EXHIBIT 10.4
PARITY LIEN
PLEDGE AND SECURITY AGREEMENT
DATED AS OF JULY 7, 2004
BETWEEN
XXXXXX & XXXXX CORPORATION,
EACH OF THE OTHER GRANTORS PARTY HERETO
AND
XXXXX FARGO BANK, N.A.,
AS COLLATERAL TRUSTEE
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; GRANT OF SECURITY............................................................... 2
1.1 GENERAL DEFINITIONS.......................................................................... 2
1.2 DEFINITIONS; INTERPRETATION.................................................................. 9
SECTION 2. GRANT OF SECURITY............................................................................ 9
2.1 GRANT OF SECURITY............................................................................ 9
2.2 CERTAIN LIMITED EXCLUSIONS................................................................... 10
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE............................................. 11
3.1 SECURITY FOR OBLIGATIONS..................................................................... 11
3.2 CONTINUING LIABILITY UNDER COLLATERAL........................................................ 11
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS................................................. 12
4.1 GENERALLY.................................................................................... 12
4.2 AS-EXTRACTED COLLATERAL, EQUIPMENT AND INVENTORY............................................. 14
4.3 RECEIVABLES.................................................................................. 15
4.4 INVESTMENT RELATED PROPERTY.................................................................. 18
4.5 MATERIAL CONTRACTS........................................................................... 23
4.6 LETTER OF CREDIT RIGHTS...................................................................... 24
4.7 INTELLECTUAL PROPERTY........................................................................ 24
4.8 COMMERCIAL TORT CLAIMS....................................................................... 27
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS. .................... 27
5.1 ACCESS; RIGHT OF INSPECTION.................................................................. 28
5.2 FURTHER ASSURANCES........................................................................... 28
5.3 ADDITIONAL GRANTORS.......................................................................... 29
SECTION 6. COLLATERAL TRUSTEE APPOINTED ATTORNEY-IN-FACT................................................ 29
6.1 POWER OF ATTORNEY............................................................................ 29
6.2 NO DUTY ON THE PART OF COLLATERAL TRUSTEE OR SECURED PARTIES................................. 30
SECTION 7. REMEDIES..................................................................................... 30
7.1 GENERALLY.................................................................................... 30
7.2 APPLICATION OF PROCEEDS...................................................................... 32
7.3 SALES ON CREDIT.............................................................................. 32
7.4 DEPOSIT ACCOUNTS............................................................................. 32
7.5 INVESTMENT RELATED PROPERTY.................................................................. 32
7.6 INTELLECTUAL PROPERTY........................................................................ 33
7.7 CASH PROCEEDS................................................................................ 35
SECTION 8. COLLATERAL TRUSTEE........................................................................... 35
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.............................................. 36
i
SECTION 10. STANDARD OF CARE; COLLATERAL TRUSTEE MAY PERFORM............................................ 36
SECTION 11. MISCELLANEOUS............................................................................... 36
SCHEDULE 4.1 -- GENERAL INFORMATION
SCHEDULE 4.2 -- LOCATION OF WELLHEAD, EQUIPMENT AND INVENTORY
SCHEDULE 4.4 -- INVESTMENT RELATED PROPERTY
SCHEDULE 4.5 -- MATERIAL CONTRACTS
SCHEDULE 4.6 -- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 -- INTELLECTUAL PROPERTY - EXCEPTIONS
SCHEDULE 4.8 -- COMMERCIAL TORT CLAIMS
EXHIBIT A -- PLEDGE SUPPLEMENT
EXHIBIT B -- UNCERTIFICATED SECURITIES CONTROL AGREEMENT
EXHIBIT C -- SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D -- DEPOSIT ACCOUNT CONTROL AGREEMENT
ii
This PARITY LIEN PLEDGE AND SECURITY AGREEMENT, dated as of July 7,
2004 (this "AGREEMENT"), between EACH OF THE UNDERSIGNED, whether as an original
signatory hereto or as an Additional Grantor (as herein defined) (each, a
"GRANTOR"), and XXXXX FARGO BANK, N.A., as collateral trustee for the Secured
Parties (as herein defined) (in such capacity as collateral trustee, the
"COLLATERAL TRUSTEE").
RECITALS:
WHEREAS, reference is made to that certain Indenture dated as of the date
hereof (as amended, supplemented, amended and restated or otherwise modified and
in effect from time to time, the "INDENTURE"), among XXXXXX & BLAKE CORPORATION,
an Ohio corporation (together with any successor, the "COMPANY"), the GUARANTORS
PARTY THERETO, and BNY MIDWEST TRUST COMPANY, as trustee (in such capacity and
together with its successors in such capacity, the "INDENTURE TRUSTEE") pursuant
to which the Company intends to issue 8.75% Senior Secured Notes due 2012
(including any related exchange notes, the "NOTES") in an aggregate principal
amount of $192,500,000;
WHEREAS, reference is made to that certain ISDA Master Agreement (together
with the schedule thereto and the confirmations thereunder, as amended,
supplemented, amended and restated or otherwise modified and in effect from time
to time, the "HEDGE AGREEMENT"), dated as of June 30, 2004, by and between
Capital C Ohio, Inc. and X. Xxxx & Company (together with its successors, the
"HEDGE COUNTERPARTY"), and assumed by Company as of the date hereof pursuant to
the merger between Company and Capital C Ohio Inc., pursuant to which the
Company and the Hedge Counterparty have entered into certain gas price swaps;
WHEREAS, pursuant to the Indenture and the Hedge Agreement, each Grantor
is required to execute and deliver this Agreement;
WHEREAS, the Grantors may, from time to time, incur Parity Lien Debt (as
defined in the Collateral Trust Agreement referred to below) that will, subject
to the terms and conditions of the Indenture and the Hedge Agreement, be secured
on a second priority basis by the Collateral (as defined herein) and constitute
Secured Obligations (as defined herein) hereunder;
WHEREAS, as of the date hereof, the Grantors have also entered into (a)
that certain Credit and Guaranty Agreement, dated as of the date hereof (as may
be amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), by and among the Grantors, the lenders party thereto from time to
time (collectively, the "Lenders"), Xxxxxxx Sachs Credit Partners L.P., as Sole
Lead Arranger, Sole Book Runner, Sole Syndication Agent and Administrative Agent
(the "ADMINISTRATIVE AGENT"), and [DOCUMENTATION AGENT], as Documentation Agent,
and (b) that Priority Lien Pledge and Security Agreement, dated as of the date
hereof (as may be amended, supplemented or otherwise modified from time to time,
the "PRIORITY LIEN SECURITY AGREEMENT"), by and between each Grantor and Xxxxx
Fargo Bank, N.A., as Collateral Trustee, for the benefit of the holders of
Priority Lien Obligations (as defined in the Collateral Trust Agreement referred
to below), pursuant to which each Grantor has granted a first priority Lien on
the Collateral to secure the such Grantor's obligations under the Credit
Documents (as defined in the Credit Agreement);
WHEREAS the Grantors, the Administrative Agent, the Indenture Trustee, the
Hedge Counterparty and the Collateral Trustee have entered into a Collateral
Trust Agreement, dated as of the date hereof (as may be amended, supplemented or
otherwise modified from time to time, the "COLLATERAL TRUST AGREEMENT"); and
WHEREAS, in consideration of the accommodations of the holders of the
Notes, the Hedge Counterparty and other holders of Parity Lien Obligations, each
Grantor has agreed to secure such Grantor's obligations under the Senior Secured
Note Documents and the Hedge Agreement Documents and the other Parity Lien
Documents (as each term is defined in the Collateral Trust Agreement) as set
forth herein.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Collateral
Trustee agree as follows:
SECTION 1. DEFINITIONS; GRANT OF SECURITY.
1.1 GENERAL DEFINITIONS.
In this Agreement, the following terms shall have the following
meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.
"ADDITIONAL GRANTORS" shall have the meaning assigned in Section
5.3.
"AGREEMENT" shall have the meaning set forth in the preamble.
"AS-EXTRACTED COLLATERAL" shall mean all "as-extracted collateral"
as defined in Article 9 of the UCC.
"ASSIGNED AGREEMENTS" shall mean all agreements and contracts to
which such Grantor is a party as of the date hereof, or to which such Grantor
becomes a party after the date hereof, including, without limitation, each
Material Contract, as each such agreement may be amended, supplemented or
otherwise modified from time to time.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"CASH PROCEEDS" shall have the meaning assigned in Section 7.7.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in Article
9 of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC.
"COLLATERAL" shall have the meaning assigned in Section 2.1.
"COLLATERAL ACCOUNT" shall mean any account established by the
Collateral Trustee.
"COLLATERAL TRUSTEE" shall have the meaning set forth in the
preamble.
"COLLATERAL TRUST AGREEMENT" shall have the meaning set forth in the
recitals.
"COLLATERAL RECORDS" shall mean books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications, manuals,
computer software,
2
computer printouts, tapes, disks and related data processing software and
similar items that at any time evidence or contain information relating to any
of the Collateral or are otherwise necessary or helpful in the collection
thereof or realization thereupon.
"COLLATERAL SUPPORT" shall mean all property (real or personal)
assigned, hypothecated or otherwise securing any Collateral and shall include
any security agreement or other agreement granting a lien or security interest
in such real or personal property.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort claims" as
defined in Article 9 of the UCC, including, without limitation, all commercial
tort claims listed on Schedule 4.8 (as such schedule may be amended or
supplemented from time to time).
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4 under the heading "COMMODITIES ACCOUNTS"
(as such schedule may be amended or supplemented from time to time).
"COMPANY" shall have the meaning set forth in the recitals.
"CONTROLLED FOREIGN CORPORATION" shall mean "controlled foreign
corporation" as defined in the Tax Code.
"COPYRIGHT LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Copyrights (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(B) (as such schedule may be amended or supplemented from time
to time).
"COPYRIGHTS" shall mean all United States, and foreign copyrights
(including Community designs), including but not limited to copyrights in
software and databases, and all Mask Works (as defined under 17 U.S.C. 901 of
the U.S. Copyright Act), whether registered or unregistered, and, with respect
to any and all of the foregoing: (i) all registrations and applications therefor
including, without limitation, the registrations and applications referred to in
Schedule 4.7(A) (as such schedule may be amended or supplemented from time to
time), (ii) all extensions and renewals thereof, (iii) all rights corresponding
thereto throughout the world, (iv) all rights to xxx for past, present and
future infringements thereof, and (v) all Proceeds of the foregoing, including,
without limitation, licenses, royalties, income, payments, claims, damages and
proceeds of suit.
"CREDIT AGREEMENT" shall have the meaning set forth in the recitals.
"DEFEASANCE ACCOUNT" shall mean any Deposit Account to be titled
"Defeasance Account" or words of similar nature established or maintained for
the benefit of the holders of Senior Secured Note Obligations (as defined in the
Collateral Trust Agreement).
"DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as defined
in Article 9 of the UCC and (ii) shall include, without limitation, all of the
accounts listed on Schedule 4.4 under the heading "Deposit Accounts" (as such
schedule may be amended or supplemented from time to time).
"DOCUMENTS" shall mean all "documents" as defined in Article 9 of
the UCC.
3
"EQUIPMENT" shall mean: (i) all "equipment" as defined in Article 9
of the UCC, (ii) all machinery, manufacturing equipment, data processing
equipment, computers, office equipment, furnishings, furniture, appliances,
fixtures, tools, oil xxxxx, gas xxxxx, injection xxxxx or other xxxxx or well
equipment, field separators, liquid extraction plants, plant compressors, pumps,
pumping units, pipelines, sales and flow lines, gathering lines, field gathering
systems, salt water disposal facilities, tanks and tank batteries, valves,
fittings, machinery and parts, engines, boilers, meters, apparatus, equipment,
appliances, tools, implements, cables, wires towers, casing, tubing and rods,
power and telephone and telegraph lines (in each case, regardless of whether
characterized as equipment under the UCC) and (iii) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing, including any fixtures.
"EVENT OF DEFAULT" shall have the meaning set forth in the Indenture
and the Hedge Agreement.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles" as
defined in Article 9 of the UCC, including "payment intangibles" also as defined
in Article 9 of the UCC and (ii) shall include, without limitation, all interest
rate or currency protection or hedging arrangements, all tax refunds, all
licenses, permits, concessions and authorizations, all Assigned Agreements and
all Intellectual Property (in each case, regardless of whether characterized as
general intangibles under the UCC).
"GOODS" (i) shall mean all "goods" as defined in Article 9 of the
UCC and (ii) shall include, without limitation, all Inventory and Equipment (in
each case, regardless of whether characterized as goods under the UCC).
"GRANTORS" shall have the meaning set forth in the preamble.
"HEDGE COUNTERPARTY" shall have the meaning set forth in the
recitals.
"INDENTURE TRUSTEE" shall have the meaning set forth in the
recitals.
"HYDROCARBONS" shall mean, collectively, oil, gas, casinghead gas,
condensate, natural gas liquids finished and unfinished petroleum products and
other liquid or gaseous hydrocarbons (including, without limitation, all
liquefiable hydrocarbons and other products that may be extracted from gas and
gas condensate by processing thereof in a gas processing plant).
"INSTRUMENTS" shall mean all "instruments" as defined in Article 9
of the UCC.
"INSURANCE" shall mean (i) all insurance policies covering any or
all of the Collateral (regardless of whether the Collateral Trustee is the loss
payee thereof) and (ii) any key man life insurance policies.
"INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights,
the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.
"INVENTORY" shall mean (i) all "inventory" as defined in Article 9
of the UCC, and (ii) all goods (including oil, gas and other minerals after
extraction) held for sale or lease or to be furnished under contracts of service
or so leased or furnished, all raw materials, work in
4
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise used or consumed in any Grantor's business; all
goods in which any Grantor has an interest in mass or a joint or other interest
or right of any kind; and all goods which are returned to or repossessed by any
Grantor, all computer programs embedded in any goods and all accessions thereto
and products thereof (in each case, regardless of whether characterized as
inventory under the UCC).
"INVESTMENT ACCOUNTS" shall mean the Collateral Account, Securities
Accounts, Commodities Accounts and Deposit Accounts.
"INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment
property" (as such term is defined in Article 9 of the UCC) and (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.
"LENDER" shall have the meaning set forth in the recitals.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right" as
defined in Article 9 of the UCC.
"LIEN" shall mean (i) any lien, mortgage, pledge, assignment,
security interest, charge or encumbrance of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, and any lease in the nature thereof) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing and
(ii) in the case of Pledged Equity Interests, any purchase option, call or
similar right of a third party with respect to such Pledged Equity Interests.
"MONEY" shall mean "money" as defined in the UCC.
"NON-ASSIGNABLE CONTRACT" shall mean any agreement, contract or
license to which any Grantor is a party that by its terms purports to restrict
or prevent the assignment or granting of a security interest therein (either by
its terms or by any federal or state statutory prohibition or otherwise
irrespective of whether such prohibition or restriction is enforceable under
Section 9-406 through 409 of the UCC).
"NOTES" shall have the meaning set forth in the recitals.
"PATENT LICENSES" shall mean all agreements providing for the
granting of any right in or to Patents (whether such Grantor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"PATENTS" shall mean all United States and foreign patents and
certificates of invention, or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 4.7(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations thereof, (iii) all rights corresponding thereto throughout the
world, (iv) all inventions and improvements described therein, (v) all rights to
xxx for past, present and future infringements thereof, (vi) all licenses,
claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds
of the
5
foregoing, including, without limitation, licenses, royalties, income, payments,
claims, damages, and proceeds of suit.
"PLEDGE SUPPLEMENT" shall mean any supplement to this agreement in
substantially the form of Exhibit A.
"PLEDGED DEBT" shall mean all Indebtedness owed to such Grantor,
including, without limitation, all Indebtedness described on Schedule 4.4(A)
under the heading "Pledged Debt" (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, and all interest, cash, instruments
and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
Indebtedness.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests.
"PLEDGED LLC INTERESTS" shall mean all interests in any limited
liability company including, without limitation, all limited liability company
interests listed on Schedule 4.4(A) under the heading "Pledged LLC Interests"
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such limited liability company interests and
any interest of such Grantor on the books and records of such limited liability
company or on the books and records of any securities intermediary pertaining to
such interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such limited liability company interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in any
general partnership, limited partnership, limited liability partnership or other
partnership including, without limitation, all partnership interests listed on
Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such partnership interests and any interest of such Grantor
on the books and records of such partnership or on the books and records of any
securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and
other property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such partnership
interests.
"PLEDGED STOCK" shall mean all shares of capital stock owned by such
Grantor, including, without limitation, all shares of capital stock described on
Schedule 4.4(A) under the heading "Pledged Stock" (as such schedule may be
amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares.
"PLEDGED TRUST INTERESTS" shall mean all interests in a Delaware
business trust or other trust including, without limitation, all trust interests
listed on Schedule 4.4(A) under the heading "Pledged Trust Interests" (as such
schedule may be amended or supplemented from time to time) and the certificates,
if any, representing such trust interests and any interest of such Grantor on
the books and records of such trust or on the books and records of any
securities
6
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of
the UCC, (ii) payments or distributions made with respect to any Investment
Related Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
"PRIORITY LIEN SECURITY AGREEMENT" shall have the meaning set forth
in the recitals.
"RECEIVABLES" shall mean all rights to payment, whether or not
earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation all such rights constituting or evidenced by any
As-extracted Collateral, Account, Chattel Paper, Instrument, General Intangible
or Investment Related Property, together with all of Grantor's rights, if any,
in any goods or other property giving rise to such right to payment and all
Collateral Support and Supporting Obligations related thereto and all
Receivables Records.
"RECEIVABLES RECORDS" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence, credit or other
files, Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of Grantor or any computer bureau or agent from time to time acting for
Grantor or otherwise, (iii) all evidences of the filing of financing statements
and the registration of other instruments in connection therewith, and
amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"RECORD" shall have the meaning specified in Article 9 of the UCC.
"REDEMPTION ACCOUNT" shall mean any Deposit Account to be titled
"Redemption Account" or words of similar nature established or maintained for
the benefit of the holders of Senior Secured Note Obligations (as defined in the
Collateral Trust Agreement).
"SECURED OBLIGATIONS" shall have the meaning assigned in Section
3.1.
"SECURED PARTIES" shall mean the holders of the Notes, the Hedge
Counterparty, the Indenture Trustee, the Collateral Trustee and the other
holders of Parity Lien Obligations and shall include, without limitation, all
former holders of the Notes, the Hedge Counterparty, the Indenture Trustee, the
Collateral Trustee and other holders of Parity Lien Obligations to the extent
that any Obligations owing to such Persons were incurred while such Persons were
holders of the Notes, the Hedge Counterparty, the Indenture Trustee, the
Collateral Trustee and other holders of Parity Lien Obligations and such
Obligations have not been paid or satisfied in full.
7
"SECURITIES" shall mean any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures,
notes, or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACCOUNTS" (i) shall mean all "securities accounts" as
defined in Article 8 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4(A) under the heading "Securities
Accounts" (as such schedule may be amended or supplemented from time to time).
"SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code of
1986, as amended from time to time.
"TRADEMARK LICENSES" shall mean any and all agreements providing for
the granting of any right in or to Trademarks (whether such Grantor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule 4.7(F) (as such schedule may be amended or supplemented from time
to time).
"TRADEMARKS" shall mean all United States, and foreign trademarks,
trade names, corporate names, company names, business names, fictitious business
names, Internet domain names, service marks, certification marks, collective
marks, logos, other source or business identifiers, designs and general
intangibles of a like nature, all registrations and applications for any of the
foregoing including, but not limited to: (i) the registrations and applications
referred to in Schedule 4.7(E) (as such schedule may be amended or supplemented
from time to time), (ii) all extensions or renewals of any of the foregoing,
(iii) all of the goodwill of the business connected with the use of and
symbolized by the foregoing, (iv) the right to xxx for past, present and future
infringement or dilution of any of the foregoing or for any injury to goodwill,
and (v) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements providing
for the granting of any right in or to Trade Secrets (whether such Grantor is
licensee or licensor thereunder) including, without limitation, each agreement
referred to in Schedule 4.7(G) (as such schedule may be amended or supplemented
from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or referring in any way to such
Trade Secret, including but not limited to: (i) the right to xxx for past,
present and future misappropriation or other violation of any Trade Secret, and
(ii) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
8
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.
"UNITED STATES" shall mean the United States of America.
1.2 DEFINITIONS; INTERPRETATION.
All capitalized terms used herein (including the preamble and recitals
hereto) and not otherwise defined herein shall have the meanings ascribed
thereto in the Collateral Trust Agreement or, if not defined therein, in the
UCC. References to "Sections," "Exhibits" and "Schedules" shall be to Sections,
Exhibits and Schedules, as the case may be, of this Agreement unless otherwise
specifically provided. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect. Any of the
terms defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference. The use herein of the word
"include" or "including", when following any general statement, term or matter,
shall not be construed to limit such statement, term or matter to the specific
items or matters set forth immediately following such word or to similar items
or matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
Notwithstanding anything herein to the contrary, the Lien and security interest
granted to the Collateral Trustee pursuant to this Agreement and the exercise of
any right or remedy by such Collateral Trustee hereunder are subject to the
provisions of the Collateral Trust Agreement. In the event of any conflict
between the terms of the Collateral Trust Agreement and this Agreement, the
terms of the Collateral Trust Agreement will govern. All references herein to
provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.
SECTION 2. GRANT OF SECURITY.
2.1 GRANT OF SECURITY.
Each Grantor hereby grants to the Collateral Trustee for the benefit of
the Secured Parties a security interest in and continuing lien on all of such
Grantor's right, title and interest in, to and under all personal property of
such Grantor including, but not limited to the following, in each case whether
now owned or existing or hereafter acquired or arising and wherever located (all
of which being hereinafter collectively referred to as the "COLLATERAL"):
(a) Accounts;
(b) As-extracted Collateral;
(c) Chattel Paper;
(d) Documents;
(e) General Intangibles;
(f) Goods;
9
(g) Instruments;
(h) Insurance;
(i) Intellectual Property;
(j) Investment Related Property;
(k) Letter of Credit Rights;
(l) Money;
(m) Receivables and Receivable Records;
(n) Commercial Tort Claims;
(o) each contract and other agreements of Grantor relating to the
sale or other disposition of Hydrocarbons, Inventory, Equipment or other goods
or products, and all operating agreements, farm-out agreements, farm-in
agreements, development agreements, participation agreements, area of mutual
interest agreements, equipment leases, purchase agreements, sale agreements,
option agreements and other agreements which cover, affect or otherwise relate
to the production, sale, purchase, exchange, processing, handling, storing,
transporting or marketing of the Hydrocarbons;
(p) all rights, titles, interests and estates now owned or hereafter
acquired by Grantor in and to all Hydrocarbons, including, without limitation,
all oil and gas in tanks and all rents, issues, profits, proceeds (including,
without limitation, all prepayment for production not taken or payments in lieu
of production), products and revenues;
(q) all Documents or other receipts of Grantor covering, evidencing
or representing the sale of Hydrocarbons, Inventory, Equipment or other goods or
products;
(r) all rights, claims and benefits of Grantor against any Person
arising out of, relating to or in connection with the purchasing by Grantor of
any rights, titles, interests and estates in any minerals including
Hydrocarbons, Inventory, Equipment or such other goods and products, including,
without limitation, any such rights, claims or benefits against any Person
storing or transporting such items;
(s) to the extent not otherwise included above, all Collateral
Records, Collateral Support and Supporting Obligations relating to any of the
foregoing; and
(t) to the extent not otherwise included above, all Proceeds,
products, accessions, rents and profits of or in respect of any of the
foregoing.
2.2 CERTAIN LIMITED EXCLUSIONS.
Notwithstanding anything herein to the contrary, in no event shall the
security interest granted under Section 2.1 hereof attach to (a) any lease,
license, contract, property rights or agreement to which any Grantor is a party
or any of its rights or interests thereunder if and for so long as the grant of
such security interest shall constitute or result in (i) the abandonment,
invalidation or unenforceability of any right, title or interest of any Grantor
therein or (ii) in a
10
breach or termination pursuant to the terms of, or a default under, any such
lease, license, contract property rights or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity), provided however that such security interest
shall attach immediately at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and to the extent severable,
shall attach immediately to any portion of such Lease, license, contract,
property rights or agreement that does not result in any of the consequences
specified in (i) or (ii) above; (b) in any of the outstanding capital stock of a
Controlled Foreign Corporation in excess of 65% of the voting power of all
classes of capital stock of such Controlled Foreign Corporation entitled to
vote; provided that immediately upon the amendment of the Tax Code to allow the
pledge of a greater percentage of the voting power of capital stock in a
Controlled Foreign Corporation without adverse tax consequences, the Collateral
shall include, and the security interest granted by each Grantor shall attach
to, such greater percentage of capital stock of each Controlled Foreign
Corporation; (c) any TBR Delayed Transfer Assets; (d) any Redemption Account or
Defeasance Account; or (e) any other assets constituting real property.
2.3 SUBORDINATION.
Notwithstanding anything herein to the contrary, it is the understanding
of the parties that the Liens granted pursuant to Section 2.1 shall, prior to
the Discharge of Priority Lien Obligations, be subject and subordinate to the
Liens granted to the Collateral Trustee for the benefit of the holders of the
Priority Lien Obligations to secure the Priority Lien Obligations pursuant to
Priority Lien Pledge Agreement and all other rights and remedies of the
Collateral Trustee and the other Secured Parties are further subject to the
intercreditor and subordination provisions of the Collateral Trustee Agreement.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral is collateral security for,
the prompt and complete payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. Section 362(a) (and any successor provision thereof)), of all Parity Lien
Obligations with respect to every Grantor (the "SECURED OBLIGATIONS").
3.2 CONTINUING LIABILITY UNDER COLLATERAL.
Notwithstanding anything herein to the contrary, (i) each Grantor shall
remain liable for all obligations under the Collateral and nothing contained
herein is intended or shall be a delegation of duties to the Collateral Trustee
or any Secured Party, (ii) each Grantor shall remain liable under each of the
agreements included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
to perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and neither the Collateral
Trustee nor any Secured Party shall have any obligation or liability under any
of such agreements by reason of or arising out of this Agreement or any other
document related thereto nor shall the Collateral Trustee nor any Secured Party
have any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or
enforce any rights under any agreement included in the Collateral, including,
without limitation, any agreements relating to Pledged
11
Partnership Interests or Pledged LLC Interests, and (iii) the exercise by the
Collateral Trustee of any of its rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 GENERALLY.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and on each Credit Date, that:
(i) it owns the Collateral purported to be owned by it or
otherwise has the rights it purports to have in each item of Collateral
and, as to all Collateral whether now existing or hereafter acquired, will
continue to own or have such rights in each item of the Collateral, except
as otherwise permitted by the Parity Lien Documents, in each case free and
clear of any and all Liens, rights or claims of all other Persons,
including, without limitation, liens arising as a result of such Grantor
becoming bound (as a result of merger or otherwise) as debtor under a
security agreement entered into by another Person other than Permitted
Liens (as defined in the Indenture);
(ii) it has indicated on Schedule 4.1(A)(as such schedule may
be amended or supplemented from time to time): (w) the type of
organization of such Grantor, (x) the jurisdiction of organization of such
Grantor, (y) its organizational identification number and (z) the
jurisdiction where the chief executive office or its sole place of
business is, and for the one-year period preceding the date hereof has
been, located.
(iii) the full legal name of such Grantor is as set forth on
Schedule 4.1(A) and it has not done in the last five (5) years, and does
not do, business under any other name (including any trade-name or
fictitious business name) except for those names set forth on Schedule
4.1(B) (as such schedule may be amended or supplemented from time to
time);
(iv) except as provided on Schedule 4.1(C), it has not changed
its name, jurisdiction of organization, chief executive office or sole
place of business or its corporate structure in any way (e.g., by merger,
consolidation, change in corporate form or otherwise) within the past five
(5) years;
(v) it has not within the last five (5) years become bound
(whether as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person, which has not heretofore been
terminated other than the agreements identified on Schedule 4.1(D) hereof
(as such schedule may be amended or supplemented from time to time);
(vi) with respect to each agreement identified on Schedule
4.1(D), it has indicated on Schedule 4.1 (A) and Schedule 4.1(B) the
information required pursuant to Section 4.1(a)(ii), (iii) and (iv) with
respect to the debtor under each such agreement;
(vii) (u) upon the filing of all UCC financing statements
naming each Grantor as "debtor" and the Collateral Trustee as "secured
party" and describing the
12
Collateral in the filing offices set forth opposite such Grantor's name on
Schedule 4.1(E) hereof (as such schedule may be amended or supplemented
from time to time) and other filings delivered by each Grantor, (v) upon
delivery of all Instruments, Chattel Paper and certificated Pledged Equity
Interests and Pledged Debt in accordance with the Collateral Trust
Agreement, (w) upon sufficient identification of Commercial Tort Claims,
(x) upon execution of a control agreement establishing the Collateral
Trustee's "control" (within the meaning of Section 9-806, 9-106 or 9-104
of the UCC, as applicable) with respect to any Investment Account, (y)
upon consent of the issuer with respect to Letter of Credit Rights, and
(z) to the extent not subject to Article 9 of the UCC, upon recordation of
the security interests granted hereunder in Patents, Trademarks and
Copyrights in the applicable intellectual property registries, including
but not limited to the United States Patent and Trademark Office and the
United States Copyright Office, the security interests granted to the
Collateral Trustee hereunder constitute valid and perfected first priority
Liens (subject in the case of priority only to Permitted Liens (as defined
in the Indenture) and to the rights of the United States government
(including any agency or department thereof) with respect to United States
government Receivables) on all of the Collateral;
(viii) all actions and consents, including all filings,
notices, registrations and recordings necessary or desirable for the
exercise by the Collateral Trustee of the voting or other rights provided
for in this Agreement or the exercise of remedies in respect of the
Collateral have been made or obtained or otherwise authorized for filing;
(ix) other than the financing statements filed in favor of the
Collateral Trustee, no effective UCC financing statement, fixture filing
or other instrument similar in effect under any applicable law covering
all or any part of the Collateral is on file in any filing or recording
office except for (x) financing statements for which proper termination
statements have been delivered to the Collateral Trustee for filing and
(y) financing statements filed in connection with Permitted Liens (as
defined in the Indenture);
(x) no authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body is
required for either (i) the pledge or grant by any Grantor of the Liens
purported to be created in favor of the Collateral Trustee hereunder or
(ii) the exercise by Collateral Trustee of any rights or remedies in
respect of any Collateral (whether specifically granted or created
hereunder or created or provided for by applicable law), except (A) for
the filings contemplated by clause (vii) above and (B) as may be required,
in connection with the disposition of any Investment Related Property, by
laws generally affecting the offering and sale of Securities;
(xi) all information supplied by any Grantor with respect to
any of the Collateral (in each case taken as a whole with respect to any
particular Collateral) is accurate and complete in all material respects;
(xii) none of the Collateral constitutes, or is the Proceeds
of, "farm products" (as defined in the UCC);
(xiii) it does not own any timber to be cut;
13
(xiv) except as described on Schedule 4.1(D), such Grantor has
not become bound as a debtor, either by contract or by operation of law,
by a security agreement previously entered into by another Person; and
(xv) such Grantor has been duly organized as an entity of the
type as set forth opposite such Grantor's name on Schedule 4.1(A) solely
under the laws of the jurisdiction as set forth opposite such Grantor's
name on Schedule 4.1(A) and remains duly existing as such. Such Grantor
has not filed any certificates of domestication, transfer or continuance
in any other jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) it shall not produce, use or permit any Collateral to be
used unlawfully or in violation of any provision of this Agreement;
(ii) it shall not change such Grantor's name, identity,
corporate structure (e.g., by merger, consolidation, change in corporate
form or otherwise) sole place of business (or principal residence if such
Grantor is a natural person), chief executive office, type of organization
or jurisdiction of organization or establish any trade names unless it
shall have (a) notified the Collateral Trustee in writing, by executing
and delivering to the Collateral Trustee a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, at least thirty (30) days prior to any
such change or establishment, identifying such new proposed name,
identity, corporate structure, sole place of business (or principal
residence if such Grantor is a natural person), chief executive office,
jurisdiction of organization or trade name and providing such other
information in connection therewith as the Collateral Trustee may
reasonably request and (b) taken all actions necessary or advisable to
maintain the continuous validity, perfection and the same or better
priority of the Collateral Trustee's security interest in the Collateral
intended to be granted and agreed to hereby;
(iii) it shall not take or permit any action which could
impair the Collateral Trustee's rights in the Collateral except as
otherwise permitted by the Parity Lien Documents; and
(iv) it shall not sell, transfer or assign (by operation of
law or otherwise) any Collateral except as otherwise permitted by the
Parity Lien Documents.
4.2 AS-EXTRACTED COLLATERAL, EQUIPMENT AND INVENTORY.
(a) Representations and Warranties. Each Grantor represents and
warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.2 (as such schedule may be amended or
supplemented from time to time) sets forth all of the locations of the
wellheads of the As-extracted Collateral;
14
(ii) all of the Inventory included in the Collateral is kept
for the past four (4) years only at the locations specified in Schedule
4.2 (as such schedule may be amended or supplemented from time to time);
and
(iii) none of the Inventory or Equipment is in the possession
of an issuer of a negotiable document (as defined in Section 7-104 of the
UCC) therefor or otherwise in the possession of a bailee or a
warehouseman.
(b) Covenants and Agreements. Each Grantor covenants and agrees
that:
(i) it shall keep the Inventory and any Documents evidencing
any Equipment and Inventory in the locations specified on Schedule 4.2 (as
such schedule may be amended or supplemented from time to time) unless it
shall have (a) notified the Collateral Trustee in writing, by executing
and delivering to the Collateral Trustee a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with all
Supplements to Schedules thereto, at least thirty (30) days prior to any
change in locations, identifying such new locations and providing such
other information in connection therewith as the Collateral Trustee may
reasonably request and (b) taken all actions reasonably necessary or
advisable to maintain the continuous validity, perfection and the same or
better priority of the Collateral Trustee's security interest in the
Collateral intended to be granted and agreed to hereby, or to enable the
Collateral Trustee to exercise and enforce its rights and remedies
hereunder, with respect to the Equipment and Inventory;
(ii) it shall not deliver any Document evidencing any
Equipment and Inventory to any Person other than the issuer of such
Document to claim the Goods evidenced therefor or the Collateral Trustee;
(iii) if any Equipment or Inventory is in possession or
control of any third party, each Grantor shall join with the Collateral
Trustee in notifying the third party of the Collateral Trustee's security
interest and obtaining an acknowledgment from the third party that it is
holding the Equipment and Inventory for the benefit of the Collateral
Trustee; and
(iv) with respect to any item of Equipment which is covered by
a certificate of title under a statute of any jurisdiction under the law
of which indication of a security interest on such certificate is required
as a condition of perfection thereof, upon the reasonable request of the
Collateral Trustee, (A) provide information with respect to any such
Equipment in excess of $100,000 individually or $500,000 in the aggregate,
(B) execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security
interest created hereunder on such certificate of title, and (C) deliver
to the Collateral Trustee copies of all such applications or other
documents filed during such calendar quarter and copies of all such
certificates of title issued during such calendar quarter indicating the
security interest created hereunder in the items of Equipment covered
thereby.
4.3 RECEIVABLES.
15
(a) Representations and Warranties. Each Grantor represents and
warrants, on the Closing Date and on each Credit Date, that:
(i) each Receivable (a) is and will be the legal, valid and
binding obligation of the Account Debtor in respect thereof, representing
an unsatisfied obligation of such Account Debtor, (b) is and will be
enforceable in accordance with its terms, (c) is not and will not be
subject to any setoffs, defenses, taxes, counterclaims (except with
respect to disputes, refunds, returns and allowances in the ordinary
course of business) and (d) is and will be in compliance with all
applicable laws, whether federal, state, local or foreign;
(ii) none of the Account Debtors in respect of any Receivable
in excess of $5,000 is the government of the United States, any agency or
instrumentality thereof, any state or municipality or any foreign
sovereign. No Receivable in excess of $5,000 requires the consent of the
Account Debtor in respect thereof in connection with the pledge hereunder,
except any consent which has been obtained;
(iii) no Receivable is evidenced by, or constitutes, an
Instrument or Chattel Paper which has not been delivered to, or otherwise
subjected to the control of, the Collateral Trustee to the extent required
by, and in accordance with Section 4.3(c); and
(iv) each Grantor has delivered to the Collateral Trustee a
complete and correct copy of each standard form of document under which a
Receivable may arise.
(b) Covenants and Agreements: Each Grantor hereby covenants and
agrees that:
(i) it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables, including, but not
limited to, the originals of all documentation with respect to all
Receivables and records of all payments received and all credits granted
on the Receivables, all merchandise returned and all other dealings
therewith;
(ii) it shall perform in all material respects all of its
material obligations with respect to the Receivables;
(iii) it shall not amend, modify, terminate or waive any
provision of any Receivable in any manner which could reasonably be
expected to have a Material Adverse Effect on the value of such Receivable
as Collateral. Other than in the ordinary course of business as generally
conducted by it on and prior to the date hereof, and other than as
permitted by the Parity Lien Documents and except as otherwise provided in
subsection (iv) below, following an Event of Default, such Grantor shall
not (w) grant any extension or renewal of the time of payment of any
Receivable, (x) compromise or settle any dispute, claim or legal
proceeding with respect to any Receivable for less than the total unpaid
balance thereof, (y) release, wholly or partially, any Person liable for
the payment thereof, or (z) allow any credit or discount thereon;
(iv) except as otherwise provided in this subsection, each
Grantor shall continue to collect all amounts due or to become due to such
Grantor under the
16
Receivables and any Supporting Obligation and diligently exercise each
material right it may have under any Receivable any Supporting Obligation
or Collateral Support, in each case, at its own expense, and in connection
with such collections and exercise, such Grantor shall take such action as
such Grantor or the Collateral Trustee may deem necessary or advisable.
Notwithstanding the foregoing, the Collateral Trustee shall have the right
at any time to notify, or require any Grantor to notify, any Account
Debtor of the Collateral Trustee's security interest in the Receivables
and any Supporting Obligation and, in addition, at any time following the
occurrence and during the continuation of an Event of Default, the
Collateral Trustee may: (1) direct the Account Debtors under any
Receivables to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Trustee; (2) notify, or
require any Grantor to notify, each Person maintaining a lockbox or
similar arrangement to which Account Debtors under any Receivables have
been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to the Collateral
Trustee; and (3) enforce, at the expense of such Grantor, collection of
any such Receivables and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor
might have done. If the Collateral Trustee notifies any Grantor that it
has elected to collect the Receivables in accordance with the preceding
sentence, any payments of Receivables received by such Grantor shall be
forthwith (and in any event within two (2) Business Days) deposited by
such Grantor in the exact form received, duly indorsed by such Grantor to
the Collateral Trustee if required, in the Collateral Account maintained
under the sole dominion and control of the Collateral Trustee, and until
so turned over, all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Receivables, any
Supporting Obligation or Collateral Support shall be received in trust for
the benefit of the Collateral Trustee hereunder and shall be segregated
from other funds of such Grantor and such Grantor shall not adjust, settle
or compromise the amount or payment of any Receivable, or release wholly
or partly any Account Debtor or obligor thereof, or allow any credit or
discount thereon; and
(v) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating to any
Receivable.
(c) Delivery and Control of Receivables. With respect to any
Receivables in excess of $10,000 individually or $100,000 in the aggregate that
is evidenced by, or constitutes, Chattel Paper or Instruments, each Grantor
shall cause each originally executed copy thereof to be delivered to the
Collateral Trustee (or its agent or designee) or otherwise in accordance with
the Collateral Trust Agreement appropriately indorsed to the Collateral Trustee
or indorsed in blank: (i) with respect to any such Receivables in existence on
the date hereof, on or prior to the date hereof and (ii) with respect to any
such Receivables hereafter arising, within ten (10) days of such Grantor
acquiring rights therein. With respect to any Receivables in excess of $10,000
individually or $100,000 in the aggregate which would constitute "electronic
chattel paper" under Article 9 of the UCC, each Grantor shall take all steps
necessary to give the Collateral Trustee control over such Receivables (within
the meaning of Section 9-105 of the UCC): (i) with respect to any such
Receivables in existence on the date hereof, on or prior to the date hereof and
(ii) with respect to any such Receivables hereafter arising, within ten (10)
days of such Grantor acquiring rights therein. Subject to the Collateral Trustee
Agreement, any Receivable not otherwise required to be delivered or subjected to
the control of the Collateral Trustee in accordance with this subsection (c)
shall be delivered or subjected to such control upon request of the Collateral
Trustee.
17
4.4 INVESTMENT RELATED PROPERTY
4.4.1
4.4.1 INVESTMENT RELATED PROPERTY GENERALLY
(a) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) in the event it acquires rights in any Investment Related
Property after the date hereof, it shall deliver to the Collateral Trustee
a completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto,
reflecting such new Investment Related Property and all other Investment
Related Property. Notwithstanding the foregoing, it is understood and
agreed that the security interest of the Collateral Trustee shall attach
to all Investment Related Property immediately upon any Grantor's
acquisition of rights therein and shall not be affected by the failure of
any Grantor to deliver a supplement to Schedule 4.4 as required hereby;
(ii) except as provided in the next sentence, in the event
such Grantor receives any dividends, interest or distributions on any
Investment Related Property, or any securities or other property upon the
merger, consolidation, liquidation or dissolution of any issuer of any
Investment Related Property, then (a) such dividends, interest or
distributions and securities or other property shall be included in the
definition of Collateral without further action and (b) such Grantor shall
immediately take all steps, if any, reasonably necessary or advisable to
ensure the validity, perfection, priority and, if applicable, control of
the Collateral Trustee over such Investment Related Property (including,
without limitation, delivery thereof to the Collateral Trustee) and
pending any such action such Grantor shall be deemed to hold such
dividends, interest, distributions, securities or other property in trust
for the benefit of the Collateral Trustee and shall segregate such
dividends, distributions, Securities or other property from all other
property of such Grantor. Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, the Collateral
Trustee authorizes each Grantor to retain all ordinary cash dividends and
distributions paid in the normal course of the business of the issuer and
consistent with the past practice of the issuer and all scheduled payments
of interest;
(iii) each Grantor consents to the grant by each other Grantor
of a Security Interest in all Investment Related Property to the
Collateral Trustee.
(b) Delivery and Control.
(i) Each Grantor agrees that with respect to any Investment
Related Property in which it currently has rights it shall comply with the
provisions of this Section 4.4.1(b) on or before the Credit Date and with
respect to any Investment Related Property hereafter acquired by such
Grantor it shall comply with the provisions of this Section 4.4.1(b)
immediately upon acquiring rights therein, in each case in form and
substance satisfactory to the Collateral Trustee. With respect to any
Investment Related Property that is represented by a certificate or that
is an "instrument" (other than any Investment Related Property credited to
a Securities Account) it shall cause such certificate or instrument to be
delivered to the Collateral Trustee, indorsed in blank by an
18
"effective indorsement" (as defined in Section 8-107 of the UCC),
regardless of whether such certificate constitutes a "certificated
security" for purposes of the UCC. With respect to any Investment Related
Property that is an "uncertificated security" for purposes of the UCC
(other than any "uncertificated securities" credited to a Securities
Account), it shall cause the issuer of such uncertificated security to
either (i) register the Collateral Trustee as the registered owner thereof
on the books and records of the issuer or (ii) execute an agreement
substantially in the form of Exhibit B hereto, pursuant to which such
issuer agrees to comply with the Collateral Trustee's instructions with
respect to such uncertificated security without further consent by such
Grantor.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have occurred and be
continuing:
(1) except as otherwise provided under the covenants and agreements
relating to investment related property in this Agreement or
elsewhere herein or in the Parity Lien Documents, each Grantor shall
be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Investment
Related Property or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Parity Lien
Documents; and
(2) the Collateral Trustee shall promptly execute and deliver (or cause
to be executed and delivered) to each Grantor all proxies, and other
instruments as such Grantor may from time to time reasonably request
for the purpose of enabling such Grantor to exercise the voting and
other consensual rights when and to the extent which it is entitled
to exercise pursuant to clause (1) above;
(3) Upon the occurrence and during the continuation of an Event of
Default:
(A) all rights of each Grantor to exercise or refrain from
exercising the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall
cease and all such rights shall thereupon become vested in the
Collateral Trustee who shall thereupon have the sole right to
exercise such voting and other consensual rights; and
(B) in order to permit the Collateral Trustee to exercise the
voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive
hereunder: (1) each Grantor shall promptly execute and deliver
(or cause to be executed and delivered) to the Collateral
Trustee all proxies, dividend payment orders and other
instruments as the Collateral Trustee may from time to time
reasonably request and (2) each Grantor acknowledges that the
Collateral Trustee may utilize the power of attorney set forth
in Section 6.1.
4.4.2 PLEDGED EQUITY INTERESTS
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and on each Credit Date, that:
19
(i) Schedule 4.4(A) (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Pledged
Stock, "Pledged LLC Interests," "Pledged Partnership Interests" and
"Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged
LLC Interests, Pledged Partnership Interests and Pledged Trust Interests
owned by any Grantor and such Pledged Equity Interests constitute the
percentage of issued and outstanding shares of stock, percentage of
membership interests, percentage of partnership interests or percentage of
beneficial interest of the respective issuers thereof indicated on such
Schedule;
(ii) except as set forth on Schedule 4.4(B), it has not
acquired any equity interests of another entity or substantially all the
assets of another entity within the past five (5) years;
(iii) it is the record and beneficial owner of the Pledged
Equity Interests free of all Liens, rights or claims of other Persons
other than Permitted Liens (as defined in the Indenture) and there are no
outstanding warrants, options or other rights to purchase, or shareholder,
voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale
of, any Pledged Equity Interests;
(iv) without limiting the generality of Section 4.1(a)(x), no
consent of any Person including any other general or limited partner, any
other member of a limited liability company, any other shareholder or any
other trust beneficiary is necessary or desirable in connection with the
creation, perfection or first priority status of the security interest of
the Collateral Trustee in any Pledged Equity Interests or the exercise by
the Collateral Trustee of the voting or other rights provided for in this
Agreement or the exercise of remedies in respect thereof;
(v) none of the Pledged LLC Interests nor Pledged Partnership
Interests are or represent interests in issuers that: (a) are registered
as investment companies or (b) are dealt in or traded on securities
exchanges or markets; and
(vi) other than with respect to Great West Operating Company,
L.C., all of the Pledged LLC Interests and Pledged Partnership Interests
are or represent interests in issuers that have opted to be treated as
securities under the uniform commercial code of any jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) without the prior written consent of the Collateral
Trustee, it shall not vote to enable or take any other action to: (a)
amend or terminate any partnership agreement, limited liability company
agreement, certificate of incorporation, by-laws or other organizational
documents in any way that materially changes the rights of such Grantor
with respect to any Investment Related Property or adversely affects the
validity, perfection or priority of the Collateral Trustee's security
interest, (b) permit any issuer of any Pledged Equity Interest to issue
any additional stock, partnership interests, limited liability company
interests or other equity interests of any nature or to issue securities
convertible into or granting the right of purchase or exchange for any
stock or other equity interest of any nature of such issuer, (c) other
than as permitted under the Parity Lien Documents, permit any issuer of
any Pledged Equity Interest to dispose of all
20
or a material portion of their assets, (d) waive any default under or
breach of any terms of any organizational document relating to the issuer
of any Pledged Equity Interest or the terms of any Pledged Debt, if such
default or breach could reasonably be expected to result in a Material
Adverse Effect, or (e) cause any issuer of any Pledged Partnership
Interests or Pledged LLC Interests which are not securities (for purposes
of the UCC) on the date hereof to elect or otherwise take any action to
cause such Pledged Partnership Interests or Pledged LLC Interests to be
treated as securities for purposes of the UCC; provided, however,
notwithstanding the foregoing, if any issuer of any Pledged Partnership
Interests or Pledged LLC Interests takes any such action in violation of
the foregoing in this clause (e), such Grantor shall promptly notify the
Collateral Trustee in writing of any such election or action and, in such
event, shall take all steps reasonably necessary or advisable to establish
the Collateral Trustee's "control" thereof;
(ii) it shall comply with all of its obligations under any
partnership agreement or limited liability company agreement relating to
Pledged Partnership Interests or Pledged LLC Interests and shall enforce
all of its rights with respect to any Investment Related Property, except
where such failure to comply or enforce could not reasonably be expected
to have a Material Adverse Effect;
(iii) without the prior written consent of the Collateral
Trustee, it shall not permit any issuer of any Pledged Equity Interest to
merge or consolidate unless (i) such issuer creates a security interest
that is perfected by a filed financing statement (that is not effective
solely under section 9-508 of the UCC) in collateral in which such new
debtor has or acquires rights, and (ii) all the outstanding capital stock
or other equity interests of the surviving or resulting corporation,
limited liability company, partnership or other entity is, upon such
merger or consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding equity
interests of any other constituent Grantor; provided that if the surviving
or resulting Grantors upon any such merger or consolidation involving an
issuer which is a Controlled Foreign Corporation, then such Grantor shall
only be required to pledge equity interests in accordance with Section
2.2; and
(iv) each Grantor consents to the grant by each other Grantor
of a security interest in all Investment Related Property to the
Collateral Trustee and, without limiting the foregoing, consents to the
transfer of any Pledged Partnership Interest and any Pledged LLC Interest
to the Collateral Trustee or its nominee following an Event of Default and
to the substitution of the Collateral Trustee or its nominee as a partner
in any partnership or as a member in any limited liability company with
all the rights and powers related thereto.
4.4.3 PLEDGED DEBT
Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and each Credit Date, that Schedule 4.4 (as
such schedule may be amended or supplemented from time to time) sets forth under
the heading "Pledged Debt" all of the Pledged Debt owned by any Grantor and all
of such Pledged Debt has been duly authorized, authenticated or issued, and
delivered and is the legal, valid and binding obligation of the issuers thereof
and is not in default and constitutes all of the issued and outstanding
inter-company Indebtedness.
4.4.4 INVESTMENT ACCOUNTS
21
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and each Credit Date, that:
(i) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Securities
Accounts" and "Commodities Accounts," respectively, all of the Securities
Accounts and Commodities Accounts in which each Grantor has an interest.
Each Grantor is the sole entitlement holder of each such Securities
Account and Commodity Account, and such Grantor has not consented to, and
is not otherwise aware of, any Person (other than the Collateral Trustee
pursuant hereto) having "control" (within the meanings of Sections 8-106
and 9-106 of the UCC) over, or any other interest in, any such Securities
Account or Commodity Account or securities or other property credited
thereto;
(ii) Schedule 4.4 hereto (as such schedule may be amended or
supplemented from time to time) sets forth under the headings "Deposit
Accounts" all of the Deposit Accounts in which each Grantor has an
interest. Each Grantor is the sole account holder of each such Deposit
Account and such Grantor has not consented to, and is not otherwise aware
of, any Person (other than the Collateral Trustee pursuant hereto) having
either sole dominion and control (within the meaning of common law) or
"control" (within the meanings of Section 9-104 of the UCC) over, or any
other interest in, any such Deposit Account or any money or other property
deposited therein; and
(iii) Each Grantor has taken all actions necessary or
desirable, including those specified in Section 4.4.4(c), to: (a)
establish Collateral Trustee's "control" (within the meanings of Sections
8-106 and 9-106 of the UCC) over any portion of the Investment Related
Property constituting Certificated Securities, Uncertificated Securities,
Securities Accounts, Securities Entitlements or Commodities Accounts (each
as defined in the UCC); (b) establish the Collateral Trustee's "control"
(within the meaning of Section 9-104 of the UCC) over all Deposit
Accounts; and (c) deliver all Instruments to the Collateral Trustee in
accordance with the Collateral Trust Agreement.
(b) Covenant and Agreement. Each Grantor hereby covenants and agrees
with the Collateral Trustee and each other Secured Party that it shall not close
or terminate any Investment Account without the prior consent of the Collateral
Trustee and unless a successor or replacement account has been established with
the consent of the Collateral Trustee with respect to which successor or
replacement account a control agreement has been entered into by the appropriate
Grantor, Collateral Trustee and securities intermediary or depository
institution at which such successor or replacement account is to be maintained
in accordance with the provisions of Section 4.4.4(c).
(c) Delivery and Control
(i) With respect to any Investment Related Property consisting
of Securities Accounts or Securities Entitlements, it shall cause the
securities intermediary maintaining such Securities Account or Securities
Entitlement to enter into an agreement substantially in the form of
Exhibit C hereto pursuant to which it shall agree to comply with the
Collateral Trustee's "entitlement orders" without further consent by such
Grantor. With respect to any Investment Related Property that is a
"Deposit Account," it shall cause the depositary institution maintaining
such account to enter into an agreement substantially in the form of
Exhibit D hereto, pursuant to which the Collateral Trustee shall have
"control" (within the meaning of Section 9-104 of the UCC)
22
over such Deposit Account. Each Grantor shall have entered into such
control agreement or agreements with respect to: (i) any Securities
Accounts, Securities Entitlements or Deposit Accounts that exist on the
Credit Date, as of or prior to the Credit Date and (ii) any Securities
Accounts, Securities Entitlements or Deposit Accounts that are created or
acquired after the Credit Date, as of or prior to the deposit or transfer
of any such Securities Entitlements or funds, whether constituting moneys
or investments, into such Securities Accounts or Deposit Accounts.
In addition to the foregoing, if any issuer of any Investment Related
Property is located in a jurisdiction outside of the United States, each
Grantor shall take such additional actions, including, without limitation,
causing the issuer to register the pledge on its books and records or
making such filings or recordings, in each case as may be necessary or
advisable, under the laws of such issuer's jurisdiction to insure the
validity, perfection and priority of the security interest of the
Collateral Trustee. Upon the occurrence of an Event of Default, the
Collateral Trustee shall have the right, without notice to any Grantor, to
transfer all or any portion of the Investment Related Property to its name
or the name of its nominee or agent. In addition, the Collateral Trustee
shall have the right at any time, without notice to any Grantor, to
exchange any certificates or instruments representing any Investment
Related Property for certificates or instruments of smaller or larger
denominations.
4.5 MATERIAL CONTRACTS.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.5 (as such schedule may be amended or
supplemented from time to time) sets forth all of the Material Contracts
to which such Grantor has rights; and
(ii) no Material Contract (other than any Non-Assignable
Contracts) prohibits assignment or requires consent of or notice to any
Person in connection with the assignment to the Collateral Trustee
hereunder, except such as has been given or made or is currently sought
pursuant to Section 4.5 (b)(vii) hereof.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that:
(i) in addition to any rights under the Section of this
Agreement relating to Receivables, the Collateral Trustee may at any time
notify, or require any Grantor to so notify, the counterparty on any
Material Contract of the security interest of the Collateral Trustee
therein. In addition, after the occurrence and during the continuance of
an Event of Default, the Collateral Trustee may upon written notice to the
applicable Grantor, notify, or require any Grantor to notify, the
counterparty to make all payments under the Material Contracts directly to
the Collateral Trustee;
(ii) it shall perform in all material respects all of its
material obligations with respect to the Material Contracts;
23
(iii) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating to any
Material Contract; and
(iv) each Grantor shall, within thirty (30) days of the date
hereof with respect to any Non-Assignable Contract that is a Material
Contract (other than the Credit Agreement, the Hedge Agreement or the
Indenture) in effect on the date hereof and within thirty (30) days after
entering into any Non-Assignable Contract that is a Material Contract
(other than the Credit Agreement, the Hedge Agreement or the Indenture)
after the Closing Date, request in writing the consent of the counterparty
or counterparties to such Non-Assignable Contract pursuant to the terms of
such Non-Assignable Contract or applicable law to the assignment or
granting of a security interest in such Non-Assignable Contract to Secured
Party and use its best efforts to obtain such consent as soon as
practicable thereafter.
4.6 LETTER OF CREDIT RIGHTS.
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and on each Credit Date, that:
(i) all material letters of credit to which such Grantor has
rights is listed on Schedule 4.6 (as such schedule may be amended or
supplemented from time to time) hereto; and
(ii) it has obtained the consent of each issuer of any
material letter of credit to the assignment of the proceeds of the letter
of credit to the Collateral Trustee.
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any material letter of credit hereafter arising it
shall obtain the consent of the issuer thereof to the assignment of the proceeds
of the letter of credit to the Collateral Trustee and shall deliver to the
Collateral Trustee a completed Pledge Supplement, substantially in the form of
Exhibit A attached hereto, together with all Supplements to Schedules thereto.
4.7 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed in Schedule
4.7(H) (as such schedule may be amended or supplemented from time to time), each
Grantor hereby represents and warrants, on the Closing Date and on each Credit
Date, that:
(i) Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) sets forth a true and complete list of (i)
all United States, state and foreign registrations of and applications for
Patents, Trademarks, and Copyrights owned by each Grantor and (ii) all
Patent Licenses, Trademark Licenses, Trade Secret Licenses and Copyright
Licenses in each case material to the business of such Grantor;
(ii) it is the sole and exclusive owner of the entire right,
title, and interest in and to all Intellectual Property listed on Schedule
4.7 (as such schedule may be amended or supplemented from time to time),
and owns or has the valid right to use all
24
other Intellectual Property used in or necessary to conduct its business,
free and clear of all Liens, claims, encumbrances and licenses, except for
Permitted Liens (as defined in the Indenture) and the licenses set forth
on Schedule 4.7(B), (D), (F) and (G) (as each may be amended or
supplemented from time to time);
(iii) all Intellectual Property listed on Schedule 4.7 is
subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, and each Grantor has performed all acts and has paid all renewal,
maintenance, and other fees and taxes required to maintain each and every
registration and application of Copyrights, Patents and Trademarks in full
force and effect;
(iv) all Intellectual Property listed on Schedule 4.7 is valid
and enforceable; no holding, decision, or judgment has been rendered in
any action or proceeding before any court or administrative authority
challenging the validity of, such Grantor's right to register, or such
Grantor's rights to own or use, any such Intellectual Property and no such
action or proceeding is pending or, to the best of such Grantor's
knowledge, threatened;
(v) all registrations and applications for Copyrights, Patents
and Trademarks are standing in the name of each Grantor, and none of the
Trademarks, Patents, Copyrights or Trade Secrets has been licensed by any
Grantor to any Affiliate or third party, except as disclosed in Schedule
4.7(B), (D), (F), or (G) (as each may be amended or supplemented from time
to time);
(vi) each Grantor has been using appropriate statutory notice
of registration in connection with its use of registered Trademarks,
proper marking practices in connection with the use of Patents, and
appropriate notice of copyright in connection with the publication of
Copyrights material to the business of such Grantor;
(vii) the conduct of such Grantor's business does not infringe
upon or otherwise violate any trademark, patent, copyright, trade secret
or other intellectual property right owned or controlled by a third party;
no claim has been made that the use of any Intellectual Property owned or
used by Grantor (or any of its respective licensees) violates the asserted
rights of any third party;
(viii) to the best of each Grantor's knowledge, no third party
is infringing upon or otherwise violating any rights in any Intellectual
Property owned or used by such Grantor, or any of its respective
licensees;
(ix) no settlement or consents, covenants not to xxx,
nonassertion assurances, or releases have been entered into by Grantor or
to which Grantor is bound that adversely affect Grantor's rights to own or
use any Intellectual Property listed on Schedule 4.7; and
(x) each Grantor has not made a previous assignment, sale,
transfer or agreement constituting a present or future assignment, sale,
transfer or agreement of any Intellectual Property listed on Schedule 4.7
that has not been terminated or released. There is no effective financing
statement or other document or instrument now executed, or on file or
recorded in any public office, granting a security interest in or
otherwise encumbering any part of the Intellectual Property listed on
Schedule 4.7, other than in favor of the Collateral Trustee.
25
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees as follows:
(i) it shall not do any act or omit to do any act whereby any
of the Intellectual Property which is material to the business of Grantor
may lapse, or become abandoned, dedicated to the public, or unenforceable,
or which would adversely affect the validity, grant, or enforceability of
the security interest granted therein;
(ii) it shall not, with respect to any Trademarks which are
material to the business of any Grantor, cease the use of any of such
Trademarks or fail to maintain the level of the quality of products sold
and services rendered under any of such Trademark at a level at least
substantially consistent with the quality of such products and services as
of the date hereof, and each Grantor shall take all steps necessary to
insure that licensees of such Trademarks use such consistent standards of
quality;
(iii) it shall, within thirty (30) days of the creation or
acquisition of any Copyrightable work which is material to the business of
Grantor, apply to register the Copyright in the United States Copyright
Office;
(iv) it shall promptly notify the Collateral Trustee if it
knows or has reason to know that any item of the Intellectual Property
that is material to the business of any Grantor may become (a) abandoned
or dedicated to the public or placed in the public domain, (b) invalid or
unenforceable, or (c) subject to any adverse determination or development
(including the institution of proceedings) in any action or proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office, any state registry, any foreign counterpart of the foregoing, or
any court;
(v) it shall take all reasonable steps in the United States
Patent and Trademark Office, the United States Copyright Office, any state
registry or any foreign counterpart of the foregoing, to pursue any
application and maintain any registration of each Trademark, Patent, and
Copyright owned by any Grantor and material to its business which is now
or shall become included in the Intellectual Property including, but not
limited to, those items on Schedule 4.7(A), (C) and (E) (as each may be
amended or supplemented from time to time);
(vi) in the event that any Intellectual Property listed on
Schedule 4.7 owned by or exclusively licensed to any Grantor is infringed,
misappropriated, or diluted by a third party, such Grantor shall promptly
take all reasonable actions to stop such infringement, misappropriation,
or dilution and protect its rights in such Intellectual Property
including, but not limited to, the initiation of a suit for injunctive
relief and to recover damages;
(vii) it shall promptly (but in no event more than thirty (30)
days after any Grantor obtains knowledge thereof) report to the Collateral
Trustee (i) the filing of any application to register any Intellectual
Property listed on Schedule 4.7 with the United States Patent and
Trademark Office, the United States Copyright Office, or any state
registry or foreign counterpart of the foregoing (whether such application
is filed by such Grantor or through any agent, employee, licensee, or
designee thereof) and (ii) the registration of any Intellectual Property
listed on Schedule 4.7 by any such office, in each case by executing and
delivering to the Collateral Trustee a completed Pledge
26
Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto;
(viii) it shall, promptly upon the reasonable request of the
Collateral Trustee, execute and deliver to the Collateral Trustee any
document required to acknowledge, confirm, register, record, or perfect
the Collateral Trustee's interest in any part of the Intellectual Property
listed on Schedule 4.7, whether now owned or hereafter acquired;
(ix) except with the prior consent of the Collateral Trustee
or as permitted under the Parity Lien Documents, each Grantor shall not
execute, and there will not be on file in any public office, any financing
statement or other document or instruments, except financing statements or
other documents or instruments filed or to be filed in favor of the
Collateral Trustee and each Grantor shall not sell, assign, transfer,
license, grant any option, or create or suffer to exist any Lien upon or
with respect to the Intellectual Property, except for the Lien created by
and under this Agreement and the other Parity Lien Documentss;
(x) it shall take all steps reasonably necessary to protect
the secrecy of all Trade Secrets, including, without limitation, entering
into confidentiality agreements with employees and labeling and
restricting access to secret information and documents;
(xi) it shall use proper statutory notice in connection with
its use of any of the Intellectual Property; and
(xii) it shall continue to collect, at its own expense, all
amounts due or to become due to such Grantor in respect of the
Intellectual Property or any portion thereof. In connection with such
collections, each Grantor may take (and, at the Collateral Trustee's
reasonable direction, shall take) such action as such Grantor or the
Collateral Trustee may deem reasonably necessary or advisable to enforce
collection of such amounts. Notwithstanding the foregoing, the Collateral
Trustee shall have the right at any time, to notify, or require any
Grantor to notify, any obligors with respect to any such amounts of the
existence of the security interest created hereby.
4.8 COMMERCIAL TORT CLAIMS
(a) Representations and Warranties. Each Grantor hereby represents
and warrants, on the Closing Date and on each Credit Date, that Schedule 4.8 (as
such schedule may be amended or supplemented from time to time) sets forth all
Commercial Tort Claims of each Grantor; and
(b) Covenants and Agreements. Each Grantor hereby covenants and
agrees that with respect to any Commercial Tort Claim in excess of $500,000
individually or $1,000,000 in the aggregate hereafter arising it shall deliver
to the Collateral Trustee a completed Pledge Supplement, substantially in the
form of Exhibit A attached hereto, together with all Supplements to Schedules
thereto, identifying such new Commercial Tort Claims.
SECTION 5. FURTHER ASSURANCES; ADDITIONAL GRANTORS.
27
5.1 [RESERVED].
5.2 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, that it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be reasonably necessary, or
that the Collateral Trustee may reasonably request in accordance with the
Collateral Trust Agreement, in order to create and/or maintain the validity,
perfection or priority of and protect any security interest granted hereby or to
enable the Collateral Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor shall:
(i) file such financing or continuation statements, or
amendments thereto, and execute and deliver such other agreements,
instruments, endorsements, powers of attorney or notices, as may be
reasonably necessary, or as the Collateral Trustee may reasonably request,
in order to perfect and preserve the security interests granted or
purported to be granted hereby;
(ii) take all actions necessary to ensure the recordation of
appropriate evidence of the liens and security interest granted hereunder
in the Intellectual Property with any intellectual property registry in
which said Intellectual Property is registered or in which an application
for registration is pending including, without limitation, the United
States Patent and Trademark Office, the United States Copyright Office,
the various Secretaries of State, and the foreign counterparts on any of
the foregoing; and
(iii) at the Collateral Trustee's request, appear in and
defend any action or proceeding that may affect such Grantor's title to or
the Collateral Trustee's security interest in all or any material part of
the Collateral.
(b) Each Grantor hereby authorizes the Collateral Trustee to file a
Record or Records, including, without limitation, financing or continuation
statements, and amendments thereto, in any jurisdictions and with any filing
offices as the Collateral Trustee may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted to the
Collateral Trustee herein. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of collateral that describes such property in any other manner as
the Collateral Trustee may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Collateral Trustee herein, including, without
limitation, describing such property as "all assets" or "all personal property,
whether now owned or hereafter acquired." Each Grantor shall furnish to the
Collateral Trustee from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Collateral Trustee may reasonably request, all in
reasonable detail.
(c) Each Grantor hereby authorizes the Collateral Trustee to modify
this Agreement after obtaining such Grantor's approval of or signature to such
modification by
28
amending Schedule 4.7 (as such schedule may be amended or supplemented from time
to time) to include reference to any right, title or interest in any existing
Intellectual Property or any Intellectual Property acquired or developed by any
Grantor after the execution hereof or to delete any reference to any right,
title or interest in any Intellectual Property in which any Grantor no longer
has or claims any right, title or interest.
5.3 ADDITIONAL GRANTORS.
From time to time subsequent to the date hereof, additional Persons may
become parties hereto as additional Grantors (each, an "Additional Grantor"), by
executing a Counterpart Agreement. Upon delivery of any such Counterpart
Agreement to the Collateral Trustee, notice of which is hereby waived by
Grantors, each Additional Grantor shall be a Grantor and shall be as fully a
party hereto as if Additional Grantor were an original signatory hereto. Each
Grantor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Grantor
hereunder, nor by any election of Collateral Trustee not to cause any Subsidiary
of Company to become an Additional Grantor hereunder. This Agreement shall be
fully effective as to any Grantor that is or becomes a party hereto regardless
of whether any other Person becomes or fails to become or ceases to be a Grantor
hereunder.
SECTION 6. COLLATERAL TRUSTEE APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY.
Each Grantor hereby irrevocably appoints the Collateral Trustee
(such appointment being coupled with an interest) as such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor, the Collateral Trustee or otherwise, from time to
time in the Collateral Trustee's discretion to take any action and to execute
any instrument that the Collateral Trustee may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, the following:
(a) upon the occurrence and during the continuance of any Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Collateral Trustee pursuant to the Parity Lien Documents;
(b) upon the occurrence and during the continuance of any Event of
Default, to ask for, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of any Event of
Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any Event of
Default, to file any claims or take any action or institute any proceedings that
the Collateral Trustee may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Collateral Trustee
with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against such
Grantor as debtor;
29
(f) to prepare, sign, and file for recordation in any intellectual
property registry, appropriate evidence of the lien and security interest
granted herein in the Intellectual Property in the name of such Grantor as
debtor;
(g) to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, access to pay or discharge taxes or Liens (other
than Permitted Liens (as defined in the Indenture)) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Collateral
Trustee in its sole discretion, any such payments made by the Collateral Trustee
to become obligations of such Grantor to the Collateral Trustee, due and payable
immediately without demand; and
(h) upon the occurrence and during the continuance of any Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as though
the Collateral Trustee were the absolute owner thereof for all purposes, and to
do, at the Collateral Trustee's option and such Grantor's expense, at any time
or from time to time, all acts and things that the Collateral Trustee deems
reasonably necessary to protect, preserve or realize upon the Collateral and the
Collateral Trustee's security interest therein in order to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
6.2 NO DUTY ON THE PART OF COLLATERAL TRUSTEE OR SECURED PARTIES.
The powers conferred on the Collateral Trustee hereunder are solely
to protect the interests of the Secured Parties in the Collateral and shall not
impose any duty upon the Collateral Trustee or any Secured Party to exercise any
such powers. The Collateral Trustee and the Secured Parties 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.
SECTION 7. REMEDIES.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Trustee may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it
at law or in equity, all the rights and remedies of the Collateral Trustee on
default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing,
whether by acceleration or otherwise, and also may pursue any of the following
separately, successively or simultaneously:
(i) require any Grantor to, and each Grantor hereby agrees
that it shall at its expense and promptly upon request of the Collateral
Trustee forthwith, assemble all or part of the Collateral as directed by
the Collateral Trustee and make it available to the Collateral Trustee at
a place to be designated by the Collateral Trustee that is reasonably
convenient to both parties;
30
(ii) enter onto the property where any Collateral is located
and take possession thereof with or without judicial process;
(iii) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent the Collateral
Trustee deems appropriate; and
(iv) without notice except as specified below or under the
UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis)
or otherwise dispose of the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Trustee's
offices or elsewhere, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other terms as the
Collateral Trustee may deem commercially reasonable.
(b) The Collateral Trustee or any Secured Party may be the purchaser
of any or all of the Collateral at any public or private (to the extent to the
portion of the Collateral being privately sold is of a kind that is customarily
sold on a recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Collateral Trustee, as
Collateral Trustee for and representative of the Secured Parties, shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Collateral Trustee at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Collateral Trustee shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Trustee may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Each Grantor agrees that it would not be commercially unreasonable
for the Collateral Trustee to dispose of the Collateral or any portion thereof
by using Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets. Each Grantor hereby waives any
claims against the Collateral Trustee arising by reason of the fact that the
price at which any Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if the
Collateral Trustee accepts the first offer received and does not offer such
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be liable for the deficiency and the fees of any
attorneys employed by the Collateral Trustee to collect such deficiency. Each
Grantor further agrees that a breach of any of the covenants contained in this
Section will cause irreparable injury to the Collateral Trustee, that the
Collateral Trustee has no adequate remedy at law in respect of such breach and,
as a consequence, that each and every covenant contained in this Section shall
be specifically enforceable against such Grantor, and 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 default has occurred giving rise
to the Secured Obligations becoming due and payable prior to their stated
maturities. Nothing in this Section shall in any way alter the rights of the
Collateral Trustee hereunder.
31
(c) The Collateral Trustee may sell the Collateral without giving
any warranties as to the Collateral. The Collateral Trustee may specifically
disclaim or modify any warranties of title or the like. This procedure will not
be considered to adversely affect the commercial reasonableness of any sale of
the Collateral.
(d) The Collateral Trustee shall have no obligation to marshal any
of the Collateral.
7.2 APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by the Collateral Trustee in respect of any sale, any collection from,
or other realization upon all or any part of the Collateral shall be applied in
full or in part by the Collateral Trustee against, the Secured Obligations in
the following order of priority: first, to the payment of all reasonable costs
and expenses of such sale, collection or other realization, including reasonable
compensation to the Collateral Trustee and its agents and counsel, and all other
reasonable expenses, liabilities and advances made or incurred by the Collateral
Trustee in connection therewith, and all amounts for which the Collateral
Trustee is entitled to indemnification hereunder (in its capacity as the
Collateral Trustee and not as a holder of Notes) and all advances made by the
Collateral Trustee hereunder for the account of the applicable Grantor, and to
the payment of all reasonable costs and expenses paid or incurred by the
Collateral Trustee in connection with the exercise of any right or remedy
hereunder or under the Parity Lien Documents, all in accordance with the terms
hereof or thereof; second, to the extent of any excess of such proceeds, to the
payment of all other Secured Obligations for the ratable benefit of the holders
of the Parity Lien Obligations; and third, to the extent of any excess of such
proceeds, to the payment to or upon the order of such Grantor or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
7.3 SALES ON CREDIT.
If Collateral Trustee sells any of the Collateral upon credit, Grantor
will be credited only with payments actually made by purchaser and received by
Collateral Trustee and applied to indebtedness of the purchaser. In the event
the purchaser fails to pay for the Collateral, Collateral Trustee may resell the
Collateral and Grantor shall be credited with proceeds of the sale.
7.4 DEPOSIT ACCOUNTS.
If any Event of Default shall have occurred and be continuing, the
Collateral Trustee may apply the balance from any Deposit Account or instruct
the bank at which any Deposit Account is maintained to pay the balance of any
Deposit Account to or for the benefit of the Collateral Trustee.
7.5 INVESTMENT RELATED PROPERTY.
Each Grantor recognizes that, by reason of certain prohibitions contained
in the Securities Act and applicable state securities laws, the Collateral
Trustee may be compelled, with respect to any sale of all or any part of the
Investment Related Property conducted without prior registration or
qualification of such Investment Related Property under the Securities Act
and/or such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire the Investment Related Property for their own
account, for investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sale may be at
32
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, each Grantor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the Collateral
Trustee shall have no obligation to engage in public sales and no obligation to
delay the sale of any Investment Related Property for the period of time
necessary to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register it.
If the Collateral Trustee determines to exercise its right to sell any or all of
the Investment Related Property, upon written request, each Grantor shall and
shall cause each issuer of any Pledged Stock to be sold hereunder, each
partnership and each limited liability company from time to time to furnish to
the Collateral Trustee all such information as the Collateral Trustee may
request in order to determine the number and nature of interest, shares or other
instruments included in the Investment Related Property which may be sold by the
Collateral Trustee in exempt transactions under the Securities Act and the rules
and regulations of the Securities and Exchange Commission thereunder, as the
same are from time to time in effect.
7.6 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default:
(i) the Collateral Trustee shall have the right (but not the
obligation) to bring suit or otherwise commence any action or proceeding
in the name of any Grantor, the Collateral Trustee or otherwise, in the
Collateral Trustee's sole discretion, to enforce any Intellectual
Property, in which event such Grantor shall, at the request of the
Collateral Trustee, do any and all lawful acts and execute any and all
documents required by the Collateral Trustee in aid of such enforcement
and such Grantor shall promptly, upon demand, reimburse and indemnify the
Collateral Trustee as provided in Section 10 hereof in connection with the
exercise of its rights under this Section, and, to the extent that the
Collateral Trustee shall elect not to bring suit to enforce any
Intellectual Property as provided in this Section, each Grantor agrees to
use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement or other violation of any of such
Grantor's rights in the Intellectual Property by others and for that
purpose agrees to diligently maintain any action, suit or proceeding
against any Person so infringing as shall be necessary to prevent such
infringement or violation;
(ii) upon written demand from the Collateral Trustee, each
Grantor shall grant, assign, convey or otherwise transfer to the
Collateral Trustee 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 Trustee such documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement;
(iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding
only to the extent that the Collateral Trustee (or any Secured Party)
receives cash proceeds in respect of the sale of, or other realization
upon, the Intellectual Property;
33
(iv) within five (5) Business Days after written notice from
the Collateral Trustee, each Grantor shall make available to the
Collateral Trustee, to the extent within such Grantor's power and
authority, such personnel in such Grantor's employ on the date of such
Event of Default as the Collateral Trustee may reasonably designate, by
name, title or job responsibility, to permit such Grantor to continue,
directly or indirectly, to produce, advertise and sell the products and
services sold or delivered by such Grantor under or in connection with the
Trademarks, Trademark Licenses, such persons to be available to perform
their prior functions on the Collateral Trustee's behalf and to be
compensated by the Collateral Trustee at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure
applicable to each as of the date of such Event of Default; and
(v) the Collateral Trustee shall have the right to notify, or
require each Grantor to notify, any obligors with respect to amounts due
or to become due to such Grantor in respect of the Intellectual Property,
of the existence of the security interest created herein, to direct such
obligors to make payment of all such amounts directly to the Collateral
Trustee, and, upon such notification and at the expense of such Grantor,
to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the
same extent as such Grantor might have done;
(1) all amounts and proceeds (including checks and other instruments)
received by Grantor in respect of amounts due to such Grantor in
respect of the Collateral or any portion thereof shall be received
in trust for the benefit of the Collateral Trustee hereunder, shall
be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to the Collateral Trustee in the
same form as so received (with any necessary endorsement) to be held
as cash Collateral and applied as provided by Section 7.7 hereof;
and
(2) Grantor shall not adjust, settle or compromise the amount or payment
of any such amount or release wholly or partly any obligor with
respect thereto or allow any credit or discount thereon.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment or other transfer to the Collateral Trustee of any rights, title and
interests in and to the Intellectual Property shall have been previously made
and shall have become absolute and effective, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Collateral Trustee shall promptly execute and deliver to such
Grantor, at such Grantor's sole cost and expense, such assignments or other
transfer as may be necessary to reassign to such Grantor any such rights, title
and interests as may have been assigned to the Collateral Trustee as aforesaid,
subject to any disposition thereof that may have been made by the Collateral
Trustee; provided, after giving effect to such reassignment, the Collateral
Trustee's security interest granted pursuant hereto, as well as all other rights
and remedies of the Collateral Trustee granted hereunder, shall continue to be
in full force and effect; and provided further, the rights, title and interests
so reassigned shall be free and clear of any other Liens granted by or on behalf
of the Collateral Trustee and the Secured Parties.
(c) Solely for the purpose of enabling the Collateral Trustee to
exercise rights and remedies under this Section 7 and at such time as the
Collateral Trustee shall be
34
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Trustee, to the extent it has the right to do so, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of said Trademarks, to use, operate under,
license, or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located.
7.7 CASH PROCEEDS
(a) . After an Event of Default shall have occurred and be
continuing, upon receipt of any Collateral consisting of cash, checks and other
non-cash items (collectively, "CASH PROCEEDS") by any Grantor, such Grantor
shall turn over all such Cash Proceeds to the Collateral Trustee. Any Cash
Proceeds shall be applied by the Collateral Trustee against the Secured
Obligations then due and owing.
7.8 NOTICE OF SOLE CONTROL.
The Collateral Trustee agrees that it shall not issue any notice of sole
control pursuant to any control agreement entered into pursuant to the terms of
this Agreement unless there shall have occurred and be continuing an Event of
Default.
SECTION 8. COLLATERAL TRUSTEE.
The Collateral Trustee has been appointed to act as Collateral Trustee by
the Indenture Trustee and the Hedge Counterparty under the Collateral Trust
Agreement and, by their acceptance of the benefits hereof, the other Secured
Parties. The Collateral Trustee shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Parity Lien Documents. In furtherance of
the foregoing provisions of this Section, each Secured Party, by its acceptance
of the benefits hereof, agrees that it shall have no right individually to
realize upon any of the Collateral hereunder, it being understood and agreed by
such Secured Party that all rights and remedies hereunder may be exercised
solely by the Collateral Trustee for the benefit of Secured Parties in
accordance with the terms of this Section. Collateral Trustee may resign at any
time by giving thirty (30) days' prior written notice thereof to Parity Lien
Representative and the Grantors, and Collateral Trustee may be removed at any
time with or without cause by an instrument or concurrent instruments in writing
delivered to the Grantors and Collateral Trustee signed by the Parity Lien
Representative. Upon any such notice of resignation or any such removal, Parity
Lien Representative shall have the right, to appoint a successor Collateral
Trustee. Upon the acceptance of any appointment as Collateral Trustee hereunder
by a successor Collateral Trustee, that successor Collateral Trustee shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Collateral Trustee under this Agreement,
and the retiring or removed Collateral Trustee under this Agreement shall
promptly (i) transfer to such successor Collateral Trustee all sums, Securities
and other items of Collateral held hereunder, together with all records and
other documents necessary or appropriate in connection with the performance of
the duties of the successor Collateral Trustee under this Agreement, and (ii)
execute and deliver to such successor Collateral Trustee or otherwise authorize
the filing of such amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with the assignment to
such successor Collateral Trustee of the security interests created hereunder,
whereupon such
35
retiring or removed Collateral Trustee shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Collateral
Trustee's resignation or removal hereunder as the Collateral Trustee, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was the Collateral
Trustee hereunder.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations and shall be binding upon each Grantor, its
successors and assigns, and inure, together with the rights and remedies of the
Collateral Trustee hereunder, to the benefit of the Collateral Trustee and its
successors, transferees and assigns. Without limiting the generality of the
foregoing, but subject to the terms of the Parity Lien Documents, any Secured
Party may assign or otherwise transfer any Obligations held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise.
Upon the payment in full of all Secured Obligations, the security interest
granted hereby shall terminate hereunder and of record and all rights to the
Collateral shall revert to Grantors. Upon any such termination the Collateral
Trustee shall, at Grantors' expense, execute and deliver to Grantors such
documents as Grantors shall reasonably request to evidence such termination.
SECTION 10. STANDARD OF CARE; COLLATERAL TRUSTEE MAY PERFORM.
The powers conferred on the Collateral Trustee hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Trustee shall have no duty as
to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Collateral Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which the Collateral Trustee
accords its own property. Neither the Collateral Trustee nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or otherwise. If any Grantor fails to
perform any agreement contained herein, the Collateral Trustee may itself
perform, or cause performance of, such agreement, and the expenses of the
Collateral Trustee incurred in connection therewith shall be payable by each
Grantor in accordance with the Parity Lien Documents.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall be
given in accordance with Section 7.7 of the Collateral Trust Agreement. No
failure or delay on the part of the Collateral Trustee in the exercise of any
power, right or privilege hereunder or under any other Parity Lien Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Credit Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available. In case any provision
in or obligation under this Agreement shall be invalid, illegal or unenforceable
in any
36
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. All
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists. This Agreement
shall be binding upon and inure to the benefit of the Collateral Trustee and
Grantors and their respective successors and assigns. No Grantor shall, without
the prior written consent of the Collateral Trustee given in accordance with the
Parity Lien Documents, assign any right, duty or obligation hereunder. This
Agreement and the other Credit Documents embody the entire agreement and
understanding between Grantors and the Collateral Trustee and supersede all
prior agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Credit Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties. This
Agreement may be executed in one or more counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE
NEW YORK GENERAL OBLIGATION LAWS).
[The remainder of this page is intentionally left blank.]
37
IN WITNESS WHEREOF, each Grantor and the Collateral Trustee have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
XXXXXX & XXXXX CORPORATION
By: /s/ Frost X. Xxxxxxx
-------------------------------------
Name: Frost X. Xxxxxxx
Title: President
THE CANTON OIL & GAS COMPANY
By: /s/ Frost X. Xxxxxxx
-------------------------------------
Name: Frost X. Xxxxxxx
Title: President
XXXX LAKE DRILLING, INC.
By: /s/ Frost X. Xxxxxxx
-------------------------------------
Name: Frost X. Xxxxxxx
Title: Chief Executive Officer
XXXXX FARGO BANK, N.A., as Collateral
Trustee
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
2
SCHEDULE 4.1
TO PLEDGE AND SECURITY AGREEMENT
GENERAL INFORMATION
(A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief
Executive Office/Sole Place of Business (or Residence if Grantor is a
Natural Person) and Organizational Identification Number of each Grantor:
Chief Executive
Office/Sole Place of
Business (or
Type of Jurisdiction of Residence if Grantor
Full Legal Name Organization Organization is a Natural Person) Organization I.D.#
--------------- ------------ ------------ -------------------- ------------------
(B) Other Names (including any Trade-Name or Fictitious Business Name) under
which each Grantor has conducted business for the past five (5) years:
Full Legal Name Trade Name or Fictitious Business Name
--------------- --------------------------------------
(C) Changes in Name, Jurisdiction of Organization, Chief Executive Office or
Sole Place of Business (or Principal Residence if Grantor is a Natural
Person) and Corporate Structure within past five (5) years:
Name of Grantor Date of Change Description of Change
--------------- -------------- ---------------------
(D) Agreements pursuant to which any Grantor is found as debtor within past
five (5) years:
Name of Grantor Description of Agreement
--------------- ------------------------
(E) Financing Statements:
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
SCHEDULE 4.1-1
SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Location of Wellhead, Equipment and Inventory
SCHEDULE 4.2-1
SCHEDULE 4.4
TO PLEDGE AND SECURITY AGREEMENT
INVESTMENT RELATED PROPERTY
(A) Pledged Stock:
% OF
STOCK NO. OF OUTSTANDING
STOCK CLASS OF CERTIFICATED CERTIFICATE PLEDGED STOCK OF THE
GRANTOR ISSUER STOCK (Y/N) NO. PAR VALUE STOCK STOCK ISSUER
------- ------ -------- ------------ ----------- --------- ------- ------------
Pledged LLC Interests:
% OF OUTSTANDING
LLC INTERESTS OF
LIMITED LIABILITY CERTIFICATE NO. NO. OF PLEDGED THE LIMITED
GRANTOR COMPANY CERTIFICATED (Y/N) (IF ANY) UNITS LIABILITY COMPANY
------- ----------------- ----------------- --------------- -------------- -----------------
Pledged Partnership Interests:
TYPE OF
PARTNERSHIP % OF OUTSTANDING
INTERESTS (E.G., PARTNERSHIP
GENERAL OR CERTIFICATE NO. INTERESTS OF THE
GRANTOR PARTNERSHIP LIMITED) CERTIFICATED (Y/N) (IF ANY) PARTNERSHIP
------- ----------- --------------- ----------------- --------------- -----------------
Pledged Trust Interests:
CLASS OF
TRUST CERTIFICATE NO. % OF OUTSTANDING TRUST
GRANTOR TRUST INTERESTS CERTIFICATED (Y/N) (IF ANY) INTERESTS OF THE TRUST
------- ----- --------- ------------------ -------- ----------------------
EXHIBIT 4.4-1
Pledged Debt:
ORIGINAL PRINCIPAL OUTSTANDING
GRANTOR ISSUER AMOUNT PRINCIPAL BALANCE ISSUE DATE MATURITY DATE
------- ------ ------ ----------------- ---------- -------------
Securities Account:
SHARE OF SECURITIES
GRANTOR INTERMEDIARY ACCOUNT NUMBER ACCOUNT NAME
------- ------------ -------------- ------------
Commodities Accounts:
NAME OF COMMODITIES
GRANTOR INTERMEDIARY ACCOUNT NUMBER ACCOUNT NAME
------- ------------ -------------- ------------
Deposit Accounts:
NAME OF DEPOSITARY
GRANTOR BANK ACCOUNT NUMBER ACCOUNT NAME
------- ---- -------------- ------------
(B)
Name of Grantor Date of Acquisition Description of Acquisition
--------------- ------------------- --------------------------
EXHIBIT 4.4-2
SCHEDULE 4.5
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Description of Material Contract
--------------- --------------------------------
SCHEDULE 4.5-1
SCHEDULE 4.6
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Description of Letters of Credit
--------------- --------------------------------
SCHEDULE 4.6-1
SCHEDULE 4.7
TO PLEDGE AND SECURITY AGREEMENT
INTELLECTUAL PROPERTY
(A) Copyrights
(B) Copyright Licenses
(C) Patents
(D) Patent Licenses
(E) Trademarks
(F) Trademark Licenses
(G) Trade Secret Licenses
(H) Intellectual Property Exceptions
SCHEDULE 4.7-1
SCHEDULE 4.8
TO PLEDGE AND SECURITY AGREEMENT
Name of Grantor Commercial Tort Claims
--------------- ----------------------
SCHEDULE 4.8-1
EXHIBIT A
TO PLEDGE AND SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This PLEDGE SUPPLEMENT, dated [mm/dd/yy], is delivered by [NAME OF
GRANTOR] a [NAME OF STATE OF INCORPORATION] [Corporation] (the "GRANTOR")
pursuant to the Pledge and Security Agreement, dated as of June __, 2004 (as it
may be from time to time amended, restated, modified or supplemented, the
"Security Agreement"), among XXXXXX & XXXXX CORPORATION, the other Grantors
named therein, and XXXXX FARGO BANK, N.A., as Collateral Trustee. Capitalized
terms used herein not otherwise defined herein shall have the meanings ascribed
thereto in the Security Agreement.
Grantor hereby confirms the grant to the Collateral Trustee set forth in
the Security Agreement of, and does hereby grant to the Collateral Trustee, a
security interest in all of Grantor's right, title and interest in and to all
Collateral to secure the Secured Obligations, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located. Grantor represents and warrants that the
attached Supplements to Schedules accurately and completely set forth all
additional information required pursuant to the Security Agreement and hereby
agrees that such Supplements to Schedules shall constitute part of the Schedules
to the Security Agreement.
IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly
executed and delivered by its duly authorized officer as of [MM/DD/YY].
[NAME OF GRANTOR]
By:______________________________________
Name:
Title:
EXHIBIT A-1
SUPPLEMENT TO SCHEDULE 4.1
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief
Executive Office/Sole Place of Business (or Residence if Grantor is a
Natural Person) and Organizational Identification Number of each Grantor:
Chief Executive
Office/Sole Place of
Business (or Residence
Jurisdiction of if Grantor is a Natural
Full Legal Name Type of Organization Organization Person) Organization I.D.#
--------------- -------------------- ------------ ------- ------------------
(B) Other Names (including any Trade-Name or Fictitious Business Name) under
which each Grantor has conducted business for the past five (5) years:
Full Legal Name Trade Name or Fictitious Business Name
--------------- --------------------------------------
(C) Changes in Name, Jurisdiction of Organization, Chief Executive Office or
Sole Place of Business (or Principal Residence if Grantor is a Natural
Person) and Corporate Structure within past five (5) years:
Name of Grantor Date of Change Description of Change
--------------- -------------- ---------------------
(D) Agreements pursuant to which any Grantor is found as debtor within past
five (5) years:
Name of Grantor Description of Agreement
--------------- ------------------------
(E) Financing Statements:
EXHIBIT A-2
Name of Grantor Filing Jurisdiction(s)
--------------- ----------------------
EXHIBIT A-3
SUPPLEMENT TO SCHEDULE 4.2
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Location of Wellhead, Equipment and Inventory
--------------- ---------------------------------------------
EXHIBIT A-4
SUPPLEMENT TO SCHEDULE 4.4
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A)
Pledged Stock:
Pledged Partnership Interests:
Pledged LLC Interests:
Pledged Trust Interests:
Pledged Debt:
Securities Account:
Commodities Accounts:
Deposit Accounts:
(B)
Name of Grantor Date of Acquisition Description of Acquisition
--------------- ------------------- --------------------------
EXHIBIT A-5
SUPPLEMENT TO SCHEDULE 4.5
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Description of Material Contract
--------------- --------------------------------
EXHIBIT A-6
SUPPLEMENT TO SCHEDULE 4.6
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Description of Letters of Credit
--------------- --------------------------------
EXHIBIT A-7
SUPPLEMENT TO SCHEDULE 4.7
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
(A) Copyrights
(B) Copyright Licenses
(C) Patents
(D) Patent Licenses
(E) Trademarks
(F) Trademark Licenses
(G) Trade Secret Licenses
(H) Intellectual Property Exceptions
EXHIBIT A-8
SUPPLEMENT TO SCHEDULE 4.8
TO PLEDGE AND SECURITY AGREEMENT
Additional Information:
Name of Grantor Commercial Tort Claims
--------------- ----------------------
EXHIBIT A-9
EXHIBIT B
TO PLEDGE AND SECURITY AGREEMENT
UNCERTIFICATED SECURITIES CONTROL AGREEMENT
This Uncertificated Securities Control Agreement dated as of _________,
200__ among ________________ (the "PLEDGOR"), XXXXX FARGO BANK, N.A., as
Collateral Trustee for the Secured Parties, (the "COLLATERAL TRUSTEE") and
____________, a ________corporation (the "ISSUER"). Capitalized terms used but
not defined herein shall have the meaning assigned in the Pledge and Security
Agreement dated [as of the date hereof], among the Pledgor, the other Grantors
party thereto and the Collateral Trustee (the "SECURITY AGREEMENT"). All
references herein to the "UCC" shall mean the Uniform Commercial Code as in
effect in the State of New York.
SECTION 1. REGISTERED OWNERSHIP OF SHARES. The Issuer hereby confirms and
agrees that as of the date hereof the Pledgor is the registered owner of
__________ shares of the Issuer's [common] stock (the "PLEDGED SHARES") and the
Issuer shall not change the registered owner of the Pledged Shares without the
prior written consent of the Collateral Trustee.
SECTION 2. INSTRUCTIONS. If at any time the Issuer shall receive
instructions originated by the Collateral Trustee relating to the Pledged
Shares, the Issuer shall comply with such instructions without further consent
by the Pledgor or any other person.
SECTION 3. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The
Issuer hereby represents and warrants to the Collateral Trustee:
(a) It has not entered into, and until the termination of this agreement
will not enter into, any agreement with any other person relating the Pledged
Shares pursuant to which it has agreed to comply with instructions issued by
such other person; and
(b) It has not entered into, and until the termination of this agreement
will not enter into, any agreement with the Pledgor or the Collateral Trustee
purporting to limit or condition the obligation of the Issuer to comply with
Instructions as set forth in Section 2 hereof.
(c) Except for the claims and interest of the Collateral Trustee and of
the Pledgor in the Pledged Shares, the Issuer does not know of any claim to, or
interest in, the Pledged Shares. If any person asserts any lien, encumbrance or
adverse claim (including any writ, garnishment, judgment, warrant of attachment,
execution or similar process) against the Pledged Shares, the Issuer will
promptly notify the Collateral Trustee and the Pledgor thereof.
(d) This Uncertificated Securities Control Agreement is the valid and
legally binding obligation of the Issuer.
SECTION 4. CHOICE OF LAW. This Agreement shall be governed by the laws of
the State of [New York].
SECTION 5. CONFLICT WITH OTHER AGREEMENTS. In the event of any conflict
between this Agreement (or any portion thereof) and any other agreement now
existing or hereafter entered
Exhibit B-1
into, the terms of this Agreement shall prevail. No amendment or modification of
this Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by all of the parties hereto.
SECTION 6. VOTING RIGHTS. Until such time as the Collateral Trustee shall
otherwise instruct the Issuer in writing, the Pledgor shall have the right to
vote the Pledged Shares.
SECTION 7. SUCCESSORS; ASSIGNMENT. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives who obtain
such rights solely by operation of law. The Collateral Trustee may assign its
rights hereunder only with the express written consent of the Issuer and by
sending written notice of such assignment to the Pledgor.
SECTION 8. INDEMNIFICATION OF ISSUER. The Pledgor and the Collateral
Trustee hereby agree that (a) the Issuer is released from any and all
liabilities to the Pledgor and the Collateral Trustee arising from the terms of
this Agreement and the compliance of the Issuer with the terms hereof, except to
the extent that such liabilities arise from the Issuer's negligence and (b) the
Pledgor, its successors and assigns shall at all times indemnify and save
harmless the Issuer from and against any and all claims, actions and suits of
others arising out of the terms of this Agreement or the compliance of the
Issuer with the terms hereof, except to the extent that such arises from the
Issuer's negligence, and from and against any and all liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising by reason of the same, until the termination of this
Agreement.
SECTION 9. NOTICES. Any notice, request or other communication required or
permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two (2) days after being sent by certified or registered United
States mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below.
Pledgor: [INSERT ADDRESS]
Attention:
Telecopier:
Collateral Trustee: Xxxxx Fargo Bank, N.A.
Sixth & Marquette; X0000-000
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telecopier: 000-000-0000
Issuer: [INSERT ADDRESS]
Attention:
Telecopier:
Any party may change its address for notices in the manner set forth
above.
SECTION 10. TERMINATION. The obligations of the Issuer to the Collateral
Trustee pursuant to this Control Agreement shall continue in effect until the
security interests of the Collateral Trustee in the Pledged Shares have been
terminated pursuant to the terms of the Security Agreement and the Collateral
Trustee has notified the Issuer of such termination in
Exhibit B-2
writing. The Collateral Trustee agrees to provide Notice of Termination in
substantially the form of Exhibit A hereto to the Issuer upon the request of the
Pledgor on or after the termination of the Collateral Trustee's security
interest in the Pledged Shares pursuant to the terms of the Security Agreement.
The termination of this Control Agreement shall not terminate the Pledged Shares
or alter the obligations of the Issuer to the Pledgor pursuant to any other
agreement with respect to the Pledged Shares.
SECTION 11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
[NAME OF PLEDGOR]
By:__________________________________
Name:
Title:
XXXXX FARGO BANK, N.A., as Collateral
Trustee
By:__________________________________
Name:
Title:
[NAME OF ISSUER]
By:__________________________________
Name:
Title:
Exhibit B-3
Exhibit A
[Letterhead of Collateral Trustee]
[Date]
[Name and Address of Issuer]
Attention:_______________________
Re: Termination of Control Agreement
You are hereby notified that the Uncertificated Securities Control
Agreement between you, [the Pledgor] and the undersigned (a copy of which is
attached) is terminated and you have no further obligations to the undersigned
pursuant to such Agreement. Notwithstanding any previous instructions to you,
you are hereby instructed to accept all future directions with respect to
Pledged Shares (as defined in the Uncertificated Control Agreement) from [the
Pledgor]. This notice terminates any obligations you may have to the undersigned
with respect to the Pledged Shares, however nothing contained in this notice
shall alter any obligations which you may otherwise owe to [the Pledgor]
pursuant to any other agreement.
You are instructed to deliver a copy of this notice by facsimile
transmission to [insert name of Pledgor].
Very truly yours,
XXXXX FARGO BANK, N.A.,
as Collateral Trustee
By:__________________________________
Name:
Title:
Exhibit B-A-1
EXHIBIT C
TO PLEDGE AND SECURITY AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT
This Securities Account Control Agreement dated as of __________, 2004
(this "AGREEMENT") among ___________ (the "DEBTOR"), XXXXX FARGO BANK, N.A., as
collateral trustee for the holders of Priority Lien Obligations and as
collateral trustee for the holders of Parity Lien Obligations (together with any
successors or assigns in such capacity, the "COLLATERAL TRUSTEE" and
____________, in its capacity as a "bank" as defined in Section 9-102 of the UCC
(in such capacity, the "FINANCIAL INSTITUTION"). Capitalized terms used but not
defined herein shall have the meaning assigned thereto in the Collateral Trust
Agreement, dated [as of the date hereof], between the Debtor, the other Grantors
party thereto, BNY Midwest Trust Company, as Indenture Trustee, X. Xxxx &
Company, as Hedge Counterparty, and the Collateral Trustee (as amended,
restated, supplemented or otherwise modified from time to time, the "TRUST
AGREEMENT"). All references herein to the "UCC" shall mean the Uniform
Commercial Code as in effect in the State of [New York].
SECTION 1. ESTABLISHMENT OF SECURITIES ACCOUNT. The Securities
Intermediary hereby confirms and agrees that:
(a) The Securities Intermediary has established account number [IDENTIFY
ACCOUNT NUMBER] in the name "[IDENTIFY EXACT TITLE OF ACCOUNT]" (such account
and any successor account, the "SECURITIES ACCOUNT") and the Securities
Intermediary shall not change the name or account number of the Securities
Account without the prior written consent of the Collateral Trustee;
(b) All securities or other property underlying any financial assets
credited to the Securities Account shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in blank or
credited to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Securities
Account be registered in the name of the Debtor, payable to the order of the
Debtor or specially indorsed to the Debtor except to the extent the foregoing
have been specially indorsed to the Securities Intermediary or in blank;
(c) All property delivered to the Securities Intermediary pursuant to the
Security Agreement will be promptly credited to the Securities Account; and
(d) The Securities Account is a "securities account" within the meaning of
Section 8-501 of the UCC.
SECTION 2. "FINANCIAL ASSETS" ELECTION. The Securities Intermediary hereby
agrees that each item of property (including, without limitation, any investment
property, financial asset, security, instrument, general intangible or cash)
credited to the Securities Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the UCC.
Exhibit C-1
SECTION 3. CONTROL OF THE SECURITIES ACCOUNT. If at any time the
Securities Intermediary shall receive any order from the Collateral Trustee
directing transfer or redemption of any financial asset relating to the
Securities Account, the Securities Intermediary shall comply with such
entitlement order without further consent by the Debtor or any other person. If
the Debtor is otherwise entitled to issue entitlement orders and such orders
conflict with any entitlement order issued by the Collateral Trustee, the
Securities Intermediary shall follow the orders issued by the Collateral
Trustee.
SECTION 4. SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event that the
Securities Intermediary has or subsequently obtains by agreement, by operation
of law or otherwise a security interest in the Securities Account or any
security entitlement credited thereto, the Securities Intermediary hereby agrees
that such security interest shall be subordinate to the security interest of the
Collateral Trustee. The financial assets and other items deposited to the
Securities Account will not be subject to deduction, set-off, banker's lien, or
any other right in favor of any person other than the Collateral Trustee (except
that the Securities Intermediary may set off (i) all amounts due to the
Securities Intermediary in respect of customary fees and expenses for the
routine maintenance and operation of the Securities Account and (ii) the face
amount of any checks which have been credited to such Securities Account but are
subsequently returned unpaid because of uncollected or insufficient funds).
SECTION 5. CHOICE OF LAW. This Agreement and the Securities Account shall
each be governed by the laws of the State of [New York]. Regardless of any
provision in any other agreement, for purposes of the UCC, [New York] shall be
deemed to be the Securities Intermediary's jurisdiction (within the meaning of
Section 8-110 of the UCC) and the Securities Account (as well as the securities
entitlements related thereto) shall be governed by the laws of the State of [New
York].
SECTION 6. CONFLICT WITH OTHER AGREEMENTS.
(a) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail;
(b) No amendment or modification of this Agreement or waiver of any
right hereunder shall be binding on any party hereto unless it is in writing and
is signed by all of the parties hereto;
(c) The Securities Intermediary hereby confirms and agrees that:
(i) There are no other control agreements entered into between the
Securities Intermediary and the Debtor with respect to the Securities
Account;
(ii) It has not entered into, and until the termination of this
Agreement, will not enter into, any agreement with any other person
relating to the Securities Account and/or any financial assets credited
thereto pursuant to which it has agreed to comply with entitlement orders
(as defined in Section 8-102(a)(8) of the UCC) of such other person; and
(iii) It has not entered into, and until the termination of this
Agreement, will not enter into, any agreement with the Debtor or the
Collateral Trustee
Exhibit C-2
purporting to limit or condition the obligation of the Securities
Intermediary to comply with entitlement orders as set forth in Section 3
hereof.
SECTION 7. ADVERSE CLAIMS. Except for the claims and interest of the
Collateral Trustee and of the Debtor in the Securities Account, the Securities
Intermediary does not know of any claim to, or interest in, the Securities
Account or in any "financial asset" (as defined in Section 8-102(a) of the UCC)
credited thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Securities Account or in any financial asset
carried therein, the Securities Intermediary will promptly notify the Collateral
Trustee and the Debtor thereof.
SECTION 8. MAINTENANCE OF SECURITIES ACCOUNT. In addition to, and not in
lieu of, the obligation of the Securities Intermediary to honor entitlement
orders as agreed in Section 3 hereof, the Securities Intermediary agrees to
maintain the Securities Account as follows:
(a) Notice of Sole Control. If at any time the Collateral Trustee
delivers to the Securities Intermediary a Notice of Sole Control in
substantially the form set forth in Exhibit A hereto, the Securities
Intermediary agrees that after receipt of such notice, it will take all
instruction with respect to the Securities Account solely from such Collateral
Trustee.
(b) Voting Rights. Until such time as the Securities Intermediary
receives a Notice of Sole Control pursuant to subsection (a) of this Section 8,
the Debtor shall direct the Securities Intermediary with respect to the voting
of any financial assets credited to the Securities Account.
(c) Permitted Investments. Until such time as the Securities
Intermediary receives a Notice of Sole Control signed by the Collateral Trustee,
the Debtor shall direct the Securities Intermediary with respect to the
selection of investments to be made for the Securities Account; provided,
however, that the Securities Intermediary shall not honor any instruction to
purchase any investments other than investments of a type described on Exhibit B
hereto.
(d) Statements and Confirmations. The Securities Intermediary will
promptly send copies of all statements, confirmations and other correspondence
concerning the Securities Account and/or any financial assets credited thereto
simultaneously to each of the Debtor and the Collateral Trustee at the address
for each set forth in Section 12 of this Agreement.
(e) Tax Reporting. All items of income, gain, expense and loss
recognized in the Securities Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the name and taxpayer
identification number of the Debtor.
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SECURITIES
INTERMEDIARY. The Securities Intermediary hereby makes the following
representations, warranties and covenants:
(a) The Securities Account has been established as set forth in Section
1 above and such Securities Account will be maintained in the manner set forth
herein until termination of this Agreement; and
(b) This Agreement is the valid and legally binding obligation of the
Securities Intermediary.
Exhibit C-3
SECTION 10 INDEMNIFICATION OF SECURITIES INTERMEDIARY. The Debtor and the
Collateral Trustee hereby agree that (a) the Securities Intermediary is released
from any and all liabilities to the Debtor and the Collateral Trustee arising
from the terms of this Agreement and the compliance of the Securities
Intermediary with the terms hereof, except to the extent that such liabilities
arise from the Securities Intermediary's negligence and (b) the Debtor, its
successors and assigns shall at all times indemnify and save harmless the
Securities Intermediary from and against any and all claims, actions and suits
of others arising out of the terms of this Agreement or the compliance of the
Securities Intermediary with the terms hereof, except to the extent that such
arises from the Securities Intermediary's negligence, and from and against any
and all liabilities, losses, damages, costs, charges, counsel fees and other
expenses of every nature and character arising by reason of the same, until the
termination of this Agreement.
SECTION 11. SUCCESSORS; ASSIGNMENT. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives who obtain
such rights solely by operation of law. The Collateral Trustee may assign its
rights hereunder only with the express written consent of the Securities
Intermediary and by sending written notice of such assignment to the Debtor.
SECTION 12. NOTICES. Any notice, request or other communication required
or permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two (2) days after being sent by certified or registered United
States mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below.
Debtor: [INSERT ADDRESS]
Attention:
Telecopier:
Collateral Trustee: Xxxxx Fargo Bank, N.A.
Sixth & Marquette; X0000-000
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telecopier: 000-000-0000
Securities Intermediary: [INSERT ADDRESS]
Attention:
Telecopier:
Any party may change its address for notices in the manner set forth
above.
SECTION 13. TERMINATION. The obligations of the Financial Institution to
the Collateral Trustee pursuant to this Agreement shall continue in effect until
the security interest of the Collateral Trustee in the Securities Account has
been terminated pursuant to the terms of the applicable Security Agreements and
the Collateral Trustee have notified the Financial Institution of such
termination in writing. The Collateral Trustee agrees to provide Notice of
Termination of Securities Account Control Agreement in substantially the form of
Exhibit C hereto to the Financial Institution upon the request of the Debtor on
or after the termination of the Collateral Trustee' security interest in the
Securities Account pursuant to the terms of the applicable Security Agreement.
The termination of this Agreement shall not terminate the Securities
Exhibit C-4
Account or alter the obligations of the Financial Institution to the Debtor
pursuant to any other agreement with respect to the Securities Account.
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
Exhibit C-5
IN WITNESS WHEREOF, the parties hereto have caused this Securities Account
Control Agreement to be executed as of the date first above written by their
respective officers thereunto duly authorized.
[DEBTOR]
By:____________________________
Name:
Title:
XXXXX FARGO BANK, N.A.,
as Collateral Trustee
By:____________________________
Name:
Title:
[NAME OF SECURITIES INTERMEDIARY],
as Securities Intermediary
By:____________________________
Name:
Title:
Exhibit C-6
EXHIBIT A
TO SECURITIES ACCOUNT CONTROL AGREEMENT
[Letterhead of Collateral Trustee]
[Date]
[Name and Address of Securities Intermediary]
Attention:
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in the Securities Account Control Agreement dated as of
_______, 200__ among [NAME OF THE DEBTOR], you and the undersigned (a copy of
which is attached), we hereby give you notice of our sole control over
securities account number ____________ (the "SECURITIES ACCOUNT") and all
financial assets credited thereto. You are hereby instructed not to accept any
direction, instructions or entitlement orders with respect to the Securities
Account or the financial assets credited thereto from any person other than the
undersigned, unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [NAME OF THE DEBTOR].
Very truly yours,
XXXXX FARGO BANK, N.A.,
as Collateral Trustee
By:________________________
Name:
Title:
cc: [NAME OF THE DEBTOR]
Exhibit C-A-1
EXHIBIT B
TO SECURITIES ACCOUNT CONTROL AGREEMENT
Permitted Investments
[TO COME]
Exhibit C-B-1
EXHIBIT C
TO SECURITIES ACCOUNT CONTROL AGREEMENT
[Letterhead of the Collateral Trustee]
[Date]
[Name and Address of Securities Intermediary]
Attention:
Re: Termination of Securities Account Control Agreement
You are hereby notified that the Securities Account Control Agreement
dated as of __________, 2004 among you, [NAME OF THE DEBTOR], XXXXX FARGO BANK,
N.A., in its capacity as collateral trustee on behalf of the holders of Priority
Lien Obligations and the holders of Parity Lien Obligations (together with any
successors or assigns in such capacity, the "COLLATERAL TRUSTEE") (a copy of
which is attached) is terminated and you have no further obligations to the
undersigned pursuant to such Agreement.
You are instructed to deliver a copy of this notice by facsimile
transmission to [NAME OF THE DEBTOR].
Very truly yours,
XXXXX FARGO BANK, N.A.,
as Collateral Trustee
By:________________________
Name:
Title:
EXHIBIT D
TO PLEDGE AND SECURITY AGREEMENT
DEPOSIT ACCOUNT CONTROL AGREEMENT
This Deposit Account Control Agreement dated as of __________, 2004 (this
"AGREEMENT") among ___________ (the "DEBTOR"), XXXXX FARGO BANK, N.A., as
collateral trustee for the holders of Priority Lien Obligations and the holders
of Parity Lien Obligations (together with any successors or assigns in such
capacity, the "COLLATERAL TRUSTEE") and ____________, in its capacity as a
"bank" as defined in Section 9-102 of the UCC (in such capacity, the "FINANCIAL
INSTITUTION"). Capitalized terms used but not defined herein shall have the
meaning assigned thereto in the Collateral Trust Agreement, dated [as of the
date hereof], between the Debtor, the other Grantors party thereto, BNY Midwest
Trust Company, as Indenture Trustee, X. Xxxx & Company, as Hedge Counterparty,
and the Collateral Trustee (as amended, restated, supplemented or otherwise
modified from time to time, the "TRUST AGREEMENT"). All references herein to the
"UCC" shall mean the Uniform Commercial Code as in effect in the State of [New
York].
SECTION 1. ESTABLISHMENT OF DEPOSIT ACCOUNT. The Financial Institution
hereby confirms and agrees that:
(a) The Financial Institution has established account number [IDENTIFY
ACCOUNT NUMBER] in the name "[IDENTIFY EXACT TITLE OF ACCOUNT]" (such account
and any successor account, the "DEPOSIT ACCOUNT") and the Financial Institution
shall not change the name or account number of the Deposit Account without the
prior written consent of the Collateral Trustee and, prior to delivery of a
Notice of Sole Control in substantially the form set forth in Exhibit A hereto,
the Debtor; and
(b) The Deposit Account is a "deposit account" within the meaning of
Section 9-102(a)(29) of the UCC.
SECTION 2. CONTROL OF THE DEPOSIT ACCOUNT. If at any time the Financial
Institution shall receive any instructions originated by the Collateral Trustee
directing the disposition of funds in the Deposit Account, the Financial
Institution shall comply with such instructions without further consent by the
Debtor or any other person. The Financial Institution hereby acknowledges that
it has received notice of the security interest of the Collateral Trustee in the
Deposit Account and hereby acknowledges and consents to such liens.
SECTION 3. SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event that the
Financial Institution has or subsequently obtains by agreement, by operation of
law or otherwise a security interest in the Deposit Account or any funds
credited thereto, the Financial Institution hereby agrees that such security
interest shall be subordinate to the security interest of the Collateral
Trustee. Money and other items credited to the Deposit Account will not be
subject to deduction, set-off, banker's lien, or any other right in favor of any
person other than the Collateral Trustee (except that the Financial Institution
may set off (i) all amounts due to the Financial Institution in respect of
customary fees and expenses for the routine maintenance and operation of the
Deposit Account and (ii) the face amount of any checks which have been credited
to such Deposit Account but are subsequently returned unpaid because of
uncollected or insufficient funds).
SECTION 4. CHOICE OF LAW. This Agreement and the Deposit Account shall
each be governed by the laws of the State of [New York]. Regardless of any
provision in any other agreement, for purposes of the UCC, [New York] shall be
deemed to be the Financial Institution's jurisdiction (within the meaning of
Section 9-304 of the UCC) and the Deposit Account shall be governed by the laws
of the State of [New York].
SECTION 5. CONFLICT WITH OTHER AGREEMENTS.
(a) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail;
(b) No amendment or modification of this Agreement or waiver of any right
hereunder shall be binding on any party hereto unless it is in writing and is
signed by all of the parties hereto; and
(c) The Financial Institution hereby confirms and agrees that:
(i) There are no other agreements entered into between the
Financial Institution and the Debtor with respect to the Deposit Account;
and
(ii) It has not entered into, and until the termination of this
Agreement, will not enter into, any agreement with any other person
relating the Deposit Account and/or any funds credited thereto pursuant to
which it has agreed to comply with instructions originated by such persons
as contemplated by Section 9-104 of the UCC.
SECTION 6. ADVERSE CLAIMS. The Financial Institution does not know of any
liens, claims or encumbrances relating to the Deposit Account. If any person
asserts any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against the
Deposit Account, the Financial Institution will promptly notify the Collateral
Trustee and the Debtor thereof.
SECTION 7. MAINTENANCE OF DEPOSIT ACCOUNT. In addition to, and not in lieu
of, the obligation of the Financial Institution to honor instructions as set
forth in Section 2 hereof, the Financial Institution agrees to maintain the
Deposit Account as follows:
(a) Statements and Confirmations. The Financial Institution will promptly
send copies of all statements, confirmations and other correspondence concerning
the Deposit Account simultaneously to each of the Debtor and the Collateral
Trustee at the address for each set forth in Section 11 of this Agreement; and
(b) Tax Reporting. All interest, if any, relating to the Deposit Account,
shall be reported to the Internal Revenue Service and all state and local taxing
authorities under the name and taxpayer identification number of the Debtor.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FINANCIAL
INSTITUTION. The Financial Institution hereby makes the following
representations, warranties and covenants:
(a) The Deposit Account has been established as set forth in Section 1 and
such Deposit Account will be maintained in the manner set forth herein until
termination of this Agreement; and
(b) This Agreement is the valid and legally binding obligation of the
Financial Institution.
SECTION 9. INDEMNIFICATION OF FINANCIAL INSTITUTION. The Debtor and the
Collateral Trustee hereby agree that (a) the Financial Institution is released
from any and all liabilities to the Debtor and the Collateral Trustee arising
from the terms of this Agreement and the compliance of the Financial Institution
with the terms hereof, except to the extent that such liabilities arise from the
Financial Institution's negligence and (b) the Debtor, its successors and
assigns shall at all times indemnify and save harmless the Financial Institution
from and against any and all claims, actions and suits of others arising out of
the terms of this Agreement or the compliance of the Financial Institution with
the terms hereof, except to the extent that such arises from the Financial
Institution's negligence, and from and against any and all liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising by reason of the same, until the termination of this
Agreement.
SECTION 10. SUCCESSORS; ASSIGNMENT. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives who obtain
such rights solely by operation of law. The Collateral Trustee may assign its
rights hereunder only with the express written consent of the Financial
Institution and by sending written notice of such assignment to the Debtor.
SECTION 11. NOTICES. Any notice, request or other communication required
or permitted to be given under this Agreement shall be in writing and deemed to
have been properly given when delivered in person, or when sent by telecopy or
other electronic means and electronic confirmation of error free receipt is
received or two (2) days after being sent by certified or registered United
States mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below.
Debtor: [INSERT ADDRESS]
Attention:
Telecopier:
Collateral Trustee: Xxxxx Fargo Bank, N.A.
Sixth & Marquette; X0000-000
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telecopier: 000-000-0000
Financial Institution: [INSERT ADDRESS]
Attention:
Telecopier:
Any party may change its address for notices in the manner set forth
above.
SECTION 12. TERMINATION. The obligations of the Financial Institution to
the Collateral Trustee pursuant to this Agreement shall continue in effect until
the security interest of the Collateral Trustee in the Deposit Account has been
terminated pursuant to the terms of the applicable Security Agreements and the
Collateral Trustee have notified the Financial Institution of such termination
in writing. The Collateral Trustee agrees to provide Notice of Termination of
Deposit Account Control Agreement in substantially the form of Exhibit B hereto
to the Financial Institution upon the request of the Debtor on or after the
termination of the Collateral Trustee'
security interest in the Deposit Account pursuant to the terms of the applicable
Security Agreement. The termination of this Agreement shall not terminate the
Deposit Account or alter the obligations of the Financial Institution to the
Debtor pursuant to any other agreement with respect to the Deposit Account.
SECTION 13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this Deposit
Account Control Agreement to be executed as of the date first above written by
their respective officers thereunto duly authorized.
[DEBTOR]
By:__________________________
Name:
Title:
XXXXX FARGO BANK, N.A., Collateral
Trustee
By:__________________________
Name:
Title:
[NAME OF FINANCIAL INSTITUTION],
as Financial Institution
By:__________________________
Name:
Title:
EXHIBIT A
TO DEPOSIT ACCOUNT CONTROL AGREEMENT
[Letterhead of Collateral Trustee]
[Date]
[Name and Address of Financial Institution]
Attention:
Re: Notice of Sole Control
Ladies and Gentlemen:
As referenced in the Deposit Account Control Agreement dated as of
_______, 200__ among [NAME OF THE DEBTOR], you and the undersigned (a copy of
which is attached), we hereby give you notice of our sole control over deposit
account number ____________ (the "DEPOSIT ACCOUNT") and all financial assets
credited thereto. You are hereby instructed not to accept any direction,
instructions or entitlement orders with respect to the Deposit Account or the
financial assets credited thereto from any person other than the undersigned,
unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [NAME OF THE DEBTOR].
Very truly yours,
XXXXX FARGO BANK, N.A.,
as Collateral Trustee
By:________________________
Name:
Title:
cc: [NAME OF THE DEBTOR]
Exhibit D-A-1
EXHIBIT B
NOTICE OF TERMINATION OF DEPOSIT ACCOUNT CONTROL AGREEMENT
[Letterhead of the Collateral Agent]
[Date]
[Name and Address of Financial Institution]
Attention:
Re: Termination of Deposit Account Control Agreement
You are hereby notified that the Deposit Account Control Agreement dated
as of __________, 2004 among you, [NAME OF THE DEBTOR], and XXXXX FARGO BANK,
N.A., in its capacity as collateral trustee on behalf of the holders of Priority
Lien Obligations and the holders of Parity Lien Obligations (together with any
successors or assigns in such capacity, the "COLLATERAL TRUSTEE") (a copy of
which is attached) is terminated and you have no further obligations to the
undersigned pursuant to such Agreement.
Notwithstanding any previous instructions to you, you are hereby
instructed to accept all future directions with respect to account number(s)
from [NAME OF THE DEBTOR]. This notice terminates any obligations you may have
to the Collateral Trustee with respect to such account(s), however nothing
contained in this notice shall alter any obligations which you may otherwise owe
to [NAME OF THE DEBTOR] pursuant to any other agreement.
You are instructed to deliver a copy of this notice by facsimile
transmission to [NAME OF THE DEBTOR].
Very truly yours,
XXXXX FARGO BANK, N.A.
as Collateral Trustee
By:________________________
Name:
Title:
Cc: [name of debtor]
Exhibit D-A-2
