EXHIBIT 10.1(k)
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SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is dated as of April 1,
2002 and entered into by and among COVANTA ENERGY CORPORATION, a Delaware
corporation ("Covanta" or "Company"), each of THE OTHER BORROWERS LISTED ON THE
SIGNATURE PAGES HEREOF, each of THE SUBSIDIARY GUARANTORS LISTED ON THE
SIGNATURE PAGES HEREOF and each ADDITIONAL SUBSIDIARY GUARANTOR AND BORROWER
that may become a party hereto after the date hereof in accordance with Section
24 hereof (each an "Additional Grantor" and collectively "Additional Grantors";
Borrowers and Subsidiary Guarantors, including any Additional Grantors, are
sometimes collectively referred to herein as "Grantors" and individually as a
"Grantor"), and BANK OF AMERICA, N.A., in its capacity as administrative agent
for and representative of Lenders from time to time party to the Credit
Agreement (in such capacity, "Secured Party"). Terms defined in the Credit
Agreement and not otherwise defined herein are being used herein as therein
defined.
RECITALS
WHEREAS, on April 1, 2002, each Borrower filed a voluntary petition
for relief under the Bankruptcy Code with the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court"), and each Borrower
continues to operate its businesses and manage its properties as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, Secured Party, as Administrative Agent, Deutsche Bank AG, New
York Branch, as Documentation Agent, and Lenders are entering into that certain
Debtor-in-Possession Credit Agreement dated as of even date herewith with
Borrowers (said Debtor-in-Possession Credit Agreement, as it may hereafter be
amended, restated, supplemented or otherwise modified from time to time, being
the "Credit Agreement"), pursuant to which, inter alia, Lenders have agreed to
provide, subject to the terms and conditions contained in the Credit Agreement,
debtor-in-possession revolving credit facilities for the Borrowers to fund
working capital and general corporate purposes and to make certain other
payments during the Chapter 11 Cases;
WHEREAS, Subsidiary Guarantors have entered into that certain
Subsidiary Guaranty dated as of even date herewith (said Subsidiary Guaranty, as
it may hereafter be amended, restated, supplemented or otherwise modified from
time to time, being the "Subsidiary Guaranty") in favor of Secured Party for the
benefit of Lenders, pursuant to which each Subsidiary Guarantor has guarantied
the prompt payment and performance when due of all obligations of Borrowers
under the Credit Agreement;
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement that Grantors listed on the signature pages hereof shall have
granted a security interest in the Collateral (as defined below) for the benefit
of Lenders;
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to enter into the Credit Agreement and make loans and other
extensions of credit thereunder from time to time and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party as follows:
Section 1. Grant of Security.
In addition to, and not in lieu of, any security interests for the
benefit of Lenders effected pursuant to the Interim Borrowing Order or the Final
Borrowing Order, each Grantor hereby assigns to Secured Party, and hereby grants
to Secured Party a security interest in, all of such Grantor's right, title and
interest in and to all assets (including all real, personal and mixed property)
of each of the Grantors (or, in the case of Borrowers, all assets of the estates
of each of such Grantors), including, without limitation, the following, in each
case whether now or hereafter existing, whether tangible or intangible, or in
which such Grantor now has or hereafter acquires an interest and wherever the
same may be located (all such assets being the "Collateral"):
(a) all equipment, in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"Equipment");
(b) all inventory in all of its forms, including but not limited to
(i) all goods held by such Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in such Grantor's business, (iii)
all goods in which such Grantor has an interest in mass or a joint or other
interest or right of any kind, and (iv) all goods which are returned to or
repossessed by such Grantor and all accessions thereto and products thereof
(collectively the "Inventory") and all negotiable and non-negotiable documents
of title (including without limitation, documents, warehouse receipts, dock
receipts and bills of lading) issued by any Person covering any Inventory (any
such negotiable document of title being a "Negotiable Document of Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles, letter-of-credit rights and other rights and
obligations of any kind owned by or owing to such Grantor and all rights in, to
and under all security agreements, leases and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel paper,
documents, instruments, general intangibles, letter-of-credit rights or other
rights and obligations (any and all such accounts, contract rights, chattel
paper, documents, instruments, general intangibles and other obligations being
the "Accounts," and any and all such security agreements, leases and other
contracts being the "Related Contracts").
(d) all deposit accounts, including any restricted deposit accounts
established and maintained by Secured Party pursuant to Section 12 and all the
accounts and concentration accounts which constitute the Cash Management System,
together with (i) all amounts on deposit from time to time in such deposit
accounts and (ii) all interest, cash, instruments, securities 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 (the "Deposit Accounts");
(e) the "Securities Collateral," which term means:
(i) the shares of stock, partnership interests, interests in joint
ventures, limited liability company interests and all other equity
interests in any other Person, including all securities convertible into,
and rights, warrants, options and other rights to purchase or otherwise
acquire, any of the foregoing now or hereafter owned by such Grantor,
including those owned on the date hereof and described on Schedule 1(e)(i),
and the certificates or other instruments representing any of the foregoing
and any interest of such Grantor in the entries on the books of any
securities intermediary pertaining thereto (the "Pledged Shares"), and all
dividends, distributions, returns of capital, cash, warrants, option,
rights, instruments, rights to vote or manage the business of such Person
pursuant to organizational documents governing the rights and obligations
of the stockholders, partners, members or other owners thereof and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged
Shares; provided, that if the issuer of any of such Pledged Shares is a
Foreign Subsidiary, the Pledged Shares shall not include any shares of
stock of such issuer in excess of the number of shares of such issuer
possessing up to but not exceeding 65% of the voting power of all classes
of capital stock entitled to vote of such issuer, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Pledged Shares; provided, further, that
Pledged Shares shall not include any shares of stock of those Subsidiaries
the pledge of which would constitute a violation of (i) a valid and
enforceable Contractual Obligation (to the extent such Contractual
Obligation is enforceable on a post-Petition Date basis) in favor of or for
the benefit of a Person other than Company or any of its Subsidiaries and
their respective Affiliates for which the required consents have not been
obtained or (ii) applicable law affecting such Grantor or such Subsidiary;
(ii) the indebtedness from time to time owed to such Grantor by any
obligor, and the instruments evidencing such indebtedness (the "Pledged
Debt"), and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Debt; and
(iii) all other investment property of such Grantor not otherwise
included in this clause (e) or the definition of Investment Collateral;
(f) the "Investment Collateral", which term means:
(i) all securities accounts, including any restricted securities
accounts established and maintained by Secured Party pursuant to Section
12, (ii) all credit balances held from time to time in such securities
accounts, (iii) any property, including any Financial Assets (as defined in
the UCC) credited to any such securities account by Secured Party and any
other property acquired by Secured Party as securities intermediary in
exchange for, with proceeds from or distributions on, or otherwise in
respect of any of the foregoing (any such property an "Investment") and any
security entitlements, securities (whether certificated or uncertificated),
instruments, accounts, chattel paper, general intangibles and deposits
representing or evidencing any Investment, and (iv) all interest,
dividends, cash, instruments, securities and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Investments.
(g) the "Intellectual Property Collateral," which term means:
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise) in and to all trademarks, service marks,
designs, logos, indicia, tradenames, trade dress, corporate names, company
names, business names, fictitious business names, trade styles and/or other
source and/or business identifiers and applications pertaining thereto,
owned by such Grantor, or hereafter adopted and used, in its business
(including, without limitation, the trademarks specifically identified in
Schedule 1(g)(i), as the same may be amended pursuant hereto from time to
time) (collectively, the "Trademarks"), all registrations that have been or
may hereafter be issued or applied for thereon in the United States and any
state thereof and in foreign countries (including, without limitation, the
registrations and applications specifically identified in Schedule 1(g)(i),
as the same may be amended pursuant hereto from time to time) (the
"Trademark Registrations"), all common law and other rights in and to the
Trademarks in the United States and any state thereof and in foreign
countries (the "Trademark Rights"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith (the
"Associated Goodwill");
(ii) all rights, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may
be, owned or held by such Grantor and all patents and patent applications
and rights, title and interests in patents and patent applications under
any domestic or foreign law that are presently, or in the future may be,
owned by such Grantor in whole or in part (including, without limitation,
the patents and patent applications listed in Schedule 1(g)(ii), as the
same may be amended pursuant hereto from time to time), all rights
corresponding thereto (including, without limitation, the right,
exercisable only upon the occurrence and during the continuation of an
Event of Default, to xxx for past, present and future infringements in the
name of such Grantor or in the name of Secured Party or Lenders), and all
re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively
referred to as the "Patents"); it being understood that the rights and
interests included in the Intellectual Property Collateral hereby shall
include, without limitation, all rights and interests pursuant to licensing
or other contracts in favor of such Grantor pertaining to patent
applications and patents presently or in the future owned or used by third
parties but, in the case of third parties which are not Affiliates of such
Grantor, only to the extent permitted by such licensing or other contracts
and, if not so permitted, only with the consent of such third parties; and
(iii) all rights, title and interest (including rights acquired
pursuant to a license or otherwise) under copyright in various published
and unpublished works of authorship including, without limitation, computer
programs, computer data bases, other computer software, layouts, trade
dress, drawings, designs, writings, and formulas owned by such Grantor
(including, without limitation, the works listed on Schedule 1(g)(iii), as
the same may be amended pursuant hereto from time to time) (collectively,
the "Copyrights"), all copyright registrations issued to such Grantor and
applications for copyright registration that have been or may hereafter be
issued or applied for thereon by such Grantor in the United States and any
state thereof and in foreign countries (including, without limitation, the
registrations listed on Schedule 1(g)(iii), as the same may be amended
pursuant hereto from time to time) (collectively, the "Copyright
Registrations"), all common law and other rights in and to the Copyrights
in the United States and any state thereof and in foreign countries
including all copyright licenses (but with respect to such copyright
licenses, only to the extent permitted by such licensing arrangements) (the
"Copyright Rights"), including, without limitation, each of the Copyrights,
rights, titles and interests in and to the Copyrights, all derivative works
and other works protectable by copyright, which are presently, or in the
future may be, owned, created (as a work for hire for the benefit of such
Grantor), authored (as a work for hire for the benefit of such Grantor), or
acquired by such Grantor, in whole or in part, and all Copyright Rights
with respect thereto and all Copyright Registrations therefor, heretofore
or hereafter granted or applied for, and all renewals and extensions
thereof, throughout the world, including all proceeds thereof (such as, by
way of example and not by limitation, license royalties and proceeds of
infringement suits), the right to renew and extend such Copyright
Registrations and Copyright Rights and to register works protectable by
copyright and the right to xxx for past, present and future infringements
of the Copyrights and Copyright Rights;
(h) all information used or useful or arising from the business
including all goodwill, trade secrets, trade secret rights, know-how, customer
lists, processes of production, ideas, confidential business information,
techniques, processes, formulas, and all other proprietary information;
(i) all licenses, contracts and agreements, as each such license,
contract and agreement may be amended, restated, supplemented or otherwise
modified from time to time (said agreements, as so amended, restated,
supplemented or otherwise modified, being referred to herein individually as an
"Assigned Agreement" and collectively as the "Assigned Agreements"), including,
without limitation, (i) all rights of such Grantor to receive moneys due or to
become due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) all claims of such Grantor for
damages arising out of any breach of or default under the Assigned Agreements,
and (iv) all rights of such Grantor to terminate, amend, supplement, modify or
exercise rights or options under the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder;
(j) to the extent not included in any other paragraph of this Section
1, each Grantor's commercial tort claims, potential claims, causes of action and
potential causes of action, including, but not limited to, those listed on
Schedule 1(j) (collectively, the "Commercial Tort Claims"), and all general
intangibles (including, without limitation, tax refunds, payment intangibles,
other rights to payment or performance, choses in action, software and judgments
taken on any rights or claims included in the Collateral);
(k) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products thereof;
(l) all real property of Borrowers (including, without limitation,
leasehold and fee interests in such real property);
(m) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(n) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance related to the Collateral (whether or not Secured Party
is the loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "proceeds" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in (i) any of such Grantor's rights or interests in any license,
contract or agreement to which such Grantor is a party or any of its rights or
interests thereunder, to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under the provisions
of any license, contract or agreement to which such Grantor is a party on the
date hereof (other than to the extent that any such provision would be rendered
ineffective pursuant to the Uniform Commercial Code, as it exists on the date of
this Agreement or as it may hereafter be amended, in the State of New York (the
"NY UCC") or any other applicable law (including the Bankruptcy Code) or
principles of equity); provided, that immediately upon the ineffectiveness,
lapse or termination of any such provision, the Collateral shall include, and
such Grantor shall be deemed to have granted a security interest in, all such
rights and interests as if such provision had never been in effect; provided,
further that if the assignment of proceeds of such license, contract or
agreement would not result in a breach of the terms of, or constitute a default
under the provisions of such license, contract or agreement, such proceeds shall
be included in the Collateral or (ii) any real property leasehold, unless a
Grantor has executed a leasehold mortgage or leasehold deed of trust covering
such real property leasehold.
Each item of Collateral listed in this Section 1 that is defined in
Articles 8 or 9 of the NY UCC shall have the meaning set forth in the NY UCC, as
it exists on the date of this Agreement or as it may hereafter be amended, it
being the intention of the Grantors that the description of the Collateral set
forth above be construed to include the broadest possible range of assets.
Section 2. Security for Obligations.
Subject to Section 1 hereof, this Agreement secures, and the
Collateral assigned by each Grantor is collateral security for, the prompt
payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including without
limitation the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code), of all Secured
Obligations of such Grantor. "Secured Obligations" means:
(i) with respect to Borrowers, all obligations and liabilities of
every nature of Borrowers now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents,
and
(ii) with respect to Subsidiary Guarantors, all obligations and
liabilities of every nature of such Subsidiary Guarantors now or hereafter
existing under or arising out of or in connection with the Subsidiary
Guaranty;
in each case together with all extensions or renewals thereof, whether
for principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to such Subsidiary Guarantor,
would accrue on such obligations, whether or not a claim is allowed against such
Subsidiary Guarantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, obligations arising
under or relating to any Hedge Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender as
a preference, fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement.
Section 3. Grantors Remain Liable.
Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts, licenses and agreements
included in the Collateral, to the extent set forth therein, to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Secured Party of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts, licenses and agreements included in the Collateral, and (c)
Secured Party shall not have any obligation or liability under any contracts,
licenses, and agreements included in the Collateral by reason of this Agreement,
nor shall Secured Party be obligated to perform any of the obligations or duties
of any Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
Section 4. Representations and Warranties.
Each Grantor represents and warrants as follows:
(a) Ownership of Collateral. Except as expressly permitted by
subsection 7.2 of the Credit Agreement, such Grantor owns the Collateral owned
by such Grantor free and clear of any Lien. Except as expressly permitted by
subsection 7.2 of the Credit Agreement, no effective financing statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any filing or recording office.
(b) Locations of Equipment and Inventory. All of the Equipment and
Inventory having a value in excess of $500,000 is, as of the date hereof, or in
the case of an Additional Grantor, the date of the applicable counterpart
entered into pursuant to Section 23 (each, a "Counterpart") located at the
places specified in Schedule 4(b), except for Equipment that is temporarily
moved from places specified in Schedule 4(b) to undergo repair or Inventory
which, in the ordinary course of business, is in transit either (i) from a
supplier to a Grantor, (ii) between the locations specified in Schedule 4(b), or
(iii) to customers of a Grantor.
(c) Negotiable Documents of Title. Except as set forth on Schedule
4(c), no Negotiable Documents of Title are outstanding with respect to any of
the Inventory.
(d) Office Locations; Type and Jurisdiction of Organization. The chief
place of business, the chief executive office and the office where such Grantor
keeps its records regarding the Accounts and all originals of all chattel paper
that evidence Accounts are, as of the date hereof, and, except as described on
Schedule 4(d), have been for the four month period preceding the date hereof,
or, in the case of an Additional Grantor, the date of the applicable
Counterpart, located at the locations described on Schedule 4(d); the type
(i.e., corporation, limited partnership, etc.) and jurisdiction of organization
of such Grantor are listed on Schedule 4(d); no Grantor is an unregistered
entity;
(e) Names. No Grantor (or predecessor by merger or otherwise of such
Grantor) has, within the four month period preceding the date hereof, or, in the
case of an Additional Grantor, the date of the applicable Counterpart, had a
different name from the name of such Grantor listed or the signature pages
hereof, except the names listed in Schedule 4(e) annexed hereto.
(f) Delivery of Certain Collateral. All certificates or instruments
(excluding checks) evidencing, comprising or representing the Collateral
(including, without limitation, the Securities Collateral) have been or, when
required pursuant to this Agreement, will be delivered to Secured Party duly
endorsed or accompanied by duly executed instruments of transfer or assignment
in blank.
(g) Securities Collateral. (i) All of the Pledged Shares described on
Schedule 1(e)(i) have been duly authorized and validly issued and are fully paid
and non-assessable; (ii) all of the Pledged Debt issued by Company or any of its
Subsidiaries has been duly authorized, authenticated or issued, and delivered
and is the legal, valid and binding obligation of the issuers thereof and is not
in default; (iii) except as described more fully on Schedule 1(e)(i), the
Pledged Shares constitute all of the issued and outstanding shares of stock or
other equity interests of each issuer thereof (subject to the proviso to Section
1(e)(i) with respect to shares of a Foreign Subsidiary), and there are no
outstanding warrants, options or other rights to purchase, or other agreements
outstanding with respect to, or property that is now or hereafter convertible
into, or that requires the issuance or sale of, any Pledged Shares, except
pursuant to any Contractual Obligation set forth on Schedule 4(g); (iv) the
Pledged Debt issued by Company or any of its Subsidiaries constitutes all of the
issued and outstanding intercompany indebtedness evidenced by a promissory note;
and (v) Schedule 1(e)(i) sets forth all of the Pledged Shares owned by each
Grantor on the date hereof.
(h) Intellectual Property Collateral.
(i) a true and complete list of all Trademark Registrations and
Trademark applications owned, held (whether pursuant to a license or
otherwise) or used by such Grantor, in whole or in part, is set forth
in Schedule 1(g)(i);
(ii) a true and complete list of all Patents owned, held (whether
pursuant to a license or otherwise) or used by such Grantor, in whole
or in part, is set forth in Schedule 1(g)(ii);
(iii) a true and complete list of all Copyright Registrations and
applications for Copyright Registrations held (whether pursuant to a
license or otherwise) by such Grantor, in whole or in part, is set
forth in Schedule 1(g)(iii);
(iv) after reasonable inquiry, such Grantor is not aware of any
pending claim by any third party that any of the Intellectual Property
Collateral owned, held or used by such Grantor is invalid or
unenforceable; and
(v) no effective security interest or other Lien covering all or
any part of the Intellectual Property Collateral is on file in the
United States Patent and Trademark Office or the United States
Copyright Office.
(i) Perfection. The security interests in the Collateral granted
hereunder to Secured Party for the benefit of Lenders constitute valid security
interests in the Collateral, , to the extent the UCC or U.S. patent, trademark
or copyright statutes are applicable thereto, securing the payment of the
Secured Obligations. If the Grantor is a Subsidiary Guarantor, upon (i) the
filing of UCC financing statements naming each such Subsidiary Guarantor as
"debtor," naming Secured Party as "secured party" and describing the Collateral
in the filing offices with respect to such Subsidiary Guarantor set forth on
Schedule 4(i), (ii) in the case of the Securities Collateral consisting of
certificated securities or evidenced by instruments, delivery of the
certificates representing such certificated securities and delivery of such
instruments to Secured Party, in each case duly endorsed or accompanied by duly
executed instruments of assignment or transfer in blank, and (iii) in the case
of the Intellectual Property Collateral listed on Schedule 5.5C to the Credit
Agreement, excluding the Intellectual Property held under foreign law, in
addition to the filing of such UCC financing statements, the filing of a Grant
of Trademark Security Interest, substantially in the form of Exhibit I, and a
Grant of Patent Security Interest, substantially in the form of Exhibit II, with
the United States Patent and Trademark Office and the filing of a Grant of
Copyright Security Interest, substantially in the form of Exhibit III, with the
United States Copyright Office (each such Grant of Trademark Security Interest,
Grant of Patent Security Interest and Grant of Copyright Security Interest being
referred to herein as a "Grant"), the security interests in the Collateral
granted to Secured Party for the benefit of Lenders will constitute perfected
security interests therein, to the extent the UCC or U.S. patent, trademark or
copyright statutes are applicable thereto, prior to all other Liens (except for
Permitted Encumbrances and other Liens permitted under the Credit Agreement to
the extent such Liens are permitted to be senior in priority to the Liens in
favor of the Lenders), and all filings and other actions in the United States
necessary or desirable to perfect and protect such security interests have been
duly made or taken. In the case of Intellectual Property held under foreign law,
after the occurrence of an Event of Default, all actions necessary or desirable
to perfect and protect such security interests shall be taken. If Grantor is a
Borrower, upon entry of the Interim Borrowing Order or Final Borrowing Order,
the security interests in the Collateral granted to Secured Party for the
benefit of Lenders hereunder will constitute security interests therein prior to
all other Liens other than Liens permitted under the Credit Agreement to the
extent such Liens are permitted to be senior in priority to the Liens in favor
of the Lenders.
(j) Commercial Tort Claims. Schedule 1(j) identifies each claim,
potential claim, cause of action and potential cause of action that any Grantor
may have which arises in tort, whether or not a Proceeding relating to such
claim or cause of action has been initiated by any Person.
(k) Rolling Stock. The rolling stock of the Grantors (collectively) as
of the date hereof has an aggregate book value of less than $1,200,000.00.
Section 5. Further Assurances.
(a) Generally. Each Grantor agrees that from time to time, at the
expense of Grantors, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby under
the UCC or U.S. patent, trademark or copyright statutes or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, each Grantor
will: (i) at the request of Secured Party, upon the occurrence and continuation
of an Event of Default, xxxx conspicuously each item of chattel paper included
in the Accounts, each Related Contract and, at the request of Secured Party,
each of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to Secured Party, indicating that such Collateral is
subject to the security interest granted hereby, (ii) at the request of Secured
Party, upon the occurrence and continuation of an Event of Default, deliver and
pledge to Secured Party hereunder all instruments (including checks) and all
original counterparts of chattel paper constituting Collateral, duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to Secured Party, (iii) execute and file such
financing or continuation statements, or amendments thereto, and execute and
deliver such agreements establishing that Secured Party has control of specified
items of Collateral and such other instruments or notices, as may be necessary
or desirable, or as Secured Party may request, in order to perfect and preserve
the security interests granted or purported to be granted hereby under the UCC
or U.S. patent, trademark or copyright statutes, (iv) furnish to Secured Party
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail, (v) upon the
request of Secured Party, execute and file with the registrar of motor vehicles
or other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security interest
created hereunder on such certificate of title or any item of Equipment that is
covered by a certificate of title under a statute of any jurisdiction under the
law of which indication of a security interest on such certificate is required
as a condition of perfection thereof, (vi) at any time during normal business
hours, upon request by Secured Party, exhibit the Collateral to and allow
inspection of the Collateral by Secured Party, or persons designated by Secured
Party, (vii) at Secured Party's request, appear in and defend any action or
proceeding that may affect such Grantor's title to or Secured Party's security
interest in all or any part of the Collateral, except for Intellectual Property
Collateral; provided, however, that the foregoing exception for Intellectual
Property Collateral shall not apply if such Intellectual Property is of material
value as determined by Secured Party in its sole and absolute discretion; (viii)
use commercially reasonable efforts to obtain any necessary consents of third
parties to the assignment and perfection of a security interest to Secured Party
with respect to any Collateral, and (ix) at Secured Party's request, Grantors
shall promptly deliver, execute and file any and all documents, instruments and
certificates that Secured Party deems necessary or desirable, and in each case
in form and substance satisfactory to Secured Party. Each Grantor hereby
authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of any Grantor. Each Grantor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by such Grantor shall be sufficient as a financing statement
and may be filed as a financing statement in any and all jurisdictions.
(b) Securities Collateral. Without limiting the generality of the
foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other equity or debt securities required to be
pledged hereunder, immediately (and in any event within three (3) Business Days)
deliver to Secured Party a Pledge Supplement, duly executed by such Grantor, in
substantially the form of Exhibit IV (a "Pledge Supplement"), in respect of the
additional Pledged Shares or Pledged Debt (to the extent issued by Company or
any of its Subsidiaries) to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Supplement to Secured Party, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) hereof shall be deemed
to have been made by such Grantor as to the Securities Collateral described in
such Pledge Supplement as of the date thereof. Each Grantor hereby authorizes
Secured Party to attach each Pledge Supplement to this Agreement and agrees that
all Pledged Shares or Pledged Debt of such Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of such
Grantor; provided that the failure of any Grantor to execute a Pledge Supplement
with respect to any additional Pledged Shares or Pledged Debt pledged pursuant
to this Agreement shall not impair the security interest of Secured Party
therein or otherwise adversely affect the rights and remedies of Secured Party
hereunder with respect thereto.
(c) Intellectual Property Collateral. Without limiting the generality
of the foregoing Section 5(a), each Grantor shall execute and deliver to Secured
Party contemporaneous with its execution and delivery of this Agreement or a
counterpart hereto (i) with respect to all of such Grantor's Trademark
Collateral, a Grant of Trademark Security Interest, substantially in the form of
Exhibit I, (ii) with respect to all of such Grantor's Patent Collateral, a Grant
of Patent Security Interest, substantially in the form of Exhibit II, and (iii)
with respect to all of such Grantor's Copyright Collateral, a Grant of Copyright
Security Interest, substantially in the form of Exhibit III. In addition, if any
Grantor shall hereafter obtain rights to any new Intellectual Property
Collateral or become entitled to the benefit of (i) any patent application or
patent or any reissue, division, continuation, renewal, extension or
continuation-in-part of any Patent or any improvement of any Patent or (ii) any
Copyright Registration, application for Copyright Registration or renewals or
extension of any Copyright, then in any such case, the provisions of this
Agreement shall automatically apply thereto. Each Grantor shall promptly notify
Secured Party in writing of any of the foregoing rights acquired by such Grantor
after the date hereof and of (i) any Trademark Registrations issued or
application for a Trademark Registration or application for a Patent made, and
(ii) any Copyright Registrations issued or applications for Copyright
Registration made, in any such case, after the date hereof. Promptly after the
filing of an application for any material (1) Trademark Registration; (2)
Patent; and (3) Copyright Registration, each Grantor shall execute and deliver
to Secured Party and record in all places where a Grant is recorded an IP
Supplement, substantially in the form of Exhibit V (an "IP Supplement"),
pursuant to which such Grantor shall grant to Secured Party a security interest
to the extent of its interest in such Intellectual Property Collateral;
provided, if, in the reasonable judgment of such Grantor, after due inquiry,
granting such interest would result in the grant of a Trademark Registration or
Copyright Registration in the name of Secured Party, such Grantor shall give
written notice to Secured Party as soon as reasonably practicable and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration or
Copyright Registration, as the case may be. Upon delivery to Secured Party of an
IP Supplement, Schedules 1(g)(i), 1(g)(ii), and 1(g)(iii) hereto and Schedule A
to each Grant, as applicable, shall be deemed modified to include reference to
any right, title or interest in any existing Intellectual Property Collateral or
any Intellectual Property Collateral included on Schedule A to such IP
Supplement. Each Grantor hereby authorizes Secured Party to modify this
Agreement without the signature or consent of any Grantor by attaching Schedules
1(g)(i), 1(g)(ii), and 1(g)(iii), as applicable, that have been modified to
include such Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
failure of any Grantor to execute an IP Supplement with respect to any
additional Intellectual Property Collateral pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto.
Section 6. Certain Covenants of Grantors.
Each Grantor shall:
(a) not use or permit any Collateral under its control to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of (i) any change
in such Grantor's chief place of business, chief executive office or residence
or the office where such Grantor keeps its records regarding the Accounts and
all originals of all chattel paper that evidence Accounts or (ii)
reincorporation, reorganization or other action that results in a change of the
jurisdiction of organization of such Grantor;
(d) if Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes;
(e) except as expressly permitted by the Credit Agreement, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral; provided that such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against such Grantor or
any of the Collateral as a result of the failure to make such payment; and
(f) after the date hereof, give Secured Party prompt notice with
sufficient particularity of any claim or cause of action of any Grantor arising
in tort and not otherwise identified on Schedule 1(j).
Section 7. Special Covenants With Respect to Equipment and Inventory.
Each Grantor shall:
(a) keep the items of Equipment and Inventory owned by such Grantor
having a value in excess of $500,000 at the places therefor specified on
Schedule 4(b) or, upon 30 days' prior written notice to Secured Party, at such
other places in jurisdictions where all action that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby, or to
enable Secured Party to exercise and enforce its rights and remedies hereunder,
with respect to such Equipment and Inventory shall have been taken;
(b) promptly furnish to Secured Party a statement respecting any
material loss or damage to any of the Equipment owned by such Grantor;
(c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such Inventory,
such Grantor's cost therefor and (where applicable) the current list prices for
such Inventory;
(d) if any Inventory is in possession or control of any of such
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $500,000, and in any event upon the occurrence of an Event of
Default (as defined in Section 16(a)), instruct such agent or processor to hold
all such Inventory for the account of Secured Party and subject to the
instructions of Secured Party;
(e) after an Event of Default has occurred and is continuing, promptly
upon the issuance and delivery to such Grantor of any Negotiable Document of
Title, deliver such Negotiable Document of Title to Secured Party; and
(f) each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement.
Section 8. Special Covenants with respect to Accounts and Related Contracts.
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper in such
Grantor's possession that evidence Accounts, at the locations therefor set forth
on Schedule 4(d) or upon 30 days' prior written notice to Secured Party, at such
other location in a jurisdiction where all action that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby, or to
enable Secured Party to exercise and enforce its rights and remedies hereunder,
with respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and each Grantor
agrees to render to Secured Party, at Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of Secured Party, each Grantor shall deliver to
Secured Party complete and correct copies of each Related Contract.
(b) Each Grantor shall maintain (i) complete records of each Account,
in accordance with its customary business practices, including records of all
payments received, credits granted and merchandise returned, and (ii) all
documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Accounts and Related Contracts. In connection with
such collections, each Grantor may take (and, upon the occurrence and during the
continuance of an Event of Default at Secured Party's direction, shall take)
such action as such Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts; provided,
however, that Secured Party shall have the right at any time, upon the
occurrence and during the continuation of an Event of Default and upon written
notice to such Grantor of its intention to do so, to notify the account debtors
or obligors under any Accounts of the assignment of such Accounts to Secured
Party and, to the extent such Grantor is not legally or contractually prohibited
from doing so and such contractual prohibitions are enforceable under applicable
law, to direct such account debtors or obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to Secured Party, to
notify each Person maintaining a lockbox or similar arrangement to which account
debtors or obligors under any Accounts have been directed to make payment to
remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to Secured Party and, upon such notification and at the expense of
Grantors, to enforce collection of any such Accounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by such Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including checks and other instruments) received
by such Grantor in respect of the Accounts and the Related Contracts shall be
received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section
18, and (ii) such Grantor shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
Section 9. Special Covenants With Respect to the Securities Collateral.
(a) Delivery. Each Grantor agrees that all certificates or instruments
representing or evidencing the Securities Collateral shall be delivered to and
held by or on behalf of Secured Party pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by such
Grantor's endorsement, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance reasonably satisfactory to
Secured Party. Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Securities Collateral for
certificates or instruments of smaller or larger denominations.
(b) Covenants. Each Grantor shall (i) not, except as expressly
permitted by the Credit Agreement, permit any issuer of Pledged Shares to merge
or consolidate unless all of the outstanding capital stock or other equity
interests of the surviving or resulting Person received by the Grantor is, upon
such merger or consolidation, pledged hereunder and no cash, securities or other
property is distributed in respect of the outstanding shares of any other
constituent corporation; provided, if the surviving or resulting Person upon any
such merger or consolidation involving an issuer of Pledged Shares which is a
Foreign Subsidiary is a Foreign Subsidiary then such Grantor shall only be
required to pledge outstanding capital stock of such surviving or resulting
Person possessing up to but not exceeding 65% of the voting power of all classes
of capital stock of such issuer entitled to vote; (ii) to the extent legally
able to do so, cause each issuer of Pledged Shares that is controlled by such
Grantor not to issue any stock, other equity interests or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor or unless such stock, equity interests or securities
received by the Grantor are pledged hereunder; (iii) pledge hereunder, as soon
as practicable (but in no event later than three Business Days) upon its
acquisition (directly or indirectly) thereof, any and all additional shares of
stock, other equity interests or other securities of each issuer of Pledged
Shares; (iv) pledge hereunder, as soon as practicable (but in no event later
than three Business Days) upon its acquisition (directly or indirectly) thereof,
any and all shares of stock or other equity interests of any Person that, after
the date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of such Grantor; provided, notwithstanding anything contained in this
clause (iv) to the contrary, such Grantor shall only be required to pledge the
outstanding capital stock of a Foreign Subsidiary up to but not exceeding 65% of
the voting power of all classes of capital stock of such Foreign Subsidiary
entitled to vote; (v) pledge hereunder, as soon as practicable (but in no event
later than three Business Days) upon their issuance, any and all instruments or
other evidences of additional indebtedness from time to time owed to such
Grantor by any obligor on the Pledged Debt (to the extent issued by Company or
any of its Subsidiaries); (vi) pledge hereunder, as soon as practicable (but in
no event later than three Business Days) upon their issuance, any and all
instruments or other evidences of indebtedness from time to time owed to such
Grantor by any Person that after the date of this Agreement becomes, as a result
of any occurrence, a direct or indirect Subsidiary of such Grantor; and (vii) at
the request of Secured Party, promptly execute and deliver to Secured Party an
agreement providing for the control, as that term is defined in the UCC, by
Secured Party of all securities entitlements and securities accounts of such
Grantor.
(c) Voting and Distributions. So long as no Event of Default shall
have occurred and be continuing, (i) each Grantor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Credit Agreement; provided, no Grantor shall exercise
or refrain from exercising any such right if Secured Party shall have notified
such Grantor that, in Secured Party's judgment, such action would have a
material adverse effect on the value of the Securities Collateral or any part
thereof; and provided further, such Grantor shall give Secured Party at least
five Business Days' prior written notice of the manner in which it intends to
exercise, or the reasons for refraining from exercising, any such right if the
exercise, or the refrain from exercising, such right would reasonably be
expected to have a material adverse effect on the value of the Securities
Collateral or any part thereof (it being understood, however, that neither
(among other things) (A) the voting by such Grantor of any Pledged Shares for or
such Grantor's consent to the election of directors or other members of a
governing body of an issuer of Pledged Shares at a regularly scheduled annual or
other meeting of stockholders or holders of equity interests or with respect to
incidental matters at any such meeting, nor (B) such Grantor's consent to or
approval of any action otherwise permitted under this Agreement and the Credit
Agreement shall be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section, and no notice of any such
voting or consent need be given to Secured Party) and (ii) each Grantor shall be
entitled to receive and retain, and to utilize any and all dividends, other
distributions and interest paid in respect of the Securities Collateral to the
extent permitted under the Credit Agreement; provided, that except as otherwise
provided in the Credit Agreement, any and all (A) dividends, distributions and
interest paid or payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in respect of, or
in exchange for, any Securities Collateral, (B) dividends and other
distributions paid or payable in cash in respect of any Securities Collateral in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-surplus, and (C) cash
paid, payable or otherwise distributed in respect of principal or in redemption
of or in exchange for any Securities Collateral, shall be, and shall forthwith
be delivered to Secured Party to hold as, Securities Collateral and shall, if
received by such Grantor, be received in trust for the benefit of Secured Party,
be segregated from the other property or funds of such Grantor and be forthwith
delivered to Secured Party as Securities Collateral in the same form as so
received (with all necessary endorsements).
Upon the occurrence and during the continuation of an Event of
Default, (x) all rights of such Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
hereto shall cease, and all such rights shall thereupon become vested in Secured
Party who shall thereupon have the sole right to exercise such voting and other
consensual rights; (y) all rights of such Grantor to receive the dividends,
other distributions and interest payments which it would otherwise be authorized
to receive and retain pursuant hereto shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to receive and hold as Securities Collateral such dividends, other distributions
and interest payments; and (z) all dividends, principal, interest payments and
other distributions which are received by such Grantor contrary to the
provisions of clause (ii) of the immediately preceding paragraph or clause (y)
above shall be received in trust for the benefit of Secured Party, shall be
segregated from other funds of such Grantor and shall forthwith be paid over to
Secured Party as Securities Collateral in the same form as so received (with any
necessary endorsements).
In order to permit Secured Party to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends, principal or interest payments and other distributions
which it may be entitled to receive hereunder, (I) each Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to Secured Party all
such proxies, dividend payment orders and other instruments as Secured Party may
from time to time request, and (II) without limiting the effect of clause (I)
above, each Grantor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares would be entitled (including
giving or withholding written consents of shareholders or other holders of
equity interests, calling special meetings of shareholders or other holders of
equity interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Shares on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Shares or any officer or agent
thereof), upon the occurrence and during the continuance of an Event of Default
and which proxy shall only terminate upon the payment in full in cash of all of
the Secured Obligations and the termination of all commitments of the Lenders
under the Credit Agreement and the satisfactory cash collateralization (as
determined by the Secured Party) of all Letters of Credit and other letters of
credit issued or maintained in connection therewith.
Section 10. Special Covenants With Respect to the Intellectual Property
Collateral.
(a) Each Grantor shall:
(i) use commercially reasonable efforts so as not to permit the
inclusion in any contract to which it hereafter becomes a party of any
provision that could or might in any way impair or prevent the creation of
a security interest in, or the assignment of, such Grantor's rights and
interests in any property included within the definition of any
Intellectual Property Collateral acquired under such contracts; and
(ii) furnish to Secured Party from time to time at Secured Party's
reasonable request statements and schedules further identifying and
describing any Intellectual Property Collateral and such other reports in
connection with such Collateral, all in reasonable detail.
(b) Except as otherwise provided in this Section 10, each Grantor
shall continue to collect in accordance with its customary business practice, at
its own expense, all amounts due or to become due to such Grantor in respect of
the Intellectual Property Collateral or any portion thereof. In connection with
such collections, each Grantor may take (and, after the occurrence and during
the continuance of any Event of Default at Secured Party's reasonable direction,
shall take) such action as such Grantor may deem reasonably necessary or
advisable to enforce collection of such amounts; provided, Secured Party shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default, to notify the obligors with respect to any such amounts of
the existence of the security interest created hereby and to direct such
obligors to make payment of all such amounts directly to Secured Party, and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such amounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. Upon the occurrence and during the continuation of any Event of Default,
(i) all amounts and proceeds (including checks and other instruments) received
by each Grantor in respect of amounts due to such Grantor in respect of the
Intellectual Property Collateral or any portion thereof shall be received in
trust for the benefit of Secured Party hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over or delivered to Secured
Party in the same form as so received (with any necessary endorsement) to be
held as cash Collateral and applied as provided by Section 19, and (ii) such
Grantor shall not adjust, settle or compromise the amount or payment of any such
amount or release wholly or partly any obligor with respect thereto or allow any
credit or discount thereon.
(c) Each Grantor shall give Secured Party 10 Business Days prior
written notice of any abandonment of any material Intellectual Property
Collateral or any pending patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own
benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Each Grantor shall promptly, following its
becoming aware thereof, notify Secured Party of the institution of, or of any
adverse determination in, any proceeding (whether in the United States Patent
and Trademark Office, the United States Copyright Office or any federal, state,
local or foreign court) regarding such Grantor's ownership, right to use, or
interest in any material Intellectual Property Collateral. Each Grantor shall
provide to Secured Party any information with respect thereto requested by
Secured Party.
(e) In addition to, and not by way of limitation of, the granting of a
security interest in the Collateral pursuant hereto, each Grantor, effective
upon the occurrence and during the continuation of an Event of Default, hereby
assigns, transfers and conveys to Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including, without limitation, the Intellectual Property Collateral)
owned or used by such Grantor that relate to the Collateral and any other
collateral granted by such Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable Secured Party to realize on the Collateral in accordance with this
Agreement and to enable any transferee or assignee of the Collateral to enjoy
the benefits of the Collateral. This right shall inure to the benefit of all
successors, assigns and transferees of Secured Party and its successors, assigns
and transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license shall be granted free of charge, without requirement that any monetary
payment whatsoever be made to such Grantor.
Section 11. Special Provisions With Respect to the Assigned Agreements.
(a) Each Grantor shall at its expense:
(i) if consistent with sound business practices, perform and observe
all terms and provisions of the Assigned Agreements to be performed or
observed by it, maintain the Assigned Agreements in full force and effect,
enforce the Assigned Agreements in accordance with such Grantor's customary
business practice, and
(ii) after the occurrence and continuation of an Event of Default and
upon the request of Secured Party, furnish to Secured Party, promptly upon
receipt thereof, copies of all notices, requests and other documents
received by such Grantor under or pursuant to the Assigned Agreements, and
from time to time (A) furnish to Secured Party such information and reports
regarding the Assigned Agreements as Secured Party may reasonably request
and (B) upon request of Secured Party make to the parties to such Assigned
Agreements such demands and requests for information and reports or for
action as such Grantor is entitled to make under the Assigned Agreements.
(b) Upon the occurrence and during the continuance of an Event of
Default, no Grantor shall:
(i) cancel or terminate any of the Assigned Agreements or consent to
or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned Agreements;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreements, except as
expressly provided therein; or
(v) take any other action in connection with the Assigned Agreements
that could reasonably be expected to materially impair the value of the
interest or rights of such Grantor thereunder or that could reasonably be
expected to materially impair the interest or rights of Secured Party.
Section 12. Special Provisions with Respect to the Collateral Accounts.
Secured Party is hereby authorized to establish and maintain at its
offices restricted deposit accounts and restricted securities accounts which
shall be in the names of Grantors and under the sole dominion and control of
Secured Party. Each Grantor agrees that from time to time, at the expense of
Grantors, such Grantor will promptly execute and deliver account control
agreements in form and substance satisfactory to Secured Party and take all
further action that may be necessary or desirable, or that Secured Party may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby in such accounts or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any such accounts.
Section 13. Secured Party Appointed Attorney-in-Fact.
Each Grantor hereby irrevocably appoints Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, Secured Party or otherwise, from time
to time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Secured Party pursuant to Section 7;
(b) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Secured Party in its sole discretion, any
such payments made by Secured Party to become obligations of such Grantor to
Secured Party, due and payable immediately without demand;
(f) upon the occurrence and during the continuance of an Event of
Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all purposes, and to do, at
Secured Party's option and Grantors' expense, at any time or from time to time,
all acts and things that Secured Party reasonably deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
Section 14. Secured Party May Perform.
If any Grantor fails to perform any agreement contained herein,
Secured Party may itself perform, or cause performance of (but shall not be
obligated to perform or cause the performance of), such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Grantors under Section 19(b).
Section 15. Standard of Care.
The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which Secured Party accords its own property.
Section 16. Remedies.
(a) Generally. If any Event of Default (as defined in the Credit
Agreement) shall have occurred and be continuing, Secured Party may exercise in
respect of the Collateral, in addition to all other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of a
secured party on default under the UCC (whether or not the UCC applies to the
affected Collateral), and also may (i) require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of Secured Party
forthwith, assemble all or part of the Collateral as directed by Secured Party
and make it available to Secured Party at a place to be designated by Secured
Party that is reasonably convenient to both parties, (ii) enter onto the
property where any Collateral is located and take possession thereof with or
without judicial process, (iii) prior to the disposition of the Collateral,
store, process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party reasonably
deems appropriate, (iv) take possession of any Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same and any of such Grantor's equipment for the purpose of completing any work
in process, taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation, (v) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or prices
and upon such other terms as Secured Party may deem commercially reasonable,
(vi) exercise dominion and control over and refuse to permit further withdrawals
from any Deposit Account maintained with Secured Party or any Lender
constituting a part of the Collateral, and (vii) without notice to any Grantor,
transfer to or to register in the name of Secured Party or any of its nominees
any or all of the Securities Collateral or exercise any and all voting rights in
connection therewith pursuant to Section 9 hereof or otherwise. Secured Party or
any Lender may be the purchaser of any or all of the Collateral at any such sale
and Secured Party, as agent for and representative of Lender (but not any Lender
in its individual capacity unless Requisite Lenders shall otherwise agree in
writing), shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold at
any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Collateral payable by Secured
Party at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor agrees that, to the extent notice of sale shall be required by law,
at least ten days' notice to such Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. To the extent permitted by
applicable law, each Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, Grantors shall be jointly and severally liable
for the deficiency and the fees of any attorneys employed by Secured Party to
collect such deficiency. Each Grantor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury to Secured
Party, that Secured Party has no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this
Section shall be specifically enforceable against such Grantor, and each Grantor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no default has
occurred giving rise to the Secured Obligations becoming due and payable prior
to their stated maturities.
(b) Securities Collateral.
(i) Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws, Secured Party may be compelled, with respect to any
sale of all or any part of the Securities Collateral conducted without
prior registration or qualification of such Securities Collateral
under the Securities Act and/or such state securities laws, to limit
purchasers to those who will agree, among other things, to acquire the
Securities Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Each Grantor
acknowledges that any such private sales may be at prices and on terms
less favorable than those obtainable through a public sale without
such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding
such circumstances and the registration rights granted to Secured
Party by such Grantor pursuant hereto, each Grantor agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation to
engage in public sales and no obligation to delay the sale of any
Securities Collateral for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so
register it. If Secured Party determines to exercise its right to sell
any or all of the Securities Collateral, upon written request, each
Grantor shall and shall cause each issuer of any Pledged Shares to be
sold hereunder from time to time to furnish to Secured Party all such
information as Secured Party may request in order to determine the
number of shares and other instruments included in the Securities
Collateral which may be sold by Secured Party in exempt transactions
under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
(ii) If Secured Party shall determine to exercise its right to
sell all or any of the Securities Collateral pursuant to this Section,
each Grantor agrees that, upon request of Secured Party (which request
may be made by Secured Party in its sole discretion), such Grantor
will, at its own expense (A) execute and deliver, and cause each
issuer of the Securities Collateral contemplated to be sold and the
directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of Secured
Party, advisable to register such Securities Collateral under the
provisions of the Securities Act and to cause the registration
statement relating thereto to become effective and to remain effective
for such period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the related
prospectus which, in the opinion of Secured Party, are necessary or
advisable, all in conformity with the requirements of the Securities
Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto; (B) use its best efforts to qualify the
Securities Collateral under all applicable state securities or "Blue
Sky" laws and to obtain all necessary governmental approvals for the
sale of the Securities Collateral, as requested by Secured Party; (C)
cause each such issuer to make available to its security holders, as
soon as practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act; (D) do or cause to
be done all such other acts and things as may be necessary to make
such sale of the Securities Collateral or any part thereof valid and
binding and in compliance with applicable law; and (E) bear all costs
and expenses, including reasonable attorneys' fees, of carrying out
its obligations under this Section.
(iii) Without limiting the generality of subsections 10.2 and
10.3 of the Credit Agreement, in the event of any public sale
described herein, each Grantor agrees to indemnify and hold harmless
Secured Party, and each Lender and each of their respective directors,
officers, employees and agents from and against any loss, fee, cost,
expense, damage, liability or claim, joint or several, to which any
such Persons may become subject or for which any of them may be
liable, under the Securities Act or otherwise, insofar as such losses,
fees, costs, expenses, damages, liabilities or claims (or any
litigation commenced or threatened in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, registration
statement, prospectus or other such document published or filed in
connection with such public sale, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
and will reimburse Secured Party and such other Persons for any legal
or other expenses reasonably incurred by Secured Party and such other
Persons in connection with any litigation, of any nature whatsoever,
commenced or threatened in respect thereof (including any and all
fees, costs and expenses whatsoever reasonably incurred by Secured
Party and such other Persons and counsel for Secured Party and such
other Persons in investigating, preparing for, defending against or
providing evidence, producing documents or taking any other action in
respect of, any such commenced or threatened litigation or any claims
asserted). This indemnity shall be in addition to any liability which
any Grantor may otherwise have and shall extend upon the same terms
and conditions to each Person, if any, that controls Secured Party or
such Persons within the meaning of the Securities Act.
(c) Collateral Accounts. If an Event of Default has occurred and is
continuing, Company shall, as and when required under the Credit Agreement, pay
to Secured Party all amounts provided for in Section 8 thereof (including,
without limitation, any amounts to be held in a collateral account as cash
collateral for undrawn Letters of Credit).
(d) Remedies with Respect to Borrowers. Furthermore, upon the
occurrence and during the continuance of any Event of Default, Secured Party may
revoke Borrowers' rights to use cash collateral in which Secured Party has an
interest; provided that, any other provision of this Agreement or any other Loan
Document to the contrary notwithstanding, with respect to the foregoing, Secured
Party shall give Credit Parties and counsel to any official committees in
respect of the Chapter 11 Cases and the office of the United States Trustee five
Business Days prior written notice (which notice shall be delivered by facsimile
or overnight courier) of the exercise of its rights and remedies with respect to
the Collateral and file a copy of such notice with the clerk of the Bankruptcy
Court. Neither Secured Party nor Lenders shall have any obligation of any kind
to make a motion or application to the Bankruptcy Court to exercise their rights
and remedies set forth or referred to in this Agreement or in the other Loan
Documents. The enumeration of the foregoing rights and remedies is not intended
to be exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative and
not alternative. Borrowers waive (i) presentment, demand and protest and notice
of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties or other
property at any time held by Secured Party or Lenders on which Loan Parties may
in any way be liable and hereby ratify and confirm whatever Secured Party and
Lenders may lawfully do in this regard, (ii) subject to the notice provisions of
the preceding paragraph, all rights to notice and hearing prior to Secured
Party's taking possession or control of, or to Secured Party's or Lenders'
reply, attachment or levy upon, the Collateral, or any bond or security which
might be required by any court prior to allowing Secured Party or Lenders to
exercise any of their remedies, and (iii) the benefit of all valuation,
appraisal and exemption laws. Borrowers acknowledge they have been advised by
counsel of their choice with respect to the effect of the foregoing waivers and
this Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.
Section 17. Additional Remedies for Intellectual Property Collateral.
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of any Grantor, Secured Party or otherwise, to enforce any Intellectual Property
Collateral, in which event each Grantor shall, at the request of Secured Party,
do any and all lawful acts and execute any and all documents required by Secured
Party in aid of such enforcement and each Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party as provided in subsections 10.2 and 10.3
of the Credit Agreement and Section 19 hereof, as applicable, in connection with
the exercise of its rights under this Section, and, to the extent that Secured
Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Intellectual Property Collateral by
others and for that purpose agrees to use its commercially reasonable judgment
in maintaining any action, suit or proceeding against any Person so infringing
reasonably necessary to prevent such infringement; (ii) upon written demand from
Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property Collateral and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; (iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Secured Party (or any Lender) receives cash proceeds in respect
of the sale of, or other realization upon, the Intellectual Property Collateral;
and (iv) within five Business Days after written notice from Secured Party, each
Grantor shall make available to Secured Party, to the extent within such
Grantor's power and authority, such personnel in such Grantor's employ on the
date of such Event of Default as Secured Party may reasonably designate, by
name, title or job responsibility, to permit such Grantor to continue, directly
or indirectly, to produce, advertise and sell the products and services sold or
delivered by such Grantor under or in connection with the Trademarks, Trademark
Registrations and Trademark Rights, such persons to be available to perform
their prior functions on Secured Party's behalf and to be compensated by Secured
Party at such Grantor's expense on a per diem, pro-rata basis consistent with
the salary and benefit structure applicable to each as of the date of such Event
of Default.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to Secured Party of any rights, title and interests in and to the
Intellectual Property Collateral shall have been previously made, and (iv) the
Secured Obligations shall not have become immediately due and payable, upon the
written request of any Grantor, Secured Party shall promptly execute and deliver
to such Grantor such assignments as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Secured Party
as aforesaid, subject to any disposition thereof that may have been made by
Secured Party; provided, after giving effect to such reassignment, Secured
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of Secured Party granted hereunder, shall continue to be in full
force and effect; and provided further, the rights, title and interests so
reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to
Secured Party and Liens permitted under subsection 7.2A of the Credit Agreement.
Section 18. Application of Proceeds.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied as provided
in subsections 2.4A and 2.4C of the Credit Agreement.
Section 19. Indemnity and Expenses.
(a) Grantors jointly and severally agree to indemnify Secured Party
and each Lender from and against any and all claims, losses and liabilities in
any way relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including without limitation enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Secured Party upon
demand the amount of any and all costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantors in this Section 19 shall (i) survive
the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Credit Agreement and the other Loan
Documents, and (ii) as to any Grantor that is a party to a Subsidiary Guaranty,
be subject to the provisions of Section 1(b) thereof.
Section 20. Continuing Security Interest; Transfer of Loans; Termination and
Release.
(a) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full in cash of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (ii) be binding upon Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to Lenders herein or otherwise.
(b) Upon the payment in full in cash of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantors. Upon any such termination Secured Party will, at Grantors'
expense, execute and deliver to Grantors such documents as Grantors shall
reasonably request to evidence such termination. In addition, upon the proposed
sale, transfer or other disposition of any Collateral by a Grantor in accordance
with the Credit Agreement for which such Grantor desires to obtain a security
interest release from Secured Party, such Grantor shall deliver an Officer's
Certificate (x) stating that the Collateral subject to such disposition is being
sold, transferred or otherwise disposed of in compliance with the terms of the
Credit Agreement and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such
Officer's Certificate and so long as no Event of Default has occurred and is
continuing or would result from the proposed disposition of the Collateral and
so long as the Proceeds from such disposition are applied in accordance with the
Loan Documents, Secured Party shall, at Grantor's expense, so long as Secured
Party has no reason to believe that the Officer's Certificate delivered by such
Grantor with respect to such sale is not true, correct and complete, execute and
deliver such releases of its security interest in such Collateral which is to be
so sold, transferred or disposed of, as may be reasonably requested by such
Grantor.
Section 21. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
without limitation the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Secured Party under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Secured Party under this Agreement;
and appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Secured Party under this Agreement, and the retiring
or removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
Section 22. Additional Grantors.
In accordance at all times with subsections 6.8A and 6.8E of the
Credit Agreement, any Subsidiary of Company which is not a party hereto may
become a party hereto as a Subsidiary Guarantor or as a Borrower, respectively,
by executing a Counterpart substantially in the form of Exhibit VI annexed
hereto, whereupon such Subsidiary shall become (i) in the case of a Subsidiary
which is not a party hereto and is the subject of subsection 6.8A of the Credit
Agreement, a Grantor with the obligations and liabilities of a Subsidiary
Guarantor hereunder, and (ii) in the case of a Subsidiary which becomes a
Borrower under the Credit Agreement pursuant to subsection 6.8E thereof or
otherwise, a Grantor with the obligations and liabilities of a Borrower
hereunder. Upon delivery of any such Counterpart to Secured Party, notice of
which is hereby waived by Grantors, each such Additional Grantor shall be a
Grantor and shall be as fully a party hereto as if such Additional Grantor were
an original signatory hereto. Each Grantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Grantor hereunder, nor by any election of Administrative Agent not
to cause any Subsidiary of Company to become an Additional Grantor hereunder.
This Agreement shall be fully effective as to any Grantor that is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Grantor hereunder.
Section 23. Amendments; Etc.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by any Grantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Secured Party and, in the case of any such amendment or modification, by
Grantors; provided that this Agreement may be modified by the execution of a
Counterpart by an Additional Grantor in accordance with Section 22 and Grantors
hereby waive any requirement of notice of or consent to any such amendment. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
Section 24. Notices.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served or sent by telefacsimile
or United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile,
or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to Secured Party
shall not be effective until received. For the purposes hereof, the address of
each party hereto shall be as provided in subsection 10.8 of the Credit
Agreement or as set forth under such party's name on the signature pages hereof
or such other address as shall be designated by such party in a written notice
delivered to the other parties hereto. Electronic mail and Internet and intranet
websites may be used to distribute routine communications, provided, however,
that no signature with respect to any notice, request, agreement, waiver,
amendment or other document or any notice that is intended to have binding
effect may be sent by electronic mail.
Section 25. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
Section 26. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 27. Headings.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
Section 28. Governing Law; Terms; Rules of Construction.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT
THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the
Credit Agreement, terms used in Articles 8 and 9 of the NY UCC are used herein
as therein defined. The rules of construction set forth in subsection 1.3 of the
Credit Agreement shall be applicable to this Agreement mutatis mutandis. To the
extent (if at all) any provision of this Agreement is inconsistent and conflicts
with any particular provision of the Credit Agreement in any particular
circumstance, the parties hereto agree that such provision of the Credit
Agreement shall prevail in such circumstance.
Section 29. Consent to Jurisdiction and Service of Process.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX
XX XXX XXXX. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 24; (IV) AGREES THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH
GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY
RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION;
AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 29 RELATING TO JURISDICTION
AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
SectAion 30. Waiver of Jury Trial.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Each Grantor and Secured Party acknowledge that this waiver is
a material inducement for Grantors and Secured Party to enter into a business
relationship, that Grantors and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Each Grantor and Secured Party further
warrant and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 30 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
Section 31. Counterparts.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, Guarantors and Secured Party have caused
this Agreement to be duly executed and delivered by their respective officers
thereto duly authorized as of the date first written above.
BORROWERS:
COVANTA ENERGY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Esq.
Title: Secretary
Each of the entities listed on Schedule A annexed
hereto
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
on behalf of each of the entities listed on
Schedule A annexed hereto
Name: Xxxxxxx X. Xxxxxxxx, Esq.
Title: Authorized Officer
Each of the entities listed on Schedule B annexed
hereto
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------
on behalf of each of the entities listed on
Schedule B annexed hereto
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
Notice Address:
00 Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
SUBSIDIARY GUARANTORS::
Each of the entities listed on Schedule C annexed
hereto
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------------
on behalf of each of the listed on Schedule C
annexed hereto
Name: Xxxxxxx X. Xxxxxxxx, Esq.
Title: Authorized Officer
Each of the entities listed on Schedule D annexed
hereto
By:
-----------------------------------------------
on behalf of each of the entities listed on
Schedule D annexed hereto
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
Notice Address:
00 Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
SUBSIDIARY GUARANTORS::
Each of the entities listed on Schedule C annexed
hereto
By:
-----------------------------------------------
on behalf of each of the entities listed on
Schedule C annexed hereto
Name: Xxxxxxx X. Xxxxxxxx, Esq.
Title: Authorized Officer
Each of the entities listed on Schedule D annexed
hereto
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------
on behalf of each of the entities listed on
Schedule D annexed hereto
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
Notice Address:
00 Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
BANK OF AMERICA, N.A.
as Secured Party
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
Schedule A
Other Borrowers
1. AMOR 14 Corp.
2. Covanta Acquisition, Inc.
3. Covanta Alexandria/Arlington, Inc.
4. Covanta Babylon, Inc.
5. Covanta Bessemer, Inc.
6. Covanta Bristol, Inc.
7. Covanta Xxxxxxxxxx Environmental Support, Inc.
8. Covanta Energy Americas, Inc.
9. Covanta Energy Construction, Inc.
10. Covanta Energy Resource Corp.
11. Covanta Energy Sao Xxxxxxxx, Inc.
12. Covanta Energy Services, Inc.
13. Covanta Energy West, Inc.
14. Covanta Engineering Services, Inc.
15. Covanta Fairfax, Inc.
16. Covanta Financial Services, Inc.
17. Covanta Geothermal Operations Holdings, Inc.
18. Covanta Geothermal Operations, Inc.
19. Covanta Heber Field Energy, Inc.
20. Covanta Hennepin Energy Resource Co., L.P.
21. Covanta Hillsborough, Inc.
22. Covanta Honolulu Resource Recovery Venture
23. Covanta Huntington Limited Partnership
24. Covanta Huntington Resource Recovery One Corp.
25. Covanta Huntington Resource Recovery Seven Corp.
26. Covanta Huntington, Inc.
27. Covanta Huntsville, Inc.
28. Covanta Hydro Energy, Inc.
29. Covanta Hydro Operations West, Inc.
30. Covanta Hydro Operations, Inc.
31. Covanta Imperial Power Services, Inc.
32. Covanta Indianapolis, Inc.
33. Covanta Kent, Inc.
34. Covanta Key Largo, Inc.
35. Covanta Lake, Inc.
36. Covanta Lancaster, Inc.
37. Covanta Xxx, Inc.
38. Covanta Long Island, Inc.
39. Covanta Xxxxxx Land Corp.
40. Covanta Xxxxxx, Inc.
41. Covanta Mid-Conn., Inc.
42. Covanta Xxxxxxxxxx, Inc.
43. Covanta New Martinsville Hydro-Operations Corp.
44. Covanta Northwest Puerto Rico, Inc.
45. Covanta Oahu Waste Energy Recovery, Inc.
46. Covanta Oil & Gas, Inc.
47. Covanta Onondaga Five Corp.
48. Covanta Onondaga Four Corp.
49. Covanta Onondaga Limited Partnership
50. Covanta Onondaga Operations, Inc.
51. Covanta Onondaga Three Corp.
52. Covanta Onondaga Two Corp.
53. Covanta Onondaga, Inc.
54. Covanta Onondaga, Limited Partnership
55. Covanta Operations of Union LLC
56. Covanta OPW Associates, Inc.
57. Covanta OPWH, Inc.
58. Covanta Pasco, Inc.
59. Covanta Plant Services of New Jersey, Inc.
60. Covanta Power Development of Bolivia, Inc.
61. Covanta Power Development, Inc.
62. Covanta Power Equity Corp.
63. Covanta Projects of Hawaii, Inc.
64. Covanta Projects of Wallingford, LP
65. Covanta RRS Holdings, Inc.
66. Covanta Secure Services USA, Inc.
67. Covanta Secure Services, Inc.
68. Covanta SIGC Energy II, Inc.
69. Covanta SIGC Energy, Inc.
70. Covanta SIGC Geothermal Operations, Inc.
71. Covanta Stanislaus, Inc.
72. Covanta Systems, Inc.
73. Covanta Tampa Bay, Inc.
74. Covanta Tulsa, Inc.
75. Covanta Union, Inc.
76. Covanta Wallingford Associates, Inc.
77. Covanta Xxxxxx Energy Resources Co., LP
78. Covanta Waste Solutions, Inc.
79. Covanta Waste to Energy of Italy, Inc.
80. Covanta Waste to Energy, Inc.
81. Covanta Water Holdings, Inc.
82. Covanta Water Systems, Inc.
83. Covanta Water Treatment Services, Inc.
84. DSS Environmental, Inc.
85. ERC Energy II, Inc.
86. ERC Energy, Inc.
87. Heber Field Company
88. Heber Field Energy II, Inc.
89. Heber Geothermal Company
90. Heber Loan Partners
91. J.R. Jacks Construction Corp.
92. Xxxxx Constructors, Inc.
93. Xxxxx Environmental & Energy Services Co., Inc.
94. OPI Quezon, Inc.
95. Second Imperial Geothermal Co., L.P.
96. Three Mountain Operations, Inc.
97. Three Mountain Power LLC
Schedule B
Other Borrowers
1. Xxxxx Facility Management Corporation of Anaheim
2. LaGuardia Fuel Facilities Corp.
3. Lenzar Electro-Optics, Inc.
4. Newark Automotive Fuel Facilities Corporation, Inc.
5. Xxxxx Allied Abatement & Decontamination Service, Inc.
6. Xxxxx Allied Maintenance Corp.
7. Xxxxx Allied Payroll Services, Inc.
8. Xxxxx Attractions, Inc.
9. Xxxxx Aviation Distributing Corp.
10. Xxxxx Aviation Fueling Company of Virginia, Inc.
11. Xxxxx Aviation Service Company of Colorado, Inc.
12. Xxxxx Aviation Service Company of New Jersey, Inc.
13. Xxxxx Aviation Service Company of New York, Inc.
14. Xxxxx Aviation Service Company of Pennsylvania, Inc.
15. Xxxxx Aviation Service International Corporation
16. Xxxxx Aviation, Inc.
17. Xxxxx Cargo Spain, Inc.
18. Xxxxx Central and South America, Inc.
19. Xxxxx Facility Holdings, Inc.
20. Xxxxx Film and Theatre, Inc.
21. Xxxxx Firehole Entertainment Corp.
22. Xxxxx International Europe, Inc.
23. Xxxxx New York Services, Inc.
24. Xxxxx Support Services, Inc.
25. PA Aviation Fuel Holdings, Inc.
26. Philadelphia Fuel Facilities Corporation
Schedule C
Subsidiary Guarantors:
1. Covanta Energy Group, Inc.
2. Covanta Energy International, Inc.
3. Covanta Equity of Stanislaus, Inc.
4. Covanta Haverhill Properties, Inc.
5. Covanta Haverhill, Inc.
6. Covanta Omega Lease, Inc.
7. Covanta Power International Holdings, Inc.
8. Covanta Projects, Inc.
9. Haverhill Power, Inc.
10. LMI, Inc.
11. Michigan Waste Energy, Inc.
12. OFS Equity of Alexandria/Arlington, Inc.
13. OFS Equity of Babylon, Inc.
14. OFS Equity of Delaware, Inc.
15. OFS Equity of Huntington, Inc.
16. OFS Equity of Indianapolis, Inc.
17. OFS Equity of Stanislaus, Inc.
18. Xxxxx Management Services, Inc.
19. Covanta Equity of Alexandria/Arlington, Inc.
Schedule D
Subsidiary Guarantors:
1. Xxxxx Technology Services Corporation
2. Xxxxx Transition Corporation
EXHIBIT I TO
SECURITY AGREEMENT
[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]
GRANT OF TRADEMARK SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Trademark Collateral (as defined below); and
WHEREAS, COVANTA ENERGY CORPORATION, a Delaware corporation
("Company") and the Subsidiaries of Company listed on the signature pages
thereof (collectively, Company and such Subsidiaries of Company are "Borrowers"
and each a "Borrower") have entered into a Debtor-in-Possession Credit Agreement
dated as of April 1, 2002 (as such Credit Agreement may heretofore have been and
as it may from time to time hereafter be amended, restated, supplemented,
restated or otherwise modified, being the "Credit Agreement") with the financial
institutions listed on the signature pages thereof as Lenders (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent, and BANK OF AMERICA, N.A., as Administrative Agent for
the Lenders (in such capacity, "Secured Party"), pursuant to which Lenders have
made certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Borrowers; and
[Insert if Grantor is a Subsidiary Guarantor:] [WHEREAS, Grantor has
executed and delivered that certain Subsidiary Guaranty dated as of April 1,
2002 (said Subsidiary Guaranty, as it may heretofore have been and as it may
from time to time hereafter be amended, restated, supplemented or otherwise
modified, being the "Guaranty") in favor of Secured Party for the benefit of
Lenders, pursuant to which Grantor has guarantied the prompt payment and
performance when due of all obligations of Borrowers under the Credit Agreement,
and the other Loan Documents, including without limitation the obligation of
Borrowers to make payments thereunder in the event of early termination thereof;
and]
WHEREAS, pursuant to the terms of a Security Agreement dated as of
April 1, 2002 (as it may heretofore have been and as it may from time to time
hereafter be amended, restated, supplemented or otherwise modified, the
"Security Agreement"), among Grantor, Secured Party and the other grantors named
therein, Grantor has agreed to create in favor of Secured Party a secured and
protected interest in, and Secured Party has agreed to become a secured creditor
with respect to, the Trademark Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Trademark Collateral"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all
trademarks, service marks, designs, logos, indicia, tradenames, trade
dress, corporate names, company names, business names, fictitious
business names, trade styles and/or other source and/or business
identifiers and applications pertaining thereto, owned by such
Grantor, or hereafter adopted and used, in its business (including,
without limitation, the trademarks specifically identified in Schedule
A) (collectively, the "Trademarks"), all registrations that have been
or may hereafter be issued or applied for thereon in the United States
and any state thereof and in foreign countries (including, without
limitation, the registrations and applications specifically identified
in Schedule A) (the "Trademark Registrations"), all common law and
other rights (but in no event any of the obligations) in and to the
Trademarks in the United States and any state thereof and in foreign
countries (the "Trademark Rights"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith (the
"Associated Goodwill"); and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Trademark Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Trademark Collateral. For purposes of this Grant
of Trademark Security Interest, the term "proceeds" includes whatever
is receivable or received when Trademark Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Trademark Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Trademark Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Trademark
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the __ day of _______, 200__.
[NAME OF GRANTOR]
By:
-----------------------------
Name:
------------------------
Title:
------------------------
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
--------------------------------------------------------------------------------
United States
Trademark Registration Registration
Registered Owner Description Number Date
--------------------------------------------------------------------------------
EXHIBIT II TO
SECURITY AGREEMENT
[FORM OF GRANT OF PATENT SECURITY INTEREST]
GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Patent Collateral (as defined below); and
WHEREAS, COVANTA ENERGY CORPORATION, a Delaware corporation
("Company") and the Subsidiaries of Company listed on the signature pages
thereof (collectively, Company and such Subsidiaries of Company are "Borrowers"
and each a "Borrower," have entered into a Debtor-in-Possession Credit Agreement
dated as of April 1, 2002 (as such Credit Agreement, may heretofore have been
and as it may from time to time hereafter be amended, restated, supplemented, or
otherwise modified, being the "Credit Agreement") with the financial
institutions listed on the signature pages thereof as Lenders (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent, and BANK OF AMERICA, N.A., as Administrative Agent for
the Lenders (in such capacity, "Secured Party"), pursuant to which Lenders have
made certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Borrowers; and
[Insert if Grantor is a Subsidiary Guarantor:] [WHEREAS, Grantor has
executed and delivered that certain Subsidiary Guaranty dated as of April 1,
2002 (said Subsidiary Guaranty, as it may heretofore have been and as it may
from time to time hereafter be amended, restated, supplemented or otherwise
modified, being the "Guaranty") in favor of Secured Party for the benefit of
Lenders, pursuant to which Grantor has guarantied the prompt payment and
performance when due of all obligations of Borrowers under the Credit Agreement,
and the other Loan Documents, including without limitation the obligation of
Borrowers to make payments thereunder in the event of early termination thereof;
and]
WHEREAS, pursuant to the terms of a Security Agreement dated as of
April 1, 2002 (as it may heretofore have been and as it may from time to time
hereafter be amended, restated, supplemented or otherwise modified, the
"Security Agreement"), among Grantor, Secured Party and the other grantors named
therein, Grantor has agreed to create in favor of Secured Party a secured and
protected interest in, and Secured Party has agreed to become a secured creditor
with respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the "Patent
Collateral"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all patents
and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or
in the future may be, owned or held by such Grantor and all patents
and patent applications and rights, title and interests in patents and
patent applications under any domestic or foreign law that are
presently, or in the future may be, owned by such Grantor in whole or
in part (including, without limitation, the patents and patent
applications listed in Schedule A), all rights (but not obligations)
corresponding thereto to xxx for past, present and future
infringements and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof (all of the foregoing
being collectively referred to as the "Patents"); and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Patent Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Patent Collateral. For purposes of this Grant of
Patent Security Interest, the term "proceeds" includes whatever is
receivable or received when Patent Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Patent Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the Patent
Collateral shall include, and Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent
Security Interest to be duly executed and delivered by its officer
thereunto duly authorized as of the ___ day of ____________, 200__.
[NAME OF GRANTOR]
By:
-----------------------------
Name:
------------------------
Title:
------------------------
NY1:852732 II-A-1
Security Agreement
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
Patents Issued:
---------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
Patents Pending:
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
EXHIBIT III TO
SECURITY AGREEMENT
[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]
GRANT OF COPYRIGHT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation ("Grantor"),
owns and uses in its business, and will in the future adopt and so use, various
intangible assets, including the Copyright Collateral (as defined below); and
WHEREAS, COVANTA ENERGY CORPORATION, a Delaware corporation
("Company") and the Subsidiaries of Company listed on the signature pages
thereof (collectively, Company and such Subsidiaries of Company are "Borrowers"
and each a "Borrower") have entered into a Debtor-in-Possession Credit Agreement
dated as of April 1, 2002 (as such Credit Agreement, may heretofore have been
and as it may from time to time hereafter be amended, restated, supplemented,
restated or otherwise modified, being the "Credit Agreement") with the financial
institutions listed on the signature pages thereof as Lenders (collectively,
together with their respective successors and assigns party to the Credit
Agreement from time to time, the "Lenders"), DEUTSCHE BANK AG, NEW YORK BRANCH,
as Documentation Agent, and BANK OF AMERICA, N.A., as Administrative Agent for
the Lenders (in such capacity, "Secured Party"), pursuant to which Lenders have
made certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Borrowers; and
[Insert if Grantor is a Subsidiary Guarantor:] [WHEREAS, Grantor has
executed and delivered that certain Subsidiary Guaranty dated as of April 1,
2002 (said Subsidiary Guaranty, as it may heretofore have been and as it may
from time to time hereafter be amended, restated, supplemented or otherwise
modified, being the "Guaranty") in favor of Secured Party for the benefit of
Lenders, pursuant to which Grantor has guarantied the prompt payment and
performance when due of all obligations of Borrowers under the Credit Agreement,
and the other Loan Documents, including without limitation the obligation of
Borrowers to make payments thereunder in the event of early termination thereof;
and]
WHEREAS, pursuant to the terms of a Security Agreement dated as of
April 1, 2002 (as it may heretofore have been and as it may from time to time
hereafter be amended, restated, supplemented or otherwise modified, the
"Security Agreement"), among Grantor, Secured Party and the other grantors named
therein, Grantor has agreed to create in favor of Secured Party a secured and
protected interest in, and Secured Party has agreed to become a secured creditor
with respect to, the Copyright Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Security Agreement, Grantor hereby grants to Secured Party a security
interest in all of Grantor's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Grantor now has or
hereafter acquires an interest and wherever the same may be located (the
"Copyright Collateral"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) under copyright in
various published and unpublished works of authorship including,
without limitation, computer programs, computer data bases, other
computer software layouts, trade dress, drawings, designs, writings,
and formulas (including, without limitation, the works listed on
Schedule A, as the same may be amended pursuant hereto from time to
time) (collectively, the "Copyrights"), all copyright registrations
issued to Grantor and applications for copyright registration that
have been or may hereafter be issued or applied for thereon in the
United States and any state thereof and in foreign countries
(including, without limitation, the registrations listed on Schedule
A, as the same may be amended pursuant hereto from time to time)
(collectively, the "Copyright Registrations"), all common law and
other rights in and to the Copyrights in the United States and any
state thereof and in foreign countries including all copyright
licenses (but with respect to such copyright licenses, only to the
extent permitted by such licensing arrangements) (the "Copyright
Rights"), including, without limitation, each of the Copyrights,
rights, titles and interests in and to the Copyrights, all derivative
works and other works protectable by copyright, which are presently,
or in the future may be, owned, created (as a work for hire for the
benefit of Grantor), authored (as a work for hire for the benefit of
Grantor), or acquired by Grantor, in whole or in part, and all
Copyright Rights with respect thereto and all Copyright Registrations
therefor, heretofore or hereafter granted or applied for, and all
renewals and extensions thereof, throughout the world, including all
proceeds thereof (such as, by way of example and not by limitation,
license royalties and proceeds of infringement suits), the right (but
not the obligation) to renew and extend such Copyright Registrations
and Copyright Rights and to register works protectable by copyright
and the right (but not the obligation) to xxx in the name of such
Grantor or in the name of Secured Party or Lenders for past, present
and future infringements of the Copyrights and Copyright Rights; and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Copyright Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Secured Party
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Copyright Collateral. For purposes of this Grant
of Copyright Security Interest, the term "proceeds" includes whatever
is receivable or received when Copyright Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Copyright Collateral include, and Grantor shall be not deemed to have granted a
security interest in, any of Grantor's rights or interests in any license,
contract or agreement to which Grantor is a party or any of its rights or
interests thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such license, contract or agreement or otherwise,
result in a breach of the terms of, or constitute a default under any license,
contract or agreement to which Grantor is a party; provided, that immediately
upon the ineffectiveness, lapse or termination of any such provision, the
Copyright Collateral shall include, and Grantor shall be deemed to have granted
a security interest in, all such rights and interests as if such provision had
never been in effect.
Grantor does hereby further acknowledge and affirm that the rights and
remedies of Secured Party with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the ___ day of ___________, 200__.
[NAME OF GRANTOR]
By:
-----------------------------
Name:
------------------------
Title:
------------------------
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. Copyrights:
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Title Registration No. Date of Issue Registered Owner
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Pending U.S. Copyright Registrations & Applications:
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Title Reference No. Date of Application Copyright Claimant
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EXHIBIT IV TO
SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This Pledge Supplement, dated as of _________________, 200__ is
delivered pursuant to the Security Agreement, dated as of April 1, 2002 among
____________, a ____________ ("Grantor"), the other Grantors named therein, and
Bank of America, N.A., as Secured Party (as it may heretofore have been and as
it may from time to time hereafter be amended, restated, supplemented or
otherwise modified, the "Security Agreement"). Capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed thereto in the
Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt] listed
on the schedule attached hereto shall be deemed to be part of the [Pledged
Shares] [Pledged Debt] and shall become part of the Securities Collateral and
shall secure all Secured Obligations.
IN WITNESS WHEREOF, Grantor has caused this Amendment to be duly
executed and delivered by its duly authorized officer as of _______________,
200__.
[NAME OF GRANTOR]
By:
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Name:
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Title:
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EXHIBIT V TO
SECURITY AGREEMENT
IP SUPPLEMENT
This IP SUPPLEMENT, dated as of ____________, 200__ is delivered
pursuant to and supplements (i) the Security Agreement, dated as of April 1,
2002 (as it may heretofore have been and as it may from time to time hereafter
be amended, restated, supplemented or otherwise modified, the "Security
Agreement"), among _______________ ("Grantor"), the other Grantors named
therein, and Bank of America, N.A., as Secured Party, and (ii) the [Grant of
Trademark Security Interest] [Grant of Patent Security Interest] [Grant of
Copyright Security Interest] dated as of ___________, 200__ (the "Grant")
executed by Grantor. Capitalized terms used herein not otherwise defined herein
shall have the meanings ascribed thereto in the Grant.
Grantor grants to Secured Party a security interest in all of
Grantor's right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] listed on Schedule A attached hereto. All
such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be
deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions
of the Security Agreement and the Grant.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of ______________,
200__.
[NAME OF GRANTOR]
By:
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Name:
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Title:
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[Attach Schedule A]
EXHIBIT VI TO
SECURITY AGREEMENT
[FORM OF COUNTERPART]
COUNTERPART (this "Counterpart"), dated as of __________, 200__ is
delivered pursuant to Section 22 of the Security Agreement referred to below.
The undersigned hereby agrees that this Counterpart may be attached to the
Security Agreement, dated as of April 1, 2002 (as it may heretofore have been
and as it may from time to time hereafter be amended, restated, supplemented or
otherwise modified, the "Security Agreement"; capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed therein), among
Covanta Energy Corporation, the other Grantors named therein, and Bank of
America, N.A., as Secured Party. The undersigned by executing and delivering
this Counterpart hereby becomes a Grantor under the Security Agreement in
accordance with Section 22 thereof and agrees to be bound by all of the terms
thereof. Without limiting the generality of the foregoing, the undersigned
hereby [For new Subsidiary Borrowers only: agrees that it hereby becomes a party
to the Security Agreement as a Grantor, and hereafter has the rights and
obligations of a Borrower thereunder and is bound by all of the provisions
thereof as fully as if the undersigned were one of the original parties
thereto.][:
**Paragraphs (i)-(v) for new Subsidiary Guarantors only**
(i) agrees that all Collateral of the undersigned, including the
items of property described on the Schedules attached hereto, shall
become part of the Collateral and shall secure all Secured
Obligations, and hereby grants to the Secured Party for the benefit of
the Lenders a continuing security interest in all such Collateral of
the undersigned;
(ii) authorizes the Secured Party to add the information set
forth on the Schedules to this Counterpart to the correlative
Schedules attached to the Security Agreement(1);
(iii) agrees that it hereby becomes a party to the Security
Agreement as a Grantor and hereafter has the rights and obligations of
a Subsidiary Guarantor thereunder and is bound by all of the
provisions thereof as fully as if the undersigned were one of the
original parties thereto;
(iv) makes the representations and warranties set forth in the
Security Agreement, as amended hereby, to the extent relating to the
undersigned; and
(v) agrees that the address and facsimile number of the
undersigned for notice purposes pursuant to Section 25 of the Security
Agreement shall be initially as set forth below.
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(1) The Schedules to the Counterpart should include copies of all Schedules that
identify Collateral to be granted by the Subsidiary Guarantor.
[NAME OF ADDITIONAL GRANTOR]
By:
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Name:
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Title:
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Notice Address:
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