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EXHIBIT 10.3
BORROWER SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Security Agreement"), dated as
of January 28, 1999, is made by NEW WORLD PASTA COMPANY, a Delaware corporation
(the "Grantor"), in favor of THE BANK OF NOVA SCOTIA, as lead arranger and
administrative agent (together with any successor(s) thereto in such capacity,
the "Administrative Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January
28, 1999 (as amended, supplemented, amended and restated or otherwise modified
from time to time, the "Credit Agreement"), among New World Pasta Company, the
various financial institutions as are, or may from time to time become, parties
thereto (the "Lenders"), Xxxxxx Xxxxxxx Senior Funding, Inc., as Syndication
Agent, the Co-Agents named therein and the Administrative Agent, the Lenders and
the Issuer have extended Commitments to make Credit Extensions to the Grantor;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
the Grantor is required to execute and deliver this Security Agreement; and
WHEREAS, the Grantor has duly authorized the execution,
delivery and performance of this Security Agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in order to induce
the Lenders and the Issuer to make each Credit Extension (including the initial
Credit Extension) to the Grantor pursuant to the Credit Agreement, the Grantor
agrees with the Administrative Agent, for the benefit of each Lender Party, as
follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Collateral Account" is defined in Section 4.1.2(c).
"Copyright Collateral" means:
(a) all United States copyrights (including without
limitation copyrights for mask works) owned by the Grantor in the Grantor's name
as such may be changed from time to time, whether statutory or common law,
registered or unregistered, including without limitation, all of the Grantor's
right, title and interest in and to all common law copyrights and copyrights
registered in the United States Copyright Office and also including, without
limitation, the copyrights referred to in Item A of Schedule IV attached hereto,
and all applications for registration and renewals thereof (all of the foregoing
items in this clause (a) being collectively called a "Copyright");
(b) all United States written Copyright licenses and
other agreements providing the Grantor with the right to use any of the items of
the type referred to in clause (a) (other than software licenses from third
parties), including each Copyright license referred to in Item B of Schedule IV
attached hereto, if any, subject, in each case, to the terms of such license
agreements; and
(c) all proceeds of, and rights of the Grantor
associated with the foregoing (including license royalties and proceeds of
infringement suits), the right to xxx third parties for past, present or future
infringements of any registered Copyright described in clause (a), including any
registered Copyright application referred to in Item A of Schedule IV attached
hereto, and for breach or enforcement of any Copyright license, including any
Copyright license referred to in Item B of
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Schedule IV attached hereto, subject, in each case, to the terms of such license
agreements.
"Credit Agreement" is defined in the first recital.
"Deposit Accounts" means any and all demand, time, savings,
passbook or other accounts with a bank or other financial institution, including
general deposit and cash concentration accounts, in which any cash, payments or
receipts of or for the benefit of the Grantor are or are to be deposited, and
all deposits therein and investments thereof, whether now or at any time
hereafter existing.
"Equipment" is defined in clause (a) of Section 2.1.
"Grantor" is defined in the preamble.
"Intellectual Property Collateral" means, collectively, the
Copyright Collateral, the Patent Collateral, the Trademark Collateral and the
Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1.
"Lender Party" means, as the context may require, each Lender,
the Issuer, each Co-Agent and the Administrative Agent and each of its
respective successors, permitted transferees and assigns.
"Lenders" is defined in the first recital.
"Patent Collateral" means:
(a) all United States letters patent and applications
for letters patent owned by the Grantor in the Grantor's name as such may be
changed from time to time, including each patent and patent application referred
to in Item A of Schedule II attached hereto (all of the foregoing items in this
clause (a) being collectively called a "Patent");
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations of any of the
items described in clause (a);
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(c) all United States written Patent licenses and
other agreements of the Grantor providing the Grantor with the right to use any
of the items of the type referred to in clauses (a) and (b), including each
Patent license referred to in Item B of Schedule II attached hereto subject, in
each case, to the terms of such license agreements; and
(d) all proceeds of, and rights of the Grantor
associated with the foregoing (including license royalties and proceeds of
infringement suits), the right to xxx third parties for past, present or future
infringements of any registered Patent described in clause (a), including any
registered Patent referred to in Item A of Schedule II attached hereto, and for
breach or enforcement of any Patent license, including any Patent license
referred to in Item B of Schedule II attached hereto, subject, in each case, to
the terms of such license agreements.
"Rate Protection Agreement" means a Hedging Obligation entered
into between the Borrower or any of its Subsidiaries and a Lender or an
Affiliate of a Lender.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Security Agreement" is defined in the preamble.
"Trademark Collateral" means:
(a) all United States trademarks, trade names, trade dress,
service marks, logos, other source of business identifiers, and designs owned by
the Grantor in the Grantor's name as such may be changed from time to time (all
of the foregoing items in this clause (a) being collectively called a
"Trademark"), now existing in the United States or hereafter adopted or acquired
in the United States, and all registrations and renewals thereof and all
applications in connection therewith, including registrations, renewals and
applications in the United States Patent and Trademark Office, including those
referred to in Item A of Schedule III attached hereto, provided, however, that
Trademark Collateral shall not include "intent to use" applications for
trademark or service xxxx registrations filed in the United States Patent and
Trademark Office pursuant to Section 1(b) of the Xxxxxx Act, 15 U.S.C. Section
1051, unless and until an Amendment to Allege Use or a Statement of Use under
Section 1(c) or 1(d) of said Act has been filed;
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(b) all United States written Trademark licenses and
other agreements of the Grantor providing the Grantor with the right to use any
items of the type described in clause (a), including each Trademark license
referred to in Item B of Schedule III attached hereto, subject, in each case, to
the terms of such license agreements;
(c) all of the goodwill of the business connected
with the use of, and symbolized by, the items described in clause (a); and
(d) all proceeds of, and rights of the Grantor
associated with the foregoing (including license royalties and proceeds of
infringement suits), the right to xxx third parties for past, present or future
infringement or dilution of any Trademark or Trademark registration referred to
in Item A of Schedule III attached hereto, or for any injury to the goodwill
associated with the use of any such Trademark and for breach or enforcement of
any Trademark license, including any Trademark license referred to in Item B of
Schedule III attached hereto, subject, in each case, to the terms of such
license agreements.
"Trade Secrets Collateral" means all United States common law
and statutory trade secrets and all other confidential or proprietary
information and know-how owned by the Grantor in the Grantor's name as such may
be changed from time to time (to the extent such confidential, proprietary or
useful information or know-how is protected by the Grantor against disclosure
and is not readily ascertainable) (all of the foregoing being collectively
called a "Trade Secret"), 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, all United States
written Trade Secret licenses or other agreements of the Grantor, including each
Trade Secret license referred to in Schedule V attached hereto, subject, in each
case, to the terms of such license agreements; and including the right to xxx
and to enjoin and to collect damages for the actual misappropriation of any
Trade Secret and for the breach or enforcement of any such Trade Secret license,
subject, in each case, to the terms of such license agreements.
"U.C.C." means the Uniform Commercial Code, as in effect in
the State of New York.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise
defined herein or the context otherwise requires, terms used in this Security
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
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SECTION 1.3 U.C.C. Definitions. Unless otherwise defined
herein or the context otherwise requires, terms for which meanings are provided
in the U.C.C. are used in this Security Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1 Grant of Security. The Grantor hereby pledges to
the Administrative Agent for its benefit and the ratable benefit of each of the
Lender Parties, and hereby grants to the Administrative Agent for its benefit
and the ratable benefit of each of the Lender Parties a security interest in,
all of the Grantor's right, title and interest in and to all of the following,
whether now or hereafter existing or acquired by the Grantor (the "Collateral"):
(a) all equipment in all of its forms of the Grantor,
wherever located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and therefor
(any and all of the foregoing being the "Equipment");
(b) all inventory in all of its forms of the Grantor,
wherever located, including
(i) all raw materials and work in process
therefor, finished goods thereof, and materials used or consumed in
the manufacture or production thereof,
(ii) all goods in which the Grantor has an
interest in mass or a joint or other interest or right of any kind
(including goods in which the Grantor has an interest or right as
consignee), and
(iii) all goods which are returned to or
repossessed by the Grantor,
and all accessions thereto, products thereof and documents therefor (any and all
such inventory, materials, goods, accessions, products and documents being the
"Inventory");
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(c) all accounts, contracts, contract rights, chattel paper,
documents, and general intangibles, rental agreements, or any part thereof
including, but not limited to Grantor's right to receive, either directly or
indirectly, from any person, any rents or other payments due and payable under
such agreements) of the Grantor, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and all rights of
the Grantor now or hereafter existing in and to all security agreements,
guaranties, leases and other contracts securing or otherwise relating to any
such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles (any and all such accounts, contracts,
contract rights, chattel paper, documents, instruments, and general intangibles
being the "Receivables", and any and all such security agreements, guaranties,
leases and other contracts being the "Related Contracts");
(d) all Intellectual Property Collateral of the
Grantor and all Investment Property;
(e) all books and records relating to, used or useful
in connection with, evidencing, embodying, incorporating or referring to, any of
the foregoing in this Section 2.1;
(f) all of the Grantor's other personal property and
rights of every kind and description and interests therein (including all
Deposit Accounts); and
(g) all products, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in clauses
(a), (b), (c), (d), (e) and (f)), proceeds deposited from time to time in the
Collateral Account and in any lock boxes of the Grantor, and, to the extent not
otherwise included, all payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral).
Notwithstanding anything herein to the contrary, the
Collateral shall exclude (i) the Grantor's rights under contracts and agreements
which by their terms prohibit the granting of a security interest therein or
assignment thereof (except for accounts and general intangibles for money due or
to become due thereunder), and (ii) Equipment which is the subject of a
capitalized lease or purchase money financing permitted under the Credit
Agreement under which a Lien has been granted in accordance with Section 7.2.3.,
but only so long as such Lien remains in effect.
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SECTION 2.2 Security for Obligations. This Security Agreement
secures the payment of all Obligations now or hereafter existing under the
Credit Agreement, the Notes and each other Loan Document to which the Grantor is
or may become a party, whether for principal, interest, costs, fees, expenses or
otherwise.
SECTION 2.3 Continuing Security Interest; Transfer of Notes.
This Security Agreement shall create a security interest in the Collateral and
shall in accordance with applicable law
(a) remain in full force and effect until the payment
in full of all Obligations and the termination of all Commitments,
(b) be binding upon the Grantor, its successors,
transferees and assigns, and
(c) inure, together with the rights and remedies of
the Administrative Agent hereunder, to the benefit of the Administrative Agent
and each other Lender Party.
Without limiting the generality of the foregoing clause (c),
any Lender may assign or otherwise transfer (in whole or in part) any Note or
Loan held by it to any other Person or entity in accordance with the Credit
Agreement, and such other Person or entity shall thereupon become vested with
all the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Security Agreement) or otherwise, subject,
however, to any contrary provisions in such assignment or transfer, and to the
provisions of Section 10.11 of the Credit Agreement. Upon (i) the sale, transfer
or other disposition of Collateral in accordance with the Credit Agreement or
(ii) the payment in full of all Obligations, the termination or expiration of
all Letters of Credit and the termination of all Commitments, the security
interest granted herein shall automatically terminate with respect to (x) such
Collateral (in the case of clause (i)) or (y) all Collateral (in the case of
clause (ii)). Upon any such termination, the Administrative Agent will, at the
Grantor's sole expense, deliver any Collateral (or portion thereof) to the
extent held by the Administrative Agent hereunder and to the extent the
termination relates to such Collateral, and at the Grantor's sole expense
execute and deliver to the Grantor such documents and instruments and take such
other action as the Grantor shall reasonably request to evidence or more fully
effect termination of the security interest hereunder relating to such portion
or all of the Collateral, as the case may be.
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SECTION 2.4 Grantor Remains Liable. Anything herein to the
contrary notwithstanding
(a) the Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein, as if this Security Agreement had not been executed,
(b) the exercise by the Administrative Agent of any
of its rights hereunder shall not release the Grantor from any of its duties or
obligations under any such contracts or agreements included in the Collateral,
and
(c) neither the Administrative Agent nor any other
Lender Party shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security Agreement, nor
shall the Administrative Agent or any other Lender Party be obligated to perform
any of the obligations or duties of the Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties. The Grantor
represents and warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1. Location of Collateral, etc. All of the
Equipment and Inventory (other than Inventory in transit) of the Grantor are
located at the places specified in Item A of Schedule I hereto, and at such
other locations as are notified to the Administrative Agent pursuant to clause
(a) of Section 4.1.2. The place(s) of business and chief executive office of the
Grantor and the office(s) where the Grantor keeps its records concerning the
Receivables, and all originals of all chattel paper which evidence Receivables,
are located at the addresses as set forth in Item C of Schedule I hereto, and at
such other locations as are notified to the Administrative Agent pursuant to
clause (a) of Section 4.1.2. As of the date hereof, the Grantor has no trade
name, except as set forth in Item D of Schedule I hereto. During the four months
preceding the date hereof, the Grantor has not been known by any legal name
different from the one set forth on the signature page hereto, nor has the
Grantor been the subject of any merger or other corporate reorganization, in
each case, except as contemplated by the Transactions and as set forth in Item E
of Schedule I.
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SECTION 3.1.2. Intentionally Omitted.
SECTION 3.1.3. Negotiable Documents, Instruments and Chattel
Paper. The Grantor has delivered to the Administrative Agent possession of all
originals of all negotiable documents, instruments and chattel paper (other than
those payable within 30 days of the date of issuance) currently owned or held by
the Grantor (duly endorsed in blank, if requested by the Administrative Agent)
having a face amount in excess of [$500,000] individually or to the extent such
securities have a face amount exceeding $750,000 in the aggregate (including all
other negotiable documents, instruments and chattel paper then held or owned by
other Obligors).
SECTION 3.1.4. Intellectual Property Collateral. With respect
to any material Intellectual Property Collateral the loss, impairment or
infringement of which could reasonably be expected to have a Material Adverse
Effect:
(a) each Patent, Trademark or Copyright is subsisting
and has not been adjudged invalid or unenforceable, in whole or in part;
(b) the Grantor has made such filings and
recordations to protect its interest in such Intellectual Property Collateral,
as are commercially reasonable and will, if requested by the Administrative
Agent to the extent practicable, effect recordations of its interest in such
Patent Collateral and Trademark Collateral in the United States Patent and
Trademark Office and its claims to the such Copyright Collateral in the United
States Copyright Office;
(c) it is the exclusive owner of the entire and
unencumbered right, title and interest in and to or has the legal right to use
such Patents, Trademarks and Copyrights, and no claim has been made that the use
of such Patents, Trademarks and Copyrights does or may violate the asserted
rights of any third party; and
(d) except as permitted by Section 4.1.4 hereof and
the Loan Documents, the Grantor has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes to
maintain all registered Patents, Trademarks and Copyrights in full force and
effect in the United States, as applicable.
SECTION 3.2 Validity, etc. (a)This Security Agreement is
effective to create, as collateral security for the Obligations of the Grantor,
valid and enforceable Liens on the Collateral in favor of the Administrative
Agent, for the benefit of the Lender Parties, except as enforceability may be
affected by bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(b) Upon the completion of the Filings (with respect
to Collateral existing on the Effective Date) and Subsequent Filings (to the
extent necessary with respect to Collateral acquired following the Effective
Date for which the Filings are not effective to perfect the Lien on such
after-acquired Collateral), and the delivery to and continuing possession by the
Administrative Agent of all instruments, investment property, chattel paper and
documents a security interest in which is (or, in the case of investment
property, may be) perfected by possession (which, in the case of such Subsequent
Filings and (to the extent required under Section 3.1.3) such instruments,
chattel paper and negotiable documents, subject to Section 3.1.1 and Section
3.1.3, shall have occurred prior to any Credit Extensions after the initial
Credit Extensions), the Liens created pursuant to this Security Agreement will
constitute valid Liens on and (to the extent provided herein) perfected security
interests in the Collateral in favor of the Administrative Agent for the benefit
of the Lender Parties, and will be prior to all other Liens of all other Persons
other than Permitted Liens permitted pursuant to Section 7.2.3. of the Credit
Agreement, and enforceable as such as against all other Persons, except (i) to
the extent that the recording of an assignment or other transfer of title to the
Administrative Agent, or the recording of other applicable documents in the
United States Patent and Trademark Office or United States Copyright Office may
be necessary for perfection or enforceability, and (ii) as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law) or by an implied covenant of good faith and fair dealing.
Notwithstanding the foregoing, the representation set forth above shall be
deemed true and correct for all purposes so long as the Grantor has complied
with its covenants set forth under Section 4.1.1, clause(a) of Section 4.1.2
clause(e) of Section 4.1.4, and Section 4.1.7 of this Security Agreement in all
material respects, including the delivery to the Administrative Agent of
executed financing statements for Subsequent Filings, whether or not the
Administrative Agent has caused such financing statements to be filed in the
applicable filing offices. As used in this Section, the following terms shall
have the following meanings:
"Filings": the filing or recording of the Financing Statements
relating to the Collateral existing on the Effective Date, in the places
specified in Item A.1 of Schedule I hereto.
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"Financing Statements": the financing statements delivered to
the Administrative Agent by the Grantor on the date hereof for filing in the
jurisdictions listed in Item A.1 of Schedule I hereto.
"Permitted Liens": Liens permitted pursuant to the Loan
Documents, including those permitted to exist pursuant to Section 7.2.3 of the
Credit Agreement.
"Subsequent Filings": any filings after the date hereof in any
jurisdiction as may be necessary under any requirement of law to perfect a Lien
on the Collateral in favor of the Administrative Agent.
ARTICLE IV
COVENANTS
SECTION 4.1 Certain Covenants. The Grantor covenants and
agrees that, so long as any Credit Extensions shall remain unpaid or any Lender
shall have any outstanding Commitment, the Grantor will, unless the Required
Lenders shall otherwise consent in writing, perform the obligations set forth in
this Section.
SECTION 4.1.1. As to Equipment and Inventory. The Grantor
hereby agrees that it shall keep all the Equipment and Inventory (other than
Equipment and Inventory sold or otherwise disposed of in accordance with the
Credit Agreement and Inventory in transit) at the places therefor specified in
Section 3.1.1 or at such other places in a jurisdiction where all
representations and warranties set forth in Article III shall be true and
correct, and all action required pursuant to the first sentence of Section 4.1.7
shall have been taken with respect to the Equipment and Inventory.
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SECTION 4.1.2. As to Receivables, Etc.
(a) The Grantor shall give the Administrative Agent a
supplement to Schedule I and Schedule VI hereto on each date a Compliance
Certificate is required to be delivered to the Administrative Agent under the
Credit Agreement, which shall set forth any changes as of such date to the
information set forth in Section 3.1.1, Section 4.1.2(b), Schedule I or Schedule
VI, as applicable. The Grantor shall be entitled to deliver such a supplement at
other times in addition to the times set forth in the preceding sentence. The
Grantor shall keep its place(s) of business and chief executive office and the
office(s) where it keeps its records concerning the Receivables located at the
addresses set forth in Item C of Schedule I hereto, or at such other locations
in a jurisdiction where all actions required by the first sentence of Section
4.1.7 shall have been taken with respect to the Receivables, and shall not
change its name after the Effective Date except upon 30 days' prior written
notice to the Administrative Agent.
(b) The Grantor shall list each of its Deposit
Accounts in Schedule VI hereto, as such Schedule is supplemented by notice to
the Administrative Agent pursuant to clause (a) of Section 4.1.2. Subject to,
and without limiting the effect of, clause (c) of this Section 4.1.2 the Grantor
shall, following and at the direction of the Administrative Agent, after an
Event of Default has occurred and so long as an Event of Default shall be
continuing, maintain each of its Deposit Accounts pursuant to a deposit account
agreement which is in all respects satisfactory to the Administrative Agent and
which provides, among other things, that (i) until the deposit account bank
shall have received written notice from the Administrative Agent pursuant to
this clause, the deposit account bank will make all payments from the Deposit
Account as specified by the Grantor, and, after any such notice, the deposit
account bank will make all payments from the Deposit Account to the
Administrative Agent for credit to the Collateral Account, (ii) the deposit
account bank (if other than the Administrative Agent or a Lender) waives all set
off rights (other than setoff rights for reasonable and customary account
service charges and fees and amounts based on items that are dishonored by the
payor thereof and returned to the deposit account bank), and (iii) such deposit
account agreement may not be amended without the written consent of the
Administrative Agent. The Administrative Agent will not give the notice referred
to in the preceding clause (b)(i) unless it has given, or is contemporaneously
giving, notice pursuant to clause (c) of this Section. In the event that a
deposit account bank refuses to enter into a deposit account agreement in
accordance with the above listed terms within 30 days of the Grantor's request,
the Administrative Agent shall have the right to direct the
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Grantor to transfer the assets in that deposit account to a bank which will
enter into a deposit account agreement in accordance with the above listed
terms.
(c) Following the occurrence and during the
continuance of a Default described Section 8.1.9 of the Credit Agreement or an
Event of Default, the Administrative Agent may give written notice to the
Grantor that all proceeds of Collateral received by the Grantor shall thereafter
be delivered in kind to the Administrative Agent for deposit to a deposit
account (the "Collateral Account") of the Grantor maintained with the
Administrative Agent, and after receipt of such notice and until such delivery
the Grantor shall not commingle any such proceeds, and shall hold separate and
apart from all other property, all such proceeds in express trust for the
benefit of the Administrative Agent until delivery thereof is made to the
Administrative Agent or until such Default or Event of Default has been cured or
waived. No funds, other than proceeds of Collateral, will be deposited in the
Collateral Account.
(d) Until the Default or the Event of Default
referred to in Section 4.1.2(c) has been cured or waived, the Administrative
Agent shall have the right to apply any amount in the Collateral Account to the
payment of any Obligations which are due and payable or payable upon demand.
The Administrative Agent may at any time transfer to the Grantor's general
demand deposit account at the Administrative Agent any or all of the collected
funds after an Event of Default has occurred and so long as an Event of Default
shall be continuing, in the Collateral Account; provided, however, that any such
transfer shall not be deemed to be a waiver or modification of any of the
Administrative Agent's rights under this clause.
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SECTION 4.1.3. As to Collateral.
(a) If there shall have occurred and be continuing a
Default of the nature set forth in Section 8.1.9 of the Credit Agreement or any
other Event of Default, the Administrative Agent, may notify any parties
obligated on any of the Collateral to make payment to the Administrative Agent
of any amounts due or to become due thereunder and enforce collection of any of
the Collateral by suit or otherwise and surrender, release, or exchange all or
any part thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder or evidenced
thereby. Upon request of the Administrative Agent (which request may not be made
unless there shall have occurred and be continuing a Default of the nature set
forth in Section 8.1.9 of the Credit Agreement or any other Event of Default),
the Grantor will, at its own expense, notify any parties obligated on any of the
Collateral to make payment to the Administrative Agent of any amounts due or to
become due thereunder.
(b) The Administrative Agent is authorized to
endorse, in the name of the Grantor, any item, howsoever received by the
Administrative Agent, representing any payment on or other proceeds of any of
the Collateral for application pursuant to Section 6.1.
SECTION 4.1.4. As to Intellectual Property Collateral. The
Grantor covenants and agrees to comply with the following provisions as such
provisions relate to any Intellectual Property Collateral to the extent material
to the operations or business of the Grantor:
(a) As to any Patent Collateral that the Grantor may
acquire following the Effective Date, the Grantor shall not, unless the Grantor
shall reasonably and in good faith determine (in which case, Grantor will, in
conjunction with the notices provided under Section 4.1.4(e), give notice of
such determination to the Administrative Agent) that any of the Patent
Collateral is of negligible economic value to the Grantor, do any act, or omit
to do any act, whereby any of the Patent Collateral may lapse or become
abandoned or dedicated to the public or unenforceable.
(b) The Grantor shall not, and the Grantor shall not
permit any of its licensees to, unless the Grantor shall reasonably and in good
faith determine it could not reasonably be expected to have a Material Adverse
Effect,
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(i) fail to continue to use any of the
Trademarks in order to maintain all of the Trademarks in full force
free from any claim of abandonment for non-use,
(ii) fail to maintain substantially as in the
past the quality of products and services offered under all of the
Trademark Collateral,
(iii) fail to employ all of the Trademarks
registered with the United States Patent and Trademark Office with an
appropriate notice of such registration; and
(iv) do or permit any act or knowingly omit to
do any act whereby any of the Trademark Collateral may lapse or become
invalid or unenforceable.
(c) The Grantor shall not, unless the Grantor shall
either reasonably and in good faith determine that any of the Copyright
Collateral or Trade Secret Collateral, respectively, do or permit any act or
knowingly omit to do any act whereby any of the Copyright Collateral or any of
the Trade Secrets Collateral may lapse or become invalid or unenforceable or
placed in the public domain except upon expiration of the end of an unrenewable
term of a registration thereof.
(d) The Grantor shall notify the Administrative Agent
promptly if it knows, or has reason to know, that any application or
registration relating to any material Patent, Trademark or Copyright may become
abandoned or dedicated to the public or placed in the public domain or invalid
or unenforceable, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding the Grantor's ownership of any of such material
Patent, Trademark or Copyright, its right to register the same or to keep and
maintain and enforce the same, in each case, which could reasonably be expected
to have a Material Adverse Effect.
(e) The Grantor shall notify the Administrative Agent
with each delivery of a Compliance Certificate, of the prior filing by the
Grantor of any application for the registration of any Patent, Trademark or
Copyright with the United States Patent and Trademark Office or the United
States Copyright Office, and upon request of the Administrative Agent, execute
and deliver any and all agreements, instruments, documents and papers as the
Administrative Agent may
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reasonably request (including a Patent Security Agreement, a Trademark Security
Agreement and a Copyright Security Agreement in the forms of Exhibit A, Exhibit
B and Exhibit C hereto, as applicable) to evidence the Administrative Agent's
security interest in such Patent, Trademark or Copyright and the goodwill and
general intangibles of the Grantor relating thereto or represented thereby.
(f) The Grantor shall take all commercially
reasonable steps, including in any proceeding before the United States Patent
and Trademark Office or the United States Copyright Office to maintain and
pursue any application (and to obtain the relevant registration) filed with
respect to, and to maintain any registration of, any material Patent, Trademark
or Copyright, including the filing of applications for renewal, affidavits of
use, affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the extent
that dedication, abandonment or invalidation is permitted under the foregoing
clauses (a), (b) and (c)).
SECTION 4.1.5. Intentionally Omitted.
SECTION 4.1.6. Intentionally Omitted.
SECTION 4.1.7. Further Assurances, etc. The Grantor agrees
that, from time to time at its own expense, the Grantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or that the Administrative Agent may reasonably request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby in Collateral located in the United States or to
enable the Administrative Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, the Grantor will
(a) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices
(including, without limitation, any assignment of claim form under or pursuant
to the federal assignment of claims statute, 31 U.S.C. Section 3726, any
successor or amended version thereof or any regulation promulgated under or
pursuant to any version thereof with respect to any Collateral the value of
which exceeds $500,000, as the Administrative Agent may reasonably request, in
order to perfect and preserve the security interests and other rights granted or
purported to be granted to the Administrative Agent hereby; and
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(b) furnish to the Administrative Agent, from time to
time at the Administrative Agent's reasonable request, statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security
interest hereunder, the Grantor hereby authorizes the Administrative Agent to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of the
Grantor where permitted by law. A carbon, photographic or other reproduction of
this Security Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement where permitted by
law.
ARTICLE V
THE ADMINISTRATIVE AGENT
SECTION 5.1 Administrative Agent Appointed Attorney-in-Fact.
The Grantor hereby irrevocably appoints the Administrative Agent the Grantor's
attorney-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor or otherwise, from time to time in the Administrative
Agent's discretion following the occurrence and during the continuance of an
Event of Default and notice to the Grantor, to take any action and to execute
any instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, including, without
limitation:
(a) to ask, demand, collect, xxx for, recover,
compromise, receive and give acquaintance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or
institute any proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of the Administrative Agent with respect to any of the Collateral;
and
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(d) to perform the affirmative obligations of the
Grantor hereunder (including all obligations of the Grantor pursuant to Section
4.1.7).
The Grantor hereby acknowledges, consents and agrees that the
power of attorney granted pursuant to this Section is irrevocable and coupled
with an interest; provided, that the foregoing power of attorney shall terminate
upon the release of the Administrative Agent's Liens on all Collateral pursuant
to Section 2.3.
SECTION 5.2 Administrative Agent May Perform. If the Grantor
fails to perform any agreement contained herein within 30 days after written
notice from the Administrative Agent, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by the
Grantor pursuant to Section 6.2.
SECTION 5.3 Administrative Agent Has No Duty. In addition to,
and not in limitation of, Section 2.4, the powers conferred on the
Administrative Agent hereunder are solely to protect its interest (on behalf of
the Lender Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative Agent 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.
SECTION 5.4 Reasonable Care. The Administrative Agent is
required to exercise reasonable care in the custody and preservation of any of
the Collateral in its possession; provided, however, the Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral, if it takes such action for that purpose
as the Grantor reasonably requests in writing at times other than upon the
occurrence and during the continuance of any Event of Default, but failure of
the Administrative Agent to comply with any such request at any time shall not
in itself be deemed a failure to exercise reasonable care.
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ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall
have occurred and be continuing:
(a) The Administrative Agent may exercise in respect
of the Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party on
default under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) and also may
(i) require the Grantor to, and the Grantor
hereby agrees that it will, at its expense and upon request of the
Administrative Agent forthwith, assemble all or part of the Collateral
as directed by the Administrative Agent and make it available to the
Administrative Agent at a place to be designated by the Administrative
Agent which is reasonably convenient to both parties; and
(ii) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Administrative Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Administrative Agent may deem commercially reason
able. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' prior notice to the 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
Administrative Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Administrative Agent 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.
(b) All cash proceeds received by the Administrative
Agent in respect of any sale of, collection from or other realization upon all
or any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as collateral for, and/or then or at
any time thereafter applied (after payment of any amounts payable to the
Administrative Agent pursuant to
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Section 6.2) in whole or in part by the Administrative Agent for the benefit of
the Lender Parties against, all or any part of the Obligations as follows: (i)
first, to the reasonable out-of-pocket costs and expenses of the Administrative
Agent in connection with the retaking, holding, preparing for sale, selling or
other disposition of the Collateral, including, without limitation, all court
costs and the reasonable fees and expenses of its agents and legal counsel; (ii)
second, to the payment in full of the Obligations or in the event that such
proceeds are insufficient to pay in full the Obligations, equally and ratably in
accordance with each Lender's respective amounts owing to it under or pursuant
to the Credit Agreement or any other Loan Document, or under or pursuant to any
Rate Protection Agreement (as to each Lender, applied first to fees and expense
reimbursements then due to such Lender, then to interest due to such Lender,
then to pay or prepay principal of the Loans or owing to, or to reduce the
"credit exposure" of, such Lender under such Rate Protection Agreement, as the
case may be, then to pay (or cash collateralize) the remaining obligations);
(iii) third, without duplication of any amounts paid pursuant to clause (ii)
above, to the Indemnified Parties to the extent of any amounts owing pursuant to
Section 10.4 of the Credit Agreement; and (iv) fourth, to the Grantor, or its
successors and assigns, or whomever may be lawfully entitled to receive the
same, of any surplus then remaining. For purposes of this Agreement, the "credit
exposure" at any time of any Lender under a Rate Protection Agreement to which
such Lender is a party shall be determined at such time in accordance with the
customary methods of calculating credit exposure under similar arrangements by
the counterparty to such arrangements, taking into account potential interest
rate movements, mitigating factors such as other interest rate swaps, caps,
collars and xxxxxx, and the respective termination provisions and notional
principal amount and term of such Rate Protection Agreement. The Grantor shall
remain liable to the Lenders for any deficiency. If the Administrative Agent has
funds available to apply to a portion of, but not all of, one of the amounts
described in clauses (i) through (iv) above, then the Administrative Agent shall
apply such funds to the applicable parties in proportion to the amounts to which
such parties would have been entitled if the entire amount described in any such
clause had been available.
SECTION 6.2 Indemnity and Expenses.
(a) The Grantor agrees to indemnify the
Administrative Agent from and against any and all claims, losses and liabilities
arising out of or resulting from this Security Agreement (including, without
limitation, enforcement of this Security Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or
willful misconduct.
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(b) The Grantor will upon demand pay to the
Administrative Agent the amount of any and all reasonable expenses, including
the reasonable fees and disbursements of its counsel (but not more than one firm
and all local or special expert counsel, if any, who may be retained by counsel
to the Administrative Agent) and of any experts and agents, which the
Administrative Agent may incur in connection with
(i) the administration of this Security
Agreement,
(ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization
upon, any of the Collateral,
(iii) the exercise or enforcement of any of the
rights of the Administrative Agent or the Lender Parties hereunder, or
(iv) the failure by the Grantor to perform or
observe any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 Loan Document. This Security Agreement is a Loan
Document executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 7.2 Amendments; etc. No amendment to or waiver of any
provision of this Security Agreement nor consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent (on behalf of the Lenders or the Required
Lenders, as the case may be) and the Grantor (other than with respect to consent
or waiver), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
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SECTION 7.3 Addresses for Notices. All notices and other
communications provided to the Grantor under this Security Agreement shall be in
writing or by facsimile and addressed, delivered or transmitted to the Grantor
at its address or facsimile number as set forth in the Credit Agreement, or at
such other address or facsimile number as may be designated by the Grantor in a
notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when transmitted.
SECTION 7.4 Section Captions. Section captions used in this
Security Agreement are for convenience of reference only, and shall not affect
the construction of this Security Agreement.
SECTION 7.5 Severability. Wherever possible each provision of
this Security Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
SECTION 7.6 Governing Law, Entire Agreement, etc. THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY
OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN
DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN
OR ORAL, WITH RESPECT THERETO.
SECTION 7.7 Counterparts. This Security Agreement may be
executed by the parties hereto in any number of counterparts, each of which
shall be deemed an original and all of which shall constitute together but one
and the same agreement.
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IN WITNESS WHEREOF, the Grantor has caused this Security
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
NEW WORLD PASTA COMPANY
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chief Financial Officer
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Senior Relationship Manager
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