Exhibit 10.24
SUBSIDIARY TRADEMARK SECURITY AGREEMENT
This SUBSIDIARY TRADEMARK SECURITY AGREEMENT (this "Agreement")
is dated as of ________ and entered into by and among [INSERT NAME OF
GRANTOR IN CAPS], a ________________ corporation ("Grantor"), and FIRST
UNION NATIONAL BANK, as administrative agent for and representative of (in
such capacity herein called "Secured Party") the financial institutions
("Lenders") party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Syndication Agent and Lenders have entered
into a Credit Agreement dated as of October 23, 1997, which Credit
Agreement has been amended and restated by an Amended and Restated Credit
Agreement dated as of January 28, 1999 (said Credit Agreement, as it may
hereafter be further amended, supplemented or otherwise modified from time
to time, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined) with The
Pantry, Inc. (the "Borrower") pursuant to which Lenders have made certain
commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to the Borrower.
B. Borrower may from time to time enter into one or more
Interest Rate Agreements (collectively, the "Lender Interest Rate
Agreements") with one or more Lenders (in such capacity, collectively,
"Interest Rate Exchangers") in accordance with the terms of the Credit
Agreement.
C. Grantor owns and uses in its business, and will in the future
adopt and so use, various intangible assets, including trademarks, service
marks, designs, logos, indicia, tradenames, corporate names, company names,
business names, fictitious business names, trade styles and/or other source
and/or business identifiers and applications pertaining thereto
(collectively, the "Trademarks").
D. Secured Party desires to become a secured creditor with
respect to all of the existing and future Trademarks, all registrations
that have been or may hereafter be issued or applied for thereon in the
United States and any state thereof (the "Registrations"), all common law
and other rights in and to the Trademarks in the United States and any
state thereof (the "Trademark Rights"), all goodwill of Grantor's business
symbolized by the Trademarks and associated therewith, including without
limitation the documents and things described in Section 1(b) (the
"Associated Goodwill"), and all proceeds of the Trademarks, the
Registrations, the Trademark Rights and the Associated Goodwill, and
Grantor agrees to create a secured and protected interest in the
Trademarks, the Registrations, the Trademark Rights, the Associated
Goodwill and all the proceeds thereof as provided herein.
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E. Grantor has executed and delivered the Subsidiary Security
Agreement dated as of even date herewith (the "Subsidiary Security
Agreement") between Grantor and Secured Party for the benefit of Lenders,
pursuant to which Grantor has granted Secured Party a security interest in
all of its personal property, including, without limitation, the Collateral
(as defined below), which Subsidiary Security Agreement is to be
supplemented by this Agreement, and it is desired that all obligations of
Grantor under the Guaranty be secured hereunder.
F. Pursuant to the Subsidiary Security Agreement, Grantor has
granted to Secured Party a lien on and security interest in, among other
assets, the equipment and inventory relating to the products and services
sold or delivered under or in connection with the Trademarks such that,
upon the occurrence and during the continuation of an Event of Default,
Secured Party would be able to exercise its remedies consistent with the
Subsidiary Security Agreement, this Agreement and applicable law to
foreclose upon Grantor's business and use the Trademarks, the Registrations
and the Trademark Rights in conjunction with the continued operation of
such business, maintaining substantially the same product and service
specifications and quality as maintained by Grantor, and benefit from the
Associated Goodwill.
G. Upon the occurrence and during the continuation of an Event
of Default, and to permit Secured Party to operate Grantor's business
without interruption and to use the Trademarks, Registrations, Trademark
Rights and Associated Goodwill in conjunction therewith, Grantor is willing
to appoint Secured Party as Grantor's attorney-in-law and attorney-in-fact
to execute documents and take actions consistent therewith.
I. It is a requirement under the Credit Agreement that Grantor
shall have granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the
Credit Agreement as well as to induce Interest Rate Exchangers to enter
into the Lender Interest Rate Agreements to enter into the Lender Interest
Rate Agreements and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Grantor hereby agrees with
Secured Party as follows:
SECTION 1. Grant of Security. Grantor hereby grants to Secured
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Party a security interest in, all of Grantor's right, title and interest in
and to the following, in each case whether now or hereafter existing or in
which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "Collateral"):
(a) each of the Trademarks and rights and interests in Trademarks
which are presently, or in the future may be, owned, held (whether pursuant
to a license or otherwise) or used by Grantor, in whole or in part
(including, without limitation, the Trademarks specifically identified in
Schedule A annexed hereto, as the same may be amended pursuant hereto from
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time to time), and including all Trademark Rights with
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respect thereto and all federal and state Registrations therefor heretofore
or hereafter granted or applied for, the right (but not the obligation) to
register claims under any state or federal trademark law and to apply for,
renew and extend the Trademarks, Registrations and Trademark Rights, the
right (but not the obligation) to xxx or bring opposition or cancellation
proceedings in the name of Grantor or in the name of Secured Party or
otherwise for past, present and future infringements of the Trademarks,
Registrations or Trademark Rights and all rights (but not obligations)
corresponding thereto in the United States and the Associated Goodwill; it
being understood that the rights and interests included herein shall
include, without limitation, all rights and interests pursuant to licensing
or other contracts in favor of Grantor pertaining to the Trademarks,
Registrations or Trademark Rights presently or in the future owned or used
by third parties but, in the case of third parties which are not Affiliates
of Grantor, only to the extent permitted by such licensing or other
contracts and, if not so permitted, only with the consent of such third
parties;
(b) the following documents and things in Grantor's possession,
or subject to Grantor's right to possession, related to (Y) the production,
sale and delivery by Grantor, or by any Affiliate, licensee or
subcontractor of Grantor, of products or services sold or delivered by or
under the authority of Grantor in connection with the Trademarks,
Registrations or Trademark Rights (which products and services shall, for
purposes of this Agreement, be deemed to include, without limitation,
products and services sold or delivered pursuant to merchandising
operations utilizing any Trademarks, Registrations or Trademark Rights); or
(Z) any retail or other merchandising operations conducted under the name
of or in connection with the Trademarks, Registrations or Trademark Rights
by Grantor or any Affiliate, licensee or subcontractor of Grantor:
(i) all lists and ancillary documents that identify and
describe any of Grantor's customers, or those of its Affiliates,
licensees or subcontractors, for products sold and services delivered
under or in connection with the Trademarks or Trademark Rights,
including without limitation any lists and ancillary documents that
contain a customer's name and address, the name and address of any of
its warehouses, branches or other places of business, the identity of
the Person or Persons having the principal responsibility on a
customer's behalf for ordering products or services of the kind
supplied by Grantor, or the credit, payment, discount, delivery or
other sale terms applicable to such customer, together with
information setting forth the total purchases, by brand, product,
service, style, size or other criteria, and the patterns of such
purchases;
(ii) all product and service specification documents and
production and quality control manuals used in the manufacture or
delivery of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights;
(iii) all documents which reveal the name and address of any
source of supply, and any terms of purchase and delivery, for any and
all materials, components and services used in the production of
products and
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services sold or delivered under or in connection with the Trademarks
or Trademark Rights; and
(iv) all documents constituting or concerning the then
current or proposed advertising and promotion by Grantor or its
Affiliates, licensees or subcontractors of products and services sold
or delivered under or in connection with the Trademarks or Trademark
Rights including, without limitation, all documents which reveal the
media used or to be used and the cost for all such advertising
conducted within the described period or planned for such products and
services;
(c) all general intangibles relating to the Collateral;
(d) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software
that at any time evidence or contain information relating to any of
the Collateral or are otherwise necessary or helpful in the collection
thereof or realization thereupon; and
(e) all proceeds, products, rents and profits (including
without limitation license royalties and proceeds of infringement
suits) of or from any and all of the foregoing Collateral and, to the
extent not otherwise included, all payments under insurance (whether
or not Secured Party is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is
receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
SECTION 2. Security for Obligations. This Agreement secures,
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and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including
the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S)362(a)), of all obligations and liabilities of every nature
of Grantor now or hereafter existing under or arising out of or in
connection with the Guaranty and all extensions or renewals thereof,
whether for principal, interest (including without limitation interest
that, but for the filing of a petition in bankruptcy with respect to
Company and/or Grantor, would accrue on such obligations, whether or
not a claim is allowed against Company and/or Grantor for such
interest in the related bankruptcy proceeding), reimbursement of
amounts drawn under Letters of Credit, payments for early termination
of Lender Interest Rate Agreements, fees, expenses, indemnities or
otherwise, whether voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Secured Party, Syndication
Agent, Documentation Agent, any Lender or Interest Rate Exchanger as a
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preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "Underlying Debt"), and all obligations of every
nature of Grantor now or hereafter existing under this Agreement (all
such obligations of Grantor, together with the Underlying Debt, being
the "Secured Obligations").
SECTION 3. Grantor Remains Liable. Anything contained herein to
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the contrary notwithstanding, (a) Grantor shall remain liable under
any contracts and agreements included in the Collateral, to the extent
set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights
hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or
liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of Grantor
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. Representations and Warranties. Grantor represents
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and warrants as follows:
(a) Description of Collateral. A true and complete list of all
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Trademarks, Registrations and Trademark Rights owned, held (whether
pursuant to a license or otherwise) or used by Grantor, in whole or in
part, as of the date of this Agreement and which are material to the
operation of the business of Grantor is set forth in Schedule A
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annexed hereto.
(b) Validity and Enforceability of Collateral. Each of the
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Trademarks, Registrations and Trademark Rights that is owned by
Grantor and is material to the financial condition or business of
Grantor is valid, subsisting and enforceable. Grantor is not aware of
any pending or threatened claim by any third party that any such
Trademarks, Registrations or Trademark Rights is invalid or
unenforceable or that the use of any of the Trademarks, Registrations
or Trademark Rights violates the rights of any third person or of any
basis for any such claim.
(c) Ownership of Collateral. Except for the security interest
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created by this Agreement or any other Collateral Document, Grantor
owns the Collateral free and clear of any Lien (other than Permitted
Encumbrances). Except such as may have been filed in favor of Secured
Party relating to this Agreement, (i) no effective financing statement
or other instrument similar in effect covering all or any part of the
Collateral is on file in any filing or recording office and (ii) no
effective filing covering all or any part of the Collateral is on file
in the United States Patent and Trademark Office.
(d) Office Locations; Other Names. The chief place of business,
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the chief executive office and the office where Grantor keeps its
records regarding the Collateral is, and has been for the four month
period preceding the date hereof, located at the location identified
in Schedule B attached hereto. Grantor has not in the past five
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years done, and does not now do, business under any other name
(including any trade-name or fictitious business name), except as set
forth in Schedule B attached hereto.
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(e) Governmental Authorizations. Except as contemplated by
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Sections 1(a) and 4(f) hereof, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority
or regulatory body is required for either (i) the grant by Grantor of
the security interest hereby, (ii) the execution, delivery or
performance of this Agreement by Grantor, or (iii) the perfection of
or the exercise by Secured Party of its rights and remedies hereunder
in the United States (except as may have been taken by or at the
direction of Grantor).
(f) Perfection. This Agreement, together with the filing of
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financing statements describing the Collateral with the Secretary of
State of the State of [Delaware] [Florida], and the recording of this
Agreement with the United States Patent and Trademark Office, which
have been made or will be made promptly following the Closing Date,
creates a valid, perfected and, except for Permitted Encumbrances,
First Priority security interest in the Collateral, securing the
payment of the Secured Obligations; provided that additional actions
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may be required with respect to the perfection of proceeds of the
Collateral.
(g) Other Information. All information heretofore, herein or
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hereafter supplied to Secured Party by or on behalf of Grantor with
respect to the Collateral is accurate and complete in all material
respects.
SECTION 5. Further Assurances; New Trademarks, Registrations and
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Trademark Rights.
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(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary in order to perfect and protect any security interest or
conditional assignment granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, Grantor will: (i) at the request of
Secured Party, xxxx conspicuously each of its records pertaining to
the Collateral with a legend, in form and substance satisfactory to
Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) execute and file such financing
or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary in order to perfect and
preserve the security interests granted or purported to be granted
hereby, (iii) at the revocable request of Secured Party, use its best
efforts to obtain any necessary consents of third parties to the grant
and perfection of a security interest and assignment to Secured Party
with respect to any Collateral, (iv) at any reasonable time, upon
request by Secured Party, exhibit the Collateral to and allow
inspection of the Collateral by Secured Party, or persons designated
by Secured Party, and (v) at Secured Party's request, appear in and
defend any action or proceeding that may affect Grantor's title to or
Secured Party's security interest in all or any part of the
Collateral.
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(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of Grantor.
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any
and all jurisdictions.
(c) Grantor hereby authorizes Secured Party to modify this
Agreement without obtaining Grantor's approval of or signature to such
modification by amending Schedule A annexed hereto to include reference to
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any right, title or interest in any existing Trademark, Registration or
Trademark Right or any Trademark, Registration or Trademark Right acquired
or developed by Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Trademark, Registration or
Trademark Right in which Grantor no longer has or claims any right, title
or interest.
(d) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party
may reasonably request, all in reasonable detail.
(e) If Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, the provisions of this Agreement shall
automatically apply thereto. Grantor shall promptly notify Secured Party
in writing of any rights to any new Trademarks or Trademark Rights acquired
by Grantor after the date hereof and of any Registrations issued or
applications for Registration made after the date hereof. Concurrently with
the filing of an application for Registration for any Trademark, Grantor
shall execute, deliver and record in all places where this Agreement is
recorded an appropriate Trademark Collateral Security Agreement,
substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement, in form and substance satisfactory to Secured
Party, pursuant to which Grantor shall grant a security interest to the
extent of its interest in such Registration as provided herein to Secured
Party unless so doing would, in the reasonable judgment of Grantor, after
due inquiry, result in the grant of a Registration in the name of Secured
Party, in which event Grantor shall give written notice to Secured Party as
soon as reasonably practicable and the filing shall instead be undertaken
as soon as practicable but in no case later than immediately following the
grant of the Registration.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
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(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
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(c) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business or chief executive office or
the office where Grantor keeps its records regarding the Collateral;
(d) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the
Collateral, except to the extent the validity thereof is being contested in
good faith; provided that Grantor shall in any event pay such taxes,
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assessments, charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or warrant of
attachment entered or filed against Grantor or any of the Collateral as a
result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted herein or
by the Credit Agreement; provided that in the event Grantor makes an Asset
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Sale permitted by the Credit Agreement and the assets subject to such Asset
Sale constitute Collateral, Secured Party shall release the Collateral that
is the subject of such Asset Sale to Grantor free and clear of any Lien and
security interest under this Agreement or any other Collateral Documents
concurrently with the consummation of such Asset Sale; provided, further
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that, as a condition precedent to such release, Secured Party shall have
received evidence satisfactory to it that arrangements satisfactory to it
have been made for delivery to Secured Party of that amount of Net Asset
Sale Proceeds required to be delivered to Secured Party under the Credit
Agreement;
(f) except for the security interest created by this Agreement or
any other Loan Document, not create or suffer to exist any Lien upon or
with respect to any of the Collateral to secure the indebtedness or other
obligations of any Person except for Permitted Encumbrances;
(g) keep reasonable records respecting the Collateral and at all
times keep at least one complete set of its records concerning
substantially all of the Trademarks, Registrations and Trademark Rights at
its chief executive office or principal place of business;
(h) not permit the inclusion in any contract to which it becomes
a party of any provision that could impair in any material respect or
prevent the creation of a security interest in, or the assignment of,
Grantor's rights and interests in any property included within the
definitions of any Trademarks, Registrations, Trademark Rights and
Associated Goodwill acquired under such contracts;
(i) take all reasonable steps necessary to protect the secrecy of
all trade secrets relating to the products and services sold or delivered
under or in connection with the Trademarks and Trademark Rights, including
without limitation entering into confidentiality agreements with employees
and labeling and restricting access to secret information and documents;
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(j) use proper statutory notice in connection with its use of
each of the Trademarks, Registrations and Trademark Rights;
(k) use consistent standards of high quality (which may be
consistent with Grantor's past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in connection
with the Trademarks, Registrations and Trademark Rights, including, to the
extent applicable, in the operation and maintenance of its retail stores
and other merchandising operations; and
(l) upon any officer of Grantor obtaining knowledge thereof,
promptly notify Secured Party in writing of any event that may materially
and adversely affect the value of the Collateral or any material portion
thereof, the ability of Grantor or Secured Party to dispose of the
Collateral or any material portion thereof, or the rights and remedies of
Secured Party in relation thereto, including without limitation the levy of
any legal process against the Collateral or any material portion thereof.
SECTION 7. Certain Inspection Rights. Grantor hereby grants to
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Secured Party and its employees, representatives and agents the right to
visit Grantor's and any of its Affiliate's or subcontractor's plants,
facilities and other places of business that are utilized in connection
with the manufacture, production, inspection, storage or sale of products
and services sold or delivered under any of the Trademarks, Registrations
or Trademark Rights (or which were so utilized during the prior six month
period), and to inspect the quality control and all other records relating
thereto upon reasonable notice to Grantor and as often as may be reasonably
requested.
SECTION 8. Amounts Payable in Respect of the Collateral. Except
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as otherwise provided in this Section 8, Grantor shall continue to collect,
at its own expense, all amounts due or to become due to Grantor in respect
of the Collateral or any portion thereof. In connection with such
collections, Grantor may take (and, at Secured Party's direction, shall
take) such action as Grantor or Secured Party may deem necessary or
advisable to enforce collection of such amounts; provided, however, that
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Secured Party shall have the right at any time, upon the occurrence and
during the continuation of an Event of Default and upon written notice to
Grantor of its intention to do so, to notify the obligors with respect to
any such amounts of the existence of the security interest created and to
direct such obligors to make payment of all such amounts directly to
Secured Party, and, upon such notification and at the expense of Grantor,
to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the
same extent as Grantor might have done. After receipt by Grantor of the
notice from Secured Party referred to in the proviso to the preceding
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sentence, (i) all amounts and proceeds (including checks and other
instruments) received by Grantor in respect of amounts due to Grantor in
respect of the Collateral or any portion thereof shall be received in trust
for the benefit of Secured Party hereunder, shall be segregated from other
funds of Grantor and shall be forthwith paid over or delivered to Secured
Party in the same form as so received (with any necessary endorsement) to
be held as cash Collateral and applied as provided by Section 16, and (ii)
Grantor shall not adjust, settle or compromise the amount or payment of any
such amount or release wholly or partly any obligor with respect thereto or
allow any credit or discount thereon.
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SECTION 9. Trademark Applications and Litigation.
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(a) Grantor shall have the duty diligently, through counsel
reasonably acceptable to Secured Party, to prosecute any trademark
application relating to any of the Trademarks specifically identified in
Schedule A annexed hereto that is pending as of the date of this Agreement,
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to make federal application on any existing or future registerable but
unregistered Trademarks, and to file and prosecute opposition and
cancellation proceedings, renew Registrations and do any and all acts which
are necessary or desirable to preserve and maintain all rights in all
Trademarks, Registrations and Trademark Rights. Any expenses incurred in
connection therewith shall be borne solely by Grantor. Grantor shall not
abandon any Trademark, Registration or Trademark Right that is material in
value or to the conduct of Grantor's business without prior written notice
to, and express consent of, Secured Party.
(b) Except as provided in Section 9(d), Grantor shall have the
right to commence and prosecute in its own name, as real party in interest,
for its own benefit and at its own expense, such suits, proceedings or
other actions for infringement, unfair competition, dilution or other
damage as are in its reasonable business judgment necessary to protect the
Collateral. Secured Party shall provide, at Grantor's expense, all
reasonable and necessary cooperation in connection with any such suit,
proceeding or action including, without limitation, joining as a necessary
party.
(c) Grantor shall promptly, following its becoming aware thereof,
notify Secured Party of the institution of, or of any adverse determination
in, any proceeding (whether in the United States Patent and Trademark
Office or any federal, state, local or foreign court) described in Section
9(a) or 9(b) or regarding Grantor's claim of ownership in or right to use
any of the Trademarks, Registrations or Trademark Rights, its right to
register the same, or its right to keep and maintain such Registration.
Grantor shall provide to Secured Party any information with respect thereto
requested by Secured Party.
(d) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default,
Secured Party shall have the right (but not the obligation) to bring suit,
in the name of Grantor, Secured Party or otherwise, to enforce any
Trademark, Registration, Trademark Right, Associated Goodwill and any
license thereunder, in which event Grantor shall, at the request of Secured
Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement and Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
Section 17 in connection with the exercise of its rights under this Section
9. To the extent that Secured Party shall elect not to bring suit to
enforce any Trademark, Registration, Trademark Right, Associated Goodwill
or any license thereunder as provided in this Section 9(d), Grantor agrees
to use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement of any of the Trademarks,
Registrations, Trademark Rights or Associated Goodwill by others and for
that purpose agrees to diligently maintain any action, suit or proceeding
against any Person so infringing necessary to prevent such infringement.
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SECTION 10. Non-Disturbance Agreements, etc. If and to the
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extent that Grantor is permitted to license the Collateral, Secured Party
shall enter into a non-disturbance agreement or other similar arrangement,
at Grantor's request and expense, with Grantor and any licensee of any
Collateral permitted hereunder in form and substance satisfactory to
Secured Party pursuant to which (a) Secured Party shall agree not to
disturb or interfere with such licensee's rights under its license
agreement with Grantor so long as such licensee is not in default
thereunder and (b) such licensee shall acknowledge and agree that the
Collateral licensed to it is subject to the security interest created in
favor of Secured Party and the other terms of this Agreement.
SECTION 11. Reassignment of Collateral. If (a) an Event of
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Default shall have occurred and, by reason of cure, waiver, modification,
amendment or otherwise, no longer be continuing, (b) no other Event of
Default shall have occurred and be continuing, (c) an assignment to Secured
Party of any rights, title and interests in and to the Collateral shall
have been previously made and shall have become absolute and effective
pursuant to Section 12(f) or Section 15(b), and (d) the Secured Obligations
shall not have become immediately due and payable, upon the written request
of Grantor and the written consent of Secured Party, Secured Party shall
promptly execute and deliver to Grantor such assignments as may be
necessary to reassign to Grantor any such rights, title and interests as
may have been assigned to Secured Party as aforesaid, subject to any
disposition thereof that may have been properly made by Secured Party
pursuant hereto; provided that, after giving effect to such reassignment,
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Secured Party's security interest granted pursuant to Section 1, as well as
all other rights and remedies of Secured Party granted hereunder, shall
continue to be in full force and effect; and provided, further that the
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rights, title and interests so reassigned shall be free and clear of all
Liens other than Liens (if any) encumbering such rights, title and interest
at the time of their assignment to Secured Party and Permitted
Encumbrances.
SECTION 12. Secured Party Appointed Attorney-in-Fact. Grantor
----------------------------------------
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact,
with full authority in the place and stead of Grantor and in the name of
Grantor, Secured Party or otherwise, from time to time in Secured Party's
discretion, upon the occurrence and during the continuation of an Event of
Default or Potential Event of Default, to take any action and to execute
any instrument that Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) to endorse Grantor's name on all applications, documents,
papers and instruments necessary for Secured Party in the use or
maintenance of the Collateral;
(b) to ask for, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b)
above;
11
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed
upon or threatened against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by Secured
Party in its sole discretion, any such payments made by Secured Party to
become obligations of Grantor to Secured Party, due and payable immediately
without demand; and
(f) (i) to execute and deliver any of the assignments or
documents requested by Secured Party pursuant to Section 15(b), (ii) to
grant or issue an exclusive or non-exclusive license to the Collateral or
any portion thereof to any Person, and (iii) otherwise generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though Secured Party were
the absolute owner thereof for all purposes, and to do, at Secured Party's
option and Grantor's expense, at any time or from time to time, all acts
and things that are reasonably necessary to protect, preserve or realize
upon the Collateral and Secured Party's security interest therein in order
to effect the intent of this Agreement, all as fully and effectively as
Grantor might do.
SECTION 13. Secured Party May Perform. If Grantor fails to
-------------------------
perform any agreement contained herein, Secured Party may itself perform,
or cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Grantor under Section
17.
SECTION 14. Standard of Care. The powers conferred on Secured
----------------
Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property.
SECTION 15. Remedies. If any Event of Default shall have
--------
occurred and be continuing:
(a) Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "Code") (whether or not the Code applies to the affected Collateral),
and also may (i) require Grantor to, and Grantor hereby agrees that it
12
will at its expense and upon request of Secured Party forthwith, assemble
all or part of the Collateral as directed by Secured Party and make it
available to Secured Party at a place to be designated by Secured Party
that is reasonably convenient to both parties, (ii) enter onto the property
where any Collateral is located and take possession thereof with or without
judicial process, (iii) prior to the disposition of the Collateral, store
the Collateral or otherwise prepare the Collateral for disposition in any
manner to the extent Secured Party deems appropriate, (iv) take possession
of Grantor's premises or place custodians in exclusive control thereof,
remain on such premises and use the same for the purpose of taking any
actions described in the preceding clause (iii) and collecting any Secured
Obligation, (v) exercise any and all rights and remedies of Grantor under
or in connection with the contracts related to the Collateral or otherwise
in respect of the Collateral, including without limitation any and all
rights of Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, such contracts, and (vi) without
notice except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other terms as
Secured Party may deem commercially reasonable. Secured Party, any Lender
or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such public sale, and to the extent permitted by law,
private sale, and Secured Party, as agent for and representative of Lenders
and Interest Rate Exchangers (but not any Lender or Lenders, Interest Rate
Exchanger or Interest Rate Exchangers in its or their respective individual
capacities unless Requisite Lenders and Requisite Obligees (as defined in
Section 19(a)) shall otherwise agree in writing), shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Secured Party
at such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Grantor, and Grantor
hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Grantor of the time and place
of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned. Grantor hereby waives any claims against Secured
Party arising by reason of the fact that the price at which any Collateral
may have been sold at such a private sale was less than the price which
might have been obtained at a public sale, even if Secured Party accepts
the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Grantor
shall be liable for the deficiency and the fees of any attorneys employed
by Secured Party to collect such deficiency.
13
(b) Upon written demand from Secured Party, Grantor shall execute
and deliver to Secured Party an assignment or assignments of the
Trademarks, Registrations, Trademark Rights and the Associated Goodwill and
such other documents as are necessary or appropriate to carry out the
intent and purposes of this Agreement.
SECTION 16. Application of Proceeds. Except as expressly
-----------------------
provided elsewhere in this Agreement, all proceeds received by Secured
Party in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied as provided in
subsection 2.4D of the Credit Agreement.
SECTION 17. Indemnity and Expenses.
----------------------
(a) Grantor agrees to indemnify Secured Party, Syndication Agent,
Documentation Agent, each Lender, each Interest Rate Exchanger from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's, Syndication Agent's, Documentation Agent's,
such Lender's, such Interest Rate Exchanger's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, that Secured Party may incur
in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Grantor to perform or observe any of the provisions hereof.
SECTION 18. Continuing Security Interest; Transfer of Loans.
-----------------------------------------------
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment
in full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters
of Credit, (b) be binding upon Grantor, its successors and assigns, and (c)
inure, together with the rights and remedies of Secured Party hereunder, to
the benefit of Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to
the provisions of subsection 10.1 of the Credit Agreement, any Lender may
assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Lenders herein or otherwise. Upon the payment
in full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters
of Credit, the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to Grantor. Upon any such
termination Secured Party will, at Grantor's expense, execute and deliver
to Grantor such documents as Grantor shall reasonably request to evidence
such termination.
14
SECTION 19. Secured Party as Administrative Agent.
-------------------------------------
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement; provided
--------
that Secured Party shall exercise, or refrain from exercising, any remedies
provided for in Section 15 in accordance with the instructions of (i)
Requisite Lenders or (ii) after payment in full of all Obligations under
the Credit Agreement and the other Loan Documents, the holders of a
majority of the aggregate notional amount (or, with respect to any Lender
Interest Rate Agreement that has been terminated in accordance with its
terms, the amount then due and payable (exclusive of expenses and similar
payments but including any early termination payments then due) under such
Lender Interest Rate Agreement) under all Lender Interest Rate Agreements
(Requisite Lenders or, if applicable, such holders being referred to herein
as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 19(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize
upon any of the Collateral hereunder, it being understood and agreed by
such Interest Rate Exchanger that all rights and remedies hereunder may be
exercised solely by Secured Party for the benefit of Lenders and Interest
Rate Exchangers in accordance with the terms of this Section 19(a).
(b) Written notice of resignation by Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute removal as Secured Party under this Agreement; and
appointment of a successor Administrative Agent pursuant to subsection 9.5
of the Credit Agreement shall also constitute appointment of a successor
Secured Party under this Agreement. Upon the acceptance of any appointment
as Administrative Agent under subsection 9.5 of the Credit Agreement by a
successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under this
Agreement, and the retiring or removed Secured Party under this Agreement
shall promptly (i) transfer to such successor Secured Party all sums,
securities and other items of Collateral held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party
such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder,
whereupon such retiring or removed Secured Party shall be discharged from
its duties and obligations under this Agreement. After any retiring or
removed Administrative Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while
it was Secured Party hereunder.
15
SECTION 20. Amendments; Etc. No amendment, modification,
---------------
termination or waiver of any provision of this Agreement, and no consent to
any departure by Grantor therefrom, shall in any event be effective unless
the same shall be in writing and signed by Secured Party and, in the case
of any such amendment or modification, by Grantor. Any such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 21. Notices. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or three Business Days
after depositing it in the mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or,
as to either party, such other address as shall be designated by such party
in a written notice delivered to the other party hereto.
SECTION 22. Failure or Indulgence Not Waiver; Remedies
------------------------------------------
Cumulative. No failure or delay on the part of Secured Party in the
----------
exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 23. Severability. In case any provision in or
------------
obligation under this Agreement shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 24. Headings. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given
any substantive effect.
SECTION 25. Governing Law; Terms. THIS AGREEMENT AND THE RIGHTS
--------------------
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
16
defined herein or in the Credit Agreement, terms used in Articles 8 and 9
of the Uniform Commercial Code in the State of New York are used herein as
therein defined.
SECTION 26. Consent to Jurisdiction and Service of Process. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. Grantor hereby agrees that service of all
process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Grantor at its address
provided in Section 21, such service being hereby acknowledged by Grantor
to be sufficient for personal jurisdiction in any action against Grantor in
any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Secured Party to
bring proceedings against Grantor in the courts of any other jurisdiction.
SECTION 27. Waiver of Jury Trial. GRANTOR AND SECURED PARTY
--------------------
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope
of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of
this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory
claims. Grantor and Secured Party each acknowledge that this waiver is a
material inducement for Grantor and Secured Party to enter into a business
relationship, that Grantor and Secured Party have already relied on this
waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Grantor and Secured Party
further warrant and represent that each has reviewed this waiver with its
legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by
the court.
SECTION 28. Counterparts. This Agreement may be executed in one
------------
or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
17
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF GRANTOR], as Grantor
By: ____________________
Title: ___________________
Notice Address: _____________________
_____________________
_____________________
FIRST UNION NATIONAL BANK,
as Secured Party
By: ____________________
Title: ___________________
Notice Address: _____________________
_____________________
_____________________
18
