EXHIBIT 10.9
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SECURITY AGREEMENT
between
TOWN SPORTS INTERNATIONAL HOLDINGS, INC.
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as COLLATERAL AGENT
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Dated as of February 4, 2004
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of February 4, 2004, made by Town
Sports International Holdings, Inc., a Delaware corporation (the "Assignor"), in
favor of Deutsche Bank Trust Company Americas, as collateral agent (together
with any successor collateral agent, the "Collateral Agent"), for the benefit of
the Secured Creditors (as defined below). Certain capitalized terms as used
herein are defined in Article IX hereof. Except as otherwise defined herein, all
other capitalized terms used herein and defined in the Credit Agreement (as
defined below) shall be used herein as therein defined.
W I T N E S S E T H:
WHEREAS, Town Sports International, Inc. (the "Borrower"), the
lenders from time to time party thereto (the "Lenders") and Deutsche Bank Trust
Company Americas, as administrative agent (together with any successor
administrative agent, the "Administrative Agent"), have entered into a Credit
Agreement, dated as of April 16, 2003 (as amended, modified or supplemented from
time to time, the "Credit Agreement"), providing for the making of Loans to, and
the issuance of, and participation in, Letters of Credit for the account of, the
Borrower, all as contemplated therein (the Lenders, each Issuing Lender, the
Administrative Agent and the Collateral Agent are herein called the "Lender
Creditors");
WHEREAS, the Borrower and/or one or more of its Subsidiaries
may have entered into, or may at any time and from time to time after the date
hereof enter into one or more Interest Rate Protection Agreements or Other
Hedging Agreements with one or more Lenders or any affiliate thereof (each such
Lender or affiliate, even if the respective Lender subsequently ceases to be a
Lender under the Credit Agreement for any reason, together with such Lender's or
affiliate's successors and assigns, if any, collectively, the "Other Creditors"
and, together with the Lender Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Holdco Guaranty, the Assignor has
guaranteed the payment and performance when due of all Guaranteed Obligations as
described therein;
WHEREAS, it is a condition precedent to the First Amendment
Effective Date that the Assignor shall have executed and delivered to the
Collateral Agent this Agreement; and
WHEREAS, the Assignor will obtain benefits from the incurrence
of Loans by the Borrower and the issuance of Letters of Credit for the account
of the Borrower under the Credit Agreement and the entering into by the Borrower
and/or one or more of its Subsidiaries of Interest Rate Protection Agreements or
Other Hedging Agreements and, accordingly, desires to execute this Agreement in
order to satisfy the condition described in the preceding recital;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Assignor, the receipt and sufficiency of which are
hereby acknowledged, the Assignor hereby makes the following representations and
warranties to the Collateral Agent for the benefit of the Secured Creditors and
hereby covenants and agrees with the Collateral Agent for the benefit of the
Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. (a) As security for the
prompt and complete payment and performance when due of all of its Obligations,
the Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent, in each case for the benefit of
the Secured Creditors, a continuing security interest in all of the right, title
and interest of the Assignor in, to and under all of the following personal
property and fixtures (and all rights therein) of the Assignor, or in which or
to which the Assignor has any rights, in each case whether now existing or
hereafter from time to time acquired existing or hereafter from time to time
acquired existing or hereafter from time to time acquired:
(i) each and every Account;
(ii) all cash;
(iii) the Cash Collateral Account and all monies,
securities, Instruments and other investments
deposited or required to be deposited in the Cash
Collateral Account;
(iv) all Chattel Paper (including, without limitation, all
Tangible Chattel Paper and all Electronic Chattel
Paper);
(v) all Commercial Tort Claims (including all Commercial
Tort Claims described in Annex H hereto);
(vi) all computer programs of the Assignor and all
intellectual property rights therein and all other
proprietary information of the Assignor, including
but not limited to Domain Names and Trade Secret
Rights;
(vii) all Contracts, together with all Contract Rights
arising thereunder;
(viii) all Copyrights;
(ix) all Equipment;
(x) all Deposit Accounts and all other demand, deposit,
time, savings, cash management, passbook and similar
accounts maintained by the Assignor with any Person
and all monies, securities, Instruments and other
investments deposited or required to be deposited in
any of the foregoing;
(xi) all Documents;
(xii) all General Intangibles;
(xiii) all Goods;
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(xiv) all Instruments;
(xv) all Inventory;
(xvi) all Investment Property;
(xvii) all Letter-of-Credit Rights (whether or not the
respective letter of credit is evidenced by a
writing);
(xviii) all Marks, together with the registrations and right
to all renewals thereof, and the goodwill of the
business of the Assignor symbolized by the Marks;
(xix) all Patents;
(xx) all Permits;
(xxi) all Software and all Software licensing rights, all
writings, plans, specifications and schematics, all
engineering drawings, customer lists, goodwill and
licenses, and all recorded data of any kind or
nature, regardless of the medium of recording;
(xxii) all Supporting Obligations; and
(xxiii) all Proceeds and products of any and all of the
foregoing (all of the above, including this clause
(xxiii), the "Collateral").
(b) The security interest of the Collateral Agent under
this Agreement extends to all Collateral which the Assignor may acquire, or with
respect to which the Assignor may obtain rights, at any time during the term of
this Agreement.
1.2 Power of Attorney. The Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of the Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys due or to become due to the Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
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2.1 Necessary Filings. All filings, registrations, recordings
and other actions necessary or appropriate to create, preserve and perfect the
security interest granted by the Assignor to the Collateral Agent hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral creates (or upon such filings will create) a valid and, together with
all such filings, registrations, recordings and other actions, a perfected
security interest therein prior to the rights of all other Persons therein and
subject to no other Liens (other than Permitted Liens) and is entitled to all
the rights, priorities and benefits afforded by the UCC or other relevant law as
enacted in any relevant jurisdiction to perfected security interests, in each
case to the extent that the Collateral consists of the type of property in which
a security interest may be perfected by possession or control (within the
meaning of the UCC as in effect on the date hereof in the State of New York), by
filing a financing statement under the UCC as enacted in any relevant
jurisdiction and by a filing of a Grant of Security Interest in the respective
form attached hereto in the United States Patent and Trademark Office or in the
United States Copyright Office.
2.2 No Liens. The Assignor is, and as to all Collateral
acquired by it from time to time after the date hereof the Assignor will be, the
owner of all Collateral free from any Lien, security interest, encumbrance or
other right, title or interest of any Person (other than Permitted Liens), and
the Assignor shall defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Collateral Agent.
2.3 Other Financing Statements. As of the date hereof, there
is no financing statement (or similar statement or instrument of registration
under the law of any jurisdiction) covering or purporting to cover any interest
of any kind in the Collateral (other than financing statements filed in respect
of Permitted Liens), and so long as the Termination Date has not occurred, the
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by the Assignor or in connection with
Permitted Liens.
2.4 Chief Executive Office, Record Locations. The chief
executive office of the Assignor is, on the date of this Agreement, located at
the address indicated on Annex A hereto for the Assignor. During the period of
the four calendar months preceding the date of this Agreement, the chief
executive office of the Assignor has not been located at any address other than
that indicated on Annex A in accordance with the immediately preceding sentence,
in each case unless each such other address is also indicated on Annex A hereto
for the Assignor.
2.5 Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof, or held at any time during the four calendar
months prior to the date hereof, by the Assignor is located at one of the
locations shown on Annex B hereto for the Assignor.
2.6 Legal Names; Type of Organization (and Whether a
Registered Organization and/or a Transmitting Utility); Jurisdiction of
Organization; Location; Organizational Identification Numbers; Changes Thereto;
etc. As of the date hereof, the exact legal name of the Assignor, the type of
organization of the Assignor, whether or not the Assignor is a Registered
Organization, the jurisdiction of organization of the Assignor, the Assignor's
Location, the
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organizational identification number (if any) of the Assignor, and whether or
not the Assignor is a Transmitting Utility, is listed on Annex C hereto for the
Assignor. The Assignor shall not change its legal name, its type of
organization, its status as a Registered Organization (in the case of a
Registered Organization), its status as a Transmitting Utility or as a Person
which is not a Transmitting Utility, as the case may be, its jurisdiction of
organization, its Location, or its organizational identification number (if any)
from that listed on Annex C hereto, except that any such changes shall be
permitted (so long as not in violation of the applicable requirements of the
Secured Debt Agreements and so long as same do not involve (x) a Registered
Organization ceasing to constitute same or (y) the Assignor changing its
jurisdiction of organization or Location from the United States or a State
thereof to a jurisdiction of organization or Location, as the case may be,
outside the United States or a State thereof) if (i) it shall have given to the
Collateral Agent not more than 15 days' written notice after each change to the
information listed on Annex C (as adjusted for any subsequent changes thereto
previously made in accordance with this sentence), together with a supplement to
Annex C which shall correct all information contained therein for the Assignor,
and (ii) in connection with such respective change or changes, it shall have
taken all action reasonably requested by the Collateral Agent to maintain the
security interests of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect. In
addition, to the extent that the Assignor does not have an organizational
identification number on the date hereof and later obtains one, the Assignor
shall promptly thereafter notify the Collateral Agent of such organizational
identification number and shall take all actions reasonably satisfactory to the
Collateral Agent to the extent necessary to maintain the security interest of
the Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.
2.7 Trade Names; etc. The Assignor does not have nor does it
operate in any jurisdiction under, nor in the preceding five years has it had or
operated in any jurisdiction under, any trade names, fictitious names or other
names except its legal name as specified in Annex C and such other trade or
fictitious names as are listed on Annex D hereto for the Assignor. The Assignor
may assume or operate in any jurisdiction under any new trade, fictitious or
other name if (i) it shall have given to the Collateral Agent not more than 15
days' written notice after any such assumption or operation, clearly describing
such new name and the jurisdictions in which such new name will be used and
providing such other information in connection therewith as the Collateral Agent
may reasonably request and (ii) with respect to such new name, it shall have
taken all action reasonably requested by the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.8 Certain Significant Transactions. During the one year
period preceding the date of this Agreement, no Person shall have merged or
consolidated with or into the Assignor, and no Person shall have liquidated
into, or transferred all or substantially all of its assets to, the Assignor, in
each case except as described in Annex E hereto. With respect to any
transactions so described in Annex E hereto, the Assignor shall have furnished
such information with respect to the Person (and the assets of the Person and
locations thereof) which merged with or into or consolidated with the Assignor,
or was liquidated into or transferred all or substantially all of its assets to
the Assignor, and shall have furnished to the Collateral Agent such UCC lien
searches as may have been requested with respect to such Person and its assets,
to establish that no security interest (excluding Permitted Liens) continues
perfected on the date hereof with respect
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to any Person described above (or the assets transferred to the Assignor by such
Person), including, without limitation, pursuant to Section 9-316(a)(3) of the
UCC.
2.9 Non-UCC Property. The aggregate fair market value (as
determined by the Assignor in good faith) of all property of the Assignor of the
types described in clauses (1), (2) and (3) of Section 9-311(a) of the UCC does
not exceed $500,000. If the aggregate value of all such property at any time
owned by the Assignor exceeds $500,000, the Assignor shall provide prompt
written notice thereof to the Collateral Agent and, upon the request of the
Collateral Agent, the Assignor shall promptly (and in any event within 30 days)
take such actions (at its own cost and expense) as may be required under the
respective United States, State or other laws referenced in Section 9-311(a) of
the UCC to perfect the security interests granted herein in any Collateral where
the filing of a financing statement does not perfect the security interest in
such property in accordance with the provisions of Section 9-311(a) of the UCC.
2.10 As-Extracted Collateral; Timber-to-be-Cut. On the date
hereof, the Assignor does not own, or expect to acquire, any property which
constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut.
If at any time after the date of this Agreement the Assignor owns, acquires or
obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, the Assignor
shall furnish the Collateral Agent with prompt written notice thereof (which
notice shall describe in reasonable detail the As-Extracted Collateral and/or
Timber-to-be-Cut and the locations thereof) and shall take all actions as may be
deemed reasonably necessary or desirable by the Collateral Agent to perfect the
security interest of the Collateral Agent therein.
2.11 Collateral in the Possession of a Bailee. If any
Inventory or other Goods are at any time in the possession of a bailee, the
Assignor shall promptly notify the Collateral Agent thereof and, if requested by
the Collateral Agent, shall use its reasonable best efforts to promptly obtain
an acknowledgment from such bailee, in form and substance reasonably
satisfactory to the Collateral Agent, that the bailee holds such Collateral for
the benefit of the Collateral Agent and shall act upon the instructions of the
Collateral Agent, without the further consent of the Assignor. The Collateral
Agent agrees with the Assignor that the Collateral Agent shall not give any such
instructions unless an Event of Default has occurred and is continuing or would
occur after taking into account any action by the Assignor with respect to any
such bailee.
ARTICLE III
SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;
INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL
3.1 Additional Representations and Warranties. As of the time
when each of its Accounts arises, the Assignor shall be deemed to have
represented and warranted that each such Account, and all original records,
papers and documents relating thereto (if any) are genuine and what they purport
to be, and that all papers and documents (if any) relating thereto (i) will, to
the knowledge of the Assignor, represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by the
respective account debtor arising out of the performance of labor or services or
the sale or lease and delivery of the merchandise listed therein, or both, (ii)
will be the only original writings evidencing and embodying such obligation of
the account debtor named therein (other than copies created for
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general accounting purposes), (iii) will, to the knowledge of the Assignor,
evidence true and valid obligations, enforceable in accordance with their
respective terms, and (iv) will be in compliance and will conform in all
material respects with all applicable federal, state and local laws and
applicable laws of any relevant foreign jurisdiction.
3.2 Maintenance of Records. The Assignor will keep and
maintain at its own cost and expense accurate records in all material respects
of its Accounts and Contracts, including, but not limited to, originals of all
documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and all
other dealings therewith, and the Assignor will make the same available on the
Assignor's premises to the Collateral Agent for inspection as otherwise
permitted by the terms of the respective Secured Debt Agreements. Upon the
occurrence and during the continuance of an Event of Default and at the request
of the Collateral Agent, the Assignor shall, at its own cost and expense,
deliver all tangible evidence of its Accounts and Contract Rights (including,
without limitation, all documents evidencing the Accounts and all Contracts) and
such books and records to the Collateral Agent or to its representatives (copies
of which evidence and books and records may be retained by the Assignor). Upon
the occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs, the Assignor shall legend, in form and manner
satisfactory to the Collateral Agent, the Accounts and the Contracts, as well as
books, records and documents (if any) of the Assignor evidencing or pertaining
to such Accounts and Contracts with an appropriate reference to the fact that
such Accounts and Contracts have been assigned to the Collateral Agent and that
the Collateral Agent has a security interest therein.
3.3 Direction to Account Debtors; Contracting Parties; etc.
Upon the occurrence and during the continuance of an Event of Default, if the
Collateral Agent so directs the Assignor, the Assignor agrees (x) to cause all
payments on account of the Accounts and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Accounts and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x), and (z) that the Collateral Agent may enforce collection of any such
Accounts and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as the Assignor.
Without notice to or assent by the Assignor, the Collateral Agent may, upon the
occurrence and during the continuance of an Event of Default, apply any or all
amounts then in, or thereafter deposited in, the Cash Collateral Account toward
the payment of the Obligations in the manner provided in Section 7.4 of this
Agreement. The reasonable costs and expenses of collection (including reasonable
attorneys' fees), whether incurred by the Assignor or the Collateral Agent,
shall be borne by the Assignor. The Collateral Agent shall deliver a copy of
each notice referred to in the preceding clause (y) to the Assignor, provided
that (x) the failure by the Collateral Agent to so notify the Assignor shall not
affect the effectiveness of such notice or the other rights of the Collateral
Agent created by this Section 3.3 and (y) no such notice shall be required if an
Event of Default of the type described in Section 10.05 of the Credit Agreement
has occurred and is continuing.
3.4 Modification of Terms; etc. Except in accordance with the
Assignor's ordinary course of business or as is consistent with reasonable
business judgment or as permitted by Section 3.5 hereof, the Assignor shall not
rescind or cancel any indebtedness evidenced by any Account or under any
Contract, or modify any material term thereof or make any material
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adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or sell any Account or Contract, or interest therein, without the prior written
consent of the Collateral Agent. The Assignor will not do anything to impair the
rights of the Collateral Agent in the Accounts or Contracts.
3.5 Collection. The Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Accounts or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Account or Contract.
Except as otherwise directed by the Collateral Agent after the occurrence and
during the continuation of an Event of Default, the Assignor may allow in the
ordinary course of business as adjustments to amounts owing under its Accounts
and Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which the Assignor finds
appropriate in accordance with reasonable business judgment, and (ii) a refund
or credit due as a result of returned or damaged merchandise or improperly
performed services or for other reasons which the Assignor finds appropriate in
accordance with reasonable business judgment. The reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) of collection,
whether incurred by the Assignor or the Collateral Agent, shall be borne by the
Assignor.
3.6 Instruments. If the Assignor owns or acquires any
Instrument in excess of $500,000 constituting Collateral (other than checks and
other payment instruments received and collected in the ordinary course of
business), the Assignor will within 10 Business Days notify the Collateral Agent
thereof, and upon request by the Collateral Agent will promptly deliver such
Instrument to the Collateral Agent appropriately endorsed to the order of the
Collateral Agent as further security hereunder.
3.7 Assignor Remains Liable Under Accounts. Anything herein to
the contrary notwithstanding, the Assignor shall remain liable under each of the
Accounts to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to such Accounts. Neither the Collateral Agent nor any
other Secured Creditor shall have any obligation or liability under any Account
(or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any other Secured Creditor
of any payment relating to such Account pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of the Assignor under or pursuant to any Account
(or any agreement giving rise thereto), to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by them or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have
been assigned to them or to which they may be entitled at any time or times.
3.8 Assignor Remains Liable Under Contracts. Anything herein
to the contrary notwithstanding, the Assignor shall remain liable under each of
the Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all
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in accordance with and pursuant to the terms and provisions of each Contract.
Neither the Collateral Agent nor any other Secured Creditor shall have any
obligation or liability under any Contract by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any other Secured Creditor
of any payment relating to such Contract pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of the Assignor under or pursuant to any
Contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any performance by any party under any Contract, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to them or to which they may
be entitled at any time or times.
3.9 Deposit Accounts; etc. (a) The Assignor does not maintain,
nor at any time after the date of this Agreement shall establish or maintain,
any demand, time, savings, passbook or similar account, except for such accounts
maintained with a bank (as defined in Section 9-102 of the UCC) whose
jurisdiction (determined in accordance with Section 9-304 of the UCC) is within
a State of the United States. Annex F-1 hereto accurately sets forth, as of the
date of this Agreement, for the Assignor, each Deposit Account maintained by the
Assignor (including a description thereof and the respective account number),
the name of the respective bank with which such Deposit Account is maintained,
and the jurisdiction of the respective bank with respect to such Deposit
Account. For each Deposit Account listed on Annex F-2 hereto, the Assignor shall
use its commercially reasonable efforts to cause the bank with which the Deposit
Account is maintained to execute and deliver to the Collateral Agent, within 30
days after the date of this Agreement or, if later, at the time of the
establishment of the respective Deposit Account, a "control agreement" in the
form of Annex G hereto (appropriately completed), with such changes thereto, or
other forms requested by any such bank, in either case as may be acceptable to
the Collateral Agent; provided, however, the provisions of this sentence shall
not apply to any Deposit Account maintained with Deutsche Bank Trust Company
Americas (whether in its capacity as Collateral Agent or in its individual
capacity) in which it otherwise has "control" over within the meaning of Section
9-104 of the UCC. Except as otherwise provided in the proviso to the immediately
preceding sentence, if any bank with which a Deposit Account listed on Annex F-2
hereto refuses to, or does not, enter into such a "control agreement", then, at
the request of the Collateral Agent or the Required Lenders, the Assignor shall
promptly close the respective Deposit Account and transfer all balances therein
to the Cash Collateral Account or another Deposit Account meeting the
requirements of this Section 3.9. If any bank with which a Deposit Account
listed on Annex F-2 hereto refuses to subordinate all its claims with respect to
such Deposit Account to the Collateral Agent's security interest therein on
terms satisfactory to the Collateral Agent, then the Collateral Agent, at its
option, may (x) require that such Deposit Account be terminated in accordance
with the immediately preceding sentence or (y) agree to a "control agreement"
without such subordination, provided that in such event the Collateral Agent may
at any time, at its option, subsequently require that such Deposit Account be
terminated (within 30 days after notice from the Collateral Agent) in accordance
with the requirements of the immediately preceding sentence.
(b) After the date of this Agreement, the Assignor shall
not establish any new demand, time, savings, passbook or similar account, except
for Deposit Accounts established and maintained with banks and meeting the
requirements of the first sentence of preceding clause (a).
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(c) The Assignor, the Collateral Agent and Deutsche Bank
Trust Company Americas in its individual capacity hereby agree that after the
occurrence and during the continuance of any Event of Default, Deutsche Bank
Trust Company Americas in its individual capacity shall only honor instructions
from the Collateral Agent with respect to Deposit Accounts maintained with
Deutsche Bank Trust Company Americas following a notice from the Collateral
Agent indicating that it is exercising control over any such Deposit Account
without the consent of any other Person (including without the consent of the
Assignor).
3.10 Letter-of-Credit Rights. If the Assignor is at any time a
beneficiary under a letter of credit with a stated amount of $500,000 or more,
the Assignor shall promptly notify the Collateral Agent thereof and, at the
request of the Collateral Agent, the Assignor shall, pursuant to an agreement in
form and substance reasonably satisfactory to the Collateral Agent, use its
reasonable best efforts to 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 the letter of credit are to be applied as provided in this
Agreement after the occurrence and during the continuance of an Event of
Default.
3.11 Commercial Tort Claims. All Commercial Tort Claims of,
and known to, the Assignor as of the date of this Agreement are described in
Annex H hereto. If the Assignor shall at any time after the date of this
Agreement acquire a Commercial Tort Claim in an amount (taking the greater of
the aggregate claimed damages thereunder or the reasonably estimated value
thereof) of $1,000,000 or more, the Assignor shall promptly notify the
Collateral Agent thereof in a writing signed by the Assignor and describing the
details thereof and shall grant to the Collateral Agent 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.
3.12 Chattel Paper. Upon the request of the Collateral Agent
made at any time or from time to time, the Assignor shall promptly furnish to
the Collateral Agent a list of all Electronic Chattel Paper held or owned by the
Assignor. Furthermore, if requested by the Collateral Agent, the Assignor shall
promptly take all actions which are reasonably practicable so that the
Collateral Agent has "control" of all Electronic Chattel Paper in accordance
with the requirements of Section 9-105 of the UCC. The Assignor will promptly
(and in any event within 10 days) following any request by the Collateral Agent,
deliver all of its Tangible Chattel Paper to the Collateral Agent.
3.13 Further Actions. The Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, certificates, reports
and other assurances or instruments and take such further steps, including any
and all actions as may be necessary or required under the Federal Assignment of
Claims Act, relating to its Accounts, Contracts, Instruments and other property
or rights covered by the security interest hereby granted, as the Collateral
Agent may reasonably require.
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ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES
4.1 Additional Representations and Warranties. The Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use the registered Marks and Domain Names listed in Annex I hereto
for the Assignor and that said listed Marks and Domain Names include all United
States marks and applications for United States marks registered in the United
States Patent and Trademark Office and all Domain Names that the Assignor owns
or uses in connection with its business as of the date hereof. The Assignor
represents and warrants that it owns, is licensed to use or otherwise has the
right to use, all Marks and Domain Names that are necessary for the conduct of
its business. The Assignor further warrants that it has no knowledge of any
third party claim received by it that any aspect of the Assignor's present or
contemplated business operations infringe or will infringe any trademark,
service xxxx or trade name of any other Person other than as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Assignor represents and warrants that it is the true and
lawful owner of or otherwise has the right to use all U.S. trademark
registrations and applications and Domain Name registrations listed in Annex I
hereto and that said registrations are valid, subsisting, have not been canceled
and that the Assignor is not aware of any third-party claim that any of said
registrations is invalid or unenforceable, and is not aware that there is any
reason that any of said registrations is invalid or unenforceable, and is not
aware that there is any reason that any of said applications will not mature
into registrations. The Assignor hereby grants to the Collateral Agent an
absolute power of attorney to sign, upon the occurrence and during the
continuance of an Event of Default, any document which may be required by the
United States Patent and Trademark Office or similar registrar in order to
effect an absolute assignment of all right, title and interest in each Xxxx
and/or Domain Name, and record the same.
4.2 Licenses and Assignments. Except as otherwise permitted by
the Secured Debt Agreements, the Assignor hereby agrees not to divest itself of
any Xxxx or Domain Name.
4.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who the Assignor believes is, or may be, infringing or diluting or
otherwise violating any of the Assignor's rights in and to any Xxxx or Domain
Name in any manner that could reasonably be expected to have a Material Adverse
Effect, or with respect to any party claiming that the Assignor's use of any
Xxxx or Domain Name material to the Assignor's business violates in any material
respect any property right of that party. The Assignor further agrees to
prosecute diligently in accordance with reasonable business practices any Person
infringing any Xxxx or Domain Name in any manner that could reasonably be
expected to have a Material Adverse Effect.
4.4 Preservation of Marks and Domain Names. The Assignor
agrees to use its Marks and Domain Names which are material to the Assignor's
business in interstate commerce during the time in which this Agreement is in
effect and to take all such other actions as are reasonably necessary to
preserve such Marks as trademarks or service marks under the laws of
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the United States (other than any such Marks which are no longer used or useful
in its business or operations).
4.5 Maintenance of Registration. The Assignor shall, at its
own expense, diligently process all documents reasonably required to maintain
all Xxxx and/or Domain Name registrations, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office for all of its material registered Marks, and
shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent (other than with respect to
registrations and applications deemed by the Assignor in its reasonable business
judgment to be no longer prudent to pursue).
4.6 Future Registered Marks and Domain Names. If any Xxxx
registration is issued hereafter to the Assignor as a result of any application
now or hereafter pending before the United States Patent and Trademark Office or
any Domain Name is registered by the Assignor, at the end of the calendar
quarter in which such certificate or similar indicia of ownership was received,
the Assignor shall deliver to the Collateral Agent a copy of such registration
certificate or similar indicia of ownership, and a grant of a security interest
in such Xxxx and/or Domain Name, to the Collateral Agent and at the expense of
the Assignor, confirming the grant of a security interest in such Xxxx and/or
Domain Name to the Collateral Agent hereunder, the form of such security to be
substantially in the form of Annex L hereto or in such other form as may be
reasonably satisfactory to the Collateral Agent.
4.7 Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the Assignor, take
any or all of the following actions: (i) declare the entire right, title and
interest of the Assignor in and to each of the Marks and Domain Names, together
with all trademark rights and rights of protection to the same, vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
rights, title and interest shall immediately vest, in the Collateral Agent for
the benefit of the Secured Creditors, and the Collateral Agent shall be entitled
to exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency or registrar; (ii) take and use or sell the Marks or
Domain Names and the goodwill of the Assignor's business symbolized by the Marks
or Domain Names and the right to carry on the business and use the assets of the
Assignor in connection with which the Marks or Domain Names have been used; and
(iii) direct the Assignor to refrain, in which event the Assignor shall refrain,
from using the Marks or Domain Names in any manner whatsoever, directly or
indirectly, and the Assignor shall execute such further documents that the
Collateral Agent may reasonably request to further confirm this and to transfer
ownership of the Marks or Domain Names and registrations and any pending
trademark application in the United States Patent and Trademark Office or
applicable Domain Name registrar to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS
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5.1 Additional Representations and Warranties. The Assignor
represents and warrants that it is the true and lawful owner of (i) all rights
in (x) the Patents listed in Annex J hereto for the Assignor and that said
Patents include all the United States patents and applications for United States
patents that the Assignor owns as of the date hereof and (y) the Copyrights
listed in Annex K hereto for the Assignor and that said Copyrights constitute
all the United States copyrights registered with the United States Copyright
Office and applications to United States copyrights that the Assignor owns as of
the date hereof and (ii) all rights in, or otherwise has the right to use, all
Trade Secrets and proprietary information necessary to operate the business of
the Assignor ("Trade Secret Rights"). The Assignor further warrants that it has
no knowledge of any third party claim that any aspect of the Assignor's present
or contemplated business operations infringes or will infringe any patent of any
other Person or the Assignor has misappropriated any trade secret or proprietary
information which, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. The Assignor hereby grants to the
Collateral Agent an absolute power of attorney to sign, upon the occurrence and
during the continuance of any Event of Default, any document which may be
required by the United States Patent and Trademark Office or the United States
Copyright Office in order to effect an absolute assignment of all right, title
and interest in each Patent or Copyright, and to record the same.
5.2 Licenses and Assignments. Except as otherwise permitted by
the Secured Debt Agreements, the Assignor hereby agrees not to divest itself of
any right under any Patent or Copyright.
5.3 Infringements. The Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to the Assignor with respect to any infringement,
contributing infringement or active inducement to infringe or other violation of
the Assignor's rights in any Patent or Copyright or to any claim that the
practice of any Patent or use of any Copyright violates any property right of a
third party, or with respect to any misappropriation of any Trade Secret Right
or any claim that practice of any Trade Secret Right violates any property right
of a third party, in each case, in any manner which, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
The Assignor further agrees, absent direction of the Collateral Agent to the
contrary, to diligently prosecute any Person infringing any Patent or Copyright
or any Person misappropriating any Trade Secret Right, in each case to the
extent that such infringement or misappropriation, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.4 Maintenance of Patents or Copyrights. At its own expense,
the Assignor shall make timely payment of all post-issuance fees required
pursuant to 35 U.S.C. Section 41 to maintain in force its rights under each
Patent or Copyright, absent prior written consent of the Collateral Agent (other
than any such Patents or Copyrights which are no longer used or are deemed by
the Assignor in its reasonable business judgment to no longer be useful in its
business or operations).
5.5 Prosecution of Patent or Copyright Applications. At its
own expense, the Assignor shall diligently prosecute all material applications
for (i) United States Patents listed in Annex J hereto and (ii) Copyrights
listed on Annex K hereto, in each case for the Assignor and
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shall not abandon any such application prior to exhaustion of all administrative
and judicial remedies (other than applications deemed by the Assignor in its
reasonable business judgment to be no longer prudent to pursue), absent written
consent of the Collateral Agent.
5.6 Other Patents and Copyrights. At the end of each calendar
quarter following the acquisition or issuance of a United States Patent,
registration of a Copyright, or acquisition of a registered Copyright, or of
filing of an application for a United States Patent or Copyright, the Assignor
shall deliver to the Collateral Agent a copy of said Copyright or Patent, or
certificate or registration of, or application therefor, as the case may be,
with a grant of a security interest as to such Patent or Copyright, as the case
may be, to the Collateral Agent and at the expense of the Assignor, confirming
the grant of a security interest, the form of such grant of a security interest
to be substantially in the form of Annex M or N hereto, as appropriate, or in
such other form as may be reasonably satisfactory to the Collateral Agent.
5.7 Remedies. If an Event of Default shall occur and be
continuing, the Collateral Agent may, by written notice to the Assignor, take
any or all of the following actions: (i) declare the entire right, title, and
interest of the Assignor in each of the Patents and Copyrights vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
right, title, and interest shall immediately vest in the Collateral Agent for
the benefit of the Secured Creditors, in which case the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 5.1 hereof
to execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct the Assignor to refrain, in which event
the Assignor shall refrain, from practicing the Patents and using the Copyrights
directly or indirectly, and the Assignor shall execute such further documents as
the Collateral Agent may reasonably request further to confirm this and to
transfer ownership of the Patents and Copyrights to the Collateral Agent for the
benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Collateral Agent's Security. Except as
otherwise permitted by the Secured Debt Agreements, the Assignor will do nothing
to impair the rights of the Collateral Agent in the Collateral. The Assignor
will at all times keep its Inventory and Equipment insured in favor of the
Collateral Agent, at the Assignor's own expense to the extent and in the manner
provided in the Secured Debt Agreements. Except to the extent otherwise
permitted to be retained by the Assignor or applied by the Assignor pursuant to
the terms of the Secured Debt Agreements, the Collateral Agent shall, at the
time any proceeds of such insurance are distributed to the Secured Creditors,
apply such proceeds in accordance with Section 7.4 hereof. The Assignor assumes
all liability and responsibility in connection with the Collateral acquired by
it and the liability of the Assignor to pay the Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to the
Assignor.
6.2 Warehouse Receipts Non-Negotiable. To the extent
practicable, the Assignor agrees that if any warehouse receipt or receipt in the
nature of a warehouse receipt is issued with
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respect to any of its Inventory, the Assignor shall request that such warehouse
receipt or receipt in the nature thereof shall not be "negotiable" (as such term
is used in Section 7-104 of the UCC as in effect in any relevant jurisdiction or
under other relevant law).
6.3 Additional Information. The Assignor will, at its own
expense, from time to time upon the reasonable request of the Collateral Agent,
promptly (and in any event within 10 days after its receipt of the respective
request) furnish to the Collateral Agent such information with respect to the
Collateral (including with reasonable specificity and in summary form, the
identity of the Collateral or such components thereof as may have been
reasonably requested by the Collateral Agent, the value and location of such
Collateral, etc.) as may be reasonably requested by the Collateral Agent.
Without limiting the foregoing, the Assignor agrees that it shall promptly (and
in any event within 10 Business Days after its receipt of the respective
request) furnish to the Collateral Agent such updated Annexes hereto as may from
time to time be reasonably requested by the Collateral Agent.
6.4 Further Actions. The Assignor will, at its own expense and
upon the reasonable request of the Collateral Agent, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
lists, descriptions and designations of its Collateral, warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps relating to the Collateral
and other property or rights covered by the security interest hereby granted,
which the Collateral Agent deems reasonably appropriate or advisable to perfect,
preserve or protect its security interest in the Collateral.
6.5 Financing Statements. The Assignor agrees to authorize and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are reasonably necessary or desirable in the
opinion of the Collateral Agent to establish and maintain a valid, enforceable,
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby. The Assignor will pay any applicable
filing fees, recordation taxes and related expenses relating to its Collateral.
The Assignor hereby authorizes the Collateral Agent to file any such financing
statements without the signature of the Assignor where permitted by law (and
such authorization includes describing the Collateral as "all assets" of the
Assignor).
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. The
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent, in addition to
any rights now or hereafter existing under applicable law and under the other
provisions of this Agreement, shall have all rights as a secured creditor under
any UCC, and such additional rights and remedies to which a secured creditor is
entitled under the laws in effect in all relevant jurisdictions and may:
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(i) personally, or by agents or attorneys, immediately
take possession of the Collateral or any part thereof, from the
Assignor or any other Person who then has possession of any part
thereof with or without notice or process of law, and for that purpose
may enter upon the Assignor's premises where any of the Collateral is
located and remove the same and use in connection with such removal any
and all services, supplies, aids and other facilities of the Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Accounts and the Contracts) constituting the Collateral to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent and may exercise any and
all remedies of the Assignor in respect of such Collateral;
(iii) instruct all depository banks which have entered into
a control agreement with the Collateral Agent to transfer all monies,
securities and instruments held by such depositary bank to the Cash
Collateral Account in accordance with the terms of the respective
control agreement (including by issuing a "Notice of Exclusive Control"
in accordance with the terms thereof);
(iv) withdraw all monies, securities and instruments in
the Cash Collateral Account and/or in any other Deposit Account
maintained with the Collateral Agent (whether or not such Deposit
Accounts are maintained with the Collateral Agent in its capacity as
such) for application to the Obligations in accordance with Section 7.4
hereof;
(v) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof,
or direct the Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(vi) take possession of the Collateral or any part
thereof, by directing the Assignor in writing to deliver the same to
the Collateral Agent at any reasonable place or places designated by
the Collateral Agent, in which event the Assignor shall at its own
expense:
(x) forthwith cause the same to be moved to the
place or places so designated by the Collateral Agent and
there delivered to the Collateral Agent;
(y) store and keep any Collateral so delivered
to the Collateral Agent at such place or places pending
further action by the Collateral Agent as provided in Section
7.2 hereof; and
(z) while the Collateral shall be so stored and
kept, provide such security and maintenance services as shall
be reasonably necessary to protect the same and to preserve
and maintain it in good condition;
(vii) license or sublicense, whether on an exclusive or
nonexclusive basis, any Marks, Domain Names, Patents or Copyrights
included in the Collateral for such term
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and on such conditions and in such manner as the Collateral Agent shall
in its sole judgment determine;
(viii) apply any monies constituting Collateral or proceeds
thereof in accordance with the provisions of Section 7.4; and
(ix) take any other action as specified in clauses (1)
through (5), inclusive, of Section 9-607(a) of the UCC;
it being understood that the Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by the Assignor of said obligation. By
accepting the benefits of this Agreement and each other Security Document, the
Secured Creditors expressly acknowledge and agree that this Agreement and each
other Security Document may be enforced only by the action of the Collateral
Agent acting upon the instructions of the Required Secured Creditors and that no
other Secured Creditor shall have any right individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted hereby,
it being understood and agreed that such rights and remedies may be exercised by
the Collateral Agent or the holders of at least a majority of the outstanding
Other Obligations, as the case may be, for the benefit of the Secured Creditors
upon the terms of this Agreement and the other Security Documents.
7.2 Remedies; Disposition of the Collateral. If any Event of
Default shall have occurred and be continuing, then any Collateral repossessed
by the Collateral Agent under or pursuant to Section 7.1 hereof and any other
Collateral whether or not so repossessed by the Collateral Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the Assignor
which the Collateral Agent shall determine to be commercially reasonable. Any
disposition which shall be a private sale or other private proceedings permitted
by such requirements shall be made upon not less than 10 days' prior written
notice to the Assignor specifying the time at which such disposition is to be
made and the intended sale price or other consideration therefor, and shall be
subject, for the 10 days after the giving of such notice, to the right of the
Assignor or any nominee of the Assignor to acquire the Collateral involved at a
price or for such other consideration at least equal to the intended sale price
or other consideration so specified. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than 10
days' prior written notice to the Assignor specifying the time and place of such
sale and, in the absence of applicable requirements of law, shall be by public
auction (which may, at the Collateral Agent's option, be subject to reserve),
after publication of notice of such auction (where required by applicable law)
not less than 10 days prior thereto. 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 the
sale, and such sale may be made at any time or place to which the sale may be so
adjourned. To the extent permitted by any such
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requirement of law, the Collateral Agent may bid for and become the purchaser of
the Collateral or any item thereof, offered for sale in accordance with this
Section 7.2 without accountability to the Assignor. If, under applicable law,
the Collateral Agent shall be permitted to make disposition of the Collateral
within a period of time which does not permit the giving of notice to the
Assignor as hereinabove specified, the Collateral Agent need give the Assignor
only such notice of disposition as shall be reasonably practicable in view of
such applicable law. The Assignor agrees to do or cause to be done all such
other acts and things as may be reasonably necessary to make such disposition or
dispositions of all or any portion of the Collateral valid and binding and in
compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Assignor's expense.
7.3 Waiver of Claims. Except as otherwise provided in this
Agreement, THE ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and the Assignor hereby further waives,
to the extent permitted by law:
(i) all damages occasioned by such taking of possession
except any damages which are the direct result of the Collateral
Agent's gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable
decision);
(ii) except as otherwise expressly provided in this
Agreement, all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any portion
thereof, and the Assignor, for itself and all who may claim under it,
insofar as it or they now or hereafter lawfully may, hereby waives the
benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Assignor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Assignor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Assignor.
7.4 Application of Proceeds. (a) All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral (and, to
the extent the Holdco Pledge Agreement requires proceeds of collateral
thereunder to be applied in accordance with the provisions of this Agreement,
all monies collected by the Pledgee under the Holdco Pledge Agreement upon any
sale or other disposition of the collateral thereunder), together with all other
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moneys received by the Collateral Agent hereunder and under the Holdco Pledge
Agreement, shall be applied as follows:
(i) first, to the payment of all amounts owing the
Collateral Agent of the type described in clauses (iii), (iv) and (v)
of the definition of "Obligations";
(ii) second, to the extent proceeds remain after the
application pursuant to preceding clause (i), an amount equal to the
outstanding Primary Obligations shall be paid to the Secured Creditors
as provided in Section 7.4(e) hereof, with each Secured Creditor
receiving an amount equal to its outstanding Primary Obligations or, if
the proceeds are insufficient to pay in full all such Primary
Obligations, its Pro Rata Share of such amount remaining to be
distributed;
(iii) third, to the extent proceeds remain after the
application pursuant to preceding clauses (i) and (ii), an amount equal
to the outstanding Secondary Obligations shall be paid to the Secured
Creditors as provided in Section 7.4(e) hereof, with each Secured
Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all
such Secondary Obligations, its Pro Rata Share of such amount remaining
to be distributed; and
(iv) fourth, to the extent proceeds remain after the
application pursuant to preceding clauses (i) through (iii), inclusive,
and following the termination of this Agreement pursuant to Section
10.8(a) hereof, to the Assignor or to whomever may be lawfully entitled
to receive such surplus.
(b) For purposes of this Agreement, (x) "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount, that amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such Secured Creditor's Primary
Obligations or Secondary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations or Secondary
Obligations, as the case may be, (y) "Primary Obligations" shall mean (i) in the
case of the Credit Document Obligations, all principal of, premium, fees and
interest on, all Loans, all Unpaid Drawings, all contingent reimbursement
obligations equal to the Stated Amount of all outstanding Letters of Credit and
all Fees and (ii) in the case of the Other Obligations, all amounts due under
each Interest Rate Protection Agreement and each Other Hedging Agreement with an
Other Creditor (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (z) "Secondary
Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon
their respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been
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paid in full to receive an amount equal to such excess amount multiplied by a
fraction the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of such Secured Creditor entitled to
distribution and the denominator of which is the unpaid Primary Obligations or
Secondary Obligations, as the case may be, of all Secured Creditors entitled to
such distribution.
(d) Each of the Secured Creditors, by their acceptance of
the benefits hereof and of the other Security Documents, agrees and acknowledges
that if the Lender Creditors are to receive a distribution on account of undrawn
amounts with respect to Letters of Credit issued under the Credit Agreement
(which shall only occur after all outstanding Loans under the Credit Agreement
and Unpaid Drawings have been paid in full), such amounts shall be paid to the
Administrative Agent under the Credit Agreement and held by it, for the equal
and ratable benefit of the Lender Creditors, as cash security for the repayment
of Obligations owing to the Lender Creditors as such. If any amounts are held as
cash security pursuant to the immediately preceding sentence, then upon the
termination of all outstanding Letters of Credit under the Credit Agreement, and
after the application of all such cash security to the repayment of all
Obligations owing to the Lender Creditors after giving effect to the termination
of all such Letters of Credit, if there remains any excess cash, such excess
cash shall be returned by the Administrative Agent to the Collateral Agent for
distribution in accordance with Section 7.4(a) hereof.
(e) All payments required to be made hereunder shall be
made (x) if to the Lender Creditors, to the Administrative Agent for the account
of the Lender Creditors, and (y) if to the Other Creditors, to the trustee,
paying agent or other similar representative (each, a "Representative") for the
Other Creditors or, in the absence of such a Representative, directly to the
Other Creditors.
(f) For purposes of applying payments received in
accordance with this Section 7.4, the Collateral Agent shall be entitled to rely
upon (i) the Administrative Agent and (ii) the Representative or, in the absence
of such a Representative, upon the Other Creditors for a determination (which
the Administrative Agent, each Representative and the Secured Creditors agree
(or shall agree) to provide upon request of the Collateral Agent) of the
outstanding Obligations owed to the Lender Creditors or the Other Creditors, as
the case may be. Unless it has received written notice from a Lender Creditor or
an Other Creditor to the contrary, the Administrative Agent and each
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume that
no Secondary Obligations are outstanding. Unless it has written notice from an
Other Creditor to the contrary, the Collateral Agent, in acting hereunder, shall
be entitled to assume that no Interest Rate Protection Agreements or Other
Hedging Agreements are in existence.
(g) This Agreement is made with full recourse to the
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of the Assignor contained herein, in the Secured Debt
Agreements and otherwise in writing in connection herewith or therewith. It is
understood that the Assignor shall remain liable to the extent of any deficiency
between the amount of the proceeds of the Collateral and the aggregate amount of
the Obligations of the Assignor.
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7.5 Remedies Cumulative. Each and every right, power and
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given to the Collateral Agent
under this Agreement, the other Secured Debt Agreements or now or hereafter
existing at law, in equity or by statute and each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time or simultaneously and as often and in such order as may be
deemed expedient by the Collateral Agent. All such rights, powers and remedies
shall be cumulative and the exercise or the beginning of the exercise of one
shall not be deemed a waiver of the right to exercise any other or others. No
delay or omission of the Collateral Agent in the exercise of any such right,
power or remedy and no renewal or extension of any of the Obligations shall
impair any such right, power or remedy or shall be construed to be a waiver of
any Default or Event of Default or an acquiescence thereof. No notice to or
demand on the Assignor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances or constitute a waiver of any
of the rights of the Collateral Agent to any other or further action in any
circumstances without notice or demand. In the event that the Collateral Agent
shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit the Collateral Agent may recover
reasonable expenses, including reasonable attorneys' fees, and the amounts
thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Collateral
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Collateral Agent, then and in every such
case the Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
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ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) Without limiting the provisions of the
other Secured Debt Agreements, the Assignor agrees to indemnify, reimburse and
hold the Collateral Agent, each other Secured Creditor (in its capacity as such)
and their respective successors, assigns, employees, affiliates, advisors and
agents (hereinafter in this Section 8.1 referred to individually as
"Indemnitee," and collectively as "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs, expenses or disbursements
(including reasonable attorneys' fees and expenses) (for the purposes of this
Section 8.1 the foregoing are collectively called "expenses") of whatsoever kind
and nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of this Agreement or the enforcement of any
of the terms hereof, or the preservation of any rights hereunder, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). The Assignor agrees that upon written notice by any Indemnitee of the
assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, the Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a)
hereof, the Assignor agrees to pay or reimburse the Collateral Agent for any and
all reasonable fees, costs and expenses of whatever kind or nature incurred in
connection with the creation, preservation or protection of the Collateral
Agent's Liens on, and security interest in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in all applicable public offices, payment or discharge
of any taxes or Liens upon or in respect of the Collateral, premiums for
insurance with respect to the Collateral and all other fees, costs and expenses
in connection with protecting, maintaining or preserving the Collateral and the
Collateral Agent's interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or
(b) hereof, the Assignor agrees to pay, indemnify and hold each Indemnitee
harmless from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out of any
misrepresentation by the Assignor in this Agreement or in any writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement.
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(d) If and to the extent that the obligations of the
Assignor under this Section 8.1 are unenforceable for any reason, the Assignor
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all of the
other Obligations and notwithstanding the full payment of all the Notes issued,
and Loans made, under the Credit Agreement, the termination of all Letters of
Credit issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements and Other Hedging Agreements entered into with the Other
Creditors and the payment of all other Obligations and notwithstanding the
discharge thereof and the occurrence of the Termination Date.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified.
Such definitions shall be equally applicable to the singular and plural forms of
the terms defined.
"Account" shall mean any "account" as such term is defined in
the UCC as in effect on the date hereof in the State of New York, and in any
event shall include but shall not be limited to, all rights to payment of any
monetary obligation, whether or not earned by performance, (i) for property that
has been or is to be sold, leased, licensed, assigned or otherwise disposed of,
(ii) for services rendered or to be rendered, (iii) for a policy of insurance
issued or to be issued, (iv) for a secondary obligation incurred or to be
incurred, (v) for energy provided or to be provided, (vi) for the use or hire of
a vessel under a charter or other contract, (vii) arising out of the use of a
credit or charge card or information contained on or for use with the card, or
(viii) as winnings in a lottery or other game of chance operated or sponsored by
a State, governmental unit of a State, or person licensed or authorized to
operate the game by a State or governmental unit of a State. Without limiting
the foregoing, the term "account" shall include all Health-Care-Insurance
Receivables.
"Administrative Agent" shall have the meaning provided in the
recitals of this Agreement.
"Agreement" shall mean this Security Agreement as the same may
be amended, modified or supplemented from time to time in accordance with its
terms.
"As-Extracted Collateral" shall mean "as-extracted collateral"
as such term is defined in the UCC as in effect on the date hereof in the State
of New York.
"Assignor" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower" shall have the meaning provided in the recitals of
this Agreement.
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"Cash Collateral Account" shall mean a non-interest bearing
cash collateral account maintained with, and in the sole dominion and control
of, the Collateral Agent for the benefit of the Secured Creditors.
"Chattel Paper" shall mean "chattel paper" as such term is
defined in the UCC as in effect on the date hereof in the State of New York.
Without limiting the foregoing, the term "Chattel Paper" shall in any event
include all Tangible Chattel Paper and all Electronic Chattel Paper.
"Class" shall have the meaning provided in Section 10.2 of
this Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a)
of this Agreement.
"Collateral Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Commercial Tort Claims" shall mean "commercial tort claims"
as such term is defined in the UCC as in effect on the date hereof in the State
of New York.
"Contract Rights" shall mean all rights of the Assignor under
each Contract, including, without limitation, (i) any and all rights to receive
and demand payments under any or all Contracts, (ii) any and all rights to
receive and compel performance under any or all Contracts and (iii) any and all
other rights, interests and claims now existing or in the future arising in
connection with any or all Contracts.
"Contracts" shall mean all contracts between the Assignor and
one or more additional parties (including, without limitation, any Interest Rate
Protection Agreements, Other Hedging Agreements, licensing agreements and any
partnership agreements, joint venture agreements and limited liability company
agreements).
"Copyrights" shall mean any United States or foreign copyright
now or hereafter owned by the Assignor, including any registrations of any
copyrights, in the United States Copyright Office or any foreign equivalent
office, as well as any application for a copyright registration now or hereafter
made with the United States Copyright Office or any foreign equivalent office by
the Assignor.
"Credit Agreement" shall have the meaning provided in the
recitals of this Agreement.
"Credit Document Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Deposit Accounts" shall mean all "deposit accounts" as such
term is defined in the UCC as in effect on the date hereof in the State of New
York.
"Documents" shall mean "documents" as such term is defined in
the UCC as in effect on the date hereof in the State of New York.
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"Domain Names" shall mean all Internet domain names and
associated URL addresses in or to which the Assignor now or hereafter has any
right, title or interest.
"Electronic Chattel Paper" shall mean "electronic chattel
paper" as such term is defined in the UCC as in effect on the date hereof in the
State of New York.
"Equipment" shall mean any "equipment" as such term is defined
in the UCC as in effect on the date hereof in the State of New York now or
hereafter owned by the Assignor, and in any event, shall include, but shall not
be limited to, all machinery, equipment, furnishings, fixtures and vehicles now
or hereafter owned by the Assignor and any and all additions, substitutions and
replacements of any of the foregoing and all accessions thereto, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default (or similar
term) under, and as defined in, the Credit Agreement and any Interest Rate
Protection Agreement or Other Hedging Agreement entered into with an Other
Creditor and shall in any event include, without limitation, any payment default
on any of the Obligations after the expiration of any applicable grace period.
"General Intangibles" shall mean "general intangibles" as such
term is defined in the UCC as in effect on the date hereof in the State of New
York.
"Goods" shall mean "goods" as such term is defined in the UCC
as in effect on the date hereof in the State of New York.
"Health-Care-Insurance Receivable" shall mean any
"health-care-insurance receivable" as such term is defined in the UCC as in
effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1(a)
of this Agreement.
"Instrument" shall mean "instruments" as such term is defined
in the UCC as in effect on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and
all additions, substitutions and replacements thereof and all accessions
thereto, wherever located, together with all goods, supplies, incidentals,
packaging materials, labels, materials and any other items used or usable in
manufacturing, processing, packaging or shipping same, in all stages of
production from raw materials through work in process to finished goods, and all
products and proceeds of whatever sort and wherever located any portion thereof
which may be returned, rejected, reclaimed or repossessed by the Collateral
Agent from the Assignor's customers, and shall specifically include all
"inventory" as such term is defined in the UCC as in effect on the date hereof
in the State of New York.
"Investment Property" shall mean "investment property" as such
term is defined in the UCC as in effect on the date hereof in the State of New
York.
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"Lender Creditors" shall have the meaning provided in the
recitals of this Agreement.
"Lenders" shall have the meaning provided in the recitals of
this Agreement.
"Letter-of-Credit Rights" shall mean "letter-of-credit rights"
as such term is defined in the UCC as in effect on the date hereof in the State
of New York.
"Location" of the Assignor, shall mean the Assignor's
"location" as determined pursuant to Section 9-307 of the UCC.
"Marks" shall mean all right, title and interest in and to any
trademarks, service marks and trade names now held or hereafter acquired by the
Assignor, including any registration or application for registration of any
trademarks and service marks now held or hereafter acquired by the Assignor,
which are registered or filed in the United States Patent and Trademark Office
or the equivalent thereof in any state of the United States or any equivalent
foreign office or agency, as well as any unregistered trademarks and service
marks used by the Assignor and any trade dress including logos, designs,
fictitious business names and other business identifiers used by the Assignor.
"Material Adverse Effect" shall have the meaning provided in
the Holdco Guaranty.
"Obligations" shall mean and include, as to the Assignor, all
of the following:
(i) the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation, principal,
premium, interest, reimbursement obligations (both actual and
contingent) under Letters of Credit, fees, cost and indemnities
(including, in each case, without limitation, all interest that accrues
after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of
the Assignor at the rate provided for in the respective documentation,
whether or not a claim for post-petition interest is allowed in any
such proceeding) of the Assignor to the Lender Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection
with, the Credit Agreement and the other Credit Documents to which the
Assignor is a party (including, without limitation, all such
obligations, liabilities and indebtedness of the Assignor under the
Holdco Guaranty) and the due performance and compliance by the Assignor
with all of the terms, conditions and agreements contained in the
Credit Agreement and in such other Credit Documents (all such
obligations, liabilities and indebtedness under this clause (i), except
to the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being
herein collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, in each case, without
limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy,
insolvency, reorganization or
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similar proceeding of the Assignor at the rate provided for in the
respective documentation, whether or not a claim for post-petition
interest is allowed in any such proceeding) owing by the Assignor to
the Other Creditors, now existing or hereafter incurred under, arising
out of or in connection with any Interest Rate Protection Agreement or
Other Hedging Agreement, whether such Interest Rate Protection
Agreement or Other Hedging Agreement is now in existence or hereinafter
arising (including, without limitation, all obligations, liabilities
and indebtedness of the Assignor under the Holdco Guaranty in respect
of the Interest Rate Protection Agreements and Other Hedging
Agreements), and the due performance and compliance by the Assignor
with all of the terms, conditions and agreements contained in each such
Interest Rate Protection Agreement and Other Hedging Agreement (all
such obligations, liabilities and indebtedness under this clause (ii)
being herein collectively called the "Other Obligations");
(iii) any and all sums advanced by the Collateral Agent in
order to preserve the Collateral or preserve its security interest in
the Collateral;
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of the
Assignor referred to in clauses (i) and (ii) above, after an Event of
Default shall have occurred and be continuing, the reasonable expenses
of retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Collateral Agent of its rights hereunder, together with reasonable
attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement under Section 8.1 of this
Agreement;
it being acknowledged and agreed that the "Obligations" shall include extensions
of credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the
recitals of this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent in or
to which the Assignor now or hereafter has any right, title or interest therein,
and any divisions, continuations (including, but not limited to,
continuations-in-parts) and improvements thereof, as well as any application for
a United States or foreign patent now or hereafter made by the Assignor.
"Permits" shall mean, to the extent permitted to be assigned
by the terms thereof or by applicable law, all licenses, permits, rights,
orders, variances, franchises or authorizations of or from any governmental
authority or agency.
"Permitted Liens" shall mean (x) inchoate Liens for taxes,
assessments or governmental charges or levies not yet due or Liens for taxes,
assessments or governmental
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charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves have been established in accordance with generally
accepted accounting principles and (y) Liens created pursuant to the Holdco
Pledge Agreement and this Agreement.
"Primary Obligations" shall have the meaning provided in
Section 7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Proceeds" shall mean all "proceeds" as such term is defined
in the UCC as in effect in the State of New York on the date hereof and, in any
event, shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Collateral Agent or
the Assignor from time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to the
Assignor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Registered Organization" shall have the meaning provided in
the UCC as in effect in the State of New York.
"Representative" shall have the meaning provided in Section
7.4(e) of this Agreement.
"Required Secured Creditors" shall mean (i) at any time when
any Credit Document Obligations are outstanding (other than contingent indemnity
obligations that are not then due and payable) or any Revolving Loan Commitments
or Letters of Credit under the Credit Agreement exist, the Required Lenders (or,
to the extent provided in Section 13.12 of the Credit Agreement, each of the
Lenders) and (ii) at any time after all of the Credit Document Obligations have
been paid in full in cash (other than contingent indemnity obligations that are
not then due and payable) and all Revolving Loan Commitments or Letters of
Credit under the Credit Agreement have been terminated, the holders of a
majority of the Other Obligations.
"Requisite Creditors" shall have the meaning provided in
Section 10.2 of this Agreement.
"Secondary Obligations" shall have the meaning provided in
Section 7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the
recitals of this Agreement.
"Secured Debt Agreements" shall mean and include (i) this
Agreement and the other Credit Documents and (ii) the Interest Rate Protection
Agreements and Other Hedging Agreements entered into with an Other Creditor.
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"Software" shall mean "software" as such term is defined in
the UCC as in effect on the date hereof in the State of New York.
"Supporting Obligations" shall mean any "supporting
obligation" as such term is defined in the UCC as in effect on the date hereof
in the State of New York, now or hereafter owned by the Assignor, or in which
the Assignor has any rights, and, in any event, shall include, but shall not be
limited to, all of the Assignor's rights in any Letter-of-Credit Right or
secondary obligation that supports the payment or performance of, and all
security for, any Account, Chattel Paper, Document, General Intangible,
Instrument or Investment Property.
"Tangible Chattel Paper" shall mean "tangible chattel paper"
as such term is defined in the UCC as in effect on the date hereof in the State
of New York.
"Termination Date" shall have the meaning provided in Section
10.8(a) of this Agreement.
"Timber-to-be-Cut" shall mean "timber-to-be-cut" as such term
is defined in the UCC as in effect on the date hereof in the State of New York.
"Trade Secret Rights" shall have the meaning provided in
Section 5.1 of this Agreement.
"Trade Secrets" shall mean any secretly held existing
engineering or other data, information, production procedures and other know-how
relating to the design manufacture, assembly, installation, use, operation,
marketing, sale and/or servicing of any products or business of the Assignor
worldwide whether written or not.
"Transmitting Utility" shall have the meaning given such term
in Section 9-102(a)(80) of the UCC.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Except as otherwise specified herein, all
notices, requests, demands or other communications to or upon the respective
parties hereto shall be sent or delivered by mail, telegraph, telex, telecopy,
cable or courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to the Collateral Agent or
the Assignor shall not be effective until received by the Collateral Agent or
the Assignor, as the case may be. All notices and other communications shall be
in writing and addressed as follows:
(a) if to the Assignor, at:
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000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(b) if to the Collateral Agent, at:
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(c) if to any Lender Creditor (other than the Collateral
Agent), at such address as such Lender Creditor shall have specified in
the Credit Agreement;
(d) if to any Other Creditor, at such address as such
Other Creditor shall have specified in writing to the Assignor and the
Collateral Agent;
or at such other address or addressed to such other individual as shall have
been furnished in writing by any Person described above to the party required to
give notice hereunder.
10.2 Waiver; Amendment. Except as provided in Sections 10.8
and 10.12 hereof, none of the terms and conditions of this Agreement or the
Holdco Pledge Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Assignor and the Collateral
Agent (with the written consent of the Required Secured Creditors); provided,
however, (i) that any change, waiver, modification or variance affecting the
rights and benefits of a single Class of Secured Creditors (and not all Secured
Creditors in a like or similar manner) also shall require the written consent of
the Requisite Creditors of such affected Class, and (ii) supplements to the
Annexes hereto and to the Holdco Pledge Agreement may be made without the
consent of any Secured Creditor, other than the Collateral Agent, as provided
herein or therein. For the purpose of this Agreement and the Holdco Pledge
Agreement, the term "Class" shall mean each class of Secured Creditors, i.e.,
whether (x) the Lender Creditors as holders of the Credit Document Obligations
or (y) the Other Creditors as the holders of the Other Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (x) with respect to the Credit Document Obligations, the Required
Lenders (or, to the extent provided in Section 13.12 of the Credit Agreement,
each of the Lenders), and (y) with respect to the Other Obligations, the holders
of at least a majority of all Other Obligations outstanding from time to time.
10.3 Obligations Absolute. The obligations of the Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement;
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or (c) any amendment to or modification of any Secured Debt Agreement or any
security for any of the Obligations; whether or not the Assignor shall have
notice or knowledge of any of the foregoing.
10.4 Successors and Assigns. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect, subject to release and/or termination as set forth in Section
10.8 hereof, (ii) be binding upon the Assignor, its successors and assigns;
provided, however, that the Assignor shall not assign any of its rights or
obligations hereunder or under the other Credit Documents without the prior
written consent of the Collateral Agent (with the prior written consent of the
Required Secured Creditors), and (iii) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the other Secured Creditors and their respective successors, transferees
and assigns. All agreements, statements, representations and warranties made by
the Assignor herein or in any certificate or other instrument delivered by the
Assignor or on its behalf under this Agreement shall be considered to have been
relied upon by the Secured Creditors and shall survive the execution and
delivery of this Agreement and the other Secured Debt Agreements regardless of
any investigation made by the Secured Creditors or on their behalf.
10.5 Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
10.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK IN
EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. THE ASSIGNOR HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER THE
ASSIGNOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF
THE AFORESAID COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER THE
ASSIGNOR. THE ASSIGNOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE ASSIGNOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN SECTION 10.1 ABOVE, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE ASSIGNOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
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ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT
SUCH SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER THIS AGREEMENT, OR ANY
SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ASSIGNOR IN ANY
OTHER JURISDICTION.
(b) THE ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.7 Assignor's Duties. It is expressly agreed, anything
herein contained to the contrary notwithstanding, that, prior to the Termination
Date, the Assignor shall remain liable to perform all of the obligations, if
any, assumed by it with respect to the Collateral and, except as otherwise
provided in Section 10.11 hereof, the Collateral Agent shall not have any
obligations or liabilities with respect to any Collateral by reason of or
arising out of this Agreement, nor shall the Collateral Agent be required or
obligated in any manner to perform or fulfill any of the obligations of the
Assignor under or with respect to any Collateral.
10.8 Termination; Release. (a) After the Termination Date,
this Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof, shall survive such
termination) and the Collateral Agent, at the request and expense of the
Assignor, will promptly execute and deliver to the Assignor a proper instrument
or instruments (including UCC termination statements on form UCC-3)
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, transfer and deliver to the Assignor (without recourse and without any
representation or warranty) such of the Collateral as may be in the possession
of the Collateral Agent and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Revolving Loan
Commitment under the Credit Agreement has been terminated and all Interest Rate
Protection Agreements and Other Hedging Agreements entered into with any Other
Creditor have been terminated, no Note under the Credit Agreement is outstanding
and all Loans thereunder have been repaid in full, all Letters of Credit issued
under the Credit Agreement have been terminated and all other Obligations then
due and payable have been paid in full.
-32-
(b) In the event that any part of the Collateral is sold
or otherwise disposed of (to a Person other than a Credit Party or a Subsidiary
thereof) (x) at any time prior to the time at which all Credit Document
Obligations have been paid in full and all Revolving Loan Commitments and
Letters of Credit under the Credit Agreement have been terminated, in connection
with a sale or disposition permitted by the Secured Debt Agreements or is
otherwise released at the direction of the Required Lenders (or all the Lenders
if required by Section 13.12 of the Credit Agreement) or (y) at any time
thereafter, to the extent permitted by the other Secured Debt Agreements, and in
the case of clauses (x) and (y), the proceeds of such sale or other disposition
(or from such release) are applied in accordance with the terms of the Credit
Agreement or such other Secured Debt Agreements, as the case may be, to the
extent required to be so applied, the Collateral Agent, at the request and
expense of the Assignor, will duly release from the security interest created
hereby (and will execute and deliver such documentation, including termination
or partial release statements and the like in connection therewith) and assign,
transfer and deliver to the Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or otherwise disposed of, or released, and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.
(c) At any time that the Assignor desires that the
Collateral Agent take any action to acknowledge or give effect to any release of
Collateral pursuant to the foregoing Section 10.8(a) or (b), the Assignor shall
deliver to the Collateral Agent a certificate signed by a senior officer of the
Assignor stating that the release of the respective Collateral is permitted
pursuant to such Section 10.8(a) or (b).
(d) The Collateral Agent shall have no liability
whatsoever to any other Secured Creditor as the result of any release of
Collateral by it in accordance with (or which the Collateral Agent in the
absence of gross negligence and willful misconduct believes to be in accordance
with) this Section 10.8.
10.9 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.
10.10 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11 The Collateral Agent and the other Secured Creditors.
The Collateral Agent will hold in accordance with this Agreement all items of
the Collateral at any time received under this Agreement. It is expressly
understood and agreed that the obligations of the Collateral Agent as holder of
the Collateral and interests therein and with respect to the disposition
thereof, and otherwise under this Agreement, are only those expressly set forth
in this
-33-
Agreement and in Section 12 of the Credit Agreement. The Collateral Agent shall
act hereunder on the terms and conditions set forth herein and in Section 12 of
the Credit Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
-34-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized officers as of
the date first above written.
TOWN SPORTS INTERNATIONAL
HOLDINGS, INC., as Assignor
By: /s/ Xxxxxxx Xxxx
__________________________
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
Accepted and Agreed to:
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Collateral Agent
By: /s/ Xxxxx X. Xxxxx
_______________________________
Name: Xxxxx X. Xxxxx
Title: Vice President
DEUTSCHE BANK TRUST COMPANY
AMERICAS, in its individual capacity
for purposes of Section 3.9(c)
By: /s/ Xxxxxxx Xxxxxxx
_______________________________
Name: Xxxxxxx Xxxxxxx
Title: Vice President
ANNEX A
to
SECURITY AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICE
Name of Assignor Address(es) of Chief Executive Office
---------------- -------------------------------------
Town Sports International Holdings, Inc. 000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
ANNEX B
to
SECURITY AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
Assignor Location
-------- --------------------
Town Sports International Holdings, Inc. 000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
ANNEX C
to
SECURITY AGREEMENT
SCHEDULE OF LEGAL NAMES, TYPE OF ORGANIZATION
(AND WHETHER A REGISTERED ORGANIZATION AND/OR
A TRANSMITTING UTILITY), JURISDICTION OF ORGANIZATION,
LOCATION AND ORGANIZATIONAL IDENTIFICATION NUMBERS
Type of Organization
(or, if the Assignor Registered
Exact Legal Name of Each is an Individual, so Organization? Jurisdiction of Assignor's Location (for
Assignor indicate) (Yes/No) Organization purposes of NY UCC Section 9-307)
------------------------- -------------------- ------------- --------------- --------------------------------
Town Sports International Corporation Yes Delaware Delaware
Holdings, Inc.
Assignor's Organization Transmitting
Identification Number Utility?
(or, if none, so indicate) (Yes/No)
-------------------------- ------------
3754592 No
ANNEX D
to
SECURITY AGREEMENT
SCHEDULE OF TRADE AND FICTITIOUS NAMES
None.
ANNEX E
to
SECURITY AGREEMENT
DESCRIPTION OF CERTAIN SIGNIFICANT TRANSACTIONS OCCURRING WITHIN
ONE YEAR PRIOR TO THE DATE OF THE SECURITY AGREEMENT
None
ANNEX F-1
to
SECURITY AGREEMENT
SCHEDULE OF DEPOSIT ACCOUNTS
ENTITY ACCOUNT BANK # BANK ABA # TYPE OF ACCOUNT
Town Sports 00000000 Deutsche Bank Trust 000000000 Money Market Fund
International Holdings, Company Americas
Inc.
Town Sports 00000000 Deutsche Bank Trust 000000000 Checking Account
International Holdings, Company Americas
Inc.
ANNEX F-2
to
SECURITY AGREEMENT
SCHEDULE OF DEPOSIT ACCOUNTS
FOR WHICH COMPANY WILL OBTAIN ACCOUNT CONTROL AGREEMENTS
None.
ANNEX G
to
SECURITY AGREEMENT
FORM OF CONTROL AGREEMENT REGARDING DEPOSIT ACCOUNTS
AGREEMENT (as amended, modified or supplemented from time to
time, this "Agreement"), dated as of _______ __, ____, among the undersigned
assignor (the "Assignor") Deutsche Bank Trust Company Americas, not in its
individual capacity but solely as Collateral Agent (the "Collateral Agent"), and
__________ (the "Deposit Account Bank"), as the bank (as defined in Section
9-102 of the Uniform Commercial Code as in effect on the date hereof in the
State of _______________ (the "UCC")) with which one or more deposit accounts
(as defined in Section 9-102 of the UCC) are maintained by the Assignor (with
all such deposit accounts now or at any time in the future maintained by the
Assignor with the Deposit Account Bank being herein called the "Deposit
Accounts").
W I T N E S S E T H :
WHEREAS, the Assignor and the Collateral Agent have entered
into a Security Agreement, dated as of February 4, 2004 (as amended, modified or
supplemented from time to time, the "Security Agreement"), under which, among
other things, in order to secure the payment of the Obligations (as defined in
the Security Agreement), the Assignor has granted a security interest to the
Collateral Agent for the benefit of the Secured Creditors (as defined in the
Security Agreement) in all of the right, title and interest of the Assignor in
and into any and all deposit accounts (as defined in Section 9-102 of the UCC)
and in all monies, securities, instruments and other investments deposited
therein from time to time (collectively, herein called the "Collateral"); and
WHEREAS, the Assignor desires that the Deposit Account Bank
enter into this Agreement in order to establish "control" (as defined in Section
9-104 of the UCC) by the Collateral Agent in each Deposit Account at any time or
from time to time maintained with the Deposit Account Bank, and to provide for
the rights of the parties under this Agreement with respect to such Deposit
Accounts;
NOW THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Assignor's Dealings with Deposit Accounts; Notice of
Exclusive Control. Until the Deposit Account Bank shall have received from the
Collateral Agent a Notice of Exclusive Control (as defined below), the Assignor
shall be entitled to present items drawn on and otherwise to withdraw or direct
the disposition of funds from the Deposit Accounts and give instructions in
respect of the Deposit Accounts; provided, however, that the Assignor may not,
and the Deposit Account Bank agrees that it shall not permit the Assignor to,
without the Collateral Agent's prior written consent, close any Deposit Account.
If the Collateral Agent shall give to the Deposit Account Bank a notice of the
Collateral Agent's exclusive control of the Deposit Accounts, which notice
states that it is a "Notice of Exclusive Control" (a "Notice of Exclusive
Control"), only the Collateral Agent shall be entitled to withdraw funds from
the
Annex G
Page 2
Deposit Accounts, to give any instructions in respect of the Deposit Accounts
and any funds held therein or credited thereto or otherwise to deal with the
Deposit Accounts.
2. Collateral Agent's Right to Give Instructions as to
Deposit Accounts. (a) Notwithstanding the foregoing or any separate agreement
that the Assignor may have with the Deposit Account Bank, the Collateral Agent
shall be entitled, for purposes of this Agreement, at any time concurrently with
or following the delivery of a Notice of Exclusive Control to the Deposit
Account Bank, to give the Deposit Account Bank instructions as to the withdrawal
or disposition of any funds from time to time credited to any Deposit Account,
or as to any other matters relating to any Deposit Account or any other
Collateral, without further consent from the Assignor. The Assignor hereby
irrevocably authorizes and instructs the Deposit Account Bank, and the Deposit
Account Bank hereby agrees, to comply with any such instructions from the
Collateral Agent without any further consent from the Assignor. Such
instructions may include the giving of stop payment orders for any items being
presented to any Deposit Account for payment. The Deposit Account Bank shall be
fully entitled to rely on, and shall comply with, such instructions from the
Collateral Agent even if such instructions are contrary to any instructions or
demands that the Assignor may give to the Deposit Account Bank. In case of any
conflict between instructions received by the Deposit Account Bank from the
Collateral Agent and the Assignor, the instructions from the Collateral Agent
shall prevail.
(b) It is understood and agreed that the Deposit Account
Bank's duty to comply with instructions from the Collateral Agent regarding the
Deposit Accounts concurrently with or following the delivery of a Notice of
Exclusive Control to the Deposit Account Bank, is absolute, and the Deposit
Account Bank shall be under no duty or obligation, nor shall it have the
authority, to inquire or determine whether or not such instructions are in
accordance with the Security Agreement or any other Secured Debt Agreement (as
defined in the Security Agreement), nor seek confirmation thereof from the
Assignor or any other Person.
3. Assignor's Exculpation and Indemnification of
Depository Bank. The Assignor hereby irrevocably authorizes and instructs the
Deposit Account Bank, concurrently with or following the delivery of a Notice of
Exclusive Control to the Deposit Account Bank, to follow instructions from the
Collateral Agent regarding the Deposit Accounts even if the result of following
such instructions from the Collateral Agent is that the Deposit Account Bank
dishonors items presented for payment from any Deposit Account. The Assignor
further confirms that the Deposit Account Bank shall have no liability to the
Assignor for wrongful dishonor of such items in following such instructions from
the Collateral Agent. The Deposit Account Bank shall have no duty to inquire or
determine whether the Assignor's obligations to the Collateral Agent are in
default or whether the Collateral Agent is entitled, under any separate
agreement between the Assignor and the Collateral Agent, to give any such
instructions. The Assignor further agrees to be responsible for the Deposit
Account Bank's customary charges and to indemnify the Deposit Account Bank from
and to hold the Deposit Account Bank harmless against any loss, cost or expense
that the Deposit Account Bank may sustain or incur in acting upon instructions
which the Deposit Account Bank believes in good faith to be instructions from
the Collateral Agent.
Annex G
Page 3
4. Subordination of Security Interests; Deposit Account
Bank's Recourse to Deposit Accounts. The Deposit Account Bank hereby
subordinates any claims and security interests it may have against, or with
respect to, any Deposit Account at any time established or maintained with it by
the Assignor (including any amounts, investments, instruments or other
Collateral from time to time on deposit therein) to the security interests of
the Collateral Agent (for the benefit of the Secured Creditors) therein, and
agrees that no amounts shall be charged by it to, or withheld or set-off or
otherwise recouped by it from, any Deposit Account of the Assignor or any
amounts, investments, instruments or other Collateral from time to time on
deposit therein; provided that the Deposit Account Bank may, however, from time
to time debit the Deposit Accounts for any of its customary charges in
maintaining the Deposit Accounts or for reimbursement for the reversal of any
provisional credits granted by the Deposit Account Bank to any Deposit Account,
to the extent, in each case, that the Assignor has not separately paid or
reimbursed the Deposit Account Bank therefor.
5. Representations, Warranties and Covenants of Deposit
Account Bank. The Deposit Account Bank represents and warrants to the Collateral
Agent that:
(a) The Deposit Account Bank constitutes a "bank" (as
defined in Section 9-102 of the UCC), that the jurisdiction (determined
in accordance with Section 9-304 of the UCC) of the Deposit Account
Bank for purposes of each Deposit Account maintained by the Assignor
with the Deposit Account Bank shall be one or more States within the
United States.
(b) The Deposit Account Bank shall not permit the
Assignor to establish any demand, time, savings, passbook or other
account with it which does not constitute a "deposit account" (as
defined in Section 9-102 of the UCC).
(c) The account agreements between the Deposit Account
Bank and the Assignor relating to the establishment and general
operation of the Deposit Accounts provide, whether specifically or
generally, that the laws of ______________ govern secured transactions
relating to the Deposit Accounts and that the Deposit Account Bank's
"jurisdiction" for purposes of Section 9-304 of the UCC in respect of
the Deposit Accounts is ___________________. The Deposit Account Bank
will not, without the Collateral Agent's prior written consent, amend
any such account agreement so that the Deposit Account Bank's
jurisdiction for purposes of Section 9-304 of the UCC is other than a
jurisdiction permitted pursuant to preceding clause (a). All account
agreements in respect of each Deposit Account in existence on the date
hereof are listed on Annex A hereto and copies of all such account
agreements have been furnished to the Collateral Agent. The Deposit
Account Bank will promptly furnish to the Collateral Agent a copy of
the account agreement for each Deposit Account hereafter established by
the Deposit Account Bank for the Assignor.
(d) The Deposit Account Bank has not entered and will not
enter, into any agreement with any other Person by which the Deposit
Account Bank is obligated to comply with instructions from such other
Person as to the disposition of funds from any Deposit Account or other
dealings with any Deposit Account or other of the Collateral.
Annex G
Page 4
(e) On the date hereof the Deposit Account Bank maintains
no Deposit Accounts for the Assignor other than the Deposit Accounts
specifically identified in Annex A hereto.
(f) Any items or funds received by the Deposit Account
Bank for the Assignor's account will be credited to said Deposit
Accounts specified in paragraph (e) above or to any other Deposit
Accounts hereafter established by the Deposit Account Bank for the
Assignor in accordance with this Agreement.
6. Deposit Account Statements and Information. The
Deposit Account Bank agrees, and is hereby authorized and instructed by the
Assignor, to furnish to the Collateral Agent upon its request, at its address
indicated below, copies of all account statements and other information relating
to each Deposit Account that the Deposit Account Bank sends to the Assignor and
to disclose to the Collateral Agent all information requested by the Collateral
Agent regarding any Deposit Account.
7. Conflicting Agreements. This Agreement shall have
control over any conflicting agreement between the Deposit Account Bank and the
Assignor.
8. Merger or Consolidation of Deposit Account Bank.
Without the execution or filing of any paper or any further act on the part of
any of the parties hereto, any bank into which the Deposit Account Bank may be
merged or with which it may be consolidated, or any bank resulting from any
merger to which the Deposit Account Bank shall be a party, shall be the
successor of the Deposit Account Bank hereunder and shall be bound by all
provisions hereof which are binding upon the Deposit Account Bank and shall be
deemed to affirm as to itself all representations and warranties of the Deposit
Account Bank contained herein.
9. Notices. (a) All notices and other communications
provided for in this Agreement shall be in writing (including facsimile) and
sent to the intended recipient at its address or telex or facsimile number set
forth below:
If to the Collateral Agent, at:
_____________________________
_____________________________
_____________________________
If to the Assignor, at:
_____________________________
_____________________________
_____________________________
If to the Deposit Account Bank, at:
Annex G
Page 5
_____________________________
_____________________________
_____________________________
or, as to any party, to such other address or telex or facsimile number as such
party may designate from time to time by notice to the other parties.
(b) Except as otherwise provided herein, all notices and
other communications hereunder shall be delivered by hand or by commercial
overnight courier (delivery charges prepaid), or mailed, postage prepaid, or
telexed or faxed, addressed as aforesaid, and shall be effective (i) three
business days after being deposited in the mail (if mailed), (ii) when delivered
(if delivered by hand or courier) and (iii) or when transmitted with receipt
confirmed (if telexed or faxed); provided that notices to the Collateral Agent
shall not be effective until actually received by it.
10. Amendment. This Agreement may not be amended,
modified or supplemented except in writing executed and delivered by all the
parties hereto.
11. Binding Agreement. This Agreement shall bind the
parties hereto and their successors and assigns and shall inure to the benefit
of the parties hereto and their successors and assigns. Without limiting the
provisions of the immediately preceding sentence, the Collateral Agent at any
time or from time to time may designate in writing to the Deposit Account Bank a
successor Collateral Agent (at such time, if any, as such entity becomes the
Collateral Agent under the Security Agreement, or at any time thereafter) who
shall thereafter succeed to the rights of the existing Collateral Agent
hereunder and shall be entitled to all of the rights and benefits provided
hereunder.
12. Continuing Obligations. The rights and powers granted
herein to the Collateral Agent have been granted in order to protect and further
perfect its security interests in the Deposit Accounts and other Collateral and
are powers coupled with an interest and will be affected neither by any
purported revocation by the Assignor of this Agreement or the rights granted to
the Collateral Agent hereunder or by the bankruptcy, insolvency, conservatorship
or receivership of the Assignor or the Deposit Account Bank or by the lapse of
time. The rights of the Collateral Agent hereunder and in respect of the Deposit
Accounts and the other Collateral, and the obligations of the Assignor and
Deposit Account Bank hereunder, shall continue in effect until the security
interests of Collateral Agent in the Deposit Accounts and such other Collateral
have been terminated and the Collateral Agent has notified the Deposit Account
Bank of such termination in writing.
13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
14. Counterparts. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.
Annex G
Page 6
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
Annex G
Page 7
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first written above.
Assignor:
[NAME]
By: ________________________
Name:
Title:
Collateral Agent:
DEUTSCHE BANK TRUST COMPANY
AMERICAS
By: ________________________
Name:
Title:
Deposit Account Bank:
[NAME]
By: ________________________
Name:
Title:
ANNEX H
to
SECURITY AGREEMENT
DESCRIPTION OF COMMERCIAL TORT CLAIMS
None
ANNEX I
to
SECURITY AGREEMENT
SCHEDULE OF MARKS AND APPLICATIONS;
INTERNET DOMAIN NAME REGISTRATIONS
None.
ANNEX J
to
SECURITY AGREEMENT
SCHEDULE OF PATENTS
None
ANNEX K
to
SECURITY AGREEMENT
SCHEDULE OF COPYRIGHTS
None
ANNEX L
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency
of which are hereby acknowledged, [Name of Grantor], a __________ _________ (the
"Grantor") with principal offices at ____________________________, hereby grants
to Deutsche Bank Trust Company Americas, as Collateral Agent, with principal
offices at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Grantee"), a security
interest in (i) all of the Grantor's right, title and interest in and to the
United States trademarks, trademark registrations and trademark applications
(the "Marks") set forth on Schedule A attached hereto, (ii) all Proceeds (as
such term is defined in the Security Agreement referred to below) and products
of the Marks, (iii) the goodwill of the businesses with which the Marks are
associated and (iv) all causes of action arising prior to or after the date
hereof for infringement of any of the Marks or unfair competition regarding the
same.
THIS GRANT is made to secure the satisfactory performance and
payment of all the Obligations of the Grantor, as such term is defined in the
Security Agreement between the Grantor and the Grantee, dated as of February 4,
2004 (as amended, modified or supplemented from time to time, the "Security
Agreement"). Upon the occurrence of the Termination Date (as defined in the
Security Agreement), the Grantee shall execute, acknowledge, and deliver to the
Grantor an instrument in writing releasing the security interest in the Marks
acquired under this Grant.
This Grant has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
as set forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this
Annex L
Page 2
Grant are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
* * *
Annex L
Page 3
IN WITNESS WHEREOF, the undersigned have executed this Grant
as of the ____ day of ____________, ____.
[NAME OF GRANTOR], Grantor
By ___________________________
Name:
Title:
DEUTSCHE BANK TRUST COMPANY
AMERICAS,
as Collateral Agent and Grantee
By ___________________________
Name:
Title:
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ day of _________, ____, before me personally came
________ ________________ who, being by me duly sworn, did state as follows:
that [s]he is ______________ of [Name of Grantor], that [s]he is authorized to
execute the foregoing Grant on behalf of said ____________ and that [s]he did so
by authority of the [Board of Directors] of said ____________.
_______________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ day of _________, ____, before me personally came
________ _____________________ who, being by me duly sworn, did state as
follows: that [s]he is __________________ of Deutsche Bank Trust Company
Americas, that [s]he is authorized to execute the foregoing Grant on behalf of
said corporation and that [s]he did so by authority of the Board of Directors of
said corporation.
_______________________
Notary Public
SCHEDULE A
XXXX REG. NO. REG. DATE
---- ------- ---------
ANNEX M
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency
of which are hereby acknowledged, [Name of Grantor], a __________ _________ (the
"Grantor") with principal offices at ____________________________, hereby grants
to Deutsche Bank Trust Company Americas, as Collateral Agent, with principal
offices 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Grantee"), a security
interest in (i) all of the Grantor's rights, title and interest in and to the
United States patents (the "Patents") set forth on Schedule A attached hereto,
in each case together with (ii) all Proceeds (as such term is defined in the
Security Agreement referred to below) and products of the Patents, and (iii) all
causes of action arising prior to or after the date hereof for infringement of
any of the Patents or unfair competition regarding the same.
THIS GRANT is made to secure the satisfactory performance and
payment of all the Obligations of the Grantor, as such term is defined in the
Security Agreement between the Grantor and the Grantee, dated as of February 4,
2004 (as amended, modified or supplemented from time to time, the "Security
Agreement"). Upon the occurrence of the Termination Date (as defined in the
Security Agreement), the Grantee shall execute, acknowledge, and deliver to the
Grantor an instrument in writing releasing the security interest in the Patents
acquired under this Grant.
Annex M
Page 2
This Grant has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
as set forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Grant
are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
* * *
Annex M
Page 3
IN WITNESS WHEREOF, the undersigned have executed this Grant
as of the ____ day of ____________, ____.
[NAME OF GRANTOR], Grantor
By ___________________________
Name:
Title:
DEUTSCHE BANK TRUST COMPANY
AMERICAS,
as Collateral Agent and Grantee
By ___________________________
Name:
Title:
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ day of _________, ____, before me personally came
________ ________________ who, being by me duly sworn, did state as follows:
that [s]he is ______________ of [Name of Grantor], that [s]he is authorized to
execute the foregoing Grant on behalf of said ____________ and that [s]he did so
by authority of the Board of Directors of said ____________.
_______________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ day of _________, ____, before me personally came
________ _____________________ who, being by me duly sworn, did state as
follows: that [s]he is __________________ of Deutsche Bank Trust Company
Americas, that [s]he is authorized to execute the foregoing Grant on behalf of
said corporation and that [s]he did so by authority of the Board of Directors of
said corporation.
_______________________
Notary Public
SCHEDULE A
PATENT PATENT NO. ISSUE DATE
------ ---------- ----------
ANNEX N
to
SECURITY AGREEMENT
GRANT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Name of Grantor], a _______________ _____________
(the "Grantor"), having its chief executive office at ____________________,
_________________, is the owner of all right, title and interest in and to the
United States copyrights and associated United States copyright registrations
and applications for registration set forth in Schedule A attached hereto;
WHEREAS, DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral
Agent, having its principal offices at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(the "Grantee"), desires to acquire a security interest in said copyrights and
copyright registrations and applications therefor; and
WHEREAS, the Grantor is willing to grant to the Grantee a
security interest in and lien upon the copyrights and copyright registrations
and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, and subject to the terms and conditions
of the Security Agreement, dated as of February 4, 2004, made by the Grantor and
the Grantee (as amended, modified or supplemented from time to time, the
"Security Agreement"), the Grantor hereby assigns to the Grantee as collateral
security, and grants to the Grantee a security interest in, the copyrights and
copyright registrations and applications therefor set forth in Schedule A
attached hereto.
This Grant has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
as set forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Grant
are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
* * *
Annex N
Page 2
EXECUTED AT __________________, ________________ the ____ day
of ____________, ____.
[NAME OF GRANTOR], Grantor
By ___________________________
Name:
Title:
DEUTSCHE BANK TRUST COMPANY
AMERICAS,
as Collateral Agent and Grantee
By ___________________________
Name:
Title:
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this __ day of _________, ____, before me personally came
___________ ______________, who being duly sworn, did depose and say that [s]he
is ___________________ of [Name of Grantor], that [s]he is authorized to execute
the foregoing Grant on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
_______________________
Notary Public
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On this ____ day of _________, ____, before me personally came
________ __________________ who, being by me duly sworn, did state as follows:
that [s]he is __________________ of Deutsche Bank Trust Company Americas, that
[s]he is authorized to execute the foregoing Grant on behalf of said __________
and that [s]he did so by authority of the Board of Directors of said __________.
_______________________
Notary Public
TABLE OF CONTENTS
PAGE
----
ARTICLE I SECURITY INTERESTS ........................................................................... 2
1.1 Grant of Security Interests ............................................................... 2
1.2 Power of Attorney ......................................................................... 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS............................................ 3
2.1 Necessary Filings ......................................................................... 4
2.2 No Liens .................................................................................. 4
2.3 Other Financing Statements ................................................................ 4
2.4 Chief Executive Office, Record Locations .................................................. 4
2.5 Location of Inventory and Equipment ....................................................... 4
2.6 Legal Names; Type of Organization (and Whether a Registered Organization and/or a
Transmitting Utility); Jurisdiction of Organization; Location; Organizational
Identification Numbers; Changes Thereto; etc. .......................................... 4
2.7 Trade Names; etc. ......................................................................... 5
2.8 Certain Significant Transactions .......................................................... 5
2.9 Non-UCC Property .......................................................................... 6
2.10 As-Extracted Collateral; Timber-to-be-Cut ................................................ 6
2.11 Collateral in the Possession of a Bailee ................................................. 6
ARTICLE III SPECIAL PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER
AND CERTAIN OTHER COLLATERAL .................................................................. 6
3.1 Additional Representations and Warranties ................................................. 6
3.2 Maintenance of Records .................................................................... 7
3.3 Direction to Account Debtors; Contracting Parties; etc. ................................... 7
3.4 Modification of Terms; etc. ............................................................... 7
3.5 Collection ................................................................................ 8
3.6 Instruments ............................................................................... 8
3.7 Assignor Remains Liable Under Accounts .................................................... 8
3.8 Assignor Remains Liable Under Contracts ................................................... 8
3.9 Deposit Accounts; etc. .................................................................... 9
3.10 Letter-of-Credit Rights .................................................................. 10
3.11 Commercial Tort Claims ................................................................... 10
3.12 Chattel Paper ............................................................................ 10
3.13 Further Actions .......................................................................... 10
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES ................................... 11
4.1 Additional Representations and Warranties ................................................. 11
4.2 Licenses and Assignments .................................................................. 11
(i)
4.3 Infringements ............................................................................. 11
4.4 Preservation of Marks and Domain Names .................................................... 11
4.5 Maintenance of Registration ............................................................... 12
4.6 Future Registered Marks and Domain Names .................................................. 12
4.7 Remedies .................................................................................. 12
ARTICLE V SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS .......................... 12
5.1 Additional Representations and Warranties ................................................. 13
5.2 Licenses and Assignments .................................................................. 13
5.3 Infringements ............................................................................. 13
5.4 Maintenance of Patents or Copyrights ...................................................... 13
5.5 Prosecution of Patent or Copyright Applications ........................................... 13
5.6 Other Patents and Copyrights .............................................................. 14
5.7 Remedies .................................................................................. 14
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL ........................................................ 14
6.1 Protection of Collateral Agent's Security ................................................. 14
6.2 Warehouse Receipts Non-Negotiable ......................................................... 14
6.3 Additional Information .................................................................... 15
6.4 Further Actions ........................................................................... 15
6.5 Financing Statements ...................................................................... 15
ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT ............................................ 15
7.1 Remedies; Obtaining the Collateral Upon Default ........................................... 15
7.2 Remedies; Disposition of the Collateral ................................................... 17
7.3 Waiver of Claims .......................................................................... 18
7.4 Application of Proceeds ................................................................... 18
7.5 Remedies Cumulative ....................................................................... 21
7.6 Discontinuance of Proceedings ............................................................. 21
ARTICLE VIII INDEMNITY ................................................................................. 22
8.1 Indemnity ................................................................................. 22
8.2 Indemnity Obligations Secured by Collateral; Survival ..................................... 23
ARTICLE IX DEFINITIONS ................................................................................. 23
ARTICLE X MISCELLANEOUS ................................................................................ 29
10.1 Notices .................................................................................. 29
10.2 Waiver; Amendment ........................................................................ 30
10.3 Obligations Absolute ..................................................................... 30
10.4 Successors and Assigns ................................................................... 31
10.5 Headings Descriptive ..................................................................... 31
10.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL ................... 31
(ii)
10.7 Assignor's Duties ........................................................................ 32
10.8 Termination; Release ..................................................................... 32
10.9 Counterparts ............................................................................. 33
10.10 Severability ............................................................................ 33
10.11 The Collateral Agent and the other Secured Creditors .................................... 33
SCHEDULE OF DEPOSIT ACCOUNTS FOR WHICH COMPANY WILL OBTAIN ACCOUNT CONTROL AGREEMENTS .................. 1
ANNEX A Schedule of Chief Executive Offices Address(es) of Chief Executive Office
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Schedule of Legal Names, Type of Organization (and Whether a Registered Organization
and/or a Transmitting Utility), Jurisdiction of Organization, Location and
Organizational Identification Numbers
ANNEX D Schedule of Trade and Fictitious Names
ANNEX E Description of Certain Significant Transactions Occurring Within One Year Prior to the
Date of the Security Agreement
ANNEX F-1 Schedule of Deposit Accounts
ANNEX F-2 Schedule of Deposit Accounts for Which Company Will Obtain Account Control Agreements
ANNEX G Form of Control Agreement Regarding Deposit Accounts
ANNEX H Schedule of Commercial Tort Claims
ANNEX I Schedule of Marks and Applications; Internet Domain Name Registrations
ANNEX J Schedule of Patents
ANNEX K Schedule of Copyrights
ANNEX L Grant of Security Interest in United States Trademarks
ANNEX M Grant of Security Interest in United States Patents
ANNEX N Grant of Security Interest in United States Copyrights
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(iii)
