EXHIBIT 4.2
------------
===============================================================================
GUARANTEE AND COLLATERAL AGREEMENT
dated as of
June 23, 2006
among
INTERLINE BRANDS, INC.,
a Delaware corporation,
as Holdings,
INTERLINE BRANDS, INC.,
a New Jersey corporation
as Borrower,
THE SUBSIDIARIES OF INTERLINE BRANDS, INC.
IDENTIFIED HEREIN
and
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
===============================================================================
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement................................................1
SECTION 1.02. Other Defined Terms.............................................1
ARTICLE II
Guarantee
SECTION 2.01. Guarantee 5
SECTION 2.02. Guarantee of Payment............................................5
SECTION 2.03. No Limitations..................................................5
SECTION 2.04. Reinstatement...................................................6
SECTION 2.05. Agreement To Pay; Subrogation...................................6
SECTION 2.06. Information.....................................................6
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge .........................................................7
SECTION 3.02. Delivery of the Pledged Collateral..............................7
SECTION 3.03. Representations, Warranties and Covenants.......................8
SECTION 3.04. Certification of Limited Liability Company and Limited
Partnership Interests.........................................9
SECTION 3.05. Registration in Nominee Name; Denominations.....................9
SECTION 3.06. Voting Rights; Dividends and Interest..........................10
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest..............................................11
SECTION 4.02. Representations and Warranties.................................13
SECTION 4.03. Covenants .....................................................15
SECTION 4.04. Other Actions..................................................18
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright
Collateral...................................................20
-i-
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default..........................................22
SECTION 5.02. Proceeds to be Turned Over to Collateral Agent.................24
SECTION 5.03. Application of Proceeds........................................24
SECTION 5.04. Grant of License to Use Intellectual Property..................25
SECTION 5.05. Securities Act.................................................25
SECTION 5.06. Registration...................................................26
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation......................................26
SECTION 6.02. Contribution and Subrogation...................................27
SECTION 6.03. Subordination..................................................27
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices 28
SECTION 7.02. Waivers; Amendment.............................................28
SECTION 7.03. Collateral Agent's Fees and Expenses; Indemnification..........28
SECTION 7.04. Successors and Assigns.........................................29
SECTION 7.05. Survival of Agreement..........................................29
SECTION 7.06. Counterparts; Effectiveness; Several Agreement.................29
SECTION 7.07. Severability...................................................30
SECTION 7.08. Right of Set-Off...............................................30
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process.....30
SECTION 7.10. WAIVER OF JURY TRIAL...........................................31
SECTION 7.11. Headings 31
SECTION 7.12. Security Interest Absolute.....................................32
SECTION 7.13. Termination or Release.........................................32
SECTION 7.14. Additional Subsidiaries........................................33
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact....................33
-ii-
SCHEDULES
Schedule I........Subsidiary Parties
Schedule II.......Capital Stock; Debt Securities
Schedule III......Intellectual Property
Schedule IV.......Insurance Requirements
Schedule V........Commercial Tort Claims
EXHIBITS
Exhibit I.........Form of Supplement
Exhibit II........Form of Perfection Certificate
-iii-
GUARANTEE AND COLLATERAL AGREEMENT (this
"AGREEMENT") dated as of June 23, 2006, among INTERLINE
BRANDS, INC., a Delaware corporation ("HOLDINGS"),
INTERLINE BRANDS, INC., a New Jersey corporation (the
"BORROWER"), the Subsidiaries of the Borrower
identified herein (the "SUBSIDIARY PARTIES") and
JPMORGAN CHASE BANK, N.A., a New York banking
corporation ("JPMCB"), as Collateral Agent.
Reference is made to the Credit Agreement dated as of June 23,
2006 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among Holdings, the Borrower, the Lenders party thereto,
JPMCB, as Administrative Agent, Xxxxxx Commercial Paper Inc., as Syndication
Agent, and Credit Suisse, Bank of America, N.A., SunTrust Bank and Wachovia
Bank, National Association, as Co-Documentation Agents. The Lenders have agreed
to extend credit to the Borrower subject to the terms and conditions set forth
in the Credit Agreement. The obligations of the Lenders to extend such credit
are conditioned upon, among other things, the execution and delivery of this
Agreement. Holdings and the Subsidiary Parties are affiliates of the Borrower,
will derive substantial benefits from the extension of credit to the Borrower
pursuant to the Credit Agreement and are willing to execute and deliver this
Agreement in order to induce the Lenders to extend such credit. Accordingly,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CREDIT AGREEMENT. (a) Capitalized terms used in
this Agreement and not otherwise defined herein have the meanings specified in
the Credit Agreement. All terms defined in the New York UCC (as defined herein)
and not defined in this Agreement have the meanings specified therein; the term
"instrument" shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Section 1.03 of the
Credit Agreement also apply to this Agreement.
SECTION 1.02. OTHER DEFINED TERMS. As used in this Agreement,
the following terms have the meanings specified below:
"ACCOUNT DEBTOR" means any Person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"ARTICLE 9 COLLATERAL" has the meaning assigned to such term in
Section 4.01.
"COLLATERAL" means Article 9 Collateral and Pledged Collateral.
2
"COPYRIGHT LICENSE" means any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or that such Grantor otherwise has the
right to license, or granting any right to any Grantor under any copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"COPYRIGHTS" means all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule III.
"CREDIT AGREEMENT" has the meaning assigned to such term in the
preliminary statement of this Agreement.
"FEDERAL SECURITIES LAWS" has the meaning assigned to such term
in Section 5.05.
"GENERAL INTANGIBLES" means all choses in action and causes of
action and all other intangible personal property of every kind and nature
(other than Accounts) now owned or hereafter acquired by any Grantor, including
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Swap
Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure or support payment by an Account Debtor of any of the
Accounts.
"GRANTORS" means Holdings, the Borrower and the Subsidiary
Parties.
"GUARANTORS" means Holdings and the Subsidiary Parties.
"INTELLECTUAL PROPERTY" means all intellectual and similar
property of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to
any of the foregoing.
"LICENSE" means any Patent License, Trademark License,
Copyright License or other license or sublicense agreement to which any Grantor
is a party, including those listed on Schedule III.
"LOAN DOCUMENT OBLIGATIONS" means (a) the due and punctual
payment by the Borrower of (i) the principal of and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding,
3
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter of Credit, when
and as due, including payments in respect of reimbursement of disbursements,
interest thereon (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) and obligations to provide
cash collateral, and (iii) all other monetary obligations of the Borrower to
any of the Secured Parties under the Credit Agreement and each of the other
Loan Documents, including obligations to pay fees, expense reimbursement
obligations and indemnification obligations, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding), (b) the due and punctual performance of all other obligations of
the Borrower under or pursuant to the Credit Agreement and each of the other
Loan Documents, and (c) the due and punctual payment and performance of all the
obligations of each other Loan Party under or pursuant to this Agreement and
each of the other Loan Documents.
"NEW YORK UCC" means the Uniform Commercial Code as from time
to time in effect in the State of New York.
"OBLIGATIONS" means (a) Loan Document Obligations and (b) the
due and punctual payment and performance of all obligations of each Loan Party
under each Swap Agreement that (i) is in effect on the Effective Date with a
counterparty that is a Lender or an Affiliate of a Lender as of the Effective
Date or (ii) is entered into after the Effective Date with any counterparty
that is a Lender or an Affiliate of a Lender at the time such Swap Agreement is
entered into.
"PATENT LICENSE" means any written agreement, now or hereafter
in effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any Grantor or that any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a patent, now or
hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
"PATENTS" means all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or the
equivalent thereof in any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or the
equivalent thereof in any other country, including registrations, recordings
and pending applications in the United States Patent and Trademark Office or
any similar offices in any other country, including those listed on Schedule
III, and (b) all reissues, continuations, divisions, continuations-in-part,
renewals or extensions thereof, and the inventions disclosed or claimed
therein, including the right to make, use and/or sell the inventions disclosed
or claimed therein.
4
"PERFECTION CERTIFICATE" means a certificate substantially in
the form of Exhibit II, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Financial Officer and
the chief legal officer of the Borrower.
"PLEDGED COLLATERAL" has the meaning assigned to such term in
Section 3.01.
"PLEDGED DEBT SECURITIES" has the meaning assigned to such term
in Section 3.01.
"PLEDGED SECURITIES" means any promissory notes, stock
certificates or other securities now or hereafter included in the Pledged
Collateral, including all certificates, instruments or other documents
representing or evidencing any Pledged Collateral.
"PLEDGED STOCK" has the meaning assigned to such term in
Section 3.01.
"PROCEEDS" has the meaning specified in Section 9-102 of the
New York UCC.
"SECURED PARTIES" means (a) the Lenders, (b) the Collateral
Agent, (c) each Issuing Bank, (d) each counterparty to any Swap Agreement with
a Loan Party the obligations under which constitute Obligations, (e) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under any Loan Document and (f) the successors and assigns of each of the
foregoing.
"SECURITY INTEREST" has the meaning assigned to such term in
Section 4.01.
"SUBSIDIARY PARTIES" means (a) the Subsidiaries identified on
Schedule I and (b) each other Subsidiary that becomes a party to this Agreement
as a Subsidiary Party after the Effective Date.
"TRADEMARK LICENSE" means any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or that any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any trademark or
service xxxx now or hereafter owned by any third party, and all rights of any
Grantor under any such agreement.
"TRADEMARKS" means all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office
or any similar offices in any State of the United States or any other country
or any political subdivision thereof, and all extensions or renewals thereof,
including those listed
5
on Schedule III, (b) all goodwill associated therewith or symbolized thereby
and (c) all other trademark and service xxxx rights and interests that uniquely
reflect or embody such goodwill.
ARTICLE II
GUARANTEE
SECTION 2.01. GUARANTEE. Each Guarantor absolutely, irrevocably
and unconditionally guarantees, jointly with the other Guarantors and
severally, as a primary obligor and not merely as a surety, the due and
punctual payment and performance of the Obligations. Each of the Guarantors
further agrees that the Obligations may be extended or renewed, in whole or in
part, or amended or modified, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal, or amendment or modification, of any Obligation. Each of the
Guarantors waives presentment to, demand of payment from and protest to the
Borrower or any other Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment.
SECTION 2.02. GUARANTEE OF PAYMENT. Each of the Guarantors
further agrees that its guarantee hereunder constitutes a guarantee of payment
when due and not of collection, and waives any right to require that any resort
be had by the Collateral Agent or any other Secured Party to any security held
for the payment of the Obligations or to any balance of any deposit account or
credit on the books of the Collateral Agent or any other Secured Party in favor
of the Borrower or any other Person.
SECTION 0.00.XX LIMITATIONS. (a) Except for termination of a
Guarantor's obligations hereunder as expressly provided in Section 7.13, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or set-off, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality or unenforceability of the Obligations
or otherwise. Without limiting the generality of the foregoing, the obligations
of each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by (i) the failure of the Collateral Agent or any other Secured Party
to assert any claim or demand or to enforce any right or remedy under the
provisions of any Loan Document or otherwise; (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or
provisions of, any Loan Document or any other agreement, including with respect
to any other Guarantor under this Agreement; (iii) the release of, or any
impairment of or failure to perfect any Lien on or security interest in, any
security held by the Collateral Agent or any other Secured Party for the
Obligations or any of them; (iv) any default, failure or delay, wilful or
otherwise, in the performance of the Obligations; or (v) any other act or
omission that may or might in any manner or to any extent vary the risk of any
Guarantor or otherwise operate as a discharge of any Guarantor as a matter of
law or equity (other than the indefeasible payment in full in cash of all the
Obligations). Each Guarantor expressly authorizes the Secured Parties to take
and hold security for the payment and performance
6
of the Obligations, to exchange, waive or release any or all such security
(with or without consideration), to enforce or apply such security and direct
the order and manner of any sale thereof in their sole discretion or to release
or substitute any one or more other guarantors or obligors upon or in respect
of the Obligations, all without affecting the obligations of any Guarantor
hereunder.
(b) To the fullest extent permitted by applicable law, each
Guarantor waives any defense based on or arising out of any defense of the
Borrower or any other Loan Party or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral Agent and the
other Secured Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Obligations, make any other accommodation with the Borrower or
any other Loan Party or exercise any other right or remedy available to them
against the Borrower or any other Loan Party, without affecting or impairing in
any way the liability of any Guarantor hereunder except to the extent the
Obligations have been fully and indefeasibly paid in full in cash. To the
fullest extent permitted by applicable law, each Guarantor waives any defense
arising out of any such election even though such election operates, pursuant
to applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any other Loan Party, as the case may be, or any security.
SECTION 2.04. REINSTATEMENT. Each of the Guarantors agrees that
its guarantee hereunder shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other
Loan Party or otherwise.
SECTION 2.05. AGREEMENT TO PAY; SUBROGATION. In furtherance of
the foregoing and not in limitation of any other right that the Collateral
Agent or any other Secured Party has at law or in equity against any Guarantor
by virtue hereof, upon the failure of the Borrower or any other Loan Party to
pay any Obligation when and as the same shall become due, whether at maturity,
by acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral
Agent for distribution to the applicable Secured Parties in cash the amount of
such unpaid Obligation. Upon payment by any Guarantor of any sums to the
Collateral Agent as provided above, all rights of such Guarantor against the
Borrower or any other Loan Party arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subject to Article VI.
SECTION 2.06. INFORMATION. Each Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's and each
other Loan Party's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks that such
7
Guarantor assumes and incurs hereunder, and agrees that none of the Collateral
Agent or the other Secured Parties will have any duty to advise such Guarantor
of information known to it or any of them regarding such circumstances or
risks.
ARTICLE III
PLEDGE OF SECURITIES
SECTION 3.01. PLEDGE. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby assigns and pledges to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in, all of such Grantor's right, title and
interest in, to and under (a) the shares of capital stock and other Equity
Interests owned by it and listed on Schedule II and any other Equity Interests
obtained in the future by such Grantor and the certificates representing all
such Equity Interests (the "PLEDGED STOCK"); PROVIDED that the Pledged Stock
shall not include (i) more than 65% of the issued and outstanding voting Equity
Interests of any Foreign Subsidiary that is not a Loan Party but is owned
directly by a Loan Party, (ii) any Equity Interests of a Foreign Subsidiary
that is not owned directly by a Loan Party and (iii) any Equity Interests in a
Joint Venture or Glenwood Acquisition LLC; (b)(i) the debt securities listed
opposite the name of such Grantor on Schedule II, (ii) any debt securities in
the future issued to such Grantor and (iii) the promissory notes and any other
instruments evidencing such debt securities (the debt securities referred to in
clauses (i), (ii) and (iii) of clause (b) being collectively referred to as the
"PLEDGED DEBT SECURITIES"); (c) all other property that may be delivered to and
held by the Collateral Agent pursuant to the terms of this Section 3.01; (d)
subject to Section 3.06, all payments of principal or interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a) and (b) above; (e) subject to Section 3.06, all rights and
privileges of such Grantor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "PLEDGED COLLATERAL").
TO HAVE AND TO HOLD the Pledged Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, forever; SUBJECT, HOWEVER, to the
terms, covenants and conditions hereinafter set forth.
SECTION 3.02. DELIVERY OF THE PLEDGED COLLATERAL. (a) Each
Grantor agrees promptly to deliver or cause to be delivered to the Collateral
Agent any and all certificates or other instruments evidencing any Pledged
Securities.
(b) In the event any Indebtedness for borrowed money owed to
any Grantor by any Person is in excess of $250,000, or if in the aggregate all
such Indebtedness owed to any Grantor shall exceed $500,000, such Grantor shall
cause any
8
such Indebtedness to be evidenced by a duly executed promissory note that is
pledged and delivered to the Collateral Agent pursuant to the terms hereof.
(c) Upon delivery to the Collateral Agent, (i) any Pledged
Securities shall be accompanied by undated stock powers duly executed in blank
or other undated instruments of transfer reasonably satisfactory to the
Collateral Agent and duly executed in blank and by such other instruments and
documents as the Collateral Agent may reasonably request and (ii) all other
property comprising part of the Pledged Collateral shall be accompanied by
proper instruments of assignment duly executed by the applicable Grantor and
such other instruments or documents as the Collateral Agent may reasonably
request. Each delivery of Pledged Securities shall be accompanied by a schedule
describing such Pledged Securities, which schedule shall be attached hereto as
an amended and restated Schedule II and made a part hereof; PROVIDED that
failure to attach any such schedule hereto shall not affect the validity of
such pledge of such Pledged Securities. Each schedule so delivered shall
supplement any prior schedules so delivered.
SECTION 3.03. REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Grantors jointly and severally represent, warrant and covenant to and with the
Collateral Agent, for the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the
issued and outstanding shares of each class of the Equity Interests of
the issuer thereof represented by Pledged Stock and includes all Equity
Interests, debt securities and promissory notes required to be pledged
hereunder in order to satisfy the Collateral and Guarantee Requirement;
(b) the Pledged Stock and, to the best of each Grantor's
knowledge, the Pledged Debt Securities have been duly and validly
authorized and issued by the issuers thereof and (i) in the case of
Pledged Stock, are fully paid and nonassessable and (ii) in the case of
Pledged Debt Securities, to the best of each Grantor's knowledge, are
legal, valid and binding obligations of the issuers thereof, and there
exists no defense, offset or counterclaim to any obligation of the
maker or issuer of any Pledged Debt Securities;
(c) except for the security interests granted hereunder, each
of the Grantors (i) is and, subject to any transfers made in compliance
with the Credit Agreement, will continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II as owned by such Grantor, (ii) holds the same free and
clear of all Liens, other than Liens created by this Agreement,
Permitted Encumbrances and transfers made in compliance with the Credit
Agreement, (iii) will make no assignment, pledge, hypothecation or
transfer of, or create or permit to exist any security interest in or
other Lien on, the Pledged Collateral, other than Liens created by this
Agreement, Permitted Encumbrances and transfers made in compliance with
the Credit Agreement, and (iv) will defend its title or interest
thereto or therein against any and all Liens (other than the Lien
9
created by this Agreement and Permitted Encumbrances), however arising,
of all Persons whomsoever;
(d) except for restrictions and limitations imposed by the Loan
Documents or securities laws generally, the Pledged Collateral is and
will continue to be freely transferable and assignable, and none of the
Pledged Collateral is or will be subject to any option, right of first
refusal, shareholders agreement, charter or by-law provisions or
contractual restriction of any nature that might prohibit, impair,
delay or otherwise affect the pledge of such Pledged Collateral
hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge
the Pledged Collateral pledged by it hereunder in the manner hereby
done or contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the
validity of the pledge effected hereby (other than such as have been
obtained and are in full force and effect);
(g) by virtue of the execution and delivery by the Grantors of
this Agreement, when any Pledged Securities are delivered to the
Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain, for the benefit of the Secured Parties, a legal,
valid and perfected first priority lien upon and security interest in
such Pledged Securities as security for the payment and performance of
the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the benefit of the Secured Parties, the rights of
the Collateral Agent in the Pledged Collateral as set forth herein.
SECTION 3.04. CERTIFICATION OF LIMITED LIABILITY COMPANY AND
LIMITED PARTNERSHIP INTERESTS. Each Grantor shall cause each interest in any
limited liability company or limited partnership controlled by such Grantor and
pledged hereunder to be represented by a certificate and to be a "security"
within the meaning of Article 8 of the New York UCC and governed by Article 8
of the New York UCC.
SECTION 3.05. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in
its sole and absolute discretion) to hold the Pledged Securities in its own
name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the applicable Grantor, endorsed or assigned in blank or in favor of
the Collateral Agent. Each Grantor will promptly give to the Collateral Agent
copies of any material notices or other communications received by it with
respect to Pledged Securities registered in the name of such Grantor. The
Collateral Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
10
SECTION 3.06. VOTING RIGHTS; DIVIDENDS AND INTEREST. (a) Unless
and until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 3.06 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; PROVIDED that such rights and powers shall not be exercised
in any manner that could materially and adversely affect the rights
inuring to a holder of any Pledged Securities or the rights and
remedies of any of the Collateral Agent or the other Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Grantor, or cause to be executed and delivered to such Grantor, all
such proxies, powers of attorney and other instruments as such Grantor
may reasonably request for the purpose of enabling such Grantor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above.
(iii) Each Grantor shall be entitled to receive and retain any
and all dividends, interest, principal and other distributions paid on
or distributed in respect of the Pledged Securities to the extent and
only to the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable laws; PROVIDED that any noncash
dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or
other exchange of assets to which such issuer may be a party or
otherwise, shall be and become part of the Pledged Collateral, and, if
received by any Grantor, shall not be commingled by such Grantor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Collateral
Agent and the other Secured Parties and shall be forthwith delivered to
the Collateral Agent in the same form as so received (endorsed in a
manner reasonably satisfactory to the Collateral Agent).
(b) Upon the occurrence and during the continuance of an Event
of Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.06, then
all rights of any Grantor to dividends, interest, principal or other
distributions that such Grantor is authorized to receive pursuant to paragraph
(a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and
11
exclusive right and authority to receive and retain such dividends, interest,
principal or other distributions. All dividends, interest, principal or other
distributions received by any Grantor contrary to the provisions of this
Section 3.06 shall be held in trust for the benefit of the Collateral Agent and
the other Secured Parties, shall be segregated from other property or funds of
such Grantor and shall be forthwith delivered to the Collateral Agent upon
demand in the same form as so received (endorsed in a manner reasonably
satisfactory to the Collateral Agent). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to
be established by the Collateral Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section
5.03. After all Events of Default have been cured or waived and the Borrower
has delivered to the Collateral Agent a certificate to that effect, the
Collateral Agent shall promptly repay to each Grantor (without interest) all
dividends, interest, principal or other distributions that such Grantor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of
this Section 3.06 and that remain in such account.
(c) Upon the occurrence and during the continuance of an Event
of Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(i) of this Section 3.06, then
all rights of any Grantor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section
3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of
this Section 3.06, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers;
PROVIDED that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Grantors to exercise such
rights.
(d) Any notice given by the Collateral Agent to the Grantors
suspending their rights under paragraph (a) of this Section 3.06 (i) may be
given by telephone if promptly confirmed in writing, (ii) may be given to one
or more of the Grantors at the same or different times and (iii) may suspend
the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part
without suspending all such rights (as specified by the Collateral Agent in its
sole and absolute discretion) and without waiving or otherwise affecting the
Collateral Agent's rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is
continuing.
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 4.01. SECURITY INTEREST. (a) As security for the
payment or performance, as the case may be, in full of the Obligations, each
Grantor hereby assigns and pledges to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, a security interest (the "SECURITY INTEREST") in, all right,
12
title or interest in or to any and all of the following assets and properties
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "ARTICLE 9 COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all cash and Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all letter-of-credit rights; (xi) all commercial tort
claims specified on Schedule V;
(xii) all books and records pertaining to the Article 9
Collateral; and
(xiii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing;
PROVIDED that, for the avoidance of doubt, the foregoing shall not include (A)
any asset in which a Grantor has a leasehold interest pursuant to a capital
lease (as determined in accordance with GAAP), (B) any asset of any Subsidiary
acquired by any Grantor after the date hereof which is not permitted to be
pledged hereunder pursuant to any Indebtedness of such Subsidiary existing
prior to such acquisition and permitted by the Credit Agreement or (C) any
Collateral not permitted to be pledged by any Grantor pursuant to a
non-assignment provision that is not rendered ineffective by the New York UCC;
PROVIDED FURTHER that in the case of this clause (C), (1) the Grantor shall
have used its commercially reasonable efforts to permit the pledge of any such
Collateral pursuant to this Agreement and (2) the fair market value of any such
Collateral excluded from the Article 9 Collateral pursuant to this clause (C)
shall not exceed $250,000 in any fiscal year of such Grantor.
(b) Each Grantor hereby irrevocably authorizes the Collateral
Agent at any time and from time to time to file in any relevant jurisdiction
any initial financing
13
statements (including fixture filings) with respect to the Article 9 Collateral
or any part thereof and amendments thereto that (i) indicate the Collateral as
all assets of such Grantor or words of similar effect as being of an equal or
lesser scope or with greater detail, and (ii) contain the information required
by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for
the filing of any financing statement or amendment, including (a) whether such
Grantor is an organization, the type of organization and any organizational
identification number issued to such Grantor and (b) in the case of a financing
statement filed as a fixture filing or covering Article 9 Collateral
constituting minerals or the like to be extracted or timber to be cut, a
sufficient description of the real property to which such Article 9 Collateral
relates. Each Grantor agrees to provide such information to the Collateral
Agent promptly upon request.
Each Grantor also ratifies its authorization for the Collateral
Agent to file in any relevant jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office or any similar office in any other country) such documents
as may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall
not subject the Collateral Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with respect to or
arising out of the Article 9 Collateral.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES. The Grantors
jointly and severally represent and warrant to the Collateral Agent and the
other Secured Parties that:
(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Collateral
Agent, for the benefit of the Secured Parties, the Security Interest in Article
9 Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval that has
been obtained.
(b) The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein, including the
exact legal name of each Grantor, is correct and complete as of the Effective
Date. The Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations prepared by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for filing in
each governmental, municipal or other office specified in Schedule 6 to the
Perfection
14
Certificate (or specified by notice from the Borrower to the Collateral Agent
after the Effective Date in the case of filings, recordings or registrations
required by Section 5.03(a) or 5.12 of the Credit Agreement), are all the
filings, recordings and registrations (other than filings required to be made
in the United States Patent and Trademark Office and the United States
Copyright Office in order to perfect the Security Interest in Article 0
Xxxxxxxxxx xxxxxxxxxx xx Xxxxxx Xxxxxx Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the benefit of the Secured Parties) in respect of all Article 9 Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the
filing of continuation statements. Each Grantor shall ensure that a fully
executed agreement and containing a description of all Article 9 Collateral
consisting of applicable Intellectual Property shall have been received and
recorded within three months after the execution of this Agreement with respect
to United States Patents and United States registered Trademarks (and
Trademarks for which United States registration applications are pending) and
within one month after the execution of this Agreement with respect to United
States registered Copyrights by the United States Patent and Trademark Office
and the United States Copyright Office, respectively, pursuant to 35 U.S.C. ss.
261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations thereunder, as
applicable, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the benefit
of the Secured Parties) in respect of all Article 9 Collateral consisting of
Patents, Trademarks and Copyrights in which a security interest may be
perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to
perfect the Security Interest with respect to any Article 9 Collateral
consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).
(c) The Security Interest constitutes (i) a legal and valid
security interest in all the Article 9 Collateral securing the payment and
performance of the Obligations, (ii) subject to the filings described in
Section 4.02(b), a perfected security interest in all Article 9 Collateral in
which a security interest may be perfected by filing, recording or registering
a financing statement or analogous document in the United States (or any
political subdivision thereof) and its territories and possessions pursuant to
the Uniform Commercial Code or other applicable law in such jurisdictions and
(iii) a security interest that shall be perfected in all Article 9 Collateral
in which a security interest may be perfected upon the receipt and recording of
this Agreement with the United States Patent and Trademark Office and the
United States Copyright Office, as applicable, within the three-month period
(commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C.
ss. 1060 or the one-month period (commencing as of the date hereof) pursuant to
17 U.S.C. ss. 205. The Security Interest is and shall be prior to any other
Lien on any of the Article 9 Collateral, other than Permitted Encumbrances that
have priority as a matter
15
of law and Liens expressly permitted to be prior to the Security Interest
pursuant to Section 6.02 of the Credit Agreement.
(d) The Article 9 Collateral is owned by the Grantors free and
clear of any Lien, except for Liens expressly permitted pursuant to Section
6.02 of the Credit Agreement. None of the Grantors has filed or consented to
the filing of (i) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Article 9
Collateral, (ii) any assignment in which any Grantor assigns any Collateral or
any security agreement or similar instrument covering any Article 9 Collateral
with the United States Patent and Trademark Office or the United States
Copyright Office or (iii) any assignment in which any Grantor assigns any
Article 9 Collateral or any security agreement or similar instrument covering
any Article 9 Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in each case, for
Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.03. COVENANTS. (a) Each Grantor agrees to maintain,
at its own cost and expense, such complete and accurate records with respect to
the Article 9 Collateral owned by it as is consistent with its current
practices and in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which such Grantor is
engaged, but in any event to include complete accounting records indicating all
payments and proceeds received with respect to any part of the Article 9
Collateral, and, at such time or times as the Collateral Agent may reasonably
request, promptly to prepare and deliver to the Collateral Agent a duly
certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Article 9 Collateral.
(b) Each Grantor shall, at its own expense, take any and all
actions necessary to defend title to the Article 9 Collateral against all
Persons and to defend the Security Interest of the Collateral Agent hereunder
in the Article 9 Collateral and the priority thereof against any Lien not
expressly permitted to be prior to the Security Interest pursuant to Section
6.02 of the Credit Agreement.
(c) Each Grantor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments
and documents and take all such actions as the Collateral Agent may from time
to time reasonably request to better assure, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the
filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or
in connection with any of the Article 9 Collateral shall be or become evidenced
by any promissory note or other instrument in excess of $250,000, such note or
instrument shall be immediately pledged and delivered to the Collateral Agent
(for the benefit of the Secured Parties), duly endorsed in a manner
satisfactory to the Collateral Agent.
16
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule III or adding
additional schedules hereto to specifically identify any asset or item that may
constitute Copyrights, Licenses, Patents or Trademarks; PROVIDED that any
Grantor shall have the right, exercisable within 10 Business Days after it has
been notified by the Collateral Agent of the specific identification of such
Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Collateral. Each Grantor agrees that it will use its commercially
reasonable efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it has been notified by the
Collateral Agent of the specific identification of such Collateral.
(d) The Collateral Agent and such Persons as the Collateral
Agent may reasonably designate shall have the right, at the Grantors' own cost
and expense, to inspect the Article 9 Collateral, all records related thereto
(and to make extracts and copies from such records) and the premises upon which
any of the Article 9 Collateral is located, to discuss the Grantors' affairs
with the officers of the Grantors and their independent accountants and to
verify under reasonable procedures, in accordance with Section 5.03 of the
Credit Agreement, the validity, amount, quality, quantity, value, condition and
status of, or any other matter relating to, the Article 9 Collateral,
including, in the case of Accounts or other Article 9 Collateral in the
possession of any third person, by contacting Account Debtors or the third
person possessing such Article 9 Collateral for the purpose of making such a
verification. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party.
(e) At its option, the Collateral Agent may discharge past due
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Article 9 Collateral and not
permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; PROVIDED that nothing in this
paragraph shall be interpreted as excusing any Grantor from the performance of,
or imposing any obligation on the Collateral Agent or any Secured Party to cure
or perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan
Documents.
(f) If at any time any Grantor shall take a security interest
in any property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent for the benefit of the Secured Parties. Such
assignment need not be filed of public record
17
unless necessary to continue the perfected status of the security interest
against creditors of and transferees from the Account Debtor or other Person
granting the security interest.
(g) Each Grantor shall remain liable to observe and perform all
the conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
other Secured Parties from and against any and all liability for such
performance.
(h) None of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as permitted by
the Credit Agreement. None of the Grantors shall make or permit to be made any
transfer of the Article 9 Collateral, and each Grantor shall remain at all
times in possession of the Article 9 Collateral owned by it, except that unless
and until the Collateral Agent shall notify the Grantors (which notice may be
given by telephone if promptly confirmed in writing) that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Article 9 Collateral (other than (i) Inventory in the ordinary
course of business consistent with its past practice and (ii) other Collateral
which, prior to the receipt of such notice, the Grantor is obligated to sell),
the Grantors may use and dispose of the Article 9 Collateral in any lawful
manner not inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Notwithstanding the foregoing, in the
event any Grantor, in the exercise of its reasonable business judgment, decides
to abandon or let lapse any Article 9 Collateral consisting of Intellectual
Property with a value not in excess of $250,000, such Grantor may do so,
provided it shall promptly give written notice to the Collateral Agent
identifying such collateral and indicating its fair market value. Without
limiting the generality of the foregoing, each Grantor agrees that it shall not
permit any Inventory with a value in excess of $250,000 to be in the possession
or control of any warehouseman, agent, bailee, or processor at any time unless
such warehouseman, bailee, agent or processor shall have been notified of the
Security Interest and shall have acknowledged in writing, in form and substance
reasonably satisfactory to the Collateral Agent, that such warehouseman, agent,
bailee or processor holds the Inventory for the benefit of the Collateral Agent
and the other Secured Parties subject to the Security Interest and shall act
upon the instructions of the Collateral Agent without further consent from the
Grantor, and that such warehouseman, agent, bailee or processor further agrees
to waive and release any Lien held by it with respect to such Inventory,
whether arising by operation of law or otherwise.
(i) None of the Grantors will, without the Collateral Agent's
prior written consent, grant any extension of the time of payment of any
Accounts included in the Article 9 Collateral, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof or allow any credit or discount
whatsoever thereon, other than extensions, compromises, settlements, releases,
credits or discounts granted or made in the ordinary course of business and
consistent with its current practices.
18
(j) The Grantors, at their own expense, shall maintain or cause
to be maintained insurance covering physical loss or damage to the Inventory
and Equipment in accordance with the requirements set forth in Schedule IV
hereto and Section 5.07 of the Credit Agreement. Each Grantor shall notify the
Collateral Agent immediately of any notice specified in paragraph (b) of
Schedule IV provided by any insurer to the Borrower. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default, of making, settling and adjusting claims in respect of
Article 9 Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance
required hereby or to pay any premium in whole or part relating thereto, the
Collateral Agent may, without waiving or releasing any obligation or liability
of the Grantors hereunder or any Event of Default, in its sole discretion,
obtain and maintain such policies of insurance and pay such premium and take
any other actions with respect thereto as the Collateral Agent deems advisable.
All sums disbursed by the Collateral Agent in connection with this paragraph,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby. (k) Each
Grantor shall maintain, in form and manner reasonably satisfactory to the
Collateral Agent, records of its Chattel Paper and its books, records and
documents evidencing or pertaining thereto.
SECTION 4.04. OTHER ACTIONS. In order to further insure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Security Interest, each Grantor agrees, in each case at such
Grantor's own expense, to take the following actions with respect to the
following Article 9 Collateral:
(a) INSTRUMENTS. If any Grantor shall at any time hold or
acquire any Instruments with a value in excess of $250,000, such
Grantor shall forthwith endorse, assign and deliver the same to the
Collateral Agent, accompanied by such undated instruments of transfer
or assignment duly executed in blank as the Collateral Agent may from
time to time reasonably request.
(b) INVESTMENT PROPERTY. Except to the extent otherwise
provided in Article III, if any Grantor shall at any time hold or
acquire any certificated securities, such Grantor shall forthwith
endorse, assign and deliver the same to the Collateral Agent,
accompanied by such undated instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time
specify. If any securities now or hereafter acquired by any Grantor are
uncertificated and are issued to such Grantor or its nominee directly
by the issuer thereof, such Grantor shall immediately notify the
Collateral Agent thereof and, at the Collateral Agent's request and
option, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (i) cause the
19
issuer to agree to comply with instructions from the Collateral Agent
as to such securities, without further consent of any Grantor or such
nominee, or (ii) arrange for the Collateral Agent to become the
registered owner of the such securities. If any securities, whether
certificated or uncertificated, or other Investment Property now or
hereafter acquired by any Grantor are held by such Grantor or its
nominee through a securities intermediary or commodity intermediary,
such Grantor shall immediately notify the Collateral Agent thereof and,
at the Collateral Agent's request and option, pursuant to an agreement
in form and substance reasonably satisfactory to the Collateral Agent,
either (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply with entitlement orders or
other instructions from the Collateral Agent to such securities
intermediary as to such security entitlements, or (as the case may be)
to apply any value distributed on account of any commodity contract as
directed by the Collateral Agent to such commodity intermediary, in
each case without further consent of any Grantor or such nominee, or
(ii) in the case of Financial Assets or other Investment Property held
through a securities intermediary, arrange for the Collateral Agent to
become the entitlement holder with respect to such Investment Property,
with the Grantor being permitted, only with the consent of the
Collateral Agent, to exercise rights to withdraw or otherwise deal with
such Investment Property. The Collateral Agent agrees with each of the
Grantors that the Collateral Agent shall not give any such entitlement
orders or instructions or directions to any such issuer, securities
intermediary or commodity intermediary, and shall not withhold its
consent to the exercise of any withdrawal or dealing rights by any
Grantor, unless an Event of Default has occurred and is continuing, or,
after giving effect to any such investment and withdrawal rights would
occur. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which the
Collateral Agent is the securities intermediary.
(c) ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If any
Grantor at any time holds or acquires an interest in any electronic
chattel paper or any "transferable record," as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions
Act as in effect in any relevant jurisdiction, such Grantor shall
promptly notify the Collateral Agent thereof and, at the request of the
Collateral Agent, shall take such action as the Collateral Agent may
reasonably request to vest in the Collateral Agent control under New
York UCC Section 9-105 of such electronic chattel paper or control
under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of
such transferable record. The Collateral Agent agrees with such Grantor
that the Collateral Agent will arrange, pursuant to procedures
reasonably satisfactory to the Collateral Agent and so long as such
procedures will not result in the Collateral Agent's loss of control,
for the Grantor to make alterations to the electronic chattel paper or
transferable record permitted under UCC Section 9-105 or, as the case
may be, Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to allow without loss
20
of control, unless an Event of Default has occurred and is continuing
or would occur after taking into account any action by such Grantor
with respect to such electronic chattel paper or transferable record.
(d) LETTER-OF-CREDIT RIGHTS. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor
of such Grantor, such Grantor shall promptly notify the Collateral
Agent thereof and, at the request and option of the Collateral Agent,
such Grantor shall, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (i) arrange for
the issuer and any confirmer of such letter of credit to consent to an
assignment to the Collateral Agent of the proceeds of any drawing under
such letter of credit or (ii) arrange for the Collateral Agent to
become the transferee beneficiary of such letter of credit, with the
Collateral Agent agreeing, in each case, that the proceeds of any
drawing under such letter of credit are to be paid to the applicable
Grantor unless an Event of Default has occurred or is continuing.
(e) COMMERCIAL TORT CLAIMS. If any Grantor shall at any time
hold or acquire a commercial tort claim in an amount reasonably
estimated to exceed $250,000 such Grantor shall promptly notify the
Collateral Agent thereof in a writing signed by such Grantor including
a summary description of such claim and grant to the Collateral Agent
for the benefit of the Secured Parties in such writing a security
interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Collateral Agent.
SECTION 4.05. COVENANTS REGARDING PATENT, TRADEMARK AND
COPYRIGHT COLLATERAL. (a) Each Grantor agrees that it will not do any act or
omit do to any act (and will exercise commercially reasonable efforts to
prevent its licensees from doing any act or omitting to do any act) whereby any
Patent that is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue,
consistent with its past practice, to xxxx any products covered by a Patent
with the relevant patent number as necessary and sufficient to establish and
preserve its rights under applicable patent laws; PROVIDED that this provision
shall cease to apply with respect to any Patent which, in the Grantor's
reasonable business judgment, is no longer material to the conduct of such
Grantor's business; PROVIDED FURTHER that, in such event, such Grantor shall
promptly give written notice to the Collateral Agent identifying such Patent
and indicating its fair market value.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark, consistent with its past
practice, in full force free from any claim of abandonment or invalidity for
non-use, (ii) maintain the quality of products and services offered under such
Trademark, consistent with its past practice, (iii) display such Trademark,
consistent with its past practice, with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law and (iv) not knowingly use or knowingly
permit the use of such Trademark in violation of any third party rights;
PROVIDED that this provision shall cease
21
to apply with respect to any Trademark which, in such Grantor's reasonable
business judgment, is no longer material to the conduct of such Grantor's
business; PROVIDED FURTHER that, in such event, such Grantor shall promptly
give written notice to the Collateral Agent identifying such Trademark and
indicating its fair market value.
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, consistent with its past practice, for each work covered by
a material Copyright, continue to xxxx such work with appropriate copyright
notice as necessary and sufficient to establish and preserve its rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if
it knows or has reason to know that any Patent, Trademark or Copyright material
to the conduct of its business may become abandoned, lost or dedicated to the
public, or of any materially adverse determination or material development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, its right to
register the same, or its right to keep and maintain the same.
(e) In the event that any Grantor, either itself or through any
agent, employee, licensee or designee, files an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, the United States Copyright
Office or any office or agency in any political subdivision of the United
States or in any other country or any political subdivision thereof, it shall
inform the Collateral Agent, within 10 Business Days of such application and,
upon request of the Collateral Agent, it shall execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest
hereunder in such Patent, Trademark or Copyright.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any office or
agency in any political subdivision of the United States or in any other
country or any political subdivision thereof, to maintain and pursue each
material application relating to the Patents, Trademarks and/or Copyrights (and
to obtain the relevant grant or registration) and to maintain each issued
Patent and each registration of the Trademarks and Copyrights that is material
to the conduct of any Grantor's business, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and
payment of maintenance fees, and, if consistent with good business judgment, to
initiate opposition, interference and cancelation proceedings against third
parties.
(g) In the event that any Grantor has reason to believe that
any Article 9 Collateral consisting of a Patent, Trademark or Copyright
material to the conduct of any Grantor's business has been or is about to be
infringed, misappropriated or diluted by a third party, such Grantor promptly
shall notify the Collateral Agent and shall, if consistent with good business
judgment, promptly xxx for infringement, misappropriation
22
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Article 9 Collateral.
(h) Upon and during the continuance of an Event of Default and
upon notice from the Collateral Agent, each Grantor shall use its commercially
reasonable best efforts to obtain all requisite consents or approvals by the
licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee for the benefit of the
Secured Parties.
ARTICLE V
REMEDIES
SECTION 5.01. REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed
that the Collateral Agent shall have the right to take any of or all the
following actions at the same or different times: (a) with respect to any
Article 9 Collateral consisting of Intellectual Property, on demand, to cause
the Security Interest to become an assignment, transfer and conveyance of any
of or all such Article 9 Collateral by the applicable Grantors to the
Collateral Agent (for the benefit of the Secured Parties), or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or nonexclusive basis, any such Article 9 Collateral throughout the world on
such terms and conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing arrangements
to the extent that waivers cannot be obtained), and (b) with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Article 9 Collateral and without liability for trespass to
enter any premises where the Article 9 Collateral may be located for the
purpose of taking possession of or removing the Article 9 Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
Uniform Commercial Code or other applicable law. Without limiting the
generality of the foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements of applicable law,
to sell or otherwise dispose of all or any part of the Collateral at a public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery as the Collateral Agent shall deem
appropriate. The Collateral Agent shall be authorized at any such sale of
securities (if it deems it advisable to do so) to restrict the prospective
bidders or purchasers to Persons who will represent and agree that they are
purchasing the Collateral for their own account for investment and not with a
view to the distribution or sale thereof, and upon consummation of any such
sale the Collateral Agent shall have the right to assign, transfer and deliver
to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any sale of Collateral 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 law) all rights of redemption, stay
and appraisal which such Grantor
23
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10
days' written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or
places as the Collateral Agent may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral , or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Collateral Agent
may (in its sole and absolute discretion) determine. The Collateral Agent shall
not be obligated to make any sale of any Collateral if it shall determine not
to do so, regardless of the fact that notice of sale of such Collateral shall
have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place to which the same
was so adjourned. In case any sale of all or any part of the Collateral is made
on credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent and the other Secured Parties shall not incur
any liability in case any such purchaser or purchasers shall fail to take up
and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by law, private) sale made pursuant to this Agreement, any Secured
Party may bid for or purchase, free (to the extent permitted by law) from any
right of redemption, stay, valuation or appraisal on the part of any Grantor
(all said rights being also hereby waived and released to the extent permitted
by law), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to such
Secured Party from any Grantor as a credit against the purchase price (but in
the case of such payment, such Secured Party will promptly notify the
Collateral Agent of the amount of such credit), and such Secured Party may,
upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered
into such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may proceed by a suit or suits
at law or in equity to foreclose this Agreement and to sell the Collateral or
any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 5.01 shall
24
be deemed to conform to the commercially reasonable standards as provided in
Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.
SECTION 5.02. PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT.
In addition to any rights of the Collateral Agent and the Lenders specified in
this Agreement, if an Event of Default shall occur and be continuing, at the
request of the Collateral Agent, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Collateral Agent and the other Secured Parties,
segregated from other funds of such Grantor, in a deposit account, and shall,
forthwith upon receipt by such Grantor, be turned over to the Collateral Agent
in the exact form received by such Grantor (duly indorsed by such Grantor to
the Collateral Agent, if required). All Proceeds received by the Collateral
Agent hereunder shall be held by the Collateral Agent in an account maintained
under its sole dominion and control either (i) with the Collateral Agent or an
Affiliate or authorized agent thereof or (ii) in a deposit account with respect
to which the depositary bank has agreed to comply with instructions from the
Collateral Agent to such depositary bank directing the disposition of funds
from time to time credited to such account, without further consent of such
Grantor or any other Person, pursuant to an agreement satisfactory to the
Collateral Agent. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Collateral Agent and
the other Secured Parties) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof until applied as
provided in Section 5.03.
SECTION 5.03. APPLICATION OF PROCEEDS. The proceeds of any
collection or sale of Collateral, including any Collateral consisting of cash,
shall be applied as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement, any other Loan Document or
any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by
25
statute or under a judicial proceeding), the receipt of the Collateral Agent or
of the officer making the sale shall be a sufficient discharge to the purchaser
or purchasers of the Collateral so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Collateral Agent or such officer or be answerable in any way
for the misapplication thereof.
SECTION 5.04. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Agreement at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to the Grantors)
to use, license or sublicense any of the Article 9 Collateral consisting of
Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or
stored and to all computer software and programs used for the compilation or
printout thereof. The use of such license by the Collateral Agent may be
exercised, at the option of the Collateral Agent, upon the occurrence and
during the continuation of an Event of Default; PROVIDED that any license,
sublicense or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
SECTION 5.05. SECURITIES ACT. In view of the position of the
Grantors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to
time in effect being called the "FEDERAL SECURITIES LAWS") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Collateral,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Collateral could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Collateral under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Grantor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Collateral, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Collateral or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Grantor acknowledges and
agrees that any such sale might result in prices and other terms less favorable
to the seller than if such sale were a public sale without such restrictions.
In the event of any such sale, the Collateral Agent
26
and the other Secured Parties shall incur no responsibility or liability for a
sale of all or any part of the Pledged Collateral at a price that the
Collateral Agent, in its sole and absolute discretion, may in good xxxxx xxxx
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 5.05 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.
SECTION 5.06. REGISTRATION. Each Grantor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Collateral at a public
sale, it will, at any time and from time to time, upon the written request of
the Collateral Agent, use its best efforts to take or to cause the issuer of
such Pledged Collateral to take such action, and prepare, distribute and/or
file such documents, as are required or advisable in the reasonable opinion of
counsel for the Collateral Agent to permit the public sale of such Pledged
Collateral. Each Grantor further agrees to indemnify, defend and hold harmless
the Collateral Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling persons from and
against all loss, liability, expenses, costs of counsel (including, without
limitation, reasonable fees and expenses to the Collateral Agent of legal
counsel), and claims (including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of or is based
upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information
furnished in writing to such Grantor or the issuer of such Pledged Collateral
by the Collateral Agent or any other Secured Party expressly for use therein.
Each Grantor further agrees, upon such written request referred to above, to
use its best efforts to qualify, file or register, or cause the issuer of such
Pledged Collateral to qualify, file or register, any of the Pledged Collateral
under the Blue Sky or other securities laws of such states as may be requested
by the Collateral Agent and keep effective, or cause to be kept effective, all
such qualifications, filings or registrations. Each Grantor will bear all costs
and expenses of carrying out its obligations under this Section 5.06. Each
Grantor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section 5.06 and that such failure would
not be adequately compensable in damages, and therefore agrees that its
agreements contained in this Section 5.06 may be specifically enforced.
ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 6.01. INDEMNITY AND SUBROGATION. In addition to all
such rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 6.03), the Borrower agrees that (a) in
the event a payment of an
27
obligation shall be made by any Guarantor under this Agreement, the Borrower
shall indemnify such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the Person to whom such payment
shall have been made to the extent of such payment and (b) in the event any
assets of any Grantor shall be sold pursuant to this Agreement or any other
Security Document to satisfy in whole or in part an obligation owed to any
Secured Party, the Borrower shall indemnify such Grantor in an amount equal to
the greater of the book value or the fair market value of the assets so sold.
SECTION 6.02. CONTRIBUTION AND SUBROGATION. Each Guarantor and
Grantor (a "CONTRIBUTING PARTY") agrees (subject to Section 6.03) that, in the
event a payment shall be made by any other Guarantor hereunder in respect of
any Obligation or assets of any other Grantor shall be sold pursuant to any
Security Document to satisfy any Obligation owed to any Secured Party and such
other Guarantor or Grantor (the "CLAIMING PARTY") shall not have been fully
indemnified by the Borrower as provided in Section 6.01, the Contributing Party
shall indemnify the Claiming Party in an amount equal to the amount of such
payment or the greater of the book value or the fair market value of such
assets, as the case may be, in each case multiplied by a fraction of which the
numerator shall be the net worth of the Contributing Party on the date hereof
and the denominator shall be the aggregate net worth of all the Guarantors and
Grantors on the date hereof (or, in the case of any Guarantor or Grantor
becoming a party hereto pursuant to Section 7.16, the date of the supplement
hereto executed and delivered by such Guarantor or Grantor). Any Contributing
Party making any payment to a Claiming Party pursuant to this Section 6.02
shall be subrogated to the rights of such Claiming Party under Section 6.01 to
the extent of such payment.
SECTION 6.03. SUBORDINATION. (a) Notwithstanding any provision
of this Agreement to the contrary, all rights of the Guarantors and Grantors
under Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full in cash of the Obligations. No failure on the
part of the Borrower or any Guarantor or Grantor to make the payments required
by Sections 6.01 and 6.02 (or any other payments required under applicable law
or otherwise) shall in any respect limit the obligations and liabilities of any
Guarantor or Grantor with respect to its obligations hereunder, and each
Guarantor and Grantor shall remain liable for the full amount of the
obligations of such Guarantor or Grantor hereunder.
(b) Each Guarantor and Grantor hereby agrees that all
Indebtedness and other monetary obligations owed by it to any other Guarantor,
Grantor or any other Subsidiary shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations.
28
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Party shall be given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02. WAIVERS; AMENDMENT. (a) No failure or delay by
the Collateral Agent, the Issuing Banks or any Lender in exercising any right
or power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent, the Issuing
Banks and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section 7.02, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed
as a waiver of any Default, regardless of whether the Collateral Agent, any
Lender or any Issuing Bank may have had notice or knowledge of such Default at
the time. No notice or demand on any Loan Party in any case shall entitle any
Loan Party to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Loan Party or Loan Parties
with respect to which such waiver, amendment or modification is to apply,
subject to any consent required in accordance with Section 9.02 of the Credit
Agreement.
SECTION 7.03. COLLATERAL AGENT'S FEES AND EXPENSES;
INDEMNIFICATION. (a) The parties hereto agree that the Collateral Agent shall
be entitled to reimbursement of its expenses incurred hereunder as provided in
Section 9.03 of the Credit Agreement.
(b) Without limitation of its indemnification obligations under
the other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding
29
relating to any of the foregoing, or to the Collateral, whether or not any
Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee or any of its Related
Parties. To the extent permitted by applicable law, each Grantor and each
Guarantor shall not assert, and hereby waives, any claims against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of proceeds thereof.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.03 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 7.03 shall be payable on written
demand therefor.
SECTION 7.04. SUCCESSORS AND ASSIGNS. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Guarantor, Grantor or
the Collateral Agent that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns and shall inure to
the benefit of the other Secured Parties and their respective successors and
assigns.
SECTION 7.05. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as
the principal of or any accrued interest on any Loan or any fee or any other
amount payable under any Loan Document is outstanding and unpaid or any Letter
of Credit is outstanding and so long as the Commitments have not expired or
terminated.
SECTION 7.06. COUNTERPARTS; EFFECTIVENESS; SEVERAL AGREEMENT.
This Agreement may be executed in counterparts, each of which shall constitute
an original but all of which when taken together shall constitute a single
contract, and shall become
30
effective as provided in this Section 7.06. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement. This Agreement
shall become effective as to any Loan Party when a counterpart hereof executed
on behalf of such Loan Party shall have been delivered to the Collateral Agent
and a counterpart hereof shall have been executed on behalf of the Collateral
Agent, and thereafter shall be binding upon such Loan Party and the Collateral
Agent and their respective permitted successors and assigns, and shall inure to
the benefit of such Loan Party, the Collateral Agent and the other Secured
Parties and their respective successors and assigns, except that no Loan Party
shall have the right to assign or transfer its rights or obligations hereunder
or any interest herein or in the Collateral without the prior written consent
of the Lenders (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This
Agreement shall be construed as a separate agreement with respect to each Loan
Party and may be amended, modified, supplemented, waived or released with
respect to any Loan Party without the approval of any other Loan Party and
without affecting the obligations of any other Loan Party hereunder.
SECTION 7.07. SEVERABILITY. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction. The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 7.08. RIGHT OF SET-OFF. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of any Subsidiary Party against any of and all the obligations
of such Subsidiary Party now or hereafter existing under this agreement owed to
such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
applicable Lender shall notify the Borrower and the Collateral Agent of such
set-off or application; PROVIDED that any failure to give or delay in giving
such notice shall not affect the validity of a set-off or application under
this Section 7.08. The rights of each Lender under this Section 7.08 are in
addition to other rights and remedies (including other rights of set-off) which
such Lender may have.
SECTION 7.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE
OF PROCESS. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
31
(b) Each of the Loan Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement or any other
Loan Document shall affect any right that the Collateral Agent, the Issuing
Banks or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any Grantor or
Guarantor, or its properties in the courts of any jurisdiction.
(c) Each of the Loan Parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section 7.09. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this
32
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 7.12. SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Collateral and all obligations of each Grantor and Guarantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor or Guarantor in respect of the Obligations or this
Agreement.
SECTION 7.13. TERMINATION OR RELEASE. (a) This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate when all the Loan Document Obligations then due
and owing have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the LC Exposure has been reduced
to zero and the Issuing Banks have no further obligations to issue Letters of
Credit under the Credit Agreement, PROVIDED that this Agreement shall not
terminate with respect to any Obligations (other than contingent obligations
that have not become due and owing) that remain outstanding after the
indefeasible payment in full of the Loan Document Obligations and after giving
effect to the termination of the security interests granted herein, unless such
Obligations are secured substantially to the same extent as under this
Agreement, as determined in the reasonable discretion of the Secured Parties
owed such remaining Obligations.
(b) A Subsidiary Party shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Party shall be automatically released upon the consummation of any
transaction permitted by the Credit Agreement as a result of which such
Subsidiary Party ceases to be a Subsidiary; PROVIDED that the Required Lenders
shall have consented to such transaction (to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise.
(c) Upon any sale or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement to any Person that is
not a Grantor, or upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to Section
9.02 of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(d) In connection with any termination or release pursuant to
paragraph (a), (b) or (c), the Collateral Agent shall execute and deliver to
any Grantor, at such Grantor's expense, all documents that such Grantor shall
reasonably request to
33
evidence such termination or release. Any execution and delivery of documents
pursuant to this Section 7.13 shall be without recourse to or warranty by the
Collateral Agent or any other Secured Party.
SECTION 7.14. ADDITIONAL SUBSIDIARIES. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary of a Loan Party that was not in
existence or not a Subsidiary on the date of the Credit Agreement and is not a
Foreign Subsidiary is required to enter in this Agreement as a Subsidiary Party
upon becoming such a Subsidiary. Upon execution and delivery by the Collateral
Agent and a Subsidiary of an instrument in the form of Exhibit I hereto, such
Subsidiary shall become a Subsidiary Party hereunder with the same force and
effect as if originally named as a Subsidiary Party herein. The execution and
delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Loan
Party as a party to this Agreement.
SECTION 7.15. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent's name or in the name of
such Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of any Grantor on any invoice or xxxx of
lading relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; PROVIDED that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby. The Collateral Agent and the other Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor 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 wilful
misconduct.
34
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
INTERLINE BRANDS, INC.,
a Delaware corporation,
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Financial Officer
INTERLINE BRANDS, INC.,
a New Jersey corporation,
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Financial Officer
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Financial Officer
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent,
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Director
Schedule I to
the Guarantee and
Collateral Agreement
SUBSIDIARY PARTIES
Wilmar Holdings, Inc.
Wilmar Financial, Inc.
Glenwood Acquisition LLC
Exhibit I to the
Guarantee and
Collateral Agreement
SUPPLEMENT NO. __ (this "SUPPLEMENT") dated as
of _____________, to the Guarantee and Collateral
Agreement dated as of June 23, 2006 among INTERLINE
BRANDS, INC., a New Jersey corporation (the
"Borrower"), INTERLINE BRANDS, INC., a Delaware
corporation ("HOLDINGS"), each subsidiary of the
Borrower listed on Schedule I thereto (each such
subsidiary individually a "SUBSIDIARY GUARANTOR" and
collectively, the "SUBSIDIARY GUARANTORS"; the
Subsidiary Guarantors, Holdings and the Borrower are
referred to collectively herein as the "GRANTORS") and
JPMORGAN CHASE BANK, N.A., a New York banking
corporation ("JPMCB"), as Collateral Agent (in such
capacity, the "COLLATERAL AGENT").
A. Reference is made to the Credit Agreement dated as of June
23, 2006 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among Holdings, the Borrower, the lenders from time to
time party thereto, JPMCB, as Administrative Agent, Xxxxxx Commercial Paper
Inc., as Syndication Agent, and Credit Suisse, Bank of America, N.A., SunTrust
Bank and Wachovia Bank, National Association, as Co-Documentation Agents.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement
and the Collateral Agreement referred to therein.
C. The Grantors have entered into the Collateral Agreement in
order to induce the Lenders to make Loans and the Issuing Banks to issue
Letters of Credit. Section 7.14 of the Collateral Agreement provides that
additional Subsidiaries may become Subsidiary Parties under the Collateral
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary (the "NEW SUBSIDIARY") is executing this
Supplement in accordance with the requirements of the Credit Agreement to
become a Subsidiary Party under the Collateral Agreement in order to induce the
Lenders to make additional Loans and the Issuing Banks to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary agree
as follows:
SECTION 1. In accordance with Section 7.14 of the Collateral
Agreement, the New Subsidiary by its signature below becomes a Subsidiary Party
(and accordingly, becomes a Guarantor and a Grantor), Grantor and Guarantor
under the Collateral Agreement with the same force and effect as if originally
named therein as a Subsidiary Party and the New Subsidiary hereby (a) agrees to
all the terms and provisions of the Collateral Agreement applicable to it as a
Subsidiary Party, Grantor and Guarantor
2
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor and Guarantor thereunder are true and
correct on and as of the date hereof. In furtherance of the foregoing, the New
Subsidiary, as security for the payment and performance in full of the
Obligations, does hereby (a) create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Subsidiary's right, title and interest in and to the Collateral of the New
Subsidiary and (b) guarantee the Obligations as set forth in Section 2 of the
Collateral Agreement. Each reference to a "Guarantor" or "Grantor" in the
Collateral Agreement shall be deemed to include the New Subsidiary. Schedule I
to the Collateral Agreement is hereby amended to include the New Subsidiary.
The Collateral Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received a counterpart of this Supplement that bears the
signature of the New Subsidiary and the Collateral Agent has executed a
counterpart hereof. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Supplement.
SECTION 4. The New Subsidiary hereby represents and warrants
that (a) set forth on Schedule I attached hereto is a true and correct schedule
of the location of any and all Collateral of the New Subsidiary and (b) set
forth under its signature hereto, is the true and correct legal name of the New
Subsidiary, its jurisdiction of formation and the location of its chief
executive office.
SECTION 5. Except as expressly supplemented hereby, the
Collateral Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Collateral Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or
3
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 7.01 of the Collateral Agreement.
SECTION 9. The New Subsidiary agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent
have duly executed this Supplement to the Collateral Agreement as of the day
and year first above written.
[NAME OF NEW SUBSIDIARY],
By: /s/
-----------------------------
Name:
Title:
Legal Name:
Jurisdiction of Formation:
Location of Chief Executive Office:
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
By: /s/
-----------------------------
Name:
Title:
33
Schedule I
to the Supplement No __ to the
Guarantee and
Collateral Agreement
LOCATION OF COLLATERAL
DESCRIPTION LOCATION
----------- --------
EQUITY INTERESTS
NUMBER AND
NUMBER OF REGISTERED CLASS OF PERCENTAGE OF
ISSUER CERTIFICATE OWNER EQUITY INTERESTS EQUITY INTERESTS
------ ----------- ---------- ---------------- ----------------
DEBT SECURITIES
PRINCIPAL
ISSUER AMOUNT DATE OF NOTE MATURITY DATE
------ --------- ------------ -------------
INTELLECTUAL PROPERTY
