EXHIBIT T3C.3
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated September ____, 2004 made
by CONTINENTAL GLOBAL GROUP, INC., a Delaware corporation ("Continental
Global"), CONTINENTAL CONVEYOR & EQUIPMENT COMPANY, a Delaware corporation
("Continental Conveyor"), and XXXXXXX CONVEYOR COMPANY, a Delaware corporation
("Xxxxxxx," and together with Continental Global and Continental Conveyor, the
"Grantors"), and XXXXX FARGO BANK, N.A., as trustee (the "Trustee") for the
holders (the "Holders") of the Senior Secured Notes (as defined below)
WITNESSETH:
WHEREAS, simultaneously herewith, Continental Global has entered into
an Indenture, dated as of September __, 2004 (as the same may be amended,
restated or otherwise modified from time to time, the "Indenture"), pursuant to
which Continental Global issued $65,000,000 in aggregate principal amount of 9%
Series A Senior Secured Notes due 2008 (the "Series A Notes") and $10,000,000 in
aggregate principal amount of 13% Series B Senior Secured Notes due 2008 (the
"Series B Notes" and together with the Series A Notes, the "Senior Secured
Notes");
WHEREAS, Continental Conveyor and Xxxxxxx are parties to the Indenture
as Subsidiary Guarantors (as defined in the Indenture) and have unconditionally
guaranteed the payment of principal, premium, if any, and interest on the Senior
Secured Notes and other amounts payable under the Indenture when due;
WHEREAS, to secure payment and performance of their respective
obligations under the Indenture and the Senior Secured Notes, each of the
Grantors have agreed to execute and deliver to the Trustee a security agreement
providing for the grant to the Trustee for the benefit of the Holders of a
security interest in substantially all personal property of such Grantor;
WHEREAS, the Senior Secured Note are being issued in exchange for
Continental Global's 11% Senior Notes due 2007, which notes have been guaranteed
by the other Grantors; and
WHEREAS, each Grantor has determined that the execution, delivery and
performance of this Agreement directly benefit, and are in the best interest of,
such Grantor;
NOW, THEREFORE, in consideration of these premises, the
foregoing recitals (which are incorporated herein by reference) and the terms
and conditions set forth in this Agreement, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1. Definitions.
(a) Reference is hereby made to the Indenture for a statement
of the terms thereof. All terms used in this Agreement and the recitals hereto
which are defined in the Indenture or in Article 9 of the Uniform Commercial
Code (the "Code") as in effect from time to
time in the State of New York and which are not otherwise defined herein shall
have the same meanings herein as set forth therein; provided that terms used
herein which are defined in the Code as in effect in the State of New York on
the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as the Trustee may otherwise
determine.
(b) The following terms shall have the respective meanings
provided for in the Code: "Accounts", "Cash Proceeds", "Chattel Paper",
"Commercial Tort Claim", "Commodity Account", "Commodity Contracts", "Deposit
Account", "Documents", "Equipment", "Fixtures", "General Intangibles", "Goods",
"Instruments", "Inventory", "Investment Property", "Letter-of-Credit Rights",
"Noncash Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes",
"Record", "Security Account", "Software", and "Supporting Secured Obligations".
(c) As used in this Agreement, the following terms shall have
the respective meanings indicated below, such meanings to be applicable equally
to both the singular and plural forms of such terms:
"Collateral" means the following assets and real and personal property
of the Grantors (whether described herein or in any other Collateral Documents)
including without limitation the following, whether now existing or hereafter
arising, in which Grantors now have or may hereafter acquire any interest
(including but not limited to any leasehold interest), wherever the same may be
located and, except as otherwise provided below, as to which security interests
may be perfected by the filing of financing statements:
(a) all Accounts, Inventory, Goods, Equipment, and Fixtures;
(b) all bank or other Deposit Accounts, Securities Accounts or
Commodities Accounts owned by or maintained by or on behalf of
Grantors in which Bank One, N.A. has a perfected security interest,
and all present and future funds on deposit therein;
(c) all Instruments, Documents, Chattel Paper and Investment Property
owned by or maintained by or on behalf of Grantors to the extent
that a security interest in the same may be perfected by filing or
as to which Bank One, N.A. has a perfected security interest by
possession or other means;
(d) all substitutes and replacements for, accessions, attachments, and
other additions to, and tools, parts, and equipment used in
connection with any of the above;
(e) all returned or repossessed Inventory, Goods, Equipment and/or
Fixtures arising from or relating to any Accounts;
(f) all real property owned in fee and all improvements thereon, the
security interest in which shall be secured by duly recorded
mortgages;
(g) to the extent not listed above as original collateral, all
products, proceeds and insurance proceeds of any and all of the
foregoing
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(h) all Commercial Tort Claims listed on Schedule VI hereto; and
(i) all recorded data of any type, including ledger sheets, customer
lists, credit files, files, records, documents, and instruments
(including, but not limited to, computer programs, printouts, tapes
and related electronic media and data processing software)
evidencing an interest in or relating to the above, and any General
Intangibles at any time evidencing or relating to any of the
foregoing.
Notwithstanding the foregoing, the term "Collateral" does not include any of the
foregoing assets located at, or owned by, the Grantors' non-US Subsidiaries.
"Collateral Documents" means, collectively, this Agreement,
any other security agreements, the Mortgages, and any other documents granting a
Lien upon the Collateral and/or Real Property as security for payment of the
Secured Obligations.
"Intercreditor Agreement" means the Intercreditor Agreement
dated as of the date hereof , by and among Continental Conveyor, Xxxxxxx,
Trustee and Bank One, NA, as the same may be amended, supplemented or otherwise
modified from time to time.
"Mortgages" means any mortgage, deed of trust or other
agreement which conveys or evidences a Lien in favor of the Holder on real
Property of a Loan Party, including any amendment, modification or supplement
thereto.
SECTION 2. Grant of Security Interest. To secure the prompt
payment and performance of the Secured Obligations, each Grantor hereby grants
to Trustee a continuing security interest in and to all of the:
(a) Collateral;
(b) All accessions to, substitutions for and all replacements, products
and proceeds of any Collateral, including, without limitation, proceeds of
insurance policies insuring any portion of the Collateral; and
(c) All books, records and other property (including without
limitation, credit files, programs, printouts and other materials and records)
of such Borrower pertaining to any of the property described in Subsections (a),
(b) or (c) above. It is acknowledged and agreed that the Secured Obligations (as
defined below) shall be secured by a second priority lien on and security
interest in the Collateral, which lien and security interest shall be junior and
subordinate only to the lien and security interest of Bank One, NA (and its
successors and assigns) in accordance with the Intercreditor Agreement.
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SECTION 3. Security for Secured Obligations. The security interest
created hereby in the Collateral constitutes continuing collateral security for
all of the following obligations, whether now existing or hereafter incurred
(the "Secured Obligations"):
(a) the prompt payment by each Grantor, as and when due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), of all amounts from time to time owing by it in respect of the
Indenture, the Collateral Documents and the Senior Secured Notes (together, the
"Loan Documents"), including, without limitation, (i) all principal of and
interest on the Senior Secured Notes (including, without limitation, all
interest that accrues after the commencement of any insolvency or bankruptcy
proceeding of any Grantor, whether or not the payment of such interest is
unenforceable or is not allowable due to the existence of such proceeding), (ii)
in the case of a Subsidiary Guarantor, all amounts from time to time owing by
such Grantor in respect of its guaranty made pursuant to Article X of the
Indenture or under any other Guaranty to which it is a party, including all
obligations guaranteed by such Grantor and (iii) all fees, commissions, charges,
expense reimbursements, indemnifications and all other amounts due or to become
due under any Loan Document; and
(b) the due performance and observance by each Grantor of all of its
other obligations from time to time existing in respect of the Loan Documents.
SECTION 4. Representations and Warranties. Each Grantor jointly and
severally represents and warrants as follows:
(a) Schedule I hereto sets forth (i) the exact legal name of each
Grantor, (ii) the jurisdiction of organization of each Grantor, and (iii) the
organizational identification number of each Grantor or states that no such
organizational identification number exists.
(b) Each Grantor (i) is a corporation, limited liability company or
limited partnership duly organized, validly existing and in good standing under
the laws of the state or jurisdiction of its organization as set forth on
Schedule I hereto and (ii) has all requisite power and authority to execute,
deliver and perform this Agreement and each other Loan Document to be executed
and delivered by it pursuant hereto and to consummate the transactions
contemplated hereby and thereby.
(c) The execution, delivery and performance by each Grantor of this
Agreement and each other Loan Document to which such Grantor is a party or will
be a party (i) have been duly authorized by all necessary action, (ii) do not
and will not contravene its charter or by-laws, its limited liability company or
operating agreement or its certificate of partnership or partnership agreement,
as applicable, or any applicable law or, subject to the qualifications and
limitations set forth in the Intercreditor Agreement, any contractual
restriction binding on or otherwise affecting such Grantor or its properties,
(iii) except as set forth in the Loan Documents, do not and will not result in
or require the creation of any Lien upon or with respect to any of its
properties and (iv) subject to the qualifications and limitations set forth in
the Intercreditor Agreement, do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to it or its
operations or any of its properties.
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(d) Subject to the qualifications and limitations set forth in the
Intercreditor Agreement, this Agreement is, and each other Loan Document to
which any Grantor is or will be a party, when executed and delivered pursuant
hereto, will be, a legal, valid and binding obligation of such Grantor,
enforceable against such Grantor in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws.
(e) There is no pending or, to the best knowledge of any Grantor,
threatened action, suit, proceeding or claim affecting any Grantor or to which
any of the properties of any Grantor is subject, before any governmental
authority or any arbitrator, or any order, judgment or award by any governmental
authority or arbitrator, that may adversely affect the grant by any Grantor, or
the perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Trustee of any of its rights or remedies
hereunder.
(f) To the best of each Grantor's knowledge, all Federal, state and
local tax returns and other reports required by applicable law to be filed by
any Grantor have been filed, or extensions have been obtained, and all taxes,
assessments and other governmental charges imposed upon any Grantor or any
property of such Grantor (including, without limitation, all federal income and
social security taxes on employees' wages and all sales taxes) and which have
become due and payable on or prior to the date hereof have been paid, except to
the extent contested in good faith by proper proceedings which stay the
imposition of any penalty, fine or Lien resulting from the non-payment thereof
and with respect to which adequate reserves have been set aside for the payment
thereof in accordance with GAAP.
(g) Each Grantor's chief place of business and chief executive office,
the place where such Grantor keeps its Records concerning Accounts and all
originals of all Chattel Paper are located at the addresses specified therefor
in Schedule III hereto. None of the Accounts is evidenced by Promissory Notes or
other Instruments except for Promissory Notes evidencing aggregate indebtedness
of not more than $50,000. Set forth in Schedule IV hereto is a complete and
accurate list, as of the date of this Agreement, of each Deposit Account,
Securities Account and Commodities Account of each Grantor in which Bank One,
N.A. has a perfected security interest, together with the name and address of
each institution at which each such Account is maintained, the account number
for each such Account and a description of the purpose of each such Account. Set
forth in Schedule II hereto is (i) a complete and correct list of each trade
name used by each Grantor and (ii) the name of, and each trade name used by,
each Person from which such Grantor has acquired any substantial part of the
Collateral within four months prior to the date hereof.
(h) The Grantors are and will be at all times the sole and exclusive
owners of, or otherwise have and will have adequate rights in, the Collateral
free and clear of any Lien, except for (i) the Lien created by this Agreement
and (ii) the Permitted Liens (as such term is defined in the Indenture). No
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording or filing office
except (A) such as may have been filed in favor of the Trustee relating to this
Agreement and (B) such as may have been filed to perfect or protect any
Permitted Liens.
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(i) To the best of each Grantor's knowledge, and subject to the terms
of the Intercreditor Agreement and the Indenture, the exercise by the Trustee of
any of its rights and remedies hereunder will not contravene any law or any
contractual restriction binding on or otherwise affecting any Grantor or any of
its properties and will not result in or require the creation of any Lien, upon
or with respect to any of its properties.
(j) To the best of each Grantor's knowledge, and subject to the terms
of the Intercreditor Agreement and the Indenture, no authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or other regulatory body, or any other Person, is required for (i) the grant by
any Grantor, or the perfection, of the security interest purported to be created
hereby in the Collateral or (ii) the exercise by the Trustee of any of its
rights and remedies hereunder, except for the filing under the Uniform
Commercial Code as in effect in the applicable jurisdiction of the financing
statements described in Schedule V hereto, all of which financing statements
have been duly filed and are in full force and effect.
(k) Subject to the Intercreditor Agreement, this Agreement creates in
favor of the Trustee, for the benefit of the Holders and the Trustee, a legal,
valid and enforceable security interest in the Collateral, as security for the
Secured Obligations. The filing of the financing statements and recording of the
Mortgages described in Schedule V hereto result in the perfection of such
security interests. Such security interests are, or in the case of Collateral in
which any Grantor obtains rights after the date hereof, will be, perfected
security interests, subject only to the Permitted Liens and the recording of
such instruments of assignment. Such recordings and filings and all other action
necessary or desirable to perfect and protect such security interest have been
duly taken.
SECTION 5. Covenants as to the Collateral. So long as any of the
Secured Obligations shall remain outstanding and the Indenture and the other
Loan Documents shall not have expired or terminated, unless the Trustee shall
otherwise consent in writing:
(a) Further Assurances. Each Grantor will at its expense, at any time
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or desirable or that
the Trustee may request in order to (i) perfect and protect the security
interest purported to be created hereby; (ii) subject to the Intercreditor
Agreement, enable the Trustee to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; or (iii) otherwise effect the purposes
of this Agreement, including, without limitation: (A) executing and filing (to
the extent, if any, that such Grantor's signature is required thereon) or
authenticating the filing of, such financing or continuation statements, or
amendments thereto, as may be necessary or desirable or that the Trustee may
request in order to perfect and preserve the security interest purported to be
created hereby, (B) furnishing to the Trustee from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Trustee may reasonably request,
all in reasonable detail, (C) if any Collateral shall be in the possession of a
third party, notifying such Person of the Trustee's security interest created
hereby and obtaining a written acknowledgment from such Person that such Person
holds possession of the Collateral for the benefit of the Trustee, which such
written acknowledgement shall be in form and substance satisfactory to the
Trustee, (D) if at any time after the date hereof, any Grantor acquires or holds
any Commercial Tort Claim, immediately notifying the Trustee in a writing
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signed by such Grantor setting forth a brief description of such Commercial Tort
Claim and granting to the Trustee a security interest therein and in the
proceeds thereof, which writing shall incorporate the provisions hereof and
shall be in form and substance satisfactory to the Trustee, and (E) taking all
actions required by any earlier versions of the Uniform Commercial Code or by
other law, as applicable, in any relevant Uniform Commercial Code jurisdiction,
or by other law as applicable in any foreign jurisdiction; provided, that in no
event shall any Grantor be required to take any action that would vitiate or
conflict with the senior lien of Bank One, NA to the extent that any Grantor
shall remain indebted to Bank One, NA (or any permitted successor or assign of
Bank One, NA under the Intercreditor Agreement) as contemplated in the
Intercreditor Agreement.
(b) Condition of Equipment. Each Grantor will maintain or cause the
Equipment to be maintained and preserved in good condition, repair and working
order as when acquired and in accordance with any manufacturer's manual,
ordinary wear and tear excepted, and will forthwith, or in the case of any loss
or damage to any Equipment as quickly as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary or desirable,
consistent with past practice, or which the Trustee may request to such end.
(c) Taxes, Etc. Each Grantor jointly and severally agrees to pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Equipment and Inventory, except to the
extent the validity thereof is being contested in good faith by proper
proceedings which stay the imposition of any penalty, fine or Lien resulting
from the non-payment thereof and with respect to which adequate reserves in
accordance with GAAP have been set aside for the payment thereof.
(d) Insurance. Each Grantor will, at its own expense, maintain
insurance (including, without limitation, comprehensive general liability and
property insurance) with respect to all of its properties, including, without
limitation, its Equipment and Inventory in such amounts, against such risks, in
such form and with responsible and reputable insurance companies or associations
as is required by any governmental authority having jurisdiction with respect
thereto or as is carried generally in accordance with sound business practice.
(e) Provisions Concerning the Accounts.
(i) No Grantor shall, without the prior written consent of the
Trustee, change (A) such Grantor's name, identity or organizational structure or
(B) its jurisdiction of incorporation or (C) its chief executive office as set
forth on Schedule III hereto. Each Grantor shall (x) immediately notify the
Trustee upon obtaining an organizational identification number, if on the date
hereof such Grantor did not have such identification number, and (y) keep
adequate records concerning the Accounts and permit representatives of the
Trustee pursuant to the terms of the Indenture to inspect and make abstracts
from such Records.
(ii) Each Grantor will, except as otherwise provided in this
subsection (f), continue to collect, at its own expense, all amounts due or to
become due under the Accounts. In connection with such collections, each Grantor
may (and, at the Trustee's
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direction, will) take such action as such Grantor or the Trustee may deem
necessary or advisable to enforce collection or performance of the Accounts.
(f) Transfers and Other Liens.
(i) Except to the extent expressly permitted by the Indenture, no
Grantor will sell, assign (by operation of law or otherwise), lease, license,
exchange or otherwise transfer or dispose of any of the Collateral.
(ii) Except to the extent expressly permitted by the Indenture, no
Grantor will create, suffer to exist or grant any Lien upon or with respect to
any Collateral.
(g) Inspection and Reporting. Each Grantor shall permit the Trustee and
the Holders, or any agents or representatives thereof or such professionals or
other Persons as the Trustee or the Holders may designate at any time and from
time to time during normal business hours, at the expense of the Borrower, (i)
to examine and make copies of and abstracts from such Grantor's records and
books of account, (ii) to visit and inspect its properties, (iii) to verify
materials, leases, notes, Accounts, Inventory and other assets of such Grantor
from time to time, (iii) to conduct audits, physical counts, appraisals and/or
valuations, Phase I and Phase II Environmental Site Assessments or examinations
at the locations of such Grantor and (iv) to discuss such Grantor's affairs,
finances and accounts with any of its directors, officers, managerial employees,
independent accountants or any of its other representatives, in each case as
provided in the Indenture.
SECTION 6. Additional Provisions Concerning the Collateral.
(a) Each Grantor hereby (i) authorizes the Trustee to file, one or more
financing or continuation statements, and amendments thereto, relating to the
Collateral and (ii) ratifies such authorization to the extent that the Trustee
has filed any such financing or continuation statements, or amendments thereto,
prior to the date hereof. A photocopy or other reproduction of this Agreement or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(b) Subject to the Intercreditor Agreement, each Grantor hereby
irrevocably appoints the Trustee as its attorney-in-fact and proxy, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Trustee's discretion, to take any action
and to execute any instrument which the Trustee may deem necessary or advisable
to accomplish the purposes of this Agreement (subject to the rights of a Grantor
under Section 5 hereof), including, without limitation, (i) to file any claims
or take any action or institute any proceedings which the Trustee may deem
necessary or desirable for the collection of any Collateral or otherwise to
enforce the rights of the Trustee and the Holders with respect to any
Collateral, and (ii) to execute assignments, licenses and other documents to
enforce the rights of the Trustee and the Holders with respect to any
Collateral. This power is coupled with an interest and is irrevocable until all
of the Secured Obligations are indefeasibly paid in full after the termination
of the Indenture and the other Loan Documents.
(c) For the purpose of enabling the Trustee to exercise rights and
remedies hereunder, at such time as the Trustee shall be lawfully entitled to
exercise such rights and
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remedies, and for no other purpose, each Grantor hereby grants to the Trustee,
to the extent assignable, and subject to the Intercreditor Agreement, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to any Grantor) to use, assign, license or sublicense any
intellectual property now owned or hereafter acquired by any Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof.
(d) If any Grantor fails to perform any agreement contained herein, the
Trustee may itself perform, or cause performance of, such agreement or
obligation, in the name of such Grantor or the Trustee, and the expenses of the
Trustee incurred in connection therewith shall be jointly and severally payable
by the Grantors pursuant to Section 8 hereof and shall be secured by the
Collateral.
(e) The powers conferred on the Trustee 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 safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Trustee
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.
(f) Anything herein to the contrary notwithstanding (i) each Grantor
shall remain liable with respect to any of the Collateral to the extent set
forth therein to perform all of its obligations thereunder to the same extent as
if this Agreement had not been executed, (ii) the exercise by the Trustee of any
of its rights hereunder shall not release any Grantor from any of its
obligations in respect of the Collateral, and (iii) the Trustee shall not have
any obligation or liability by reason of this Agreement with respect to any of
the other Collateral, nor shall the Trustee 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 7. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing, and subject to the Intercreditor Agreement:
(a) The Trustee may exercise in respect of the Collateral, in addition
to any other rights and remedies provided for herein or otherwise available to
it, all of the rights and remedies of a secured party upon default under the
Code (whether or not the Code applies to the affected Collateral), and also may,
if an Event of Default under the Indenture exists and is continuing (i) take
absolute control of the Collateral, including, without limitation, transfer into
the Trustee's name or into the name of its nominee or nominees (to the extent
the Trustee has not theretofore done so) and thereafter receive, for the benefit
of the Trustee, all payments made thereon, give all consents, waivers and
ratifications in respect thereof and otherwise act with respect thereto as
though it were the outright owner thereof, (ii) require each Grantor to, and
each Grantor hereby agrees that it will at its expense and upon request of the
Trustee forthwith, assemble all or part of the Collateral as directed by the
Trustee and make it available to the Trustee at a place or places to be
designated by the Trustee that is reasonably convenient to both parties, and the
Trustee may enter into and occupy any premises owned or leased by any Grantor
where the Collateral or any part thereof is located or assembled for a
reasonable period in order
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to effectuate the Trustee's rights and remedies hereunder or under law, without
obligation to any Grantor in respect of such occupation, and (iii) without
notice except as specified below and without any obligation to prepare or
process the Collateral for sale, (A) sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Trustee's offices
or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Trustee may deem commercially reasonable
and/or (B) lease, license or dispose of the Collateral or any part thereof upon
such terms as the Trustee may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale or any other disposition of the Collateral
shall be required by law, at least ten (10) days' notice to a Grantor of the
time and place of any public sale or the time after which any private sale or
other disposition of the Collateral is to be made shall constitute reasonable
notification. The Trustee shall not be obligated to make any sale or other
disposition of Collateral regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Each Grantor hereby
waives any claims against the Trustee and the Holders arising by reason of the
fact that the price at which the Collateral may have been sold at a private sale
was less than the price which might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if the Trustee
accepts the first offer received and does not offer the Collateral to more than
one offeree, and waives all rights that such Grantor may have to require that
all or any part of the Collateral be marshalled upon any sale (public or
private) thereof. Each Grantor hereby acknowledges that (i) any such sale of the
Collateral by the Trustee shall be made without warranty, (ii) the Trustee may
specifically disclaim any warranties of title, possession, quiet enjoyment or
the like, and (iii) such actions set forth in clauses (i) and (ii) above shall
not adversely effect the commercial reasonableness of any such sale of the
Collateral. In addition to the foregoing, (i) upon written notice to any Grantor
from the Trustee, each Grantor shall cease any use of the Intellectual Property
or any trademark, patent or copyright similar thereto for any purpose described
in such notice; (ii) the Trustee may, at any time and from time to time, upon
ten (10) days' prior notice to any Grantor, license, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any of the
Intellectual Property, throughout the universe for such term or terms, on such
conditions, and in such manner, as the Trustee shall in its sole discretion
determine; and (iii) the Trustee may, at any time, pursuant to the authority
granted in Section 6 hereof (such authority being effective upon the occurrence
and during the continuance of an Event of Default), execute and deliver on
behalf of a Grantor, one or more instruments of assignment of the Intellectual
Property (or any application or registration thereof), in form suitable for
filing, recording or registration in any country.
(b) Any cash held by the Trustee as Collateral and all Cash Proceeds
received by the Trustee in respect of any sale of or collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Trustee, be held by the Trustee as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the Trustee
pursuant to Section 8 hereof) in whole or in part by the Trustee against, all or
any part of the Secured Obligations in such order as the Trustee shall elect,
consistent with the provisions of the Indenture. Any surplus of such cash or
Cash Proceeds held by the Trustee and remaining after the indefeasible payment
in full of all of the Secured Obligations after the termination of the Indenture
and the other Loan Documents shall be paid over to whomsoever shall be lawfully
entitled to receive the same or as a court of competent jurisdiction shall
direct.
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(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Trustee and the
Holders are legally entitled, the Grantors shall be jointly and severally liable
for the deficiency, together with interest thereon at the highest rate specified
in any applicable Loan Document for interest on overdue principal thereof or
such other rate as shall be fixed by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and other client charges of
any attorneys employed by the Trustee to collect such deficiency.
(d) Each Grantor hereby acknowledges that if the Trustee complies with
any applicable state or federal law requirements in connection with a
disposition of the Collateral, such compliance will not adversely effect the
commercial reasonableness of any sale or other disposition of the Collateral.
(e) The Trustee shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of the Trustee's rights hereunder and
in respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that any Grantor lawfully may, such Grantor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Trustee's rights under this
Agreement or under any other instrument creating or evidencing any of the
Secured Obligations or under which any of the Secured Obligations is outstanding
or by which any of the Secured Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, each Grantor hereby
irrevocably waives the benefits of all such laws.
SECTION 8. Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to defend, protect,
indemnify and hold the Trustee and each Holder harmless from and against any and
all claims, damages, losses, liabilities, obligations, penalties, fees, costs
and expenses (including, without limitation, legal fees, costs, expenses, and
disbursements of Trustee's and each Holder's counsel) to the extent that they
arise out of or otherwise result from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting solely and directly from the Trustee's or such Holder's gross
negligence or willful misconduct, as determined by a final judgment of a court
of competent jurisdiction.
(b) The Grantors will upon demand pay to the Trustee the amount of any
and all costs and expenses, including the reasonable fees, costs, expenses and
disbursements of counsel for the Trustee and of any experts and agents
(including, without limitation, any collateral trustee which may act as agent of
the Trustee), which the Trustee or such Holder may incur in connection with (i)
the preparation, negotiation, execution, delivery, recordation, administration,
amendment, waiver or other modification or termination of this Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral, (iii) the exercise or enforcement of
any of the rights of the Trustee or such Holder hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions hereof.
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SECTION 9. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), telecopied or delivered, if to a
Grantor, to it in care of the Borrower at its address specified in the Indenture
or if to the Trustee, to it at its address specified in the Indenture; or as to
any such Person, at such other address as shall be designated by such Person in
a written notice to such other Person complying as to delivery with the terms of
this Section 9. All such notices and other communications shall be effective (a)
if mailed (by certified mail, postage prepaid and return receipt requested),
when received or three (3) Business Days after deposited in the mails, whichever
occurs first, (b) if telecopied, when transmitted and confirmation is received,
provided same is on a Business Day and, if not, on the next Business Day; or (c)
if delivered, upon delivery, provided same is on a Business Day and, if not, on
the next Business Day.
SECTION 10. Security Interest Absolute. All rights of the Trustee and
the Holders, all Liens and all obligations of each of the Grantors hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Indenture or any other agreement or instrument relating
thereto, (b) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Secured Obligations, or any other
amendment or waiver of or consent to any departure from the Indenture or any
other Loan Document, (c) any exchange or release of, or non-perfection of any
Lien on any Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations, or (d)
any other circumstance which might otherwise constitute a defense available to,
or a discharge of, any of the Grantors in respect of the Secured Obligations.
All authorizations and agencies contained herein with respect to any of the
Collateral are irrevocable and powers coupled with an interest.
SECTION 11. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by each Grantor and the Trustee, and no
waiver of any provision of this Agreement, and no consent to any departure by
any Grantor therefrom, shall be effective unless it is in writing and signed by
the Trustee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(b) No failure on the part of the Trustee to exercise, and no delay in
exercising, any right hereunder or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Trustee or any Holder provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Trustee
or any Holder under any Loan Document against any party thereto are not
conditional or contingent on any attempt by such Person to exercise any of its
rights under any other Loan Document against such party or against any other
Person, including but not limited to, any Grantor.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the
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validity or enforceability of such provision in any other jurisdiction. To the
extent any provisions of this Agreement are in conflict with any provisions of
the Indenture (including provisions of the Trust Indenture Act of 1939 that are
made a part thereof), the terms of the Indenture shall govern.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the later of (A)
the indefeasible payment in full of the Secured Obligations and (B) the
termination of the Indenture and the other Loan Documents and (ii) be binding on
each Grantor and all other Persons who become bound as debtor to this Agreement
in accordance with Section 9-203(d) of the Code and shall inure, together with
all rights and remedies of the Trustee and the Holders hereunder, but subject to
the Intercreditor Agreement, to the benefit of the Trustee and the Holders and
their respective permitted successors, transferees and assigns. Without limiting
the generality of clause (ii) of the immediately preceding sentence, without
notice to the Grantors, the Trustee and the Holders may, subject to the terms of
the Indenture and the Intercreditor Agreement, assign or otherwise transfer
their rights and obligations under this Agreement and any other Loan Document,
to any other Person and such other Person shall thereupon become vested with all
of the benefits in respect thereof granted to the Trustee and the Holders herein
or otherwise. Upon any such assignment or transfer, all references in this
Agreement to the Trustee or any such Holder shall mean the assignee of the
Trustee or such Holder. None of the rights or obligations of any Grantor
hereunder may be assigned or otherwise transferred without the prior written
consent of the Trustee, and any such assignment or transfer shall be null and
void.
(e) Upon the satisfaction in full of the Secured Obligations and the
termination of the Indenture and the other Loan Documents, (i) this Agreement
and the security interests created hereby shall terminate and all rights to the
Collateral shall revert to the Grantors and (ii) the Trustee will, upon the
Grantors' request and at the Grantors' expense, (A) subject to the Intercreditor
Agreement, return to the Grantors such of the Collateral as shall not have been
sold or otherwise disposed of or applied pursuant to the terms hereof and (B)
execute and deliver to the Grantors such documents as the Grantors shall
reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
(g) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX
XXXX IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY
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ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS
IS DEEMED APPROPRIATE BY THE COURT.
(h) EACH OF THE GRANTORS (AND BY ITS ACCEPTANCE OF THE BENEFITS OF THIS
AGREEMENT, THE AGENT) WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.
(i) Each Grantor irrevocably consents to the service of process of any
of the aforesaid courts in any such action, suit or proceeding by the mailing of
copies thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Grantor at its address provided herein,
such service to become effective ten (10) days after such mailing.
(j) Nothing contained herein shall affect the right of the Trustee to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against any Grantor or any property of any Grantor in any
other jurisdiction.
(k) Each Grantor irrevocably and unconditionally waives any right it
may have to claim or recover in any legal action, suit or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
(l) Section headings herein are included for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
(m) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
(n) All of the obligations of the Grantors hereunder are joint and
several. The Trustee may, in its sole and absolute discretion, enforce the
provisions hereof against any of the Grantors and shall not be required to
proceed against all Grantors jointly or seek payment from the Grantors ratably.
In addition, the Trustee may, in its sole and absolute discretion, select the
Collateral of any one or more of the Grantors for sale or application to the
Secured Obligations, without regard to the ownership of such Collateral, and
shall not be required to make such selection ratably from the Collateral owned
by all of the Grantors. The release or discharge of
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any Grantor by the Trustee shall not release or discharge any other Grantor from
the obligations of such Person hereunder.
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the date
first above written.
GRANTORS:
TRUSTEE:
SCHEDULE I
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR
JURISDICTION OF ORGANIZATION
Sched. I-1
Sched. II-1
SCHEDULE III
LOCATIONS OF GRANTORS
LOCATION Description of Location (State if Location
(i) contains
Equipment, Fixtures,
Goods or Inventory,
(ii) is chief place of business and
chief executive office, or
(iii) contains Records concerning Accounts)
Sched. III-1
SCHEDULE IV
DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS
Name and Address
of Institution
Maintaining Account Account Number Type of Account
------------------- -------------- ---------------
Sched. IV-1
SCHEDULE V
UCC-1 FINANCING STATEMENTS
UCC-1 Financing Statements have been filed in the jurisdictions below
against the Grantors:
NAME OF DEBTOR SECRETARY OF STATE
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SCHEDULE VI
COMMERCIAL TORT CLAIMS
