SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 2, 1998 (the "Security Agreement"),
entered into by and between GOLDEN BOOKS PUBLISHING COMPANY, INC. (together with
its successors and assigns, the "Company"), and MARINE MIDLAND BANK, as the
Trustee under the Indenture (defined below) and Collateral Agent and secured
party hereunder, for its benefit and the ratable benefit of the holders (the
"Holders") of the Notes (defined below) (together with its successors and
assigns, in such capacity, the "Collateral Agent"). This Security Agreement is
being entered into in connection with, pursuant to and as collateral security
for the debts, liabilities and obligations arising under or with respect to the
Indenture and the Notes.
NOW, THEREFORE, in consideration of the premises and the covenants set
forth herein and in the Indenture, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, capitalized terms defined in the
Indenture and not otherwise defined herein shall have the meanings ascribed to
them in the Indenture. All terms defined in the UCC (defined below) and not
otherwise defined herein or in the Indenture shall have the meanings assigned to
them in the UCC.
"Accounts Receivable" shall have the meaning ascribed to it by the UCC.
"Chattel Paper" shall have the meaning ascribed to it by the UCC.
"Christmas Classics" shall have the meaning ascribed to it in Schedule
1.1(a) attached hereto.
"Collateral" shall have the meaning ascribed to it in Article II hereof.
"Copyrights" shall mean all of the Company's proprietary rights, in whole
or in part, related to Christmas Classics, Lone Ranger and Underdog; all
copyrights, in whole or in part, related to Christmas Classics, Lone Ranger and
Underdog, whether registered or unregistered, and whether or not the underlying
works of authorship have been published, and all works of authorship and other
rights therein or derived therefrom, and all Records relating thereto; and all
right, title and interest to make and exploit all derivative works based upon or
adopted from works, now owned or hereafter acquired, covered by such copyright,
copyright registrations, copyright applications and proprietary rights, and any
renewals or extensions thereof, including, without limitation, (a) the right to
print, reproduce, publish and distribute any of the foregoing, (b) the right to
xxx or otherwise recover for any and all past, present and future
infringements and misappropriations thereof, (c) all income, royalties, damages
and other payments now or hereafter due and/or payable with respect thereto
(including, without limitation, payments under all agreements and contracts
entered into in connection therewith, and damages and payments for past or
future infringements thereof), and (d) all rights of the Company corresponding
thereto throughout the world and all other rights of any kind whatsoever of the
Company accruing thereunder or pertaining thereto.
"Copyright Licenses" shall mean, with respect to the Company, all
agreements and contracts with any other Person in connection with or referring
to, in whole or in part, any of the Copyrights, now owned or hereafter acquired,
throughout the world, subject, in each case, to the terms of such agreements and
contracts.
"Disney" shall mean Disney Licensed Publishing, Inc., doing business as
Disney Licensed Publishing.
"Distribution Center" shall have the meaning ascribed to it in Paragraph
2.1(a)(iii).
"Documents" shall have the meaning ascribed to it by the UCC.
"Equipment" shall have the meaning ascribed to it by the UCC.
"First Lien Eligible Assets" shall mean the Eligible Assets related to
Christmas Classics, Lone Ranger and Underdog.
"Goods" shall have the meaning ascribed to it by the UCC.
"Governmental Authority" shall mean any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic and whether national, federal, state, provincial or local.
"Headquarters" shall have the meaning ascribed to it in Paragraph
2.1(a)(v).
"Headquarters Lease" shall mean the Lease between Paramount Group, Inc., as
agent for 000 0xx Xxxxxx Associates Limited Partnership and Golden Books Family
Entertainment, Inc. dated as of December 24, 1996.
"Indenture" shall mean the Indenture, dated September 15, 1992, between the
Company and Marine Midland Bank, as trustee thereunder, relating to the Notes,
as amended or supplemented from time to time in accordance with its terms,
including the Second Supplemental Indenture thereto dated as of the Effective
Date.
"Inventory" shall have the meaning ascribed to it by the UCC.
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"License Agreement" shall mean that certain Licensed Book Publishing
Agreement, dated September 26, 1997, between Disney and the Company.
"Lone Ranger" shall have the meaning ascribed to it in Schedule 1.1(b)
hereto.
"Manufacturing Facility" shall have the meaning ascribed to it in Paragraph
2.1(a)(iv).
"Notes" shall mean the 7.65% Senior Notes Due 2002 of the Company issued in
accordance with the Indenture.
"Obligations" shall mean the Company's and the Parent Guarantor's
Obligations under the Indenture, the Notes and the Collateral Agreements.
"Permitted Lien Collateral" shall mean the items of First Lien Collateral
listed in Sections 2.1(a)(ii), (iii), (iv) and (v) hereof together with the
Second Lien Collateral.
"Person" or "person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Records" shall mean all of the present and future books of account of
every kind or nature of the Company, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of the Company
with respect to the foregoing maintained with or by any other Person).
"Requisite Holders" shall mean the Holder or Holders of at least a majority
in principal amount of the outstanding Notes, unless otherwise provided in
Article Eight of the Indenture.
"Restricted Collateral" shall mean any Inventory owned by the Company
which, upon the sale of such Inventory, results in an obligation of the Company
to pay a royalty to Disney under the License Agreement.
"Second Lien Eligible Assets" shall mean all Eligible Assets other than
First Lien Eligible Assets.
"Secured Parties" shall mean the collective reference to the Collateral
Agent and each Holder.
"Trademarks" shall mean all trademarks, service marks, trade names, trade
dress or other indicia of trade origin, in whole or in part, trademark and
service xxxx registrations, and
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applications for trademark or service xxxx registrations and any renewals
thereof, and all Records relating thereto, throughout the world, now owned or
hereafter acquired, related to Christmas Classics, Lone Ranger and Underdog,
including, without limitation, (a) the right to xxx or otherwise recover for any
and all past, present and future infringements and misappropriations thereof,
(b) all income, royalties, damages and other payments now or hereafter due
and/or payable with respect thereto (including, without limitation, payments
under all agreements and contracts entered into in connection therewith, and
damages and payments for past or future infringements thereof), and (c) the
right to use and register and all rights corresponding thereto and all other
rights of any kind whatsoever of the Company accruing thereunder or pertaining
thereto, together, in each case, with the goodwill of the business connected
with the use of, and symbolized by, each such trademark, service xxxx, trade
name, trade dress or other indicia of trade origin. Solely for the avoidance of
doubt, the term "Trademarks" as used herein shall not include any trademarks,
service marks, trade names, trade dress or other indicia of origin that are used
solely to identify the Company, including, but not limited to, GOLDEN BOOKS, the
G Design and the distinctive gold spine.
"Trademark Licenses" shall mean, with respect to the Company, all
agreements and contracts with any other Person in connection with or referring
to, in whole or in part, any of the Trademarks, now owned or hereafter acquired,
throughout the world, subject, in each case, to the terms of such agreements and
contracts.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in the State of New York, PROVIDED that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.
"Underdog" shall have the meaning ascribed to it in Schedule 1.1(c) hereto.
ARTICLE II
GRANT OF SECURITY INTERESTS
2.1 SECURITY INTEREST.
(a) As security for the prompt and complete payment and performance in full
of the principal of, premium, if any, and interest on the Notes when and as the
same shall be due and payable, whether on an interest payment date, at maturity,
by acceleration, purchase, repurchase, redemption or otherwise, and interest on
the overdue principal of, premium and interest, if any, to the extent such
premium or interest is permitted by law, on the Notes and the performance of all
other Obligations, the Company hereby grants to the Collateral Agent, for the
benefit of itself and the Holders, a security interest in and continuing first
priority Lien on, all of its right, title and
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interest in, to and under the following, in each case, whether now owned or
existing or hereafter acquired or arising, and wherever located (all of which is
defined as the "First Lien Collateral"):
(i) the Copyrights, Copyright Licenses, Trademarks, Trademark Licenses, and
all proprietary rights in and to all products and proceeds therefrom, except the
Copyright Licenses and Trademark Licenses listed in Schedule 2.1(a)(i);
(ii) the First Lien Eligible Assets, and all products and proceeds
therefrom;
(iii) personal property (other than Second Lien Collateral) and fixtures
owned by the Company located at the Company's distribution center in
Crawfordsville, Indiana, on the land more particularly described in Exhibit A
hereto (the "Distribution Center"), including, but not limited to, any Equipment
or Goods, all items listed on Schedule 2.1(a)(iii) and all excess cash proceeds
held by the Collateral Agent pursuant to section 1.05 or section 1.13 of the
Mortgage, and all products and proceeds therefrom;
(iv) personal property (other than Second Lien Collateral) and fixtures
owned by the Company located at the Company's manufacturing facility in Racine,
Wisconsin, on the land more particularly described in Exhibit B hereto (the
"Manufacturing Facility"), including, but not limited to, any Equipment or Goods
and all items listed on Schedule 2.1(a)(iv), and all products and proceeds
therefrom; and
(v) personal property (other than Second Lien Collateral) and fixtures
owned by the Company located at the Company's and its Parent's headquarters in
New York City, on the land more particularly described in Exhibit C hereto (the
"Headquarters"), including, but not limited to, any Equipment or Goods and all
items listed on Schedule 2.1(a)(v), and all products and proceeds therefrom;
PROVIDED that the security interest and continuing first priority Lien granted
to the Collateral Agent by the Company with respect to the items of the First
Lien Collateral listed in Sections 2.1(a)(ii), (iii), (iv) and (v) hereof, may
be subject to Permitted Liens (as defined in the Indenture) other than Eligible
Credit Facility Liens.
(b) As further security for the prompt and complete payment and performance
in full of the principal of, premium, if any, and interest on the Notes when and
as the same shall be due and payable, whether on an interest payment date, at
maturity, by acceleration, purchase, repurchase, redemption or otherwise, and
interest on the overdue principal of, premium and interest, if any, to the
extent such premium or interest is permitted by law, on the Notes and the
performance of all other Obligations, the Company hereby grants to the
Collateral Agent, for the benefit of itself and the Holders, a security interest
in and continuing second priority Lien (subject to Permitted Liens) on, all of
its right, title and interest in, to and under the Second Lien Eligible Assets,
in each case whether now owned or existing or hereafter acquired or arising, and
wherever located (all of which is defined as the "Second Lien Collateral");
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PROVIDED, however, (A) such Lien and security interest in the Second Lien
Collateral shall be junior in all respects to Eligible Credit Facility Liens of
the Lenders in the Second Lien Collateral securing up to $30.0 million aggregate
principal amount of borrowings under the Eligible Credit Facilities and their
pro rata share of related interest, default interest, expenses, fees and
premiums; (B) notwithstanding anything to the contrary contained in this
Security Agreement (including, without limitation, Article VI hereof), the
Indenture or any other Collateral Agreement, until the Eligible Credit Facility
Liens are indefeasibly fully satisfied, released or terminated, the Collateral
Agent shall be prohibited from taking any action with respect to any such
Eligible Credit Facility Liens or Second Lien Collateral, including, without
limitation, attempting to foreclose or realize upon or collect the proceeds of
any Second Lien Collateral or otherwise exercising any rights and remedies of
any kind or nature whatsoever with respect to any such Eligible Credit Facility
Liens or Second Lien Collateral, including, without limitation, (I) any right to
seek adequate protection in a bankruptcy proceeding of its interests in the
Second Lien Collateral prior to similar action by the Lenders, (II) any right
with respect to any such Eligible Credit Facility Liens to object to or
participate in the manner of liquidating the Second Lien Collateral, or (III)
any right with respect to any such Eligible Credit Facility Liens to claim the
benefits of any doctrine of marshaling; and (C) if the claims of the Lenders
have not been satisfied in all respects, then any proceeds, consideration or
other value received by the Collateral Agent in respect of the aforesaid Second
Lien Collateral shall be received in trust for and promptly remitted to the
Lenders, except this subparagraph (C) shall not apply with respect to any
proceeds, consideration or other value received or to be received by the
Collateral Agent (I) under a confirmed plan of reorganization of the Company or
(II) following the consensual release by the Lenders of any such Second Lien
Collateral. Nothing in the foregoing shall in any manner alter or abridge the
rights and remedies of the Collateral Agent with respect to (x) any other
collateral that is pledged to it, (y) the right to file and prosecute a secured
or unsecured claim under Section 501 of the United States Bankruptcy Code or
similar evidence of indebtedness in an out-of-court or other proceeding with
respect to the debt secured by this Lien or any other debt, and (z) the right to
defend its interests if challenged.
Notwithstanding the foregoing proviso, Lenders may at any time modify or
amend their agreements (including renewals and extensions) without notice to the
Collateral Agent and Holders and without affecting this Paragraph 2.1(b). The
Collateral Agent agrees that it shall not contest the validity, perfection,
priority or enforceability of the Lenders' Liens and security interests in the
Second Lien Collateral, and that this Paragraph 2.1(b) shall be in full force
and effect at all times including upon the commencement of and during any
bankruptcy proceeding.
At the request of the Lenders, the Collateral Agent shall enter into a
Mortgagee Waiver Letter or similar document substantially in the form of Exhibit
D hereto.
On the Effective Date, the Collateral Agent shall execute and deliver to
the Company the Environmental Disclosure Document for Transfer of Real Property
and the Acknowledgment and Waiver under the Indiana Responsible Property
Transfer Law substantially in the forms of Exhibits E-1 and E-2 hereto,
respectively.
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Collectively, the First Lien Collateral and the Second Lien Collateral,
including, in each case, without limitation, the Substitute Collateral, if any,
will be referred to as the "Collateral."
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Collateral Agent, which
representations and warranties shall survive execution and delivery of this
Security Agreement, as follows:
3.1 VALIDITY, PERFECTION AND PRIORITY.
(a) Upon the filing of UCC-1 financing statements in the jurisdictions
identified in Schedule 3.1(a), the filing of the Trademark Assignment with the
United States Patent and Trademark Office and the filing of the Copyright
Assignment with the United States Copyright Office, all of which have been
completed as of the date hereof, the security interests in the First Lien
Collateral granted to the Collateral Agent hereunder constitute and will
constitute valid and continuing first priority perfected security interests
therein, superior and prior to all Liens and rights or claims of all other
Persons, PROVIDED that the Permitted Lien Collateral may be subject to Permitted
Liens, except that First Lien Collateral shall not be subject to Eligible Credit
Facility Liens.
(b) Upon the filing of UCC-1 financing statements in the jurisdictions
identified in Schedule 3.1(b), which has been done as of the date hereof, the
security interests in the Second Lien Collateral granted to the Collateral Agent
hereunder constitute and will constitute valid and continuing second priority
perfected security interests therein, superior and prior to all Liens and rights
or claims of all other Persons, except Permitted Liens.
(c) Notwithstanding anything in the Indenture or the Collateral Agreements
to the contrary, so long as no Event of Default has occurred and is continuing,
the Company need not perfect the Lien on vehicles having a book value of up to
$100,000 unless requested to do so by the Collateral Agent.
3.2 NO LIENS; OTHER FINANCING STATEMENTS.
(a) Except for the Security Interests granted to the Collateral Agent
hereunder and, in the case of the Permitted Lien Collateral, Permitted Liens
(except that First Lien Collateral shall not be subject to Eligible Credit
Facility Liens), the Company owns and, as to all Collateral whether now existing
or hereafter acquired, subject to Section 4.7 hereof and the terms of the
Indenture, will continue to own, each item of the Collateral free and clear of
all Liens, rights and claims, and the Company shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the
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Collateral Agent on the Collateral (other than claims against any Permitted Lien
Collateral relating to any Permitted Lien).
(b) Without limiting the generality of the foregoing subparagraph (a), the
Company expressly represents, warrants and covenants that it owns all Equipment
and Goods constituting Collateral located at the Distribution Center, the
Manufacturing Facility and the Headquarters and each item of personal property
listed on Schedules 2.1 (a)(iii), (iv) and (v) and will, subject to Section 4.7
hereof and the terms of the Indenture, continue to own such property and all
other personal property hereafter acquired and located at the Distribution
Center, the Manufacturing Facility and the Headquarters, free and clear of all
Liens (other than Permitted Liens), rights or claims including, without
limitation, any Liens, rights or claims based upon an assertion that any item of
such property is a fixture or an appurtenance to the premises or otherwise has
become property of, or subject to, an interest of a landlord.
(c) No financing statement or other evidence of any Lien covering or
purporting to cover any of the Collateral is on file and is effective in any
public office other than (i) financing statements filed or to be filed in
connection with the Security Interests granted to the Collateral Agent
hereunder, (ii) in the case of the Second Lien Collateral, financing statements
filed or to be filed in connection with the Eligible Credit Facility, (iii) in
the case of Permitted Lien Collateral, financing statements relating to any
Permitted Lien (except that no financing statement regarding Eligible Credit
Facility Liens is on file and effective in any public office with respect to
First Lien Collateral), and (iv) financing statements for which proper, executed
termination statements have been delivered to the Collateral Agent for filing.
3.3 CHIEF EXECUTIVE OFFICE. The chief executive office of the Company is
located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000. The originals of
the Records are located at the chief executive office of the Company, at the
Manufacturing Facility and at the Distribution Facility. All Records are
maintained at, and controlled and directed (including, without limitation, for
general accounting purposes) from the chief executive office or other offices
identified on Schedule 3.3 as such.
3.4 LOCATION OF INVENTORY. All Inventory constituting Collateral is kept
only at (or shall be in transit to) the locations listed on Schedule 3.4 hereto.
None of such Inventory is in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor or otherwise in the
possession of a bailee or other Person.
3.5 TRADE NAMES; PRIOR NAMES. The only names under which the Company has
conducted business during the last five years are as set forth on Schedule 3.5
hereto.
3.6 ACCOUNTS RECEIVABLE AND CHATTEL PAPER.
(a) Each Account Receivable and Chattel Paper constituting Collateral
arises from the actual and BONA FIDE sale and delivery of goods by the Company
or rendition of services by the Company in the ordinary course of its business.
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(b) The representation and warranty contained in this Section shall be
deemed to be repeated by the Company as of the time when each respective Account
Receivable or Chattel Paper arises.
3.7 INTELLECTUAL PROPERTY.
(a) With respect to Schedules 1.1(a), (b) and (c), (i) such schedules set
forth all Trademarks of the Company as of the date hereof, (ii) the Trademarks
listed in such schedules are valid, in use and in full force and effect, (iii)
the Company owns and has good and marketable title to, free and clear of all
Liens, all such Trademarks listed in such schedules and (iv) the Company has
made or is currently in the process of making, which process shall be complete
within three months of the date hereof, all necessary filings and recordations
to protect and maintain its interest in such Trademarks listed in such
schedules, including, without limitation, all necessary filings and recordings
in the United States Patent and Trademark Office and throughout the world. With
respect to the Trademark Licenses, (i) such licenses are valid and in full force
and effect and (ii) the Company owns and has good and marketable title to such
licenses, free and clear of all Liens.
(b) With respect to Schedules 1.1(a), (b) and (c), (i) such schedules set
forth all Copyrights of the Company as of the date hereof, (ii) the Copyrights
listed in such schedules are valid, in use and in full force and effect, (iii)
the Company owns and has good and marketable title to, free and clear of all
Liens, all such Copyrights listed in such schedules and (iv) to the Company's
best knowledge, after due inquiry, the Company and its predecessors-in-interest
have made all necessary filings and recordations and have complied with all
formalities and notice requirements to protect and maintain its interest in such
Copyrights listed on such schedules including, without limitation, all necessary
filings and recordings in the United States Copyright Office and throughout the
world and all formalities and notice requirements set forth in the 1909 and 1976
Copyright Act. With respect to the Copyright Licenses, (i) such licenses are
valid and in full force and effect and (ii) the Company owns and has good and
marketable title to such licenses, free and clear of all Liens.
(c) As of the date hereof, each Trademark and Copyright is subsisting, has
not been abandoned, and is valid and enforceable throughout the world.
(d) As of the date hereof, except for the Trademark Licenses and Copyright
Licenses, the Company has not made a previous assignment, license, sale,
transfer, Lien or agreement constituting a present or future assignment, grant
of any rights or encumbrance of any of or on any of such Trademarks or
Copyrights throughout the world. Except as identified in Schedule 3.7(d), the
Company has not granted any release, covenant not to xxx, or non-assertion
assurance to any Person with respect to any of the Trademarks, Trademark
Licenses, Copyrights or Copyright Licenses.
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(e) No holding, decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity, registrability or
enforceability of any of the Trademarks or Copyrights throughout the world.
(f) To the Company's best knowledge, after due inquiry, no right or any
claim exists that is likely to be made under or against any of the Trademarks or
Copyrights throughout the world.
(g) To the Company's best knowledge, after due inquiry, no claim has been
made and is continuing or threatened that the use by the Company of any of the
Trademarks or Copyrights is invalid or unenforceable or that the use of such
Trademarks or Copyrights does or may violate the rights of any Person throughout
the world. To the Company's best knowledge, after due inquiry, there is
currently no infringement or unauthorized use of any of the Trademarks or
Copyrights throughout the world.
(h) No action or proceeding is pending (i) seeking to limit, cancel or
question the validity of any of the Trademarks or Copyrights throughout the
world or (ii) which, if adversely determined, would be reasonably likely to have
a material adverse effect on the value of any such Trademarks or Copyrights
throughout the world.
3.8 EQUIPMENT. All Equipment constituting Collateral is owned free and
clear of all Liens, except Permitted Liens (other than Eligible Credit Facility
Liens), is located only at the locations set forth on Schedule 3.8 hereto and is
in good working condition subject only to wear and tear in the ordinary course,
all of which is accounted for at the lower of cost or fair market value in
accordance with GAAP on the financial statements of the Company.
3.9 BASIC REPRESENTATIONS AND WARRANTIES. The Company (a) is duly organized
and validly existing in good standing under the laws of the jurisdiction of its
formation or other jurisdiction in which it is qualified to do business; (b) has
the power and authority to execute, deliver and carry out the terms and
provisions of this Security Agreement and consummate the transactions
contemplated hereby; (c) has taken all necessary action to authorize the
execution, delivery and performance of this Security Agreement and the
consummation of the transactions contemplated hereby; and (d) has duly executed
and delivered this Security Agreement. This Security Agreement constitutes the
Company's legal, valid and binding obligation, enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability. Except as set forth on Schedule 3.9 hereto, no consent of any
lender, security holder of the Company or other Person is required for the
Company to enter into and deliver this Security Agreement or to consummate the
transactions contemplated hereby (other than consents which have been duly
obtained) nor do the Certificate of Incorporation or By-Laws of the Company or
any contract, agreement, license, lease, commitment, mortgage or other
instrument to which the Company is bound or affecting any of its respective
properties or leasehold interests conflict with or restrict the execution and
delivery of this Security Agreement or the consummation of the transactions
contemplated hereby.
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ARTICLE IV
COVENANTS
The Company covenants and agrees with the Collateral Agent that from and
after the date of this Security Agreement:
4.1 FURTHER ASSURANCES. The Company will from time to time at its own
expense, promptly execute, deliver, file and record all further instruments,
endorsements and other documents, and take such further action consistent with
the terms of this Security Agreement, the Indenture and the other Collateral
Agreements, as may be required by law for the Collateral Agent to obtain, or as
the Collateral Agent may deem necessary in obtaining, the full benefits of this
Security Agreement and of the rights, remedies and powers herein granted,
including, without limitation, the following:
(a) the filing of any financing statements, in form reasonably
acceptable to the Collateral Agent, under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens and security interests
granted hereby (and the Company hereby authorizes the Collateral Agent to
file any such financing statement without its respective signature to the
extent permitted by applicable law);
(b) furnish to the Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail and in form reasonably
satisfactory to the Collateral Agent;
(c) execute and deliver the Trademark Assignment and cause it to be
duly filed with the United States Patent and Trademark Office;
(d) execute and deliver the Copyright Assignment and cause it to be
duly filed with the United States Copyright Office;
(e) execute and deliver any other trademark security agreement
relating to Trademarks and Trademark Licenses and cause it to be perfected
outside the United States; and
(f) execute and deliver any other copyright security agreement
relating to Copyrights and Copyright Licenses and cause it to be perfected
outside the United States.
Notwithstanding the foregoing, the Company acknowledges its own
obligation, independent of any request by the Collateral Agent, to
maintain (i) with respect to the First Lien Collateral, valid and
continuing first priority perfected security interests, superior to
all Liens and rights or claims of all other Persons, and (ii) with
respect to the Second Lien Collateral, valid and continuing second
priority perfected security interests,
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superior to all Liens and rights or claims of all other Persons;
PROVIDED that Permitted Lien Collateral may be subject to Permitted
Liens, except that First Lien Collateral shall not be subject to
Eligible Credit Facility Liens.
4.2 CHANGE OF NAME, IDENTITY, CORPORATE STRUCTURE, CHIEF EXECUTIVE OFFICES,
OR LOCATION OF INVENTORY AND EQUIPMENT. The Company will not change its name,
identity, corporate structure or the location of its chief executive offices (as
specified in Section 3.3 hereof) or location of its Inventory or (subject to
Section 4.12 hereof) Equipment constituting Collateral without (i) giving the
Collateral Agent at least thirty (30) days' prior written notice clearly
describing such new name, identity, corporate structure or new location and
providing such other information in connection therewith as the Collateral Agent
may reasonably request, and (ii) taking all action necessary and reasonably
satisfactory to the Collateral Agent, as may be required by law or as the
Collateral Agent may reasonably request, to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby at all
times fully perfected with the same or better priority than exists on the date
hereof and in full force and effect. All Accounts Receivable, Chattel Paper,
Documents and Records of the Company will continue to be maintained at, and
controlled and directed (including, without limitation, for general accounting
purposes) from, such chief executive office or a location identified as a
location at which Accounts Receivable, Chattel Paper, Documents or Records are
maintained, controlled and directed on Schedule 3.3, or such new locations as
the Company may establish in accordance with this Section 4.2.
4.3 MAINTAIN RECORDS. The Company will keep and maintain at its own cost
and expense satisfactory and complete records of the Collateral, including, but
not limited to, the originals of all documentation with respect to all Accounts
Receivable and records of all payments received and all credits granted on the
Accounts Receivable, and all other dealings therewith.
4.4 RIGHT OF INSPECTION. The Collateral Agent, any authorized
representative of the Collateral Agent and any authorized representative of any
Holder or Holders of 25% or more aggregate principal amount of the Notes shall
at all times have reasonable access during normal business hours and upon
reasonable notice to the Company to all the books, correspondence and records of
the Company relating to the Collateral, and the Collateral Agent and its
representative and any such representative of a Holder or Holders may examine
the same, take extracts therefrom and make photocopies thereof, and the Company
agrees to render the Collateral Agent and any such representative of a Holder or
Holders, at the cost and expense of the Company, such clerical and other
assistance as may be reasonably requested with regard thereto.
4.5 PAYMENT OF OBLIGATIONS. The Company will pay, prior to the date when
material penalties would attach thereto, all taxes, assessments and governmental
charges or levies imposed upon the Collateral, as well as all claims of any kind
(including, without limitation, claims for labor, materials, supplies and
services) against or with respect to the Collateral, except that no such tax,
assessment, charge, claim or levy need be paid if (i) the validity thereof is
being contested in good faith by appropriate proceedings properly instituted
-12-
and diligently conducted for which adequate reserves, to the extent required
under GAAP, have been taken and (ii) such proceedings do not involve, in the
reasonable opinion of the Collateral Agent, any material danger of the sale,
forfeiture or loss of any of the Collateral or any interest therein.
4.6 NEGATIVE PLEDGE. (a) The Company will not create, incur or permit to
exist, and will defend the Collateral against, and will take such other action
as is necessary to remove, any Lien or claim on or to the Collateral, other than
the Security Interests created hereby and, in the case of Permitted Lien
Collateral, Permitted Liens (except that the Company will not create, incur or
permit to exist, will defend against, and will take such other action as is
necessary to remove, in the case of First Lien Collateral, any Eligible Credit
Facility Liens).
(b) Without limiting the generality of the foregoing subparagraph (a), the
Company expressly covenants that it will not create, incur or permit to exist,
will defend against, and will take such other action as is necessary to remove,
any Lien (other than Permitted Liens) or claim on or to any Equipment or Goods
presently or hereafter located or used at the Distribution Center, the
Manufacturing Facility and the Headquarters and each item of personal property
listed on Schedules 2.1(a)(iii), (iv) and (v), including, without limitation,
any Lien or claim based upon an assertion that any item of such property is a
fixture or an appurtenance to the premises or otherwise has become property of,
or subject to an interest of, a landlord.
4.7 LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Company will not sell,
transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer
or contract to do so except (i) as permitted in Section 12.4 of the Indenture
and (ii) so long as no Event of Default occurs and is continuing, obsolete
Equipment and Equipment no longer useful to the business of the Company
constituting Collateral in an amount less than $50,000 per year in the
aggregate.
(a) The Company hereby grants to the Collateral Agent, for the benefit of
itself and the Holders, a security interest in and continuing first or second
priority Lien, as applicable, on all of its right, title and interest in, to and
under the Substitute Collateral, as defined in the Indenture, whether now owned
or existing or hereafter acquired or arising, and wherever located, and shall
deliver or cause to be delivered the items required under Section 12.2 of the
Indenture to evidence perfection of a first or second priority perfected Lien,
as applicable (in the case of Permitted Lien Collateral, subject to Permitted
Liens, except that First Lien Collateral shall not be subject to Eligible Credit
Facility Liens), in the Substitute Collateral by the Collateral Agent.
(b) The Company agrees that the Substitute Collateral and its grant of the
security interest therein as contemplated in Section 4.7(a) hereof shall be
subject to all of the terms of this Security Agreement.
4.8 PERFORMANCE BY THE COLLATERAL AGENT OF THE OBLIGATIONS OF THE COMPANY;
REIMBURSEMENT. If the Company fails to perform or comply with any of its
agreements contained herein the Collateral Agent may, without consent
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by the Company, perform or comply or cause performance or compliance therewith,
and the reasonable expenses of the Collateral Agent incurred in connection with
such performance or compliance, together with interest thereon at a rate per
annum borne by the Notes, shall be payable by the Company to the Collateral
Agent on demand and such reimbursement obligation shall be secured hereby.
4.9 NO IMPAIRMENT. Except as expressly permitted herein or in the Indenture
(including, without limitation, in the case of Permitted Lien Collateral, the
creation of Permitted Liens, except that First Lien Collateral shall not be
subject to Eligible Credit Facility Liens), the Company will not take or
knowingly permit to be taken (to the extent of its power) any action which could
impair the Collateral Agent's rights in the Collateral. The Company shall
promptly notify the Collateral Agent of any changes in fact or circumstance
represented or warranted by the Company or that could reasonably be expected to
have a material adverse effect with respect to any material portion of the
Collateral, of any material impairment of the Collateral and of any claim,
action or proceeding affecting title to all or any of the Collateral, except any
claims, actions or proceedings affecting title which in the aggregate during a
one year period involve Equipment constituting Collateral with book value of
less than $50,000.
4.10 INSURANCE. The Company will maintain, with financially sound and
reputable insurers reasonably acceptable to the Collateral Agent and licensed to
do business in each state in which any of the Collateral covered by any policy
is located, insurance against loss or damage to the extent that property of
similar character is usually so insured by corporations similarly situated and
owning like properties. With respect to the First Lien Collateral, and with
respect to the Second Lien Collateral, except as limited by the rights of a
Lender in the Second Lien Collateral, all policies of insurance shall (i) name
the Collateral Agent as additional insured (with respect to liability insurance
policies) or loss payee with a lender's loss payable endorsement, (ii) include
waivers by the insurer of all claims for insurance premiums against the
Collateral Agent, (iii) provide that any losses shall be payable to the
Collateral Agent notwithstanding (A) any act, failure to act or negligence of or
violation of warranties, declarations or conditions contained in such policy by
the Company, (B) any foreclosure or other proceedings or notice of sale relating
to any Collateral insured thereunder, or (C) any change in the title to or
ownership of any Collateral insured thereunder, and (iv) provide that no
cancellation, termination or lapse in coverage thereof shall be effective until
at least 30 days after receipt by the Collateral Agent of written notice
thereof, except that the insurer may cancel such policies upon ten days written
notice to the Collateral Agent if cancellation is for nonpayment of premium.
4.11 INTELLECTUAL PROPERTY. (a) The Company will (i) continue to use or
will make a good faith effort to commence use of each of the Trademarks on each
and every trademark class of goods applicable to its current line as reflected
in its current catalogs, brochures and price lists or as set forth in any
intention to use application in order to maintain such Trademarks in full force
throughout the world free from any claim of abandonment for non-use, (ii)
maintain the quality of products offered under such Trademarks, (iii) employ
such Trademarks with any appropriate notice of registration, (iv) not adopt or
use any xxxx throughout the world which is confusingly similar or a colorable
imitation of such Trademarks, unless the
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Collateral Agent shall obtain a perfected security interest in such xxxx
pursuant to this Security Agreement, and (v) not do any act or knowingly omit to
do any act whereby any such Trademarks would be reasonably likely to become
invalid or unenforceable.
(b) The Company (i) will not do any act, or omit to do any act, whereby any
registered Copyrights or Trademarks may become invalid, unenforceable, abandoned
or dedicated, (ii) will not print, reproduce, publish or distribute any work
which is substantially similar to such Copyrights unless the Collateral Agent
shall obtain a perfected security interest in such work pursuant to this
Security Agreement, and (iii) will take any and all steps necessary to maintain
such Copyrights and registrations therefor throughout the world.
(c) The Company will notify the Collateral Agent promptly if it knows or
could reasonably be expected to know, that any application or registration
relating to any Trademarks or Copyrights may become abandoned or dedicated, and
of any adverse determination or material adverse development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal throughout the world) regarding the
Company's ownership of any such Trademarks or Copyrights or its right to
register the same or to keep and maintain the same.
(d) The Company agrees that, in the event that it shall at any time and
from time to time obtain an ownership interest in any trademark or copyright
related to Christmas Classics, Lone Ranger or Underdog, or become a party to any
copyright or trademark agreement or contract related to Christmas Classics, Lone
Ranger or Underdog, the provisions of Section 2.1 hereof shall automatically
apply thereto and any such trademark, copyright, agreement or contract shall
automatically become part of the Collateral.
(e) Whenever the Company, either by itself or through any agent, employee
or designee, shall file an application for the registration of any Trademark
with the United States Patent and Trademark Office or in any country throughout
the world, or for the registration of any Copyright with the United States
Copyright Office, or shall acquire any such trademark or copyright, the Company
shall report such filing or acquisition to the Collateral Agent within twenty
Business Days after the last day of the fiscal quarter in which such filing or
acquisition occurs and shall promptly execute and deliver any and all
agreements, instruments, documents, and papers as may be necessary (or as the
Collateral Agent otherwise may request) to evidence the Collateral Agent's
security interest in any such trademark or copyright, and the goodwill and
general intangibles of the Company relating thereto or represented thereby.
(f) The Company will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office or the United States Copyright Office, or any court or tribunal
throughout the world, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of the Trademarks and
Copyrights throughout the world and participate in opposition, cancellation,
infringement and misappropriation proceedings throughout the world.
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(g) In the event that any of the Trademarks or Copyrights is infringed or
misappropriated by a third party, the Company shall promptly notify the
Collateral Agent of such infringement or misappropriation and shall promptly xxx
for infringement or misappropriation, to seek injunctive relief where
appropriate and seek to recover any and all damages for such infringement or
misappropriation, or take such other actions as the Company or Collateral Agent
shall reasonably deem appropriate under the circumstances to protect such
Trademarks or Copyrights.
4.12 EQUIPMENT. The Company shall maintain the Equipment constituting
Collateral in good and working condition, subject to ordinary wear and tear and
consistent with current business practice, free of all Liens, except Permitted
Liens (other than Eligible Credit Facility Liens), and shall not remove or
relocate any Equipment constituting Collateral except as provided herein, except
that any vehicles or rolling stock intended to be mobile may be so used to the
extent that all necessary and appropriate actions have been taken and filings
made to perfect a first priority security interest therein in favor of the
Collateral Agent for its benefit and the ratable benefit of the Holders.
4.13 ASSEMBLY OF TENANT'S PROPERTY. With respect to items of personal
property and fixtures owned by the Company which are "Tenant's Property" under
Section 4.01 of the Headquarters Lease, if an Event of Default occurs and is
continuing, the Company covenants to remove such items of personal property and
fixtures owned by the Company from the Headquarters and to deliver the same to
the Collateral Agent upon the request of the Collateral Agent in accordance with
the terms of Section 6.2 hereof.
ARTICLE V
POWER OF ATTORNEY
The Company hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Company and in the name of the Company, from time to
time in the Collateral Agent's discretion, for the purpose of carrying out the
terms of this Security Agreement, to take any and all appropriate action, and to
execute in any appropriate manner any and all documents and instruments which
may be necessary to accomplish the purposes of this Security Agreement. This
power of attorney is a power coupled with an interest and shall be irrevocable
until termination of this Security Agreement pursuant to Section 7.7 hereof.
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ARTICLE VI
REMEDIES; RIGHTS UPON DEFAULT
6.1 RIGHTS AND REMEDIES GENERALLY. If an Event of Default occurs and is
continuing, then and in every such case, the Collateral Agent shall have all the
rights of a secured party under the UCC, shall have all rights now or hereafter
existing under all other applicable laws, and, subject to any mandatory
requirements of applicable law then in effect, shall have all the rights set
forth in this Security Agreement and all the rights set forth with respect to
the Collateral or this Security Agreement in any other agreement between the
parties.
6.2 ASSEMBLY OF COLLATERAL. If an Event of Default occurs and is
continuing, upon written notice to the Company, the Company shall forthwith, at
its own expense, and to the extent commercially practicable, assemble the
Collateral (or from time to time any portion thereof) and make it available to
the Collateral Agent at any place or places designated by the Collateral Agent
which is reasonably convenient to both parties.
6.3 DISPOSITION OF COLLATERAL. If an Event of Default occurs and is
continuing, the Collateral Agent will determine the circumstances and manner in
which the Collateral will be disposed of, including, but not limited to, the
determination of whether to foreclose on the Collateral if an Event of Default
occurs and is continuing. The Collateral Agent will give the Company reasonable
written notice of the time and place of any public sale of the Collateral or any
part thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. The Company agrees that the requirements of
reasonable notice to it shall be met if such notice is delivered to its address
specified in and in accordance with Section 7.3 hereof (or such other address
that the Company may provide to the Collateral Agent in writing) at least ten
days before the time of any public sale or after which any private sale may be
made.
6.4 PROCEEDS. If an Event of Default occurs and is continuing, (i) all
proceeds and distributions on the Collateral received by the Company shall be
held in trust for the Collateral Agent, segregated from other funds of the
Company in a separate deposit account containing only such proceeds and
distributions, and shall forthwith upon receipt thereof, be turned over to the
Collateral Agent in the same form received (appropriately endorsed or assigned
to the order of the Collateral Agent or in such other manner as shall be
satisfactory to the Collateral Agent) and (ii) any and all such proceeds and
distributions received by the Collateral Agent (whether from the Company or
otherwise), or any part thereof, may, in the sole discretion of the Collateral
Agent, be held by the Collateral Agent in a separate account as Collateral
hereunder and/or then or at any time or from time to time thereafter, be applied
by the Collateral Agent against the Obligations (whether matured or unmatured)
and related expenses, including attorney's fees as provided in Section 6.6
hereof.
6.5 RECOURSE. The Company shall pay or remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to satisfy the Obligations. The Company shall also be liable for all reasonable
expenses of the Collateral
-17-
Agent incurred in connection with collecting such deficiency, including, without
limitation, the reasonable fees and disbursements of any attorneys employed by
the Collateral Agent to collect such deficiency.
6.6 EXPENSES; ATTORNEYS FEES. The Company shall pay or reimburse the
Collateral Agent for all its reasonable expenses in connection with the exercise
of its rights hereunder, including, without limitation, (i) all reasonable
attorneys' fees and reasonable legal expenses incurred by the Collateral Agent
and (ii) all filing fees and related expenses contemplated by Section 4.1
hereof. Expenses of retaking, holding, preparing for sale, selling or the like
shall include the reasonable attorneys' fees and reasonable legal expenses of
the Collateral Agent. All such expenses shall be secured hereby.
6.7 LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
(a) The Collateral Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Collateral Agent deals with similar property for its own account;
(b) The Collateral Agent shall have no obligation to take any steps to
preserve rights against prior parties to any Collateral; and
(c) Neither the Collateral Agent nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligations to sell or otherwise dispose of any Collateral upon the
request of the Company or otherwise, except with respect to actions taken or
omitted with negligence, willful misconduct or in bad faith.
6.8 GRANT OF LICENSE TO USE COPYRIGHT AND TRADEMARK COLLATERAL.
(a) For the purposes of enabling the Collateral Agent to exercise its
rights and remedies under Article VI hereof at such time as the Collateral
Agent, without regard to this Section 6.8(a), shall be lawfully entitled to
exercise such rights and remedies, the Company hereby grants, effective upon the
occurrence and during the continuance of an Event of Default, to the Collateral
Agent an irrevocable (until cure, waiver or other satisfaction of such Event of
Default), non-exclusive license (exercisable without payment of royalty or other
compensation to the Company) to use, license or sublicense any Copyright, now
owned or hereafter acquired by the Company, throughout the world, PROVIDED that
such license will automatically terminate upon the termination of this Security
Agreement pursuant to Section 7.7 hereof.
(b) For the purposes of enabling the Collateral Agent to exercise its
rights and remedies under Article VI hereof at such time as the Collateral
Agent, without regard to this Section 6.8(b), shall be lawfully entitled to
exercise such rights and remedies, the Company hereby grants, effective upon the
occurrence and during the continuance of an Event of Default,
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to the Collateral Agent an irrevocable (until cure, waiver or other satisfaction
of such Event of Default), non-exclusive license (exercisable without payment of
royalty or other compensation to the Company) to use, license or sublicense any
Trademark, now owned or hereafter acquired by the Company, throughout the world,
PROVIDED that such license will automatically terminate upon the termination of
this Security Agreement pursuant to Section 7.7 hereof.
6.9 LIMITATIONS WITH RESPECT TO RESTRICTED COLLATERAL. Notwithstanding
anything to the contrary contained herein, the Collateral Agent shall not
dispose of any Restricted Collateral except (i) on terms regarding sale and
distribution acceptable to Disney and (ii) where, out of the proceeds therefor,
the Collateral Agent shall deduct therefrom and pay to Disney an amount equal to
the royalty due to Disney out of the proceeds of such sale, in each case as
determined by Disney pursuant to and in accordance with the License Agreement.
The Collateral Agent may, prior to taking any other action with respect to any
Collateral, require the advice of Disney or the Company as to what Collateral
constitutes Restricted Collateral.
ARTICLE VII
MISCELLANEOUS
7.1 INDEMNITY. The Company agrees to indemnify, reimburse and hold the
Collateral Agent and its officers, directors, employees, representatives and
agents ("Indemnitees") harmless from any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, costs or expenses
or disbursements (including reasonable attorneys' fees and expenses) of
whatsoever kind or nature ("Losses") which may be imposed on, asserted against
or incurred by any of the Indemnitees in any way relating to or arising out of
this Security Agreement or the transactions contemplated hereby, except to the
extent that such Losses are caused by the negligence or bad faith of such
Indemnitees as determined by a final judgment of a court of competent
jurisdiction. The obligations of the Company under this Section shall be secured
hereby and shall survive payment and performance or discharge of the Obligations
and the termination of this Security Agreement.
7.2 GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS).
7.3 NOTICES. Except as otherwise expressly provided herein, all notices,
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by telecopy, telex, or cable communication), and
shall be deemed to have been duly given or made when delivered by hand, or five
days after being deposited in the United States mail, postage prepaid, or, in
the case of telex notice, when sent, answer-back received, or in the case of
telecopy notice, when sent, or in the case of a nationally recognized overnight
courier service, one business day after delivery to such courier service,
addressed, in the case of each party hereto to the following address, or to such
other address as may be designated by any party in a written notice to the other
party hereto:
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IF TO THE COMPANY:
Golden Books Publishing Company, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO THE COLLATERAL AGENT:
Marine Midland Bank
Corporate Trust Services
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Corporate Trust Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
7.4 SUCCESSORS AND ASSIGNS. This Security Agreement shall be binding upon
and inure to the benefit of the Company, the Collateral Agent, all future
holders of the Obligations and their respective successors and assigns, except
that the Company may not assign or transfer any of its rights or obligations
under this Security Agreement without the prior written consent of the
Collateral Agent or as otherwise permitted by the Indenture.
-20-
7.5 WAIVERS AND AMENDMENTS. None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except in accordance with the terms of Article Nine of the Indenture and, in the
case of amendments, supplements and other modifications affecting the rights of
Lenders under Paragraph 2.1(b), including, without limitation, definitions
relating thereto that affect such rights, with the written consent of Lenders,
as Lenders are third party beneficiaries under such paragraph. In the case of
any waiver, the Company and the Collateral Agent shall be restored to their
former position and rights hereunder and under the outstanding Obligations, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing, but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
7.6 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of the
Collateral Agent in exercising any right, power or privilege hereunder and no
course of dealing between the Company and the Collateral Agent shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy which the Collateral Agent would otherwise
have on any future occasion. The rights and remedies herein expressly provided
are cumulative and may be exercised singly or concurrently and as often and in
such order as the Collateral Agent deems expedient and are in addition to any
other rights and remedies that the Collateral Agent would otherwise have whether
by security agreement or now or hereafter existing under applicable law. No
notice to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Collateral Agent to any other or future
action in any circumstances without notice or demand.
7.7 TERMINATION; RELEASE. When the Obligations have been completely paid
and performed in full in accordance with Section 10.1 of the Indenture, this
Security Agreement shall terminate, and the Collateral Agent, at the request and
sole expense of the Company, and subject to and in accordance with the
applicable terms of the Indenture, will execute and deliver to the Company the
proper instruments (including, without limitation, UCC termination statements)
acknowledging the termination of this Security Agreement, and will duly assign,
transfer and deliver to the Company, without recourse, representation or
warranty of any kind whatsoever, such of the Collateral as may be in possession
of the Collateral Agent and that has not theretofore been disposed of, applied
or released, all in accordance with the terms and conditions of the Indenture
and the Collateral Agreements. In addition, so long as no Default or Event of
Default is continuing (with respect to a Released Interest other than in
connection with the immediately preceding sentence), the Collateral Agent, at
the request and sole expense of the Company, will execute and deliver to the
Company the proper instruments to effect the release of the Released Interests
in compliance with Section 12.4 of the Indenture.
7.8 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Security Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Security Agreement.
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7.9 SEVERABILITY. In case any provision in or obligation under this
Security Agreement or the Obligations 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.
7.10 COUNTERPARTS. This Security Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.
7.11 TRUSTEE CAPACITY. In acting as Collateral Agent hereunder, the
Collateral Agent shall benefit from and be entitled to all of the protections
and benefits of the terms set forth in Articles Six and Twelve of the Indenture.
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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed and delivered as of the date first above written.
GOLDEN BOOKS PUBLISHING COMPANY INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Financial Officer
MARINE MIDLAND BANK, as Collateral Agent
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
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SCHEDULE 1.1(a)
CHRISTMAS CLASSICS
The "Christmas Classics" shall mean:
1. All of the Company's proprietary rights in the properties listed in the
table below, in whole or in part, all copyrights therein, in whole or in
part, whether registered or unregistered, and whether or not the underlying
works of authorship have been published, and all works of authorship and
other rights therein or derived therefrom, and all Records relating
thereto; and all right, title and interest to make and exploit all
derivative works based upon or adopted from works, now owned or hereafter
acquired, covered by such copyrights, copyright registrations, copyright
applications and proprietary rights, and any renewals or extensions
thereof, including, without limitation, (a) the right to print, reproduce,
publish and distribute any of the foregoing, (b) the right to xxx or
otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (c) all income, royalties, damages and other
payments now or hereafter due and/or payable with respect thereto
(including, without limitation, payments under all agreements and contracts
entered into in connection therewith, and damages and payments for past or
future infringements thereof), and (d) all rights of the Company
corresponding thereto throughout the world and all other rights of any kind
whatsoever of the Company accruing thereunder or pertaining thereto,
including, but not limited to, the following:
PROPERTY REGISTRATION NO. RENEWAL NO.
Xxxxxx the Red Nosed Reindeer PA 393-260; registered 12/6/83 RE 578-253; renewed in 1992
Frosty the Snowman PA 393-253; registered 12/3/69 RE 752-663; renewed 1/10/97
Santa Claus Is Coming to Town PA 395-212; registered 12/13/70 not yet renewed
The Little Drummer Boy PA 392-705; registered RE 735-831; renewed 4/22/96
6/l/68
Frosty Returns the exclusive and perpetual right to distribute and subdistribute
throughout the world a one-half hour animated program presently entitled
FROSTY RETURNS, subject to all of the terms and conditions of an
agreement dated as of November 28, 1989, as amended, between T.E.
Acquisition Company, Inc. and CBS; Memorandum of Transfer as recorded in
the Copyright Office on March 15, 1993 in Volume 2879 at pages 000 -000.
(hereinafter collectively referred to as "the Scheduled Copyrights 1.(a)").
2. All agreements and contracts now owned or hereafter acquired, throughout
the world, with any other Person, in connection with or referring to, in
whole or in part, any of the rights set forth in paragraph 1 of this
schedule.
3. All trademarks, service marks, trade names, trade dress or other indicia of
trade origin relating to or used in connection with the Scheduled
Copyrights 1.1(a) set forth in paragraph 1 of this schedule, in whole or in
pail, including any trademark and service xxxx registrations, and
applications for trademark or service xxxx registrations and any renewals
thereof, and all Records relating thereto, throughout the world, now owned
or hereafter acquired, including, without limitation, (a) the right to xxx
or otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (b) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all agreements and contracts
entered into in connection therewith, and damages and payments for past or
future infringements thereof), and (c) the right to use and register and
all rights corresponding thereto and all other rights of any kind
whatsoever of the Company accruing thereunder or pertaining thereto,
together, in each case, with the goodwill of the business connected with
the use of, and symbolized by, each such trademark, service xxxx, trade
name, trade dress or other indicia of trade origin (hereinafter
collectively referred to as "the Scheduled Trademarks 1. 1 (a)"). The term
"the Scheduled Trademarks 1.1(a)" as used herein shall not include any
trademarks, service marks, trade names, trade dress or other indicia of
origin that are used solely to identify the Company, including, but not
limited to, GOLDEN BOOKS, the G Design and the distinctive gold spine.
4. All agreements and contracts now owned or hereafter acquired, throughout
the world, with any other Person in connection with or referring to, in
whole or in part, any of the rights set forth in paragraph 3 of this
schedule.
SCHEDULE 1.1(b)
LONE RANGER
The "Lone Ranger" shall mean:
1. All of the Company's proprietary rights in the properties listed in the
attached Schedule of Copyrights, in whole or in part, all copyrights
therein, in whole or in part, whether registered or unregistered, and
whether or not the underlying works of authorship have been published, and
all works of authorship and other rights therein or derived therefrom, and
all Records relating thereto; and all right, title and interest to make and
exploit all derivative works based upon or adopted from works, now owned or
hereafter acquired, covered by such copyrights, copyright registrations,
copyright applications and proprietary rights, and any renewals or
extensions thereof, including, without limitation, (a) the right to print,
reproduce, publish and distribute any of the foregoing, (b) the right to
xxx or otherwise recover for any and all past, present and future
infringements and misappropriations thereof, (c) all income, royalties,
damages and other payments now or hereafter due and/or payable with respect
thereto (including, without limitation, payments under all agreements and
contracts entered into in connection therewith, and damages and payments
for past or future infringements thereof), and (d) all rights of the
Company corresponding thereto throughout the world and all other rights of
any kind whatsoever of the Company accruing thereunder or pertaining
thereto, including, but not limited to, the copyrights set forth in the
Schedule of Copyrights annexed hereto (hereinafter collectively referred to
as "the Scheduled Copyrights 1. 1 (b)").
2. All agreements and contracts now owned or hereafter acquired, throughout
the world, with any other Person, in connection with or referring to, in
whole or in part, any of the rights set forth in paragraph 1 of this
schedule.
3. All trademarks, service marks, trade names, trade dress or other indicia of
trade origin relating to or used in connection with the Scheduled
Copyrights 1.1(b) set forth in paragraph 1 of this schedule, in whole or in
part, including any trademark and service xxxx registrations, and
applications for trademark or service xxxx registrations and any renewals
thereof, and all Records relating thereto, throughout the world, now owned
or hereafter acquired, including, without limitation, (a) the right to xxx
or otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (b) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all agreements and contracts
entered into in connection therewith, and damages and payments for past or
future infringements thereof), and (c) the right to use and
register and all rights corresponding thereto and all other rights of any
kind whatsoever of the Company accruing thereunder or pertaining thereto,
together, in each case, with the goodwill of the business connected with
the use of, and symbolized by, each such trademark, service xxxx, trade
name, trade dress or other indicia of trade origin, including, but not
limited to, those set forth in the Schedule of Trademarks annexed hereto
(hereinafter collectively referred to as "the Scheduled Trademarks
1.1(b)"). The term "the Scheduled Trademarks 1.1(b)" as used herein shall
not include any trademarks, service marks, trade names, trade dress or
other indicia of origin that are used solely to identify the Company,
including, but not limited to, GOLDEN BOOKS, the G Design and the
distinctive gold spine.
4. All agreements and contracts now owned or hereafter acquired, throughout
the world, with any other Person, in connection with or referring to, in
whole or in part, any of the rights set forth in paragraph 3 of this
schedule.
LONE RANGER Trademarks
Country Xxxx Reg. No./(Appl. No.) Reg. Date/(Filing Date) Class
USA LONE RANGER 850,146 6/4/68 28
LONE RANGER 2,116,491 11/25/97 25
THE LONE RANGER 1,314,682 1/15/85 21
THE LONE RANGER 770,539 5/26/64 41
THE LONE RANGER 365,670 3/14/39 16
LONE RANGER (74/370,704) (3/22/93) 9
LONE RANGER (74/366,207) (3/9/93) 16
LONE RANGER (74/390,778) (5/17/93) 28
LONE RANGER (75/131,669) (7/9/96) 3
SILVER 1,802,750 11/2/93 21
Lone Ranger Theme Music (74/639,801) (2/22/95) 41
Lone Ranger Theme Music (74/639,802) (2/22/95) 9
Australia LONE RANGER A337415 1/14/58 16
LONE RANGER A337416 9/4/79 28
LONE RANGER & Al35276 1/14/58 16
Design
LONE RANGER & Al35277 1/14/79 29
Design
LONE RANGER & A267698 1/14/58 30
Design
LONE RANGER & A267699 1/14/58 31
Design
LONE RANGER & A267700 1/14/58 32
Design
Austria LONE RANGER 135808 5/15/91 9,16,25,28,30
Benelux LONE RANGER 302514 2/2/71 9,16,25,28
Canada LONE RANGER 164396 8/l/69
LONE RANGER 262736 10/2/81
LONE RANGER 320299 11/7/86
THE LONE RANGER 306644 9/6/85
HI-YO-SILVER 320949 11/21/86
TONTO 320950 11/21/86
Denmark LONE RANGER 271/1983 1/28/83 9,16,25,28
Finland LONE RANGER 81353 4/20/82 9,16
France THE LONE RANGER 1511443 1/27/89 9,16,25,28,41
UK LONE RANGER 1120271 9/7/86 14
LONE RANGER 769768 10/3/78 16
LONE RANGER 769769 10/3/78 30
LONE RANGER 683037 10/10/49 28
LONE RANGER 1147875 1/30/81 14
LONE RANGER 2043434 11/3/95 9
LONE RANGER (2017896) (4/19/95) 25
HI-YO SILVER 1304179 8/28/90 9
TONTO 1318390 8/10/87 9
Germany LONE RANGER 871678 1/23/88 9,16
Greece LONE RANGER 53414 9/8/81 28
Hong Kong LONE RANGER 943/1980 9/7/79 28
LONE RANGER 944/1980 9/7/79 30
THE LONE RANGER 946/1980 9/7/79 16
THE LONE RANGER 945/1980 9/7/79 9
TONTO 2575/1988 3/27/87 9
Page 1
India LONE RANGER 353470 9/13/79 28
THE LONE RANGER 353471 9/13/79 9
THE LONE RANGER 353472 9/13/79 16
Ireland LONE RANGER 96793 9/6/79 28
THE LONE RANGER 96792 9/6/79 16
THE LONE RANGER 96791 9/6/79 9
Israel LONE RANGER 48595 9/10/79 14
LONE RANGER 48598 9/10/79 28
LONE RANGER 48597 9/10/79 25
THE LONE RANGER 48596 9/10/79 16
THE LONE RANGER 48594 9/10/79 9
Italy LONE RANGER 268078 2/28/73 9,16,25,28
LONE RANGER 378918 11/15/85 14,30
Jamaica LONE RANGER 21137 9/26/79 28
THE LONE RANGER 21307 9/26/79 9
THE LONE RANGER 20008 9/26/79 00
Xxxxx LONE RANGER 2284319 11/30/90 9
LONE RANGER 2243395 7/30/90 28
LONE RANGER (4141/94) (1/18/94) 16
HI-YO-SILVER 2243613 7/30/90 9
TONTO 2243612 7/30/90 16
HI-YO-SILVER 157739 8/2/88 9
TONTO 157719 8/1/88 9
Macao THE LONE RANGER 5469 9/2/96 9
New Zealand LONE RANGER 129398 9/3/79 30
LONE RANGER 129394 9/3/79 14
LONE RANGER 129397 9/3/79 28
LONE RANGER 129396 9/3/79 25
THE LONE RANGER 129393 9/3/79 9
THE LONE RANGER 129395 9/3/79 16
Norway LONE RANGER 112827 1/13/83 9,16,25,28
Peru THE LONE RANGER 99073 8/26/92 9
Portugal LONE RANGER 279636J 10/20/93 28
THE LONE RANGER 203713G 12/12/94 9
THE LONE RANGER 279635 10/20/93 16
Singapore LONE RANGER 81975 9/5/79 28
THE LONE RANGER 81973 9/5/79 9
THE LONE RANGER 81974 9/5/79 16
Spain EL LLANERO SOLITARIO 989487 11/20/82 28
LONE RANGER 917501 7/5/80 25
THE LONE RANGER 917414 7/5/80 16
Sweden LONE RANGER 177610 7/31/81 9,16,25,28
LONE RANGER 159683 6/3/77 28
Switzerland LONE RANGER 306628 9/5/79 9,16,28
Venezuela LONE RANGER 101990-f 4/15/83 28
LONE RANGER 102211 5/27/83 16
LONE RANGER 102794 9/1/83 25
CTM THE LONE RANGER (171850) (4/1/96) 9,16,25,28
Page 2
SCHEDULE 1.1(c)
UNDERDOG
"Underdog" shall mean:
1. All of the Company's proprietary rights in the animated series "Underdog"
and the property registered in the United States Copyright Office on
4/29/83 by Registration No. PA 301-494, and renewed on 10/16/89 by Renewal
No. RE 442-154, in whole or in part, all copyrights therein, in whole or in
part, whether registered or unregistered, and whether or not the underlying
works of authorship have been published, and all works of authorship and
other rights therein or derived therefrom, and all Records relating
thereto; and all right, title and interest to make and exploit all
derivative works based upon or adopted from works, now owned or hereafter
acquired, covered by such copyrights, copyright registrations, copyright
applications and proprietary rights, and any renewals or extensions
thereof, including, without limitation, (a) the right to print, reproduce,
publish and distribute any of the foregoing, (b) the right to xxx or
otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (c) all income, royalties, damages and other
payments now or hereafter due and/or payable with respect thereto
(including, without limitation, payments under all agreements and contracts
entered into in connection therewith, and damages and payments for past or
future infringements thereof), and (d) all rights of the Company
corresponding thereto throughout the world and all other rights of any kind
whatsoever of the Company accruing thereunder or pertaining thereto,
including, but not limited to, "Underdog", registered in the United States
Copyright Office on 4/29/83 by Registration No. PA 301-494, and renewed on
10/16/89 by Renewal No. RE 442-154 (hereinafter collectively referred to as
"the Scheduled Copyrights 1.1(c)").
2. All agreements and contracts now owned or hereafter acquired, throughout
the world, with any other Person, in connection with or referring to, in
whole or in part, any of the rights set forth in paragraph 1 of this
schedule.
3. All trademarks, service marks, trade names, trade dress or other indicia of
trade origin relating to or used in connection with the Scheduled
Copyrights 1.1(c) set forth in paragraph 1 of this schedule, in whole or in
part, including any trademark and service xxxx registrations, and
applications for trademark or service xxxx registrations and any renewals
thereof, and all Records relating thereto, throughout the world, now owned
or hereafter acquired, including, without limitation, (a) the right to xxx
or otherwise recover for any and all past, present and future infringements
and misappropriations thereof, (b) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments
under all agreements and contracts entered into in connection therewith,
and damages and payments for past or future infringements thereof), and (c)
the right to use and register and all rights corresponding thereto and all
other rights of any kind whatsoever of the Company accruing thereunder or
pertaining thereto, together, in each case, with the goodwill of the
business connected with the use of, and symbolized by, each such trademark,
service xxxx, trade name, trade dress or other indicia of trade origin,
including, but not limited to, the following:
TRADEMARK REGISTRATION / APPLICATION NO.
DESIGN (Underdog) Application No. 75/167,392
DESIGN (Underdog) Application No. 75/167,388
DESIGN (Underdog) Application No. 75/167,387
DESIGN (Underdog) Application No. 75/167,386
UNDERDOG Registration No. 2,145,933
UNDERDOG Application No. 75/167,390
UNDERDOG Application No. 75/167,385
UNDERDOG Application No. 75/167,383
(hereinafter collectively referred to as "the Scheduled Trademarks
1.1(c)"). The term "the Scheduled Trademarks 1.1(c)" as used herein
shall not include any trademarks, service marks, trade names, trade
dress or other indicia of origin that are used solely to identify the
Company, including, but not limited to, GOLDEN BOOKS, the G Design and
the distinctive gold spine.
4. All agreements and contracts now owned or hereafter acquired,
throughout the world, with any other Person, in connection with or
referring to, in whole or in part, any of the rights set forth in
paragraph 3 of this schedule.
Schedule 2.1(a)(i)
EXCLUDED COPYRIGHT LICENSES AND TRADEMARK LICENSES
1. Agreement dated December 26, 1995 between Golden Books Entertainment Group
and Fox Family Films concerning the development and possible production of
a theatrical motion picture project entitled "The Lone Ranger" to the
extent that said agreement is not assignable by the Company (except that
all proceeds payable to the Company under the Agreement are not excluded).
Exhibit D
Mortgagee Waiver
June 2, 1998
Marine Midland Bank, as Trustee
Corporate Trust Services
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Corporate Trust Department
Re: Golden Books Publishing Company, Inc. (the "Company")
Gentlemen:
NATIONSCREDIT COMMERCIAL CORPORATION, THROUGH ITS NATIONSCREDIT COMMERCIAL
FUNDING DIVISION ("Lender"), wishes to inform you that Lender and the Company
have entered, or may enter, into various agreements, instruments and documents,
including a Loan and Security Agreement of even date herewith and related loan
documents (collectively, the "Financing Agreements") providing for loans and
advances by Lender to or for the benefit of the Company, to be secured by
security interests in certain of the Company's assets, as described on Exhibit A
hereto and hereafter acquired property of the same nature (the "Collateral").
The Company has indicated that certain of the Collateral may, from time to time,
be located on the premises commonly known as 000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxxxxxxx, Xxxxxxx (the "Premisies"). Lender has been informed that you are
the Trustee under the Indenture dated as of September 15, 1992 among the
Company, certain guarantors and you, as Trustee, governing the Company's 7.65%
Senior Notes due 2002 (the "Notes"), and that the Notes are secured by a
mortgage on the Premises (the "Mortgage"), which mortgage also grants to you a
first priority lien upon all personal property located on the Premises other
than the Collateral (the "Mortgage Collateral"), which lien Lender acknowledges
to be superior in interest with respect to any interest Lender may have in the
Mortgage Collateral. Lender further acknowledges that in the event of a default
by the Company under any of the Financing Agreements, Lender shall have no
rights with respect to the Mortgage Collateral or, if Lender shall have any
rights with respect to the Mortgage Collateral, such rights shall be subordinate
to any rights you may have with respect thereto in accordance with the Mortgage.
As one of the conditions to making loans and advances to the Company,
Lender requests that, if and to the extent that you shall be in possession of or
otherwise in control of the Premises, you agree as follows:
1. Upon reasonable notice to you, Lender may have access to the Premises
for the purpose of reviewing all portions of any books and records located at
the Premises relating to the Company, and exercising its rights under the
Financing Agreements with respect to all Collateral contained thereon without
any objection, delay, hindrance or interference by you; provided that Lender, is
exercising its rights hereunder, shall minimize interference with the operation
of the Premises.
2. In the event of default by the Company under the Financing Agreements,
Lender, upon three (3) business days written notice to you, which notice may be
delivered to you at the address first set forth above by overnight courier, may
remove the Collateral from the Premises without any objection, delay, hindrance
or interference by you; provided that Lender, in exercising its rights
hereunder, shall minimize interference with the operation of the Premises. In
the event of such default and after having given such notice, Lender shall have
the right, during normal business hours, to enter upon the Premises to assemble,
appraise, display, remove, maintain, prepare for sale or lease, repair, lease,
transfer and sell the Collateral.
3. Lender shall repair any damage to the Premises caused by the removal of
any property by Lender, and such removal shall be at Lender's expense.
Please acknowledge your agreement to the terms of this letter by executing
this letter in the space provided below and returning a copy to NationsCredit
Commercial Corporation, through its NationsCredit Commercial Funding Division,
1177 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxx Xxxxx. This letter shall be binding upon, and inure to the benefit of, the
successors and assigns of each party hereto.
Very truly yours,
NATIONSCREDIT COMMERCIAL CORPORATION,
THROUGH ITS NATIONSCREDIT COMMERCIAL FUNDING DIVISION
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Its Vice President
--------------------------------------------
-2-
Accepted and Agreed to this 2nd of
June, 1998
MARINE MIDLAND BANK, as Trustee
By /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Its Vice President
------------------------------------
-0-
XXXXXXXXXXXXXX
XXXXX XX XXX XXXX )
)SS.
COUNTY OF NEW YORK )
I, Xxxxxxx X. Xxxxxx, a Notary Public in and for and residing in said
County and State, DO HEREBY CERTIFY THAT Xxxxx X. Xxxxxx of Marine Midland Bank,
a New York banking and Trust company, personally known to me to be the same
person whose name is subscribed to the foregoing instruments, appeared before me
this day in person and acknowledged that he signed and delivered said instrument
as his own free and voluntary act as the free and voluntary act of said
corporation for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 2nd day of June, 1998.
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Notary Public
[Notarial Seal]
My Commission Expires:
3/30/99
--------------------------------------
-4-
EXHIBIT A
MORTGAGEE WAIVER BETWEEN MARINE MIDLAND BANK, AS TRUSTEE
AND NATIONSCREDIT COMMERCIAL CORPORATION, THROUGH ITS
NATIONSCREDIT COMMERCIAL FUNDING DIVISION
All of Company's interest in the following, whether now owned or in
existence or hereafter acquired or arising, wherever located, whether or not
eligible for lending purposes:
(i) any right to payment for goods sold or leased or for services
rendered by Company's Children's Publishing Division which is not evidenced
by an instrument or chattel paper, whether or not it has been earned by
performance ("Accounts"), excluding Accounts relating to Company's
Christmas Classics, Long Ranger and Underdog properties;
(ii) all chattel paper and documents relating toe Company's Children's
Publishing Division, excluding chattel paper and documents relating to
Company's Christmas Classics, Lone Ranger and Underdog properties;
(iii) all goods held for sale or lease or furnished or to be furnished
under contracts of service in connection with Company's Children's
Publishing Division, including all raw materials, work in process, finished
goods, goods in transit and materials and supplies which are or might be
used or consumed in a business or used in connection with the manufacture,
packing, shipping, advertising, selling, or finishing of such goods, and
all products of the foregoing, and shall include interests in goods
represented by Accounts, returned, reclaimed or repossessed goods and
rights as an unpaid vendor ("Inventory"), excluding all Inventory relating
to Company's Christmas Classics, Lone Ranger and Underdog properties;
(iv) all proceeds and products of all of the foregoing (including
proceeds of any insurance policies, proceeds of proceeds and claims against
third parties for loss or any destruction of any of the foregoing; and
(v) all books and records relating to any of the foregoing.
All terms used above, unless otherwise indicated, shall have the meanings
provided by the Uniform Commercial Code as adapted and in effect in the State of
Illinois on the date of this filing, to the extent such terms are defined
therein.
-5-
