
adjustments to amounts, services or products owing under its Receivables and
Contracts (i) an extension or renewal of the time or times of payment or
exchange, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services. The costs and expenses (including, without
limitation, attorneys' fees) of collection, whether incurred by an Assignor or
the Collateral Agent, shall be borne by the Assignors.
3.6 Instruments. If any Assignor owns or acquires any
Instrument constituting Collateral, such Assignor will within 10 Business Days
notify the Collateral Agent thereof, and upon request by the Collateral Agent
will promptly deliver such Instrument to the Collateral Agent appropriately
endorsed to the order of the Collateral Agent as further security hereunder.
3.7. Concentration Account. (a) Within 30 days following the
Initial Borrowing Date, the Assignors will establish the Concentration Account
with the Concentration Account Bank as referenced in Section 8.18 of the Credit
Agreement. Within 30 days following the Initial Borrowing Date, each Assignor
hereby agrees that it shall notify the Concentration Account Bank that the
Concentration Account maintained with the Concentration Account Bank by such
Assignor is under the exclusive dominion and control of the Collateral Agent and
all moneys, instruments and other securities received in the Concentration
Account are to be held by the Concentration Account Bank for the benefit of the
Collateral Agent. Furthermore, within 30 days following the Initial Borrowing
Date, each Assignor shall cause the Concentration Account Bank to execute and
deliver to the Collateral Agent a Concentration Account Consent Letter,
acknowledging the security interest and exclusive dominion and control of the
Collateral Agent in all moneys, instruments and other securities deposited in
the Concentration Account established with the Concentration Account Bank by
such Assignor. Each Assignor hereby transfers to the Collateral Agent the
exclusive dominion and control over the Concentration Account. Each Assignor
hereby represents and warrants that it does not now maintain, and will not in
the future maintain, any concentration or similar account into which cash is
regularly swept by such Assignor and its Subsidiaries from their respective
local deposit accounts other than the Concentration Account, it being understood
and agreed that the Assignors may close the
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then existing Concentration Account and establish and maintain a new
Concentration Account with a new Concentration Account Bank if (i) the Assignors
shall have given the Collateral Agent 30 days' prior written notice of their
intention to establish a new Concentration Account with a new Concentration
Account Bank, (ii) such new Concentration Account Bank shall be reasonably
acceptable to the Collateral Agent and (iii) such new Concentration Account Bank
shall enter into a Concentration Account Consent Letter, with such changes to
such Concentration Account Consent Letter as may be acceptable to the Collateral
Agent.
(b) Until an Event of Default shall have occurred and be
continuing, each Assignor is hereby authorized by the Collateral Agent to direct
the disposition of any and all moneys, instruments and other securities
deposited in the Concentration Account for use by the Assignor in a manner
permitted by the Credit Agreement.
(c) Upon the occurrence and during the continuance of an Event
of Default, the authorization of a Borrower under Section 3.7(b) shall be
revoked and all deposits contained in the Concentration Account, and any
additional moneys, instruments and other securities subsequently deposited in
the Concentration Account shall be transferred to the Cash Collateral Account,
to be held by the Collateral Agent as Collateral for the Obligations or applied
to the Obligations in accordance with this Agreement (all such deposits in any
such Cash Collateral Account shall constitute "Collateral" for all purposes of
this Agreement). Upon the occurrence and during the continuance of an Event of
Default, without notice to or assent by any Assignor, the Collateral Agent may
apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account in the manner provided in Section 7.4 of this Agreement. The
costs and expenses (including attorney's fees) of collection, whether incurred
by an Assignor or the Collateral Agent, shall be borne by the Assignors.
3.8. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.
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ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the Marks listed in Annex E hereto and that said listed Marks
constitute all the Marks that such Assignor presently owns or uses in connection
with its business. Except as set forth on Annex E, each Assignor represents and
warrants that it owns, is licensed to use or otherwise has the right to use all
Marks that it uses. Other than as set forth on Annex E, each Assignor further
warrants that it has no knowledge as of the date hereof, of any third party
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any rights in any trademark, service xxxx
or trade name. Each Assignor represents and warrants that it is the beneficial
and record owner of all U.S. and foreign trademark registrations and
applications listed in Annex E hereto and that said registrations are valid,
subsisting and have not been cancelled and that, other than as set forth on
Annex E, such Assignor is not aware of any third-party claim that any of said
registrations is invalid or unenforceable, or that there is any reason that any
of said applications will not pass to registration. Each Assignor represents and
warrants that upon the recordation of an Assignment of Security Interest in
United States Trademarks and Patents in the form of Annex H hereto in the United
States Patent and Trademark Office, together with filings on Form UCC-1 pursuant
to this Agreement, all filings, registrations and recordings necessary or
appropriate to perfect the security interest granted to the Collateral Agent in
the United States Marks covered by this Agreement under federal law will have
been accomplished. Each Assignor agrees to execute such an Assignment of
Security Interest in United States Trademark and Patents covering all right,
title and interest in each United States Xxxx, and the associated goodwill, of
such Assignor, and to record the same. Each Assignor hereby grants to the
Collateral Agent an absolute power of attorney to sign, upon the occurrence and
during the continuance of an Event of Default, any document which may be
required by the U.S. Patent and Trademark Office or secretary of state or
equivalent governmental agency of any State of the United States or in any
foreign jurisdiction in order to effect an absolute assignment of all right,
title and interest in each Xxxx, and record the same.
4.2. Licenses and Assignments. Each Assignor hereby agrees not
to divest itself of any right under any material Xxxx absent prior written
approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to (i) any party who such Assignor believes is infringing or diluting or
otherwise violating in any material respect any of such Assignor's rights in and
to any Xxxx, or (ii) any party claiming that such Assignor's use of any Xxxx
violates in any material respect any property right of that party. Each Assignor
further agrees, unless otherwise agreed by the Collateral Agent, diligently to
prosecute any Person infringing any material Xxxx.
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4.4. Preservation of Marks. Each Assignor agrees to use its
Marks in interstate during the time in which this Agreement is in effect,
sufficiently to preserve such Marks as valid and subsisting trademarks or
service marks under the laws of the United States, except if the failure to
preserve such Marks could not reasonably be expected to have a material adverse
effect on the performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects of the
Borrower or its Subsidiaries taken as a whole.
4.5. Maintenance of Registration. Except as otherwise provided
in Section 4.4, each Assignor shall, at its own expense, diligently process all
documents required by the Trademark Act of 1946, as amended, 15 U.S.C.
Sections 1051 et seq. to maintain trademark registrations, including but
not limited to affidavits of continued use and applications for renewals of
registration in the United States Patent and Trademark Office for all of its
registered Marks pursuant to 15 U.S.C. Sections 1058, 1059 and 1065 and
any foreign equivalent thereof, and shall pay all fees and disbursements in
connection therewith and shall not abandon any such filing of affidavit of use
or any such application of renewal prior to the exhaustion of all administrative
and judicial remedies without prior written consent of the Collateral Agent.
4.6. Future Registered Marks. If any registration for any Xxxx
issues hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office or any equivalent
governmental agency in any foreign jurisdiction, within 45 days of receipt of
such certificate, such Assignor shall deliver to the Collateral Agent a copy of
such certificate, and an assignment for security in such Xxxx, to the Collateral
Agent and at the expense of such Assignor, confirming the assignment for
security in such Xxxx to the Collateral Agent hereunder, the form of such
security to be substantially the same as the form hereof or in such other form
as may be satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the relevant
Assignor, take any or all of the following actions: (i) declare the entire
right, title and interest of such Assignor in and to each of the Marks, together
with all trademark rights and rights of protection to the same and the goodwill
of such Assignor's business symbolized by said Marks and the right to recover
for past infringements thereof, vested in the Collateral Agent for the benefit
of the Secured Creditors, in which event such rights, title and interest shall
immediately vest, in the Collateral Agent for the benefit of the Secured
Creditors, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 to execute, cause to be acknowledged and
notarized and to record said absolute assignment with the applicable agency;
(ii) take and use or sell the Marks and the goodwill of such Assignor's business
symbolized by the Marks and the right to carry on the business and use the
assets of such Assignor in connection with which the Marks have been used; and
(iii) direct such Assignor to refrain, in which event such Assignor shall
refrain, from using the Marks in any manner whatsoever, directly or indirectly,
and, if requested by the Collateral Agent, change such Assignor's corporate name
to eliminate therefrom any use of any Xxxx and execute such other and further
documents that the Collateral Agent may request to further confirm this and to
transfer ownership of the Marks and registrations and any pending trademark
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applications therefor in the United States Patent and Trademark Office or any
equivalent governmental agency in any foreign jurisdiction to the Collateral
Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of all rights in
(i) all trade secrets and proprietary information necessary to operate the
business of such Assignor (the "Trade Secret Rights"), (ii) the Patents listed
in Annex F hereto and (iii) the Copyrights listed in Annex G hereto, that said
Patents constitute all the patents and applications for patents that such
Assignor now owns and that such Copyrights constitute all registrations of
copyrights and applications for copyright registrations that such Assignor now
owns. Each Assignor further represents and warrants that it has the exclusive
right to use and practice under all such Patents and Copyrights that it owns,
uses or practices under. Each Assignor further warrants that it is aware of no
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any rights of any third party in any
patent or copyright or such Assignor has misappropriated any trade secret or
proprietary information. Each Assignor represents and warrants that upon the
recordation of an Assignment of Security Interest in United States Trademarks
and Patents in the form of Annex H hereto in the United States Patent and
Trademark Office and the recordation of an Assignment of Security Interest in
United States Copyrights in the form of Annex I hereto in the United States
Copyright Office, together with filings on Form UCC-1 pursuant to this
Agreement, all filings, registrations and recordings necessary or appropriate to
perfect the security interest granted to the Collateral Agent in the United
States Patents and United States Copyrights covered by this Agreement under
federal law will have been accomplished. Each Assignor agrees to execute such an
Assignment of Security Interest in United States Trademarks and Patents covering
all right, title and interest in each United States Patent of such Assignor and
to record the same, and to execute such an Assignment of Security Interest in
United States Copyrights covering all right, title and interest in each United
States Copyright of such Assignor and to record the same. Each Assignor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of any Event of Default, any document
which may be required by the U.S. Patent and Trademark Office or equivalent
governmental agency in any foreign jurisdiction or the U.S. Copyright Office or
equivalent governmental agency in any foreign jurisdiction in order to effect an
absolute assignment of all right, title and interest in each Patent and
Copyright, and to record the same.
5.2. Licenses and Assignments. Each Assignor hereby agrees not
to divest itself of any material right under any Patent or Copyright absent
prior written approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon
learning thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement
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to infringe in any Patent or Copyright or to any claim that the practice of any
Patent or the use of any Copyright violates any property right of a third party,
or with respect to any misappropriation of any Trade Secret Right or any claim
that such Assignor's practice of any Trade Secret Right violates any property
right of a third party. Each Assignor further agrees, absent direction of the
Collateral Agent to the contrary, diligently to prosecute any Person infringing
any material Patent or material Copyright or any Person misappropriating any
material Trade Secret Right.
5.4. Maintenance of Patents and Copyrights. At its own
expense, each Assignor shall make timely payment of all post-issuance fees
required pursuant to 35 U.S.C. Section 41 and any foreign equivalent thereof to
maintain in full force rights under each Patent, and to apply as permitted
pursuant to applicable law for any renewal of each Copyright absent prior
written consent of the Collateral Agent.
5.5. Prosecution of Patent and Copyright Applications. At its
own expense, each Assignor shall diligently prosecute all applications for
Patents listed in Annex F hereto and for Copyrights listed in Annex G hereto and
shall not abandon any such application prior to exhaustion of all administrative
and judicial remedies, absent written consent of the Collateral Agent.
5.6. Other Patents and Copyrights. Within 45 days of the
acquisition or issuance of a Patent or of a Copyright registration, or of filing
of an application for a Patent or Copyright registration, the relevant Assignor
shall deliver to the Collateral Agent a copy of said Copyright registration or
Patent or certificate or registration of, or application therefor, as the case
may be, with an assignment for security as to such Patent or Copyright, as the
case may be, to the Collateral Agent and at the expense of such Assignor,
confirming the assignment for security, the form of such assignment for security
to be substantially the same as the form hereof or in such other form as may be
satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may by written notice to the relevant Assignor,
take any or all of the following actions: (i) declare the entire right, title,
and interest of such Assignor in each of the Patents and Copyrights vested in
the Collateral Agent for the benefit of the Secured Creditors, in which event
such right, title, and interest shall immediately vest in the Collateral Agent
for the benefit of the Secured Creditors, in which case the Collateral Agent
shall be entitled to exercise the power of attorney referred to in Section 5.1
to execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents, Copyrights and Trade Secret Rights; and (iii) direct such Assignor to
refrain, in which event such Assignor shall refrain, from practicing the Patents
and using the Copyrights and/or Trade Secret Rights directly or indirectly, and
such Assignor shall execute such other and further documents as the Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents, Copyrights and Trade Secret Rights to the Collateral Agent for the
benefit of the Secured Creditors.
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ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor
will do nothing to impair the rights of the Collateral Agent in the Collateral.
Each Assignor will at all times keep its Inventory and Equipment insured in
favor of the Collateral Agent, at such Assignor's own expense to the extent and
in the manner provided in the Credit Agreement; all policies or certificates
with respect to such insurance (and any other insurance (other than employee
benefit insurance) maintained by such Assignor): (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee and
naming each of the Banks, the Agent and the Collateral Agent as additional
insureds); and (ii) shall state that such insurance policies shall not be
cancelled or revised without 30 days' prior written notice thereof by the
insurer to the Collateral Agent; and certified copies of such policies shall be
deposited with the Collateral Agent. If any Assignor shall fail to insure its
Inventory and Equipment in accordance with the preceding sentence, or if any
Assignor shall fail to so endorse and deposit all policies with respect thereto,
the Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and such Assignor agrees to promptly reimburse the
Collateral Agent for all costs and expenses of procuring such insurance. Unless
the Agent shall have received the officer's certificate described in the first
proviso to Section 4.02(A)(h) of the Credit Agreement, all proceeds of any
insurance shall be deposited in the Cash Collateral Account pending application
thereof pursuant to the Credit Agreement or pursuant hereto. The Collateral
Agent shall, at the time such proceeds of such insurance are distributed to the
Secured Creditors, apply such proceeds in accordance with Section 7.4. Each
Assignor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-Negotiable. Each Assignor agrees
that if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or receipt
in the nature thereof shall not be "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law).
6.3. Further Actions. Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
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6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law. Each Assignor will pay any applicable filing fees, recordation
taxes and related expenses relating to its Collateral. Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements without
the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent, in addition to
any rights now or hereafter existing under applicable law, shall have all rights
as a secured creditor under the Uniform Commercial Code in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon
such Assignor's premises where any of the Collateral is located and
remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables and the Contracts) constituting the Collateral to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent and may exercise any and
all remedies of such Assignor in respect of such Collateral;
(iii) withdraw all moneys, instruments and other securities in
the Concentration Account and/or the Cash Collateral Account and/or in
any other cash collateral account for application to the Obligations in
accordance with Section 7.4;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2, or
direct the relevant Assignor to sell, assign or otherwise liquidate any
or all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place
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or places designated by the Collateral Agent, in which event such
Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place
or places so designated by the Collateral Agent and there
delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further
action by the Collateral Agent as provided in Section 7.2; and
(z) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain
them in good condition; and
(vi) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such manner as
the Collateral Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 and any
other Collateral whether or not so repossessed by the Collateral Agent, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent
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permitted by any such requirement of law, the Collateral Agent may bid for and
become the purchaser of the Collateral or any item thereof, offered for sale in
accordance with this Section without accountability to the relevant Assignor.
If, under mandatory requirements of applicable law, the Collateral Agent shall
be required to make disposition of the Collateral within a period of time which
does not permit the giving of notice to the relevant Assignor as hereinabove
specified, the Collateral Agent need give such Assignor only such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law. Each Assignor agrees to do or cause to be done
all such other acts and things as may be reasonably necessary to make such sale
or sales of all or any portion of the Collateral valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise expressly provided
in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
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7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent that the U.S. Pledge Agreement, the Canadian
Security Documents or the Additional Security Documents require proceeds of
collateral under such Security Documents to be applied in accordance with the
provisions of this Agreement, the Pledgee or other party under such other
Security Document) upon any sale or other disposition of the Collateral (or the
collateral under such other Security Documents), together with all other moneys
received by the Collateral Agent hereunder (or the Pledgee or such other party
under such other Security Documents), shall be applied as follows:
(i) first, to the payment of all Obligations owing the
Collateral Agent (or any other Indemnitee, in the case of clause (v)
referenced below) of the type provided in clauses (iii), (iv) and (v)
of the definition of Obligations;
(ii) second, to the extent proceeds remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Primary Obligations shall be paid to the Secured
Creditors as provided in Section 7.4(e), with each Secured Creditor
receiving an amount equal to its outstanding Primary Obligations or, if
the proceeds are insufficient to pay in full all such Primary
Obligations, its Pro Rata Share of the amount remaining to be
distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to the preceding clauses (i) and (ii), an amount
equal to the outstanding Secondary Obligations shall be paid to the
Secured Creditors as provided in Section 7.4(e), with each Secured
Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of the amount remaining
to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to the preceding clauses (i), (ii) and (iii) and
following the termination of this Agreement pursuant to Section 10.9
hereof, to the relevant Assignor or as required by applicable law.
(b) For purposes of this Agreement, (x) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the
case of the Credit Document Obligations, all principal of, and interest on, all
Loans, all Unpaid Drawings theretofore made (together with all interest accrued
thereon), the aggregate Stated Amounts of all Letters of Credit issued under the
Credit Agreement, and all Fees and (ii) in the case of the Other Obligations,
all amounts due under the Interest Rate Protection or Other Hedging Agreements
(other than indemnities, fees (including, without limitation, attorneys' fees)
and similar obligations and liabilities) and (z) "Secondary Obligations" shall
mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied
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(for purposes of making determinations under this Section 7.4 only) (i) first,
to their Primary Obligations and (ii) second, to their Secondary Obligations. If
any payment to any Secured Creditor of its Pro Rata Share of any distribution
would result in overpayment to such Secured Creditor, such excess amount shall
instead be distributed in respect of the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of the other Secured Creditors, with each
Secured Creditor whose Primary Obligations or Secondary Obligations, as the case
may be, have not been paid in full to receive an amount equal to such excess
amount multiplied by a fraction the numerator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of such Secured
Creditor and the denominator of which is the unpaid Primary Obligations or
Secondary Obligations, as the case may be, of all Secured Creditors entitled to
such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that
if the Bank Creditors are to receive a distribution on account of undrawn
amounts with respect to Letters of Credit issued under the Credit Agreement
(which shall only occur after all outstanding Loans and Unpaid Drawings with
respect to such Letters of Credit have been paid in full), such amounts shall be
paid to the Agent under the Credit Agreement and held by it, for the equal and
ratable benefit of the Bank Creditors, as cash security for the repayment of
Obligations owing to the Bank Creditors as such. If any amounts are held as cash
security pursuant to the immediately preceding sentence, then upon the
termination of all outstanding Letters of Credit, and after the application of
all such cash security to the repayment of all Obligations owing to the Bank
Creditors after giving effect to the termination of all such Letters of Credit,
if there remains any excess cash, such excess cash shall be returned by the
Agent to the Collateral Agent for distribution in accordance with Section 7.4(a)
hereof.
(e) Except as set forth in Section 7.4(d) hereof, all payments
required to be made hereunder shall be made (i) if to the Bank Creditors, to the
Agent under the Credit Agreement for the account of the Bank Creditors, and (ii)
if to the Other Creditors, to the trustee, paying agent or other similar
representative (each, a "Representative") for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance
with this Section 7.4, the Collateral Agent shall be entitled to rely upon (i)
the Agent under the Credit Agreement and (ii) the Representative for the Other
Creditors or, in the absence of such a Representative, upon the Other Creditors
for a determination (which the Agent, each Representative for any Other
Creditors and the Secured Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors, as the
case may be. Unless it has actual knowledge (including by way of written notice
from a Bank Creditor or an Other Creditor) to the contrary, the Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume that
no Secondary Obligations are outstanding. Unless it has actual knowledge
(including by way of written notice from an Other Creditor) to the contrary, the
Collateral Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection or Other Hedging Agreements are in existence.
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(g) It is understood that each Assignor shall remain jointly
and severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clauses (i), (ii) and (iii) of Section 7.4(a) with respect to the relevant
Assignor.
7.5. Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection or Other Hedging Agreements, the other Credit Documents
now or hereafter existing at law, in equity or by statute and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time or simultaneously and as often and in such
order as may be deemed expedient by the Collateral Agent. All such rights,
powers and remedies shall be cumulative and the exercise or the beginning of the
exercise of one shall not be deemed a waiver of the right to exercise any other
or others. No delay or omission of the Collateral Agent in the exercise of any
such right, power or remedy and no renewal or extension of any of the
Obligations shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein. No
notice to or demand on any Assignor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand. In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder and
shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
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ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees
to indemnify, reimburse and hold the Collateral Agent, each other Secured
Creditor and their respective successors, permitted assigns, employees, agents
and servants (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all reasonable costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 8.1 the foregoing are collectively called "expenses")
of whatsoever kind and nature imposed on, asserted against or incurred by any of
the Indemnitees in any way relating to or arising out of this Agreement, any
Interest Rate Protection or Other Hedging Agreement, any other Credit Document
or any other document executed in connection herewith or therewith or in any
other way connected with the administration of the transactions contemplated
hereby or thereby or the enforcement of any of the terms of, or the preservation
of any rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other governmental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for losses, damages or
liabilities to the extent caused by the gross negligence or willful misconduct
of such Indemnitee. Each Assignor agrees that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty, claim, demand, action, suit or judgment, the relevant Assignor shall
assume full responsibility for the defense thereof. Each Indemnitee agrees to
use its best efforts to promptly notify the relevant Assignor of any such
assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other reasonable fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b),
each Assignor agrees, jointly and severally, to pay, indemnify and hold each
Indemnitee harmless from and against any loss, costs, damages and expenses which
such Indemnitee may suffer, expend or incur in consequence of or growing out of
any misrepresentation by any Assignor in
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this Agreement, any Interest Rate Protection or Other Hedging Agreement, any
other Credit Document or in any writing contemplated by or made or delivered
pursuant to or in connection with this Agreement, any Interest Rate Protection
or Other Hedging Agreement or any other Credit Document.
(d) If and to the extent that the obligations of any Assignor
under this Section 8.1 are unenforceable for any reason, such Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival.
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Letters of
Credit and all Interest Rate Protection or Other Hedging Agreements and the
payment of all other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Agent" shall have the meaning provided in the recitals to
this Agreement.
"Agreement" shall have the meaning provided in the preamble to
this Agreement.
"Assignor" shall have the meaning provided in the preamble to
this Agreement.
"Bank Creditors" shall have the meaning provided in the
preamble to this Agreement.
"Banks" shall have the meaning provided in the recitals to
this Agreement.
"Borrower" shall have the meaning provided in the recitals to
this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing
account maintained with, and in the sole dominion and control of, the Collateral
Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
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"Class" shall have the meaning provided in Section 10.2.
"Collateral" shall have the meaning provided in Section 1.1(a).
"Collateral Agent" shall have the meaning provided in the
preamble to this Agreement.
"Concentration Account" shall mean the separate account
established and maintained by the Assignors with the Concentration Account Bank
for the benefit of the Secured Creditors.
"Concentration Account Bank" shall mean [___________] or such
other bank that replaces [_____________] as the Concentration Account Bank in
accordance with the provisions of Section 3.7(a).
"Concentration Account Consent Letter" shall mean the letter
agreement in the form attached as Annex J hereto, between the Assignors and the
Concentration Account Bank, with such modifications thereto as may be acceptable
to the Collateral Agent, as the same may be amended, modified or supplemented
from time to time in accordance with the terms hereof and thereof.
"Contract Rights" shall mean all rights of any Assignor
(including without limitation all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and
one or more additional parties (including, without limitation, any Interest Rate
Protection or Other Hedging Agreement and the Merger Documents).
"Copyrights" shall mean any U.S. or foreign copyright owned by
any Assignor, including any registrations of any Copyrights, in the U.S.
Copyright Office or the equivalent thereof in any foreign jurisdiction, as well
as any application for a U.S. or foreign copyright registration now or hereafter
made with the U.S. Copyright Office or the equivalent thereof in any foreign
jurisdiction by any Assignor.
"Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Credit Document Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of
time, or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
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"Equipment" shall mean any "equipment," as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor and, in any event,
shall include, but shall not be limited to, all machinery, equipment,
furnishings, movable trade fixtures and vehicles now or hereafter owned by any
Assignor and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and
as defined in, the Credit Agreement or any payment default under any Interest
Rate Protection or Other Hedging Agreement and shall in any event, without
limitation, include any payment default on any of the Obligations after the
expiration of any applicable grace period.
"General Intangibles" shall have the meaning provided in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Goods" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection or Other Hedging Agreements" shall
have the meaning provided in the preamble to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and
all additions, substitutions and replacements thereof, wherever located,
together with all goods, supplies, incidentals, packaging materials, labels,
materials and any other items used or usable in manufacturing, processing,
packaging or shipping same; in all stages of production -- from raw materials
through work-in-process to finished goods -- and all products and proceeds of
whatever sort and wherever located and any portion thereof which may be
returned, rejected, reclaimed or repossessed by the Collateral Agent from any
Assignor's customers, and shall specifically include all "inventory" as such
term is defined in the Uniform Commercial Code as in effect on the date hereof
in the State of New York, now or hereafter owned by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement, lessor's interest
in a financing lease or analogous instrument, in, of, or on any Assignor's
property.
"Marks" shall mean all right, title and interest in and to any
U.S. or foreign trademarks, service marks and trade names now held or hereafter
acquired by any Assignor, including any registration or application for
registration of any trademarks and service marks in the United States Patent and
Trademark Office, or the equivalent thereof in any State of the United States or
in any foreign country, and any trade dress including logos and/or designs used
by any Assignor in the United States or any foreign country.
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"Obligations" shall mean (i) the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and indebtedness
(including, without limitation, indemnities, fees and interest thereon) of the
Borrower and each Assignor owing to the Bank Creditors, now existing or
hereafter incurred under, arising out of or in connection with any Credit
Document and the due performance and compliance by the Borrower and each
Assignor with the terms of each such Credit Document (all such obligations and
indebtedness under this clause (i), except to the extent consisting of
obligations or indebtedness with respect to Interest Rate Protection or Other
Hedging Agreements, being herein collectively called the "Credit Document
Obligations"); (ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and indebtedness (including, without
limitation, indemnities, fees and interest thereon) of the Borrower and each
Assignor owing to the Other Creditors now existing or hereafter incurred under,
arising out of or in connection with any Interest Rate Protection or Other
Hedging Agreement including, without limitation, in the case of each Subsidiary
Guarantor, all obligations under the Subsidiaries Guaranty, in respect of
Interest Rate Protection or Other Hedging Agreements (all such obligations and
indebtedness under this clause (ii) being herein collectively called the "Other
Obligations"); (iii) any and all sums advanced by the Collateral Agent in order
to preserve the Collateral or preserve its security interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities referred to in clauses (i), (ii) and
(iii) above, after an Event of Default shall have occurred and be continuing,
the reasonable expenses of retaking, holding, preparing for sale or lease,
selling or otherwise disposing of or realizing on the Collateral, or of any
exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (v) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 8.1 of this Agreement.
"Other Creditors" shall have the meaning provided in the
preamble to this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any U.S. or foreign patent to which any
Assignor now or hereafter has title and any divisions or continuations thereof,
as well as any application for a U.S. or foreign patent now or hereafter made by
any Assignor.
"Primary Obligation" shall have the meaning provided in
Section 7.4(b).
"Pro Rata Share" shall have the meaning provided in Section
7.4(b).
"Proceeds" shall have the meaning provided in the Uniform
Commercial Code as in effect in the State of New York on the date hereof or
under other relevant law and, in any event, shall include, but not be limited
to, (i) any and all proceeds of any
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insurance, indemnity, warranty or guaranty payable to the Collateral Agent or
any Assignor from time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to any
Assignor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor and, in any event, shall
include, but shall not be limited to, all of such Assignor's rights to payment
for goods sold or leased or services performed by such Assignor, whether now in
existence or arising from time to time hereafter, including, without limitation,
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (a) all
security pledged, assigned, hypothecated or granted to or held by such Assignor
to secure the foregoing, (b) all of any Assignor's right, title and interest in
and to any goods or services, the sale of which gave rise thereto, (c) all
guarantees, endorsements and indemnifications on, or of, any of the foregoing,
(d) all powers of attorney for the execution of any evidence of indebtedness or
security or other writing in connection therewith, (e) all books, records,
ledger cards, and invoices relating thereto, (f) all evidences of the filing of
financing statements and other statements and the registration of other
instruments in connection therewith and amendments thereto, notices to other
creditors or secured parties, and certificates from filing or other registration
officers, (g) all credit information, reports and memoranda relating thereto and
(h) all other writings related in any way to the foregoing.
"Representative" shall have the meaning provided in Section
7.4(e).
"Requisite Creditors" shall have the meaning provided in
Section 10.2.
"Secondary Obligation" shall have the meaning provided in
Section 7.4(b).
"Secured Creditors" shall have the meaning provided in the
preamble to this Agreement.
"Subsidiaries Guaranty" shall have the meaning provided in
the recitals to this Agreement.
"Termination Date" shall have the meaning provided in Section
10.9.
"Trade Secret Rights" shall have the meaning provided in
Section 5.1.
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ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and shall be delivered, mailed,
telegraphed, telexed, facsimile transmitted or cabled, addressed:
(a) if to any Assignor, at its address set forth opposite its
signature below;
(b) if to the Collateral Agent:
Banque Paribas
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000;
(c) if to any Bank Creditor (other than the Collateral Agent),
either (x) to the Agent, at the address of the Agent specified in the
Credit Agreement or (y) at such address as such Bank Creditor shall
have specified in the Credit Agreement;
(d) if to any Other Creditor, to the Representative for the
Other Creditors, at such address as such Representative may have
provided to the Borrower and the Collateral Agent from time to time,
or, in the absence of a Representative, directly to the Other Creditors
at such address as the Other Creditors shall have specified in writing
to the Borrower and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. All such notices
and communications shall, when mailed, telegraphed, telexed, facsimile
transmitted or cabled or sent by overnight courier, be effective on the third
Business Day following deposit in the U.S. mails, certified, return receipt
requested, when delivered to the telegraph company, cable company or on the day
following delivery to an overnight courier, as the case may be, or sent by telex
or facsimile device.
10.2. Waiver; Amendment. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by each Assignor directly affected
thereby and the Collateral Agent (with the consent of (x) either the Required
Banks or, to the extent required by Section 13.12 of the Credit Agreement, all
of the Banks at all times prior to the time at which all Credit Document
Obligations have been paid in full or (y) the holders of at least a majority of
the outstanding Other Obligations at all times after the time at which all
Credit Document Obligations have been paid in full); provided, that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured
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Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement the term "Class" shall mean each
class of Secured Creditors, i.e., whether (x) the Bank Creditors as holders of
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection or Other Hedging
Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor, except to
the extent that the enforceability thereof may be limited by any such event; (b)
any exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection or Other Hedging Agreement, except as specifically
set forth in a waiver granted pursuant to Section 10.2; or (c) any amendment to
or modification of any Credit Document or any Interest Rate Protection or Other
Hedging Agreement or any security for any of the Obligations; whether or not any
Assignor shall have notice or knowledge of any of the foregoing, except as
specifically set forth in an amendment or modification executed pursuant to
Section 10.2.
10.4. Successors and Assigns. This Agreement shall be binding
upon each Assignor and its successors and assigns and shall inure to the benefit
of the Collateral Agent and each Secured Creditor and their respective
successors and assigns; provided, that no Assignor may transfer or assign any or
all of its rights or obligations hereunder without the prior written consent of
the Collateral Agent. All agreements, statements, representations and warranties
made by each Assignor herein or in any certificate or other instrument delivered
by such Assignor or on its behalf under this Agreement shall be considered to
have been relied upon by the Secured Creditors and shall survive the execution
and delivery of this Agreement, the other Credit Documents and the Interest Rate
Protection or Other Hedging Agreements regardless of any investigation made by
the Secured Creditors or on their behalf.
10.5. Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.6. 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.
10.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
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ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
10.8. Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that each Assignor shall
remain liable to perform all of the obligations, if any, assumed by it with
respect to the Collateral and the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Agent be required or
obligated in any manner to perform or fulfill any of the obligations of each
Assignor under or with respect to any Collateral.
10.9. Termination; Release. (a) After the Termination Date,
this Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including, without limitation, Uniform Commercial
Code termination statements on form UCC-3 and terminations of applicable
assignments of trademarks) acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of its
Collateral as may be in the possession of the Collateral Agent and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement. As used in this Agreement, "Termination Date" shall mean the date
upon which the Total Commitment and all Interest Rate Protection or Other
Hedging Agreements have been terminated, no Note is outstanding (and all Loans
have been paid in full), all Letters of Credit have been terminated (or cash
collateralized to the Collateral Agent's satisfaction) and all other Obligations
then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by the Credit Agreement or is otherwise
released at the direction of the Required Banks (or all the Banks if required by
Section 13.12 of the Credit Agreement) and the proceeds of such sale or sales or
from such release are applied in accordance with the terms of the Credit
Agreement, such Collateral will be sold free and clear of the Liens created by
this Agreement and the Collateral Agent, at the request and expense of the
respective Assignor, will duly assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such of the
Collateral of such Assignor as is then being (or has been) so sold or released
and as may be in the possession of the Collateral Agent and has not theretofore
been released pursuant to this Agreement.
(c) At any time that an Assignor desires that Collateral be
released as provided in the foregoing Section 10.9(a) or (b), it shall deliver
to the Collateral Agent a certificate signed by its chief financial officer or
another authorized senior officer stating that the release of the respective
Collateral is permitted pursuant to Section 10.9(a) or (b). If reasonably
requested by the Collateral Agent (although the Collateral Agent shall have no
obligation to make any such request), the relevant Assignor shall furnish
appropriate legal opinions (from counsel, which may be in-house counsel,
acceptable to the Collateral Agent) to the effect set forth in the immediately
preceding sentence. The Collateral Agent shall
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have no liability whatsoever to any Secured Creditor as the result of any
release of Collateral by it as permitted by this Section 10.
10.10. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.
10.11. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement and all applicable law all items of the
Collateral at any time received under this Agreement. It is expressly understood
and agreed by the parties hereto and each Secured Creditor, by accepting the
benefits of this Agreement, acknowledges and agrees that the obligations of the
Collateral Agent as holder of the Collateral and interests therein and with
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Collateral Agent shall act
hereunder on the terms and conditions set forth in Section 12 of the Credit
Agreement.
10.12. Limited Obligations. It is the desire and intent of
each Assignor, the Collateral Agent and the Secured Creditors that this
Agreement shall be enforced against each Assignor to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If and to the extent that the obligations of each
Assignor under this Agreement 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,
which laws would determine the solvency of any Assignor by reference to the full
amount of the Obligations at the time of the execution and delivery of this
Agreement), then the amount of the Obligations of such Assignor shall be deemed
to be reduced and such Assignor shall pay the maximum amount of the Obligations
which would be permissible under the applicable law.
10.13. Additional Assignors. It is understood and agreed that
any Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become an Assignor hereunder by executing a counterpart hereof and
delivering the same to the Collateral Agent.
* * * *
30
35
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
Address:
3100 World Trade Center VIDEO UPDATE, INC.,
00 Xxxx Xxxxxxx Xxxxxx as an Assignor
Xx. Xxxx, XX 00000
Attention: President
Tel: ( ) - By /s/ Xxxxxx X. Xxxxxx
Fax: ( ) - --------------------------------------
Name:
Title:
Address: MOOVIES, INC.,
as an Assignor
Attention: President By /s/ Xxxxxx X. Xxxxxx
Tel: ( ) - --------------------------------------
Fax: ( ) - Name:
Title:
Address: MOOVIES OF MICHIGAN, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: MOVIE WAREHOUSE FRANCHISE SYSTEMS,
INC., as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President ----------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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36
Address: E.C.6., INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address SONI, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: PQ3, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President -----------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: SNO, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: GBO, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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37
Address: D-XXXXXX, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: DCO, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: PTO, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: THE MOVIE STORE, INC. #2,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address: THE MOVIE STORE III, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
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38
Address: ALPHARETTA MEDIA ASSOCIATES, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address RIO MEDIA ASSOCIATES, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Address PIC-A-FLICK OF GREENVILLE, INC.,
as an Assignor
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000 By /s/ Xxxxxx X. Xxxxxx
Attention: President --------------------------------------
Tel: (000) 000-0000 Name:
Fax: (000) 000-0000 Title:
Accepted and Agreed to:
BANQUE PARIBAS,
as Collateral Agent, as Pledgee
By /s/ X. Xxxxxx
-----------------------------
Name: X. Xxxxxx
Title: M. Director
By -----------------------------
Name:
Title:
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39
Address: TINSELTOWN VIDEO, INC.,
c/o Video Update, Inc. as an Assignor
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000 By /S/ XXXXXX X. XXXXXX
------------------------
Attention: President Name:
Tel: (000) 000-0000 Title:
Fax: (000) 000-0000
Address: XXXXXXXX VIDEO, INC.,
c/o Video Update, Inc. as an Assignor
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000 By /S/ XXXXXX X. XXXXXX
------------------------
Attention: President Name:
Tel: (000) 000-0000 Title:
Fax: (000) 000-0000
Address: VUI MERGER CORP.,
c/o Video Update, Inc. as an Assignor
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000 By /S/ XXXXXX X. XXXXXX
------------------------
Attention: President Name:
Tel: (000) 000-0000 Title:
Fax: (000) 000-0000
Address: MOOVIES OF THE CAROLINAS, INC.,
000 Xxxxxxxxxx Xxxxxxx as an Assignor
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President By /S/ XXXXXX X. XXXXXX
Tel: (000) 000-0000 ------------------------
Fax: (000) 000-0000 Name:
Title:
Address: MOOVIES OF GEORGIA, INC.,
000 Xxxxxxxxxx Xxxxxxx as an Assignor
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President By /S/ XXXXXX X. XXXXXX
Tel: (000) 000-0000 ------------------------
Fax: (000) 000-0000 Name:
Title:
40
Address: MOOVIES OF IOWA, INC.,
000 Xxxxxxxxxx Xxxxxxx as an Assignor
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President By /S/ XXXXXX X. XXXXXX
Tel: (000) 000-0000 ------------------------
Fax: (000) 000-0000 Name:
Title:
