EXECUTION VERSION
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GUARANTEE AND COLLATERAL AGREEMENT
made by
PAPERWEIGHT DEVELOPMENT CORP.,
APPLETON PAPERS INC.,
and certain of its Subsidiaries
in favor of
FIFTH THIRD BANK,
as Administrative Agent
Dated as of February 8, 2010
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TABLE OF CONTENTS
Page
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GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 8, 2010, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of Fifth
Third Bank, as Administrative Agent (in such capacity, the "Administrative
Agent") for the banks, financial institutions and other entities (the "Lenders")
from time to time parties to the Credit Agreement, dated as of the date hereof
(as amended, restated, supplemented and/or otherwise modified from time to time,
the "Credit Agreement"), among Appleton Papers Inc., a Delaware corporation (the
"Borrower"), Paperweight Development Corp., a Wisconsin corporation
("Holdings"), the Administrative Agent and the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part (i) to repay certain existing indebtedness and
(ii) to enable the Borrower to make valuable transfers to one or more of the
other Grantors in connection with the operation of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Administrative Agent and
Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent for the
ratable benefit of the Administrative Agent and Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in the New York
UCC: Account, Certificated Security, Chattel Paper, Commercial Tort Claim,
Document, Equipment, Farm Products, General Intangible, Instruments, Inventory,
Letter-of-Credit Right and Supporting Obligation.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
be amended, restated, supplemented and/or otherwise modified from time to time.
"Borrower Credit Agreement Obligations": with respect to the Borrower,
the collective reference to the unpaid principal of and interest on the Loans
and Reimbursement Obligations and all other obligations and liabilities of the
Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and Reimbursement Obligations and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).
"Borrower Obligations": with respect to the Borrower, the collective
reference to (i) the Borrower Credit Agreement Obligations, (ii) the Secured
Hedge Agreement Obligations, (iii) Secured Cash Management Obligations and (iv)
all other obligations and liabilities of the Loan Parties to the Administrative
Agent or any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of this
Agreement).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office or any other similar authority throughout the world,
(ii) all rights corresponding thereto throughout the world and (iii) the right
to obtain all extensions and renewals thereof.
"Copyright Licenses": any written or oral agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right
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under any Copyright, including, without limitation, the grant of rights to
manufacture, distribute, exploit and sell materials derived from any Copyright.
"Credit Agreement Collateral": all "Collateral" under, and as defined
in, the Credit Agreement.
"Deposit Account": as defined in the New York UCC and, in any event,
including, without limitation, any demand, time, savings, passbook or like
account maintained with a depositary institution. The Deposit Accounts of the
Grantors as of the Closing Date are listed on Schedule 8.
"Excluded Stock": means all interests of the Borrower or any Grantor
in any of their respective Subsidiaries that are not a Domestic Subsidiary and
are not a Guarantor (as such term is defined in the Credit Agreement).
"Governmental Authority": the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
"Guarantor Obligations": with respect to any Guarantor, the collective
reference to (i) the Borrower Credit Agreement Obligations, (ii) the Secured
Hedge Agreement Obligations, (iii) the Secured Cash Management Obligations and
(iv) all other obligations and liabilities of such Guarantor to the
Administrative Agent or any Lender which may arise under or in connection with
this Agreement (including, without limitation, Section 2) or any other Loan
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent or to the Lenders that are required to be
paid by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Guarantors": the collective reference to each Grantor other than the
Borrower.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property or similar
proprietary rights, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, Trade Secrets and Trade Secret Licenses and all rights
thereto throughout the world including, without limitation, all claims, causes
of action, defenses arising out of or related to any of the foregoing and the
right to xxx at law or in equity for any past, present and future infringement,
misappropriation, misuse, dilution or other impairment thereof, including the
right to receive all proceeds and damages from all of the foregoing.
"Intercompany Note": any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.
"Intercreditor Agreement": as defined in Section 3.
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"Investment Property": the collective reference to (i) all "investment
property" as such term is defined in Section 9-102(a)49 of the New York UCC and
(ii) whether or not constituting "investment property" as so defined in the
preceding clause (i), all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": in the case of any Grantor, such Person's (i) Borrower
Obligations and/or (ii) Guarantor Obligations.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, including, without limitation, any of the foregoing referred to in
Schedule 6, (ii) all applications for letters patent of the United States or any
other country and all reissues, extensions, renewals, reexaminations, divisions,
continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to in Schedule 6, (iii) all invention disclosures,
utility models or similar industrial property rights and (iv) all rights
corresponding thereto throughout the world, including rights to obtain any
reissues or extensions of the foregoing.
"Permitted Unperfected Account": with respect to any Grantor, any
Deposit Account or Securities Account of such Grantor (a) that contains a
balance of deposits equal to or less than $10,000; provided that such Deposit
Account or Securities Account shall not cease to be a Permitted Unperfected
Account if it contains a balance greater than $10,000 for not longer than 2
consecutive Business Days and provided that the balance of deposits in all such
Deposit Accounts and Securities Accounts of the Grantors and all other
Guarantors combined shall not exceed $100,000 in the aggregate at any time, (b)
with respect to Deposit Accounts only, is used solely as (i) a payroll account,
(ii) an employee benefit account, (ii) an operating expenses disbursement
account that is zero-balanced on a daily basis, (iii) a sub-concentration
account that is zero-balanced on a daily basis, or (iii) a fiduciary or trust
account; or (c) as to which the Administrative Agent otherwise agrees that no
control agreement need be obtained. The Permitted Unperfected Accounts of the
Grantors as of the Closing Date are so indicated on Schedule 8. Notwithstanding
the foregoing, no "Notes Priority Collateral Account" (as such term is defined
in the First Lien Note Indenture) shall in any event constitute a "Permitted
Unperfected Account" for purposes of this Agreement.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
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"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options, interests or rights
of any nature whatsoever in respect of the Capital Stock of any Person that may
be issued or granted to, or held by, any Grantor while this Agreement is in
effect; provided that such term shall not, in any case, include any Excluded
Stock.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Requirement of Law": as to any Person, the certificate or articles of
incorporation and by laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Secured Cash Management Obligations": the collective reference to all
obligations and liabilities of a Loan Party (including, without limitation,
interest accruing at the then applicable rate provided in any Secured Cash
Management Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to a
Loan Party, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to any Cash Management Bank, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, any
Secured Cash Management Agreement or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
relevant Lender or affiliate thereof that are required to be paid by any Loan
Party pursuant to the terms of any Secured Cash Management Agreement).
"Secured Hedge Agreement Obligations": the collective reference to all
obligations and liabilities of a Loan Party (including, without limitation,
interest accruing at the then applicable rate provided in any Secured Hedge
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such Loan Party,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Hedge Bank, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, any Secured Hedge Agreement or
any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the relevant Lender or affiliate thereof
that are required to be paid by the Borrower pursuant to the terms of any
Secured Hedge Agreement).
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"Securities Account": as defined in the New York UCC. The Securities
Accounts of the Grantors as of the Closing Date are listed on Schedule 8.
"Securities Act": the Securities Act of 1933, as amended.
"Trade Secret Licenses" means any and all written or oral agreements
granting any right in or to Trade Secrets (whether a Grantor is licensee or
licensor thereunder).
"Trade Secrets" means all trade secrets, as recognized under
applicable local law, whether or not reduced to a writing or other tangible
form, now or hereafter in force, owned or used in, or contemplated at any time
for use in, the business of any Grantor, including with respect to any and all
of the foregoing: (i) all documents and things embodying, incorporating, or
referring in any way thereto, (ii) all rights to xxx for past, present and
future infringement thereof, (iii) all claims, damages, and proceeds of suit
arising therefrom, and (iv) all payments and royalties and rights to payments
and royalties arising out of the sale, lease, license, assignment, or other
dispositions thereof.
"Trademark License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule 6.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in Schedule 6, and (ii) the right to obtain all extensions and
renewals thereof. Notwithstanding the foregoing, the Trademarks shall not
include any "intent-to-use" applications for trademark or service xxxx
registrations filed pursuant to Section 1(b) of the Xxxxxx Act, 15 U.S.C.
Section 1051, unless and until an Amendment to Allege Use or a Statement of Use
under Section 1(c) or Section 1(d) of the Xxxxxx Act has been filed, to the
extent that any assignment of an "intent-to-use" application prior to such
filing would violate the Xxxxxx Act or cause the trademark that is the subject
thereof to be invalidated or abandoned.
1.2 Other Definitional Provisions.
(a) The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
(d) Unless the context otherwise requires, any Cash Management Bank
or Hedge Bank which is party to a Secured Hedge Agreement or a Secured Cash
Management Agreement shall be deemed to be a "Lender" for purposes of this
Agreement.
SECTION 2. GUARANTEE
2.1 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
ratable benefit of the Administrative Agent and the Lenders and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of all Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of such Guarantor hereunder
without impairing the guarantee contained in this Section 2 or affecting the
rights and remedies of the Administrative Agent or any Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Obligations and the obligations of each Guarantor
under the guarantee contained in this Section 2 shall have been satisfied by
payment in full, no Letter of Credit shall be outstanding and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement the Borrower may be free from any Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
release the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of
the Obligations or any payment received or collected from such Guarantor in
respect of the Obligations), remain liable for the Borrower Obligations up to
the maximum liability of such Guarantor hereunder until the Borrower Obligations
are paid in full, no Letter of Credit shall be outstanding and the Commitments
are terminated. Notwithstanding the foregoing, in no event shall the Guarantors
be liable for payment of any amount in excess of the then outstanding Borrower
Obligations and, without duplication, Guarantor Obligations.
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2.2 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations are paid in full, no Letter of Credit shall
be outstanding and the Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly endorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
such Agent or such Lender and any of the Borrower Obligations continued, and the
Borrower Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and the Credit Agreement and
the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required Lenders or all
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Borrower Obligations
may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor the Lenders shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
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2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent or any Lender
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against any Guarantor.
For the purposes hereof "demand" shall include, but not be limited to the
commencement and continuance of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
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2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars in accordance with the direction of the Administrative Agent.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders, a security interest in, all of the
following property now owned or at any time hereafter acquired by such Grantor
or in which such Grantor now has or at any time in the future may acquire any
right, title or interest (collectively, the "Collateral"), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all Letter-of-Credit Rights;
(m) all books and records pertaining to the Collateral;
(n) those certain Commercial Tort Claims of the Obligors set forth on
Schedule 7 attached hereto; and
(o) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in any property to the extent that
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(x) such grant of a security interest is prohibited by any Requirement of Law,
requires a consent not obtained of any Governmental Authority pursuant to any
such Requirement of Law or is prohibited by, or constitutes a breach or default
under, or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing
or giving rise to such property or, in the case of any Investment Property,
Pledged Stock or Pledged Note, any applicable shareholder or similar agreement,
except to the extent that such Requirement of Law or the applicable terms in
such contract, license, agreement, instrument or other document or shareholder
or similar agreement providing for such prohibition, breach, default or
termination or requiring such consent is ineffective under applicable law or (y)
such property constitutes "Collateral" under and as defined in the Fox River
Security Agreement;
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL TERMS OF THIS
AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE REPRESENTATIONS AND WARRANTIES
MADE HEREIN, THE LIENS AND SECURITY INTERESTS GRANTED TO THE ADMINISTRATIVE
AGENT PURSUANT TO THIS AGREEMENT, THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
ADMINISTRATIVE AGENT AND LENDERS HEREUNDER, ALL OTHER RIGHTS AND BENEFITS
AFFORDED HEREUNDER TO THE ADMINISTRATIVE AGENT AND THE LENDERS AND ALL
OBLIGATIONS OF THE BORROWER AND OTHER GRANTORS HEREUNDER) ARE SUBJECT IN ALL
RESPECTS TO THE TERMS, CONDITIONS AND PROVISIONS OF THAT CERTAIN INTERCREDITOR
AGREEMENT, DATED AS OF FEBRUARY 8, 2010 (AS AMENDED, RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE
"INTERCREDITOR AGREEMENT") BY AND AMONG FIFTH THIRD BANK, AS RCF REPRESENTATIVE
FOR THE BENEFIT OF THE RCF SECURED PARTIES (AS DEFINED THEREIN), U.S. BANK
NATIONAL ASSOCIATION, AS NOTE REPRESENTATIVE FOR THE NOTE SECURED PARTIES (AS
DEFINED THEREIN), FIFTH THIRD BANK, IN ITS CAPACITY AS FIRST LIEN REPRESENTATIVE
(AS DEFINED THEREIN), AND CERTAIN OTHER PERSONS PARTY OR THAT MAY BECOME PARTY
THERETO FROM TIME TO TIME. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE
INTERCREDITOR AGREEMENT AND THE TERMS OF THIS AGREEMENT, THE TERMS OF THE
INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to each Agent and each Lender that:
4.1 Representations in Credit Agreement. In the case of each Guarantor,
the representations and warranties set forth in Article V of the Credit
Agreement as they relate to such Guarantor or to the Loan Documents to which
such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and each Agent and each Lender shall be
entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the
Borrower's knowledge shall, for the purposes of this Section 4.1, be deemed to
be a reference to such Guarantor's knowledge.
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4.2 Title; No Other Liens. Except for the security interest granted to the
Administrative Agent for the ratable benefit of the Administrative Agent and the
Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns its Collateral in all
material respects free and clear of any and all Liens or claims of others. For
the avoidance of doubt, it is understood and agreed that any Grantor may, as
part of its business, grant licenses to third parties to use Intellectual
Property owned or developed by a Grantor. For purposes of this Agreement and the
other Loan Documents, such licensing activity shall not constitute a "Lien" or a
"claim" on such Intellectual Property. Each of the Administrative Agent and each
Lender understands that any such licenses may be exclusive to the applicable
licensees, and such exclusivity provisions may limit the ability of the
Administrative Agent to utilize, sell, Lease or transfer the related
Intellectual Property or otherwise realize value from such Intellectual Property
pursuant hereto.
4.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (including obtaining "control" (within the meaning of
the applicable Uniform Commercial Code) of Deposit Accounts and Securities
Accounts (other than Permitted Unperfected Accounts), Investment Property and,
to the extent requested in writing by the Administrative Agent, Letter-of-Credit
Rights (which, in the case of all filings and other documents referred to on
said Schedule, unless otherwise noted, have been delivered to the Administrative
Agent in completed and, where applicable, duly executed form) will constitute
valid perfected security interests (to the extent perfection of security
interests therein may be perfected by filing of UCC-1 financing statements
and/or filings with the United States Patent and Trademark Office and United
States Copyright Office, possession by the Administrative Agent of the
respective Investment Property or "control" of Deposit Accounts and Securities
Accounts) in all of the Collateral (excluding Letter-of-Credit Rights where
written request has not been made by the Administrative Agent) in favor of the
Administrative Agent, for the ratable benefit of the Administrative Agent and
the Lenders, as collateral security for such Grantor's Obligations, enforceable
in accordance with the terms hereof against all creditors of such Grantor and
any Persons purporting to purchase any Collateral from such Grantor, other than
purchasers in the ordinary course of business, and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for Liens
permitted by the Credit Agreement and other Liens which have priority over the
Liens granted hereunder on the Collateral by operation of law. Notwithstanding
anything to the contrary contained above or elsewhere in this Agreement, but
nonetheless subject to the terms of the Intercreditor Agreement, with respect to
Letter-of-Credit Rights where the relevant Grantor has been requested by the
Administrative Agent to obtain "control" of same, the respective Grantor shall
have a reasonable period of time to comply with such request and such "control"
shall not be required if the respective Grantor is unable to obtain any required
consents for such "control" after using commercially reasonable efforts to
obtain same, and unless and until "control" of the respective Letter-of-Credit
Rights is obtained in accordance with the above provisions of this Section 4.3
(including this sentence), there shall be no violation of any representation or
warranty or covenant contained in this Agreement as a result thereof.
4.4 Jurisdiction of Organization; Chief Executive Office. On the date
hereof, such Grantor's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of such Grantor's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 4.
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4.5 Inventory and Equipment. On the date hereof, except where the value of
such Inventory and Equipment at any one location does not exceed $250,000 in the
aggregate for the Grantors and all other Guarantors combined, all of the
Grantors' Inventory and Equipment (other than goods in transit) is kept at the
locations listed on Schedule 5.
4.6 Farm Products. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
4.7 Investment Property.
(a) The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor, except for Excluded Stock.
(b) On the date hereof, all the shares of the Pledged Stock have been
duly and validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes issued by a Loan Party constitutes the
legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens in favor of, or claims of, any other Person, except the
security interest created by this Agreement and as otherwise would not violate
the applicable requirements of the Credit Agreement.
4.8 Receivables.
(a) Except to the extent that such amounts so payable to Grantors and
the other Guarantors combined do not exceed $50,000 in aggregate, no amount
payable to such Grantor under or in connection with any Receivable is evidenced
by any Instrument or Chattel Paper that has not been delivered to the
Administrative Agent..
(b) As of the date hereof, not more than ten percent (10%) of the
Receivables have a Governmental Authority as an obligor.
4.9 Intellectual Property.
(a) Schedule 6 lists all registered and applied for Patents, Trademarks
and Copyrights in the United States that are owned by such Grantor in its own
name on the date hereof. As of the date hereof, all Intellectual Property owned
by such Grantor and set forth on Schedule 6 is valid, in full force and effect,
subsisting, unexpired and enforceable, and has not been abandoned. The business
of such Grantor and the use of any Intellectual Property in connection
therewith, does not infringe, misappropriate, dilute or violate the intellectual
property rights of any third Person. There are no pending or, to such Grantor's
knowledge, threatened
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claims of infringement, misappropriation, dilution or violation by Grantor of
any third Person's intellectual property rights, and there are no facts or
circumstances that such Grantor reasonably believes are likely to form the basis
for any such claim, and such Grantor has not received written notice of any such
claim
(b) Except as set forth in Schedule 6, on the date hereof none of the
material Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
SECTION 5. COVENANTS.
Each Grantor covenants and agrees with the Administrative Agent and the
Lenders that, from and after the date of this Agreement until the Obligations
shall have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor or any of its Subsidiaries.
5.2 Delivery of Instruments, Certificated Securities and Chattel Paper.
Except to the extent that such amounts so payable to Grantors and the other
Guarantors combined do not exceed $50,000 in aggregate, if any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be promptly delivered to the
Administrative Agent, duly endorsed in a manner reasonably satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance.
(a) Such Grantor will maintain, with financially sound and reputable
companies, insurance policies, in accordance with the terms of the Credit
Agreement, (i) insuring the Inventory and Equipment against loss by fire,
explosion, theft and such other casualties in accordance with the terms of the
Credit Agreement and (ii) insuring such Grantor against liability for personal
injury and property damage relating to such Inventory and Equipment.
(b) All such insurance shall (i) provide for not less than 30 days'
prior notice to the Administrative Agent of termination, lapse or cancellation
of such insurance (to the extent such provision is obtainable using commercially
reasonably efforts) and (ii) name the Administrative Agent as an additional
insured and/or loss payee, as applicable.
(c) The Borrower shall deliver to the Administrative Agent,
substantially concurrently with the annual renewal of each insurance policy
covered by the certificates of insurance delivered on the Closing Date pursuant
to Section 4.01(a)(xi) of the Credit Agreement, updated insurance certificates
with respect to each such insurance policy and, in addition, such supplemental
information with respect to each such insurance policy as the Administrative
Agent may from time to time reasonably request.
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5.4 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by this
Agreement as a perfected security interest (but only to the extent that such
security interest can be perfected by filing a filing a financing statements
under the Uniform Commercial Code (or other similar laws) or obtaining "control"
(within the meaning of the applicable Uniform Commercial Code) of Deposit
Accounts (other than Permitted Unperfected Accounts) or Investment Property)
having at least the priority described in Section 4.3 and shall defend such
security interest against the claims and demands of all Persons whomsoever
(other than Persons with prior Liens permitted under clause (b) of Section 4.3),
subject to the rights of such Grantor under the Loan Documents to dispose of the
Collateral.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the reasonable written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) filing any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby (ii) in the case of Investment Property, Deposit Accounts and
Securities Accounts (other than Permitted Unperfected Accounts),
Letter-of-Credit Rights (but, in the case of such Letter-of-Credit Rights, only
after written request from the Administrative Agent and subject to the last
sentence of Section 4.3) and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain "control" (within the
meaning of the applicable Uniform Commercial Code) with respect thereto and
(iii) in the case of Intellectual Property, filings to the United States Patent
and Trademark Office, the United States Copyright Office or other similar
authority in any jurisdiction in the world.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except upon 15
days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional financing statements and other documents
reasonably requested by the Administrative Agent to maintain the validity,
perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization from that referred to in
Section 4.4; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, of the occurrence of any event which
could reasonably be
15
expected to have a material adverse effect on the aggregate value of the Credit
Agreement Collateral or on the security interests created hereby.
5.7 Investment Property.
(a) If such Grantor shall become entitled to receive or shall receive
any certificate (including, without limitation, any certificate representing a
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the Capital Stock of any Issuer,
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any shares of the Pledged Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the Administrative Agent and the
Lenders, hold the same in trust for the Administrative Agent and the Lenders and
deliver the same forthwith to the Administrative Agent in the exact form
received, duly endorsed by such Grantor to the Administrative Agent, if
required, together with an undated stock power covering such certificate duly
executed in blank by such Grantor to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security for the
Obligations. If an Event of Default has occurred and is continuing, any sums
paid upon or in respect of the Investment Property upon the liquidation or
dissolution of, or as a distribution of capital by, any Issuer shall be paid
over to the Administrative Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any property (if an Event
of Default has occurred and is continuing) or any Investment Property shall be
distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor (when otherwise required to be paid or delivered over
to the Administrative Agent as set forth above), such Grantor shall, until such
money or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) if an Event of Default has occurred and is continuing,
vote to enable, or take any other action to permit, any Issuer to issue any
Capital Stock of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any Capital Stock of any nature
of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property or Proceeds thereof
(except pursuant to a transaction permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or otherwise permitted in the Credit Agreement or (iv) enter into any
agreement or undertaking, other than as permitted under the Credit Agreement,
restricting the right or ability of such Grantor or the Administrative Agent to
sell, assign or transfer any of the Investment Property or Proceeds thereof.
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(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it and (ii) the terms of Section 6.3(c) shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(c) with respect to the Investment Property issued by it.
5.8 Receivables.
(a) Other than in the ordinary course of business, such Grantor will
not, with respect to any material portion of the Receivables, (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could materially adversely affect the
value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that challenges the
validity or enforceability of more than five percent (5%) of the aggregate
amount of the then outstanding Receivables.
(c) If, as of any fiscal quarter end occurring after the Closing
Date, the Grantors determine that more than ten percent (10%) of Receivables (in
the aggregate for all Grantors) have a Governmental Authority as an obligor,
then the Grantors shall so notify the Administrative Agent (such notice to be
given substantially concurrently with the delivery of the quarterly financial
statements required pursuant to Section 6.01(b) of the Credit Agreement) and,
upon the reasonable request of the Administrative Agent, promptly take such
steps as may be necessary to comply with any applicable federal assignment of
claims laws and other comparable laws.
5.9 Intellectual Property.
(a) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor will (i)
continue to use each Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current catalogs, brochures
and price lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such Trademark
with the appropriate notice of registration and all other notices and legends
required by applicable Requirements of Law, (iv) not adopt or use any xxxx which
is confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Administrative Agent and
the Lenders, shall obtain a perfected security interest in such xxxx pursuant to
this Agreement, and (v) not do any act or knowingly omit to do any act whereby
such Trademark may become invalidated or impaired in any way.
(b) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor will not do any
act, or omit to do any act, whereby any Patent may become forfeited, abandoned
or dedicated to the public.
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(c) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor (i) will employ
each Copyright and (ii) will not do any act or knowingly omit to do any act
whereby any Copyright may become invalidated or otherwise impaired. Such Grantor
will not do any act whereby any Copyright may fall into the public domain, to
the extent such Copyright is material to the aggregate value of the Credit
Agreement Collateral.
(d) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor will not do any
act that knowingly uses any Intellectual Property to infringe the intellectual
property rights of any other Person.
(e) Such Grantor will promptly notify the Administrative Agent and
the Lenders if it knows, or has reason to know, that any application or
registration relating to any Intellectual Property may become forfeited,
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
Intellectual Property or such Grantor's right to register the same or to own and
maintain the same, in each case to the extent such Intellectual Property is
material to the aggregate value of the Credit Agreement Collateral.
(f) Whenever such Grantor, either by itself or through the
Administrative Agent, employee, licensee or designee, shall file an application
for the registration of any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, such
Grantor shall report such filing to the Administrative Agent in accordance with
Section 6.02(a)(iii)(y) of the Credit Agreement. Upon reasonable request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent' and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability, in each case to the extent such Intellectual Property is
material to the aggregate value of the Credit Agreement Collateral.
(h) In the event that any Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) promptly notify the
Administrative Agent after it learns thereof, in each case to the extent such
Intellectual Property is material to the aggregate value of the Credit Agreement
Collateral.
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(i) Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall use its best efforts to obtain all requisite
consents or approvals from the licensor of each Copyright License, Patent
License, Trade Secret License or Trademark License to effect the assignment or
sublicense of all of such Grantor's right, title and interest thereunder to the
Grantee or its designee for the benefit of the Grantees in accordance with this
Agreement or the Credit Agreement.
5.10 Commercial Tort Claims. Each Grantor shall (i) forward to the
Administrative Agent written notification (such notice to be given substantially
concurrently with the delivery of the quarterly financial statements required
pursuant to Section 6.01(b) of the Credit Agreement) of any and all Commercial
Tort Claims where the expected recovery could reasonably be expected to be in an
amount in excess of $200,000, including, but not limited to, any and all
actions, suits and proceedings before any court or Governmental Authority by or
affecting such Grantor or any of its Subsidiaries and (ii) if and to the extent
requested by the Administrative Agent in writing, execute and deliver such
statements, documents and notices and do and cause to be done all such things as
may be required by the Administrative Agent, or required by law, including all
things which may from time to time be necessary under the UCC to fully create,
preserve, perfect and protect the priority of the Administrative Agent's
security interest in any such Commercial Tort Claims.
5.11 Cash Management Systems.
(a) On or prior to the Closing Date, the Borrower shall have
established and shall thereafter maintain in existence one or more lockboxes
(each a "Lockbox") with the Administrative Agent or such other Lender as shall
be reasonably acceptable to the Administrative Agent (each a "Depositary Account
Bank") and shall instruct all account debtors on the Borrower's Accounts to
remit all payments to a Lockbox. All payments remitted by account debtors of the
Borrower to any Lockbox, all other amounts received by the Borrower from any
account debtor and all other cash received by the Borrower from any other source
shall in each case upon receipt thereof be deposited into a Deposit Account.
(b) Each Deposit Account or Securities Account of the Borrower or any
other Grantor that is not a Permitted Unperfected Account (each such Deposit
Account, a "Controlled Deposit Account," and each such Securities Account, a
"Controlled Securities Account," Controlled Securities Accounts together with
Controlled Deposit Accounts may sometimes be referred to herein individually as
a "Controlled Account" and, collectively, as "Controlled Accounts") shall be
maintained with a Depositary Account Bank.
(c) On or prior to the Closing Date, the Borrower and each other
Grantor shall have entered into a deposit account control agreement or
securities account control agreement in form and substance satisfactory to the
Administrative Agent with respect to each Controlled Account with the respective
Depositary Account Bank and in favor of the Administrative Agent (each an
"Account Control Agreement"), which, in the case of Account Control Agreements
with respect to Controlled Deposit Accounts, shall provide that, among other
things, (i) upon the occurrence and during the continuance of an Event of
Default or (ii) upon the commencement and during the continuance of an
Availability Trigger Period, all available amounts held in each Controlled
Deposit Account maintained at such Depositary Account Bank shall be wired on
each
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Business Day into an account (the "Administrative Agent Account") maintained by
the Administrative Agent; provided, that the Administrative Agent hereby agrees
that it will not give any instructions under any Account Control Agreement
unless and until an Event of Default shall have occurred and be continuing or
the occurrence of an Availability Trigger Period. All amounts swept and wired
into an Administrative Agent Account pursuant to any Account Control Agreement
during the continuance of an Availability Trigger Period shall, subject to
Section 6.5 if an Event of Default shall have occurred and be continuing and
subject to the Administrative Agent's election to subject such amounts to
Section 6.5, be applied first to reduce that portion of the Obligations
consisting of the then aggregate outstanding balance of the Loans, L/C
Borrowings and all other Obligations, second to Cash Collateralize that portion
of the L/C Obligations comprised of the aggregate undrawn amount of Letters of
Credit, and last, after all other Obligations then due have been indefeasibly
paid in full, to be deposited into an account as directed by the Borrower.
(d) The closing of any Lockbox or Controlled Account and the
termination of any Account Control Agreement shall require in each case the
prior written consent of the Administrative Agent.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) If an Event of Default shall have occurred and be continuing, (x)
the Administrative Agent shall have the right to make test verifications of the
Receivables in any reasonable manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance and
information as the Administrative Agent may require in connection with such test
verifications and (y) upon the Administrative Agent's reasonable request and at
the expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly endorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor.
(c) If an Event of Default shall have occurred and be continuing, at
the Administrative Agent's reasonable request, (i) each Grantor shall deliver to
the Administrative Agent all original (to the extent such Grantor has original
copies) and other documents
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evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including, without limitation, all original (to the extent such
Grantor has original copies) orders, invoices and shipping receipts and (ii) the
applicable Grantor shall take such steps as may be necessary to comply with any
applicable federal assignment of claims laws and other comparable laws.
6.2 Communications with Obligors; Grantors Remain Liable.
(a) The Administrative Agent in its own name or in the name of others
may at any time after the occurrence and during the continuance of an Event of
Default communicate with obligors under the Receivables and parties to the
Contracts to verify with them to the Administrative Agent's satisfaction the
existence, amount and terms of any Receivables or Contracts.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent for
the ratable benefit of the Administrative Agent and the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. No Agent or Lender shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating thereto, nor shall the Administrative Agent or
any Lender be obligated in any manner to perform any of the obligations of any
Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto) or Contract, to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
6.3 Pledged Stock.
(a) Unless an Event of Default shall have occurred and be continuing
and the Administrative Agent shall have given notice to the relevant Grantor of
the Administrative Agent's intent to exercise its corresponding rights pursuant
to Section 6.3(b), each Grantor shall be permitted to receive all dividends paid
in respect of the Pledged Stock and all payments made in respect of the Pledged
Notes and to exercise all voting and corporate or other organizational rights
with respect to the Investment Property; provided, however, that no vote shall
be cast or corporate or other organizational right exercised or other action
taken which would materially impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document.
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(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Investment Property shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Administrative Agent.
6.4 Proceeds to be Turned Over to Administrative Agent. In addition
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and other similar near-cash items shall be held by such Grantor in trust
for the Administrative Agent and the Lenders, segregated from other funds of
such Grantor, and shall, upon the request of the Administrative Agent, be turned
over to the Administrative Agent forthwith upon receipt by such Grantor in the
exact form received by such Grantor (duly endorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor in trust
for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. Subject to any different order of
payment set forth in the Credit Agreement (which different order shall be
controlling), if an Event of Default shall
22
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Obligations
in the following order:
(a) First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
(b) Second, to the Administrative Agent, for application by it
towards payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Lenders according to the amounts of the
Obligations then due and owing and remaining unpaid to the Lenders;
(c) Third, to the Administrative Agent, for application by it towards
prepayment of the Obligations, pro rata among the Lenders according to the
amounts of the Obligations then held by the Lenders; and
(d) Fourth, to any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, have assigned to
it, appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, license, sublicense, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Administrative Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. Upon
written demand from the Administrative Agent, each Grantor shall grant, assign,
convey or otherwise transfer to the Collateral Agent an absolute assignment of
all of such Grantor's right, title and interest in and to the Intellectual
Property and shall execute and deliver to the Collateral Agent such documents as
are necessary or appropriate to carry out the intent and purposes of this
Agreement. The Administrative Agent or any Lender shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in any Grantor, which right or
equity is hereby waived and released to the extent permitted by law. Each
Grantor further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it
23
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in the order set forth in Section 6.5
hereof, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-615(a)(3) of the New York UCC, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Lender arising
out of the exercise by them of any rights hereunder, except for gross negligence
or willful misconduct on the part of the Administrative Agent or such Lender. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 20 days before such sale or other disposition.
6.7 Private Sales.
(a) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
6.8 Deficiency. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the
24
reasonable fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
6.9 Intellectual Property License. The Grantors hereby grant the Grantee a
non-exclusive, transferable, sublicensable, worldwide license and right,
effective solely during an Event of Default, to the maximum extent permitted by
applicable law and to the extent of the Grantors' interest therein, exercisable
without payment of royalty or other compensation, under and to any and all of
the Intellectual Property now or hereafter owned by, licensed to, or otherwise
used by the Grantors to purchase, use, market, repossess, possess, store,
assemble, manufacture, process, sell, transfer, distribute, lease, license and
otherwise exploit and dispose of any asset included in the Collateral to the
extent the Grantee takes possession of such in accordance with the terms and
conditions of this Agreement and the Credit Agreement. For the avoidance of
doubt, in the event that any such Event of Default is cured in accordance with
the terms and conditions of this Agreement and the Credit Agreement, the
foregoing license shall automatically be suspended. The Grantors agree that any
sale, transfer, grant of an exclusive license or other disposition of any of the
foregoing Intellectual Property (whether by foreclosure or otherwise) will be
subject to the Grantee's rights as set forth in this Section 6.9. Any use of
Trademarks under the foregoing license shall be consistent with the historical
use of such Trademarks by the Grantors and shall meet the Grantors' standards of
quality in all material respects. At the Grantors' reasonable request, the
Grantee shall provide samples of any goods to be sold under a Grantor Trademark.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative 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 such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Receivable or Contract
or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may reasonably request to evidence the
Administrative Agent' and
25
the Lenders' security interest in such Intellectual Property and the goodwill
and general intangibles of such Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6,
any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the Administrative
Agent's and the Lenders' security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Grantor
might do.
Anything in this Section 7.1 to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1 unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per
26
annum equal to the rate per annum at which interest would then be payable on
Revolving Loans that are Base Rate Loans (which rate shall increase to the rate
applicable to such Loans that are past due for periods after the date that is 5
days after demand for payment has been made upon the Borrower by the
Administrative Agent) under the Credit Agreement, from the date of payment by
the Administrative Agent to the date reimbursed by the relevant Grantor, shall
be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative 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 New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Filing of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
"all personal property" or such similar language in any such financing
statements. Each Grantor hereby ratifies and authorizes the filing by the
Administrative Agent of any financing statement with respect to the Collateral
made prior to the date hereof.
7.4 Authority of Administrative Agent. Each Grantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent
27
for the Administrative Agent and the Lenders with full and valid authority so to
act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.01 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.02 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Agent or
Lender shall by any act (except by a written instrument pursuant to Section
8.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which such Agent
or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification.
(a) Each Guarantor agrees to pay or reimburse the Administrative
Agent, and during the existence of an Event of Default, each Lender, for all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Agreement and the other Loan Documents to which such Guarantor is a
party, including, without limitation, the reasonable fees and disbursements of
counsel to each Lender and of counsel to the Administrative Agent.
(b) Each Grantor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this
28
Agreement to the extent the Borrower would be required to do so pursuant to
Section 10.04 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Agent and
each Lender at any time after the Loans and other amounts payable under the
Credit Agreement shall have become due and payable pursuant to Article VIII of
the Credit Agreement, without notice to such Grantor or any other Grantor, any
such notice being expressly waived by each Grantor, to set-off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Agent or such Lender to
or for the credit or the account of such Grantor, or any part thereof in such
amounts as such Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to such Agent or such Lender
hereunder and claims of every nature and description of such Agent or such
Lender against such Grantor, in any currency, whether arising hereunder, under
the Credit Agreement, any other Loan Document or otherwise, as such Agent or
such Lender may elect, whether or not the Administrative Agent or any Lender has
made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. Each Agent and each Lender shall notify
such Grantor promptly of any such set-off and the application made by such Agent
or such Lender of the proceeds thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Agent and each Lender under this Section 8.6 are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which such Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy or other electronic transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
29
8.9 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Grantors, the Administrative Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) no Agent or Lender has any fiduciary relationship with or duty to
any Grantor arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Grantors, on the one
hand, and the Administrative Agent and
30
Lenders, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is required
to become a party to this Agreement pursuant to Section 6.09 of the Credit
Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations and the
other Obligations (other than Secured Hedge Agreement Obligations and Secured
Cash Management Obligations to the extent (x) such Obligations have been secured
or backstopped to the satisfaction of the Lender holding such Obligations or (y)
the Lender holding such Obligations has otherwise consented to such exclusion)
shall have been paid in full, the Commitments have been terminated and no
Letters of Credit shall be outstanding (other than those Letters of Credit
secured or backstopped to the satisfaction of the L/C Issuer), the Collateral
shall be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Administrative Agent
shall deliver to such Grantor any Collateral held by the Administrative Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination and to authorize
the filing by Grantors of any necessary UCC terminations or other terminations
or releases.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
31
8.17 Permitted Liens. Subject to the terms of the Intercreditor Agreement,
the inclusion or reference to liens permitted under the Credit Agreement in this
Agreement or in any other Loan Document is not intended to subordinate and shall
not subordinate, and shall not be interpreted as subordinating, the Lien and
security interest created by this Agreement or any other Loan Document to any
liens permitted under the Credit Agreement.
[Signature Pages Follow]
32
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
PAPERWEIGHT DEVELOPMENT
CORP., a Wisconsin corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Controller
APPLETON PAPERS INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Controller
AMERICAN PLASTICS COMPANY,
INC., a Wisconsin corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Treasurer
NEW ENGLAND EXTRUSION INC., a
Wisconsin corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Treasurer
Guarantee and Collateral Agreement
Annex I
to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 20___, made by
______________________________, a ______________ [corporation] (the "Additional
Grantor"), in favor of Fifth Third Bank, as administrative agent (in such
capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, Appleton Papers Inc., a Delaware corporation (the "Borrower"),
PAPERWEIGHT DEVELOPMENT CORP., a Wisconsin corporation ("Holdings"), the Lenders
and the Administrative Agent have entered into a Credit Agreement, dated as of
February 8, 2010 (as amended, restated, supplemented and/or otherwise modified
from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and certain
of its Affiliates (other than the Additional Grantor) have entered into the
Guarantee and Collateral Agreement, dated as of February 8, 2010 (as amended,
restated, supplemented and/or otherwise modified from time to time, the
"Guarantee and Collateral Agreement") in favor of the Administrative Agent for
the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to become a
party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.14 of the
Guarantee and Collateral Agreement, hereby becomes a party to the Guarantee and
Collateral Agreement as a Grantor thereunder and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules ____________[*]
to the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Guarantee and Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
----------
* Refer to each Schedule which needs to be supplemented.
Guaranty and Collateral Agreement
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
------------------------------------
Name:
Title:
Guaranty and Collateral Agreement
