Exhibit 10.3
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security Agreement"),
is entered into as of April 14, 2003, among THE PANTRY, INC., a Delaware
corporation (the "Borrower"), the Domestic Subsidiaries of the Borrower
(individually a "Guarantor" and collectively the "Guarantors"; the Guarantors,
together with the Borrower, individually an "Obligor" and collectively the
"Obligors") and WACHOVIA BANK, NATIONAL ASSOCIATION, in its capacity as
Administrative Agent under the Credit Agreement referred to below (in such
capacity, the "Administrative Agent") for the several banks and other financial
institutions as may from time to time become parties to such Credit Agreement
(individually a "Secured Party" and collectively the "Secured Parties").
RECITALS
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated as of January 28, 1999 (as amended, modified, extended, renewed or
replaced, the "Existing Credit Agreement"), among the Borrower, the lenders
party thereto, and the Administrative Agent, the Secured Parties agreed to make
loans and issue letters of credit upon the terms and subject to the conditions
set forth therein;
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated as of the date hereof (as amended, modified, extended, renewed or replaced
from time to time, the "Credit Agreement"), among the Borrower, the Guarantors,
the Secured Parties party thereto, and the Administrative Agent, the Secured
Parties have agreed to refinance the Existing Credit Agreement and make Loans
and issue Letters of Credit upon the terms and subject to the conditions set
forth therein;
WHEREAS, in connection with the Existing Credit Agreement, the Borrower
entered into that certain Company Security Agreement dated as of October 23,
1997 and certain of the Guarantors entered into those certain Subsidiary
Security Agreements and Subsidiary Trademark Security Agreements each dated as
of January 28, 1999 (as amended, modified, extended, renewed or replaced, the
"Existing Security Agreements"); and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Secured Parties to make their respective
Loans and to issue Letters of Credit under the Credit Agreement that the
Obligors shall have executed and delivered this Security Agreement (which amends
and restates the Existing Security Agreements) to the Administrative Agent for
the ratable benefit of the Secured Parties.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement, and
the following terms which are defined in the Uniform Commercial Code from
time to time in effect in the State of New York (the "UCC") are used herein
as so defined: Accessions, Accounts, As-Extracted Collateral, Chattel
Paper, Commercial Tort Claims, Consumer Goods, Control, Deposit Accounts,
Documents, Electronic Chattel Paper, Equipment, Farm Products, Fixtures,
General Intangibles, Goods, Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, Manufactured Homes, Proceeds, Securities
Intermediary, Security Entitlement, Software, Supporting Obligations and
Tangible Chattel Paper. For purposes of this Security Agreement, (i) the
term "Secured Party" shall include (X) any Affiliate of any Secured Party
which has entered into a Hedging Agreement with any Obligor and (Y) any
Person that was a Secured Party (or an Affiliate of a Secured Party) under
the Credit Agreement at the time it entered into a Hedging Agreement that
has ceased to be a Secured Party under the Credit Agreement, and (ii) the
term "Hedging Agreement" shall mean any Hedging Agreement between any
Secured Party and any Obligor that is permitted by the terms of the Credit
Agreement.
(b) In addition, the following term shall have the following meaning:
"Secured Obligations": (a) all of the Credit Party Obligations,
howsoever evidenced, created, incurred or acquired, whether primary,
secondary, direct, contingent, or joint and several and (b) all expenses
and charges, legal and otherwise, incurred by the Administrative Agent
and/or the Secured Parties in collecting or enforcing any Credit Party
Obligations or in realizing on or protecting any security therefor,
including without limitation the security granted hereunder.
2. Grant of Security Interest in the Collateral.
(a) To secure the prompt payment and performance in full when due,
whether by lapse of time, acceleration, mandatory prepayment or otherwise,
of the Secured Obligations, each Obligor hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a
continuing security interest in any and all right, title and interest of
such Obligor in and to the following, whether now owned or existing or
owned, acquired, or arising hereafter (collectively, the "Collateral"):
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(i) all Accounts;
(ii) all cash and Cash Equivalents;
(iii) all Chattel Paper;
(iv) those certain Commercial Tort Claims set forth on Schedule
2(a) attached hereto (as such Schedule may be updated from
time to time by the Obligors);
(v) all Copyright Licenses;
(vi) all Copyrights;
(vii) all Deposit Accounts;
(viii) all Documents;
(ix) all Equipment;
(x) all Fixtures;
(xi) all General Intangibles;
(xii) all Goods;
(xiii) all Instruments;
(xiv) all Inventory;
(xv) all Investment Property;
(xvi) all Letter-of-Credit Rights;
(xvii) all Material Contracts and all such other agreements,
contracts, leases, licenses, tax sharing agreements or
hedging arrangements now or hereafter entered into by an
Obligor, as such agreements may be amended or otherwise
modified from time to time (collectively, the "Assigned
Agreements"), including without limitation, (A) all rights
of an Obligor to receive moneys due and to become due under
or pursuant to the Assigned Agreements, (B) all rights of an
Obligor to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to the Assigned
Agreements, (C) claims of an Obligor for damages arising out
of or
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for breach of or default under the Assigned Agreements and
(D) the right of an Obligor to terminate the Assigned
Agreements, to perform thereunder and to compel performance
and otherwise exercise all remedies thereunder;
(xviii) all Patent Licenses;
(xix) all Patents;
(xx) all Payment Intangibles;
(xxi) all Trademark Licenses;
(xxii) all Trademarks;
(xxiii) all Software;
(xxiv) all Supporting Obligations;
(xxv) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks, and related data processing
software (owned by such Obligor or in which it has an
interest) that at any time evidence or contain information
relating to any Collateral or are otherwise necessary or
helpful in the collection thereof or realization thereupon;
(xxvi) all other personal property of any kind or type whatsoever
owned by such Obligor; and
(xxvii) to the extent not otherwise included, all Accessions,
Proceeds and products of any and all of the foregoing.
Notwithstanding the foregoing, nothing in this Section 2 or
otherwise in this Security Agreement shall constitute a grant by any
Obligor of a security interest in any contract, document, instrument,
general intangible, lease, license or other right of any kind to the extent
such agreement was entered into prior to the date of this Security
Agreement and to the extent such a grant of a security interest would,
after giving effect to the provisions of subsections 9-406, 9-407 and 9-408
of the UCC, constitute a breach or violation of any term thereof.
(b) The Obligors and the Administrative Agent, on behalf of the
Secured Parties, hereby acknowledge and agree that the security interest
created hereby in the Collateral (i) constitutes continuing collateral
security for all of the Secured Obligations,
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whether now existing or hereafter arising and (ii) is not to be construed
as an assignment of any Intellectual Property.
3. Provisions Relating to Accounts, Contracts and Agreements.
(a) Anything herein to the contrary notwithstanding, each of the
Obligors shall remain liable under each of its Accounts, contracts and
agreements to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms
of any agreement giving rise to each such Account or the terms of such
contract or agreement. Neither the Administrative Agent nor any Secured
Party shall have any obligation or liability under any Account (or any
agreement giving rise thereto), contract or agreement by reason of or
arising out of this Security Agreement or the receipt by the Administrative
Agent or any Secured Party of any payment relating to such Account,
contract or agreement pursuant hereto, nor shall the Administrative Agent
or any Secured Party be obligated in any manner to perform any of the
obligations of an Obligor under or pursuant to any Account (or any
agreement giving rise thereto), contract or agreement, to make any payment,
to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
under any Account (or any agreement giving rise thereto), contract or
agreement, 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 it or to which it may be entitled at any time or times.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Administrative Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and the Obligors
shall furnish all such assistance and information as the Administrative
Agent may reasonably require in connection with such test verifications.
Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent's request and at the expense of the Obligors, the
Obligors shall cause independent public accountants or others satisfactory
to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts. Subject to Section 2(a), the Administrative
Agent in its own name or in the name of others may communicate with account
debtors on the Accounts to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby represents and
warrants to the Administrative Agent, for the benefit of the Secured Parties,
that so long as any of the Secured Obligations remain outstanding (other than
contingent indemnity or reimbursement obligations) or any Credit Document or
Hedging Agreement is in effect, and until all of the Commitments shall have been
terminated:
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(a) Chief Executive Office; Books & Records; Legal Name; State of
Formation. As of the Closing Date, each Obligor's chief executive office
and chief place of business are (and for the prior four months has been)
located at the locations set forth on Schedule 3.5-3 to the Credit
Agreement and as of the Closing Date each Obligor keeps its books and
records at such locations. As of the Closing Date, each Obligor's exact
legal name is as shown in this Security Agreement and its state of
formation is (and for the prior four months has been) the location set
forth on Schedule 3.1-1 to the Credit Agreement. No Obligor has in the four
months preceding the Closing Date changed its name, been party to a merger,
consolidation or other change in structure or used any tradename not
disclosed on Schedule 4(a) attached hereto.
(b) Location of Tangible Collateral. The location of all tangible
Collateral owned by each Obligor is set forth in the Perfection Certificate
delivered in accordance with the Credit Agreement.
(c) Ownership. Each Obligor is the legal and beneficial owner of its
Collateral and has the right to pledge, sell, assign or transfer the same.
(d) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, in the Collateral of such Obligor
and, when properly perfected by filing, the granting of Control to the
Administrative Agent or otherwise, shall constitute a valid first priority,
perfected security interest in such Collateral, to the extent such security
interest can be perfected by filing or otherwise under the UCC or by filing
an appropriate notice with the United States Patent and Trademark Office or
the United States Copyright Office, free and clear of all Liens except for
Permitted Liens.
(e) Consents. Except for (i) the filing or recording of UCC financing
statements, (ii) the filing of appropriate notices with the United States
Patent and Trademark Office and the United States Copyright Office or (iii)
obtaining Control to perfect the Liens created by this Security Agreement,
no consent or authorization of, filing with, or other act by or in respect
of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder, member or creditor
of such Obligor), is required (A) for the grant by such Obligor of the
security interest in the Collateral granted hereby or for the execution,
delivery or performance of this Security Agreement by such Obligor or (B)
for the perfection of such security interest or the exercise by the
Administrative Agent of the rights and remedies provided for in this
Security Agreement.
(f) Types of Collateral. None of the Collateral consists of, or is the
Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products,
Manufactured Homes or standing timber (as used in the UCC).
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(g) Accounts. With respect to the Accounts of the Obligors: (i) to the
extent an Account arises out of goods sold and/or services furnished, (A)
the goods sold and/or services furnished giving rise to each Account, are
not subject to any security interest or Lien except the first priority,
perfected security interest granted to the Administrative Agent herein and
Permitted Liens and (B) such Account arises out of a bona fide transaction
for goods sold and delivered (or in the process of being delivered) by an
Obligor or for services actually rendered by an Obligor, which transaction
was conducted in the ordinary course of the Obligor's business or otherwise
permitted by the Credit Agreement; (ii) no Account of an Obligor is
evidenced by any Instrument or Chattel Paper unless such Instrument or
Chattel Paper, except (x) those representing an obligation of less than
$50,000, or (y) as to which notice has been given to the Administrative
Agent and at the request of Administrative Agent, the same has been
endorsed over and delivered to, or submitted to the Control of the
Administrative Agent; (iii) each Account and the papers and documents of
the applicable Obligor relating thereto are genuine and in all material
respects what they purport to be; (iv) the amount of each Account as shown
on the applicable Obligor's books and records, and on all invoices and
statements which may be delivered to the Administrative Agent with respect
thereto, is due and payable to the applicable Obligor and is not in any way
contingent; (v) no Account is evidenced by judgment, there are no set-offs,
counterclaims or disputes existing or asserted with respect to any Account
that in the aggregate could reasonably be expected to have a Material
Adverse Effect, and no Obligor has made any agreement with any account
debtor for any deduction from any Account except for deductions made in the
ordinary course of its business; (vi) there has been no development or
event which individually or in the aggregate has had or could be reasonably
expected to have an adverse effect on the validity or enforcement of any
Account or tend to reduce the amount payable thereunder as shown on the
applicable Obligor's books and records and all invoices and statements
delivered to the Administrative Agent with respect thereto, which
development or event could reasonably be expected to have a Material
Adverse Effect; and (vii) the right to receive payment under each Account
is assignable except where the account debtor with respect to such Account
is the United States government or any State government or any agency,
department or instrumentality thereof, to the extent the assignment of any
such right to payment is prohibited or limited by applicable law,
regulations, administrative guidelines or contract.
(h) Inventory. Except as set forth on Schedule 4 attached hereto, no
Inventory of an Obligor is held by a third party pursuant to consignment,
sale or return, sale on approval or similar arrangement.
(i) Intellectual Property.
(i) Schedule 3.21 to the Credit Agreement includes all
Intellectual Property owned by the Obligors as of the date hereof.
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(ii) All Intellectual Property owned by each Obligor i is valid,
subsisting, unexpired, enforceable and has not been abandoned, and
each Obligor is legally entitled to use each of its tradenames.
(iii) Except as set forth in Schedule 3.21 to the Credit
Agreement, none of the Intellectual Property owned by the Obligors is
the subject of any licensing or franchise agreement.
(iv) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the
validity of any Intellectual Property of the Obligors.
(v) To the knowledge by each Obligor no action or proceeding is
pending seeking to limit, cancel or question the validity of any
Intellectual Property of the Obligors, or which, if adversely
determined, would have a material adverse effect on the value of any
such Intellectual Property.
(vi) All filed applications pertaining to the Intellectual
Property of each Obligor have been duly and properly filed, and all
registrations or letters pertaining to such Intellectual Property have
been duly and properly filed and issued, and all of such Intellectual
Property is valid and enforceable.
(vii) No Obligor has made any assignment or agreement in conflict
with the security interest of the Administrative Agent in the
Intellectual Property of each Obligor hereunder.
(j) Documents, Instruments and Chattel Paper. All Documents,
Instruments and Chattel Paper evidencing or constituting Collateral are, to
the Obligors' knowledge, complete, valid, and genuine.
(k) Equipment. With respect to each Obligor's Equipment: (i) such
Obligor has good and marketable title thereto; and (ii) all such Equipment
is in normal operating condition and repair, ordinary wear and tear alone
excepted, and is suitable for the uses to which it is customarily put in
the conduct of such Obligor's business.
5. Covenants. Each Obligor covenants that, so long as any of the Secured
Obligations remain outstanding (other than contingent indemnity or reimbursement
obligations) or any Credit Document or Hedging Agreement is in effect, and until
all of the Commitments shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims and demands
of all other parties claiming an interest therein and keep the Collateral
free from all Liens, except for Permitted Liens. If an Obligor proposes to
obtain financing permitted under Section 6.1(c) of the Credit Agreement
with respect to any asset acquired after the
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Closing Date (a "Purchase Money Financing"), the Administrative Agent will
either (i) with respect to such asset, subordinate the Lien and security
interest created hereunder to the Lien securing the Purchase Money
Financing by a subordination agreement reasonably acceptable to the
Administrative Agent and the provider thereof or (ii) if the Obligor has
not been able, after reasonable effort, to get the provider of such
Purchase Money Financing to agree to subordination, the Administrative
Agent will release the Lien and security interest granted hereunder in such
asset.
(b) Sales and Sale and Lease-Backs of Collateral. Neither the
Administrative Agent nor any Secured Party authorizes any Obligor to, and
no Obligor shall, sell, exchange, transfer, assign, lease or otherwise
dispose of the Collateral or any interest therein, except as permitted
under the Credit Agreement; provided that in the event the Obligor makes an
asset sale or sale and lease-back transaction permitted by the Credit
Agreement and the assets subject to such asset sale or sale and lease-back
transaction constitute Collateral, the Administrative Agent shall release
the Collateral that is the subject of such asset sale to the Obligor free
and clear of any Lien and security interest under this Security Agreement
or any other Credit Document concurrently with the consummation of such
asset sale or sale and lease-back transaction.
(c) Preservation of Collateral. Keep the Collateral in good order,
condition and repair in all material respects, ordinary wear and tear
excepted; not use the Collateral in violation of the provisions of this
Security Agreement or any other agreement relating to the Collateral or any
policy insuring the Collateral or any applicable Requirement of Law; not
permit any Collateral to be or become a fixture to real property or an
accession to other personal property unless the Administrative Agent has a
valid, perfected and first priority security interest for the benefit of
the Secured Parties in such real or personal property; and not, without the
prior written consent of the Administrative Agent, alter or remove any
identifying symbol or number on its Equipment.
(d) Possession or Control of Certain Collateral. If (i) any amount
payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument, Tangible Chattel Paper or Supporting
Obligation or (ii) if any Collateral shall be stored or shipped subject to
a Document or (iii) if any Collateral shall consist of Investment Property
in the form of certificated securities, in the case of either clause (i) or
(ii), in an amount of $50,000 or more, immediately notify the
Administrative Agent of the existence of such Collateral and, upon the
request of the Administrative Agent, deliver such Instrument, Chattel
Paper, Supporting Obligation, Document or Investment Property to the
Administrative Agent, duly endorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Security
Agreement. If any Collateral shall consist of Deposit Accounts, Electronic
Chattel Paper, Letter-of-Credit Rights or uncertificated Investment
Property, execute and deliver (and, with respect to any Collateral
consisting of uncertificated Security Entitlements or Investment Property,
cause the Securities Intermediary or the issuer, as applicable, with
respect to such Investment Property to execute and deliver) to the
Administrative Agent all control agreements, assignments,
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instruments or other documents as reasonably requested by the
Administrative Agent for the purposes of obtaining and maintaining Control
of such Collateral.
(e) Changes in Corporate Structure or Location. Not, without providing
10 days prior written notice to the Administrative Agent and without filing
(or confirming that the Administrative Agent has filed) such financing
statements and amendments to any previously filed financing statements as
the Administrative Agent may require, (i) alter its corporate existence,
(ii) change its state of incorporation or formation or the location where
it maintains its books and records or (iii) change its registered corporate
name.
(f) Inspection. Allow the Administrative Agent or its representatives
to visit and inspect the Collateral as set forth in Section 5.5 of the
Credit Agreement.
(g) Perfection of Security Interest. Xxxx its books and records to
reflect the security interest of the Administrative Agent in the
Collateral. Each Obligor hereby authorizes the Administrative Agent to
prepare and file such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other
instruments as the Administrative Agent may from time to time deem
necessary or appropriate in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC. To the extent
permitted by applicable law, each Obligor hereby agrees that a carbon,
photographic or other reproduction of this Security Agreement or any such
financing statement is sufficient for filing as a financing statement by
the Administrative Agent without notice thereof to such Obligor wherever
the Administrative Agent may reasonably determine is appropriate. Each
Obligor shall also execute and deliver to the Administrative Agent such
agreements, assignments or instruments (including affidavits, notices,
reaffirmations and amendments and restatements of existing documents, as
the Administrative Agent may reasonably request) and do all such other
things as the Administrative Agent may reasonably deem necessary or
appropriate (i) to assure to the Administrative Agent its security
interests hereunder are perfected, including (A) such financing statements
(including continuation statements) or amendments thereof or supplements
thereto or other instruments as the Administrative Agent may from time to
time reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC and any other
personal property security legislation in the appropriate state(s) or
province(s), (B) with regard to Copyrights, a Notice of Grant of Security
Interest in Copyrights for filing with the United States Copyright Office
in the form of Schedule 5(f)(i) attached hereto, (C) with regard to
Patents, a Notice of Grant of Security Interest in Patents for filing with
the United States Patent and Trademark Office in the form of Schedule
5(f)(ii) attached hereto and (D) with regard to Trademarks, a Notice of
Grant of Security Interest in Trademarks for filing with the United States
Patent and Trademark Office in the form of Schedule 5(f)(iii) attached
hereto, (ii) to consummate the transactions contemplated hereby and (iii)
to otherwise protect and assure the Administrative Agent of its rights and
interests hereunder. To that end, each Obligor hereby irrevocably makes,
constitutes and appoints the Administrative
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Agent, its nominee or any other person whom the Administrative Agent may
designate, as such Obligor's attorney-in-fact with full power and for the
limited purpose to sign in the name of such Obligor any notices or any
similar documents which in the Administrative Agent's reasonable discretion
would be necessary or appropriate in order to perfect and maintain
perfection of the security interests granted hereunder, such power, being
coupled with an interest, being and remaining irrevocable so long as any of
the Secured Obligations remain outstanding (other than any such obligations
which by the terms thereof are stated to survive termination of the Credit
Documents) or any Credit Document or Hedging Agreement (to the extent the
obligations of such Obligor thereunder constitute Secured Obligations) is
in effect, and until all of the Commitments shall have terminated. In the
event for any reason the law of any jurisdiction other than New York
becomes or is applicable to the Collateral of any Obligor or any part
thereof, or to any of the Secured Obligations, such Obligor agrees to
execute and deliver all such instruments and to do all such other things as
the Administrative Agent in its reasonable discretion reasonably deems
necessary or appropriate to preserve, protect and enforce the security
interests of the Administrative Agent under the law of such other
jurisdiction (and, if an Obligor shall fail to do so promptly upon the
request of the Administrative Agent, then the Administrative Agent may
execute any and all such requested documents on behalf of such Obligor
pursuant to the power of attorney granted hereinabove).
(h) Collateral Held by Warehouseman, Bailee, etc. If any Collateral
with a book value of $1,000,000 or more is at any time in the possession or
control of a warehouseman, bailee or any agent or processor of such
Obligor, (i) notify the Administrative Agent of such possession, (ii)
notify such Person of the Administrative Agent's security interest for the
benefit of the Secured Parties in such Collateral, (iii) instruct such
Person to hold all such Collateral for the Administrative Agent's account
subject to the Administrative Agent's instructions and (iv) obtain an
acknowledgment from such Person that it is holding such Collateral for the
benefit of the Administrative Agent.
(i) Treatment of Accounts. (i) Not grant or extend the time for
payment of any Account, or compromise or settle any Account for less than
the full amount thereof, or release any person or property, in whole or in
part, from payment thereof, or allow any credit or discount thereon, other
than as normal and customary in the ordinary course of an Obligor's
business and (ii) maintain at its principal place of business a record of
Accounts consistent with customary business practices.
(j) Covenants Relating to Inventory.
(i) Maintain, keep and preserve its Inventory in good salable
condition at its own cost and expense, subject to policies and
procedures relating to obsolete, defective, damaged, or slow-moving
items and items held for return that are normal and customary in the
ordinary course of any Obligor's business.
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(ii) Comply with all reporting requirements set forth in the
Credit Agreement with respect to Inventory.
(iii) If any of the Inventory with a book value in excess of
$100,000 is at any time evidenced by a document of title, immediately
upon request by the Administrative Agent, deliver such document of
title to the Administrative Agent.
(k) Covenants Relating to Copyrights.
(i) Employ the Copyright for each material Work with such notice
of copyright as may be required by law to secure copyright protection.
(ii) Not do any act or knowingly omit to do any act whereby any
Copyright may become invalidated and (A) not do any act, or knowingly
omit to do any act, whereby any Copyright material to the conduct of
its business may become injected into the public domain; (B) notify
the Administrative Agent immediately if it knows, or has reason to
know, that any Copyright material to the conduct of its business may
become injected into the public domain or of any adverse determination
or development (including, without limitation, the institution of, or
any such determination or development in, any proceeding in any court
or tribunal in the United States or any other country) regarding an
Obligor's ownership of any such Copyright or its validity; (C) take
all necessary steps as it shall deem appropriate under the
circumstances, to maintain and pursue each application (and to obtain
the relevant registration) and to maintain each registration of each
Copyright owned by an Obligor, which any Obligor reasonably determines
are material to the conduct of its business, including, without
limitation, filing of applications for renewal where necessary; and
(D) promptly notify the Administrative Agent of any material
infringement of any Copyright of an Obligor of which it becomes aware
(with respect to Copyrights that an Obligor reasonably determines is
material to the conduct of its business) and take such actions as it
shall reasonably deem appropriate under the circumstances to protect
such Copyright, including, where appropriate, the bringing of suit for
infringement, seeking injunctive relief and seeking to recover any and
all damages for such infringement.
(iii) Not make any assignment or agreement in conflict with the
security interest in the Copyrights of each Obligor hereunder.
(l) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each Trademark, which any Obligor
reasonably determines is material to the conduct of its business, in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past the quality of
products and services offered
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under such Trademark, (C) employ such Trademark with the appropriate
notice of registration, (D) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark unless
the Administrative Agent, for the ratable benefit of the Secured
Parties, shall obtain a perfected security interest in such xxxx
pursuant to this Security Agreement, and (E) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any such Trademark may become invalidated.
(ii) Not do any act, or omit to do any act, whereby any Patent,
which any Obligor reasonably determines is material to the conduct of
its business, may become abandoned or dedicated.
(iii) Promptly notify the Administrative Agent if it knows, or
has reason to know, that any application or registration relating to
any Patent or Trademark material to the conduct of its business may
become abandoned or dedicated, or of any adverse determination or
development (including, without limitation, the institution of, or any
such determination or development in, any proceeding in the United
States Patent and Trademark Office or any court or tribunal in any
country) regarding an Obligor's ownership of any such Patent or
Trademark or its right to register the same or to keep, maintain and
use the same.
(iv) Whenever an Obligor, either by itself or through an agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, such Obligor shall
report such filing to the Administrative Agent within five Business
Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Administrative Agent, an Obligor shall
execute and deliver any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Secured Parties' security interest in
any Patent or Trademark and the goodwill and General Intangibles of
such Obligor relating thereto or represented thereby.
(v) Take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and
Trademark Office, or any similar office or agency in any other country
or any political subdivision thereof, to maintain and pursue each
material application, to obtain the relevant registration and to
maintain each registration of the Patents and Trademarks, which any
Obligor reasonably determines is material to the conduct of its
business, including, without limitation, filing of applications for
renewal, affidavits of use and affidavits of incontestability.
(vi) Promptly notify the Administrative Agent and the Secured
Parties after it learns that any Patent or Trademark included in the
Collateral, which any
13
Obligor reasonably determines is material to the conduct of its
business, is infringed, misappropriated or diluted by a third party
and, if such Patent or Trademark is necessary or desirable for the
conduct of any Obligor's business and if consistent with good business
judgment, then promptly xxx for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover
any and all damages for such infringement, misappropriation or
dilution, or take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Patent or
Trademark.
(vii) Not make any assignment or agreement in conflict with the
security interest in the Patents or Trademarks of any Obligor
hereunder.
(m) New Patents, Copyrights and Trademarks. Promptly provide the
Administrative Agent with (i) a listing of all applications, if any, for
new Copyrights, Patents or Trademarks (together with a listing of the
issuance of registrations or letters on present applications) which new
applications and issued registrations of letters shall be subject to terms
and conditions hereunder, and (ii) (A) with respect to Copyrights, a duly
executed Notice of Grant of Security Interest in Copyrights, (B) with
respect to Patents, a duly executed Notice of Grant of Security Interest in
Patents, (C) with respect to Trademarks, a duly executed Notice of Grant of
Security Interest in Trademarks or (D) such other duly executed documents
as the Administrative Agent may request in a form acceptable to counsel for
the Administrative Agent and suitable for recording to evidence the
security interest in the Copyright, Patent or Trademark which is the
subject of such new application.
(n) Commercial Tort Claims; Notice of Litigation. (i) Promptly forward
to the Administrative Agent written notification of any and all Commercial
Tort Claims of any Obligor, including, but not limited to, any and all
actions, suits, and proceedings before any court or Governmental Authority
by or affecting such Obligor or any of its Subsidiaries and (ii) execute
and deliver such statements, documents and notices and do and cause to be
done all such things as may be required by the Administrative Agent, or
required by law, including all things which may from time to time be
necessary under the UCC to fully create, preserve, perfect and protect the
priority of the Administrative Agent's security interest in any Commercial
Tort Claims.
(o) Fixtures. At all times maintain the Collateral as personal
property and not affix any of the Collateral to any real property (except
real property in which the Administrative Agent has a valid, perfected and
first priority security interest) in a manner which would change its nature
from personal property to real property or a Fixture.
(p) Insurance. Insure, repair and replace the Collateral of such
Obligor as set forth in the Credit Agreement. Subject to the provisions of
the Credit Agreement, all
14
insurance proceeds shall be subject to the security interest of the
Administrative Agent hereunder.
(q) New Licenses and Leases. Use its commercially reasonable best
efforts to ensure that any material license or any material lease obtained
or entered into by such Obligor after the Closing Date does not contain
legally enforceable restrictions on the granting of a security interest
therein.
6. License of Patents, Trademarks, Copyrights, etc. The Obligors hereby
assign, transfer and convey to the Administrative Agent, effective upon the
occurrence of any Event of Default, the nonexclusive right and license to use
all Trademarks, tradenames, Copyrights, Patents or technical processes owned or,
to the extent this license can be granted without violation of the Obligor's
license thereof, used by any Obligor that relate to the Collateral and any other
collateral granted by the Obligors as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable the Administrative Agent to use, possess and realize on the Collateral
and to enable any successor or assign to enjoy the benefits of the Collateral.
This right and license shall inure to the benefit of all successors, assigns and
transferees of the Administrative Agent and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to the Obligors.
7. Special Provisions Regarding Inventory. Notwithstanding anything to the
contrary contained in this Security Agreement, each Obligor may, unless and
until an Event of Default occurs and is continuing and the Administrative Agent
instructs such Obligor otherwise, without further consent or approval of the
Administrative Agent, use, consume, sell, lease and exchange its Inventory in
the ordinary course of its business as presently conducted, whereupon, in the
case of such a sale or exchange, the security interest created hereby in the
Inventory so sold or exchanged (but not in any Proceeds arising from such sale
or exchange) shall cease immediately without any further action on the part of
the Administrative Agent.
8. Performance of Obligations; Advances by Administrative Agent. On failure
of any Obligor to perform any of the covenants and agreements contained herein,
the Administrative Agent may, at its sole option and sole discretion, perform or
cause to be performed the same and in so doing may expend such sums as the
Administrative Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential Lien,
expenditures made in defending against any adverse claim and all other
expenditures which the Administrative Agent may make for the protection of the
security interest hereof or may be compelled to make by operation of law. All
such sums and amounts so expended shall be repayable by the Obligors on a joint
and several basis promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the default rate for Alternate Base Rate Loans set
forth in Section 2.11 of the Credit Agreement. No such performance of any
covenant
15
or agreement by the Administrative Agent on behalf of any Obligor, and no such
advance or expenditure therefor, shall relieve the Obligors of any default under
the terms of this Security Agreement, the other Credit Documents or any Hedging
Agreement. The Administrative Agent may make any payment hereby authorized in
accordance with any xxxx, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such xxxx, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by an Obligor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.
9. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an event of default hereunder (an "Event
of Default").
10. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during continuation thereof, the Administrative Agent and the Secured
Parties shall have, in addition to the rights and remedies provided herein,
in the Credit Documents, in any Hedging Agreement or by law (including, but
not limited to, levy of attachment, garnishment and the rights and remedies
set forth in the Uniform Commercial Code of the jurisdiction applicable to
the affected Collateral), the rights and remedies of a secured party under
the UCC (regardless of whether the UCC is the law of the jurisdiction where
the rights and remedies are asserted and regardless of whether the UCC
applies to the affected Collateral), and further, the Administrative Agent
may, with or without judicial process or the aid and assistance of others,
(i) to the extent permitted by applicable law, enter on any premises on
which any of the Collateral may be located and, without resistance or
interference by the Obligors, take possession of the Collateral, (ii)
subject to Section 10(c) with respect to leased properties, dispose of any
Collateral on any such premises, (iii) require the Obligors to assemble and
make available to the Administrative Agent at the expense of the Obligors
any Collateral at any place and time designated by the Administrative Agent
which is reasonably convenient to both parties, (iv) remove any Collateral
from any such premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without advertisement,
notice, hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by applicable law, at any place and
time or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more parcels,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Administrative Agent deems advisable, in its sole discretion (subject
to any and all mandatory legal requirements). Neither the Administrative
Agent's compliance with any applicable state or federal law in the conduct
of such sale, nor its disclaimer of any warranties relating to the
Collateral, shall be considered to adversely affect the commercial
reasonableness of such sale. In addition to all other sums due the
Administrative Agent and the Secured Parties
16
with respect to the Secured Obligations, the Obligors shall pay the
Administrative Agent and each of the Secured Parties all reasonable
documented costs and expenses incurred by the Administrative Agent or any
such Secured Party, including, but not limited to, reasonable attorneys'
fees and court costs, in obtaining or liquidating the Collateral, in
enforcing payment of the Secured Obligations, or in the prosecution or
defense of any action or proceeding by or against the Administrative Agent
or the Secured Parties or the Obligors concerning any matter arising out of
or connected with this Security Agreement, any Collateral or the Secured
Obligations, including, without limitation, any of the foregoing arising
in, arising under or related to a case under the Bankruptcy Code. To the
extent the rights of notice cannot be legally waived hereunder, each
Obligor agrees that any requirement of reasonable notice shall be met if
such notice is personally served on or mailed, postage prepaid, to the
Borrower in accordance with the notice provisions of Section 9.2 of the
Credit Agreement at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Administrative Agent and
the Secured Parties shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having been given. To
the extent permitted by applicable law, any Secured Party may be a
purchaser at any such sale. To the extent permitted by applicable law, each
of the Obligors hereby waives all of its rights of redemption with respect
to any such sale. Subject to the provisions of applicable law, the
Administrative Agent and the Secured Parties may postpone or cause the
postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by law, be made at the time and
place to which the sale was postponed, or the Administrative Agent and the
Secured Parties may further postpone such sale by announcement made at such
time and place.
(b) Remedies Relating to Accounts. Upon the occurrence of an Event of
Default and during the continuation thereof, whether or not the
Administrative Agent has exercised any or all of its rights and remedies
hereunder, the Administrative Agent shall have the right, subject to
applicable law, to enforce any Obligor's rights against any account debtors
and obligors on such Obligor's Accounts. Each Obligor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of the
Administrative Agent in accordance with the provisions of this Section
shall be solely for the Administrative Agent's own convenience in
administering the provisions of this Security Agreement and that such
Obligor shall not have any right, title or interest in such Proceeds or in
any such other amounts except as expressly provided herein. To the extent
required by the Administrative Agent, each Obligor agrees to execute any
document or instrument, and to take any action, necessary under applicable
law (including the Federal Assignment of Claims Act) in order for the
Administrative Agent to exercise its rights and remedies (or be able to
exercise its rights and remedies at some future date) with respect to any
Accounts of such Obligor where the account debtor is a Governmental
Authority. The Administrative Agent and the Secured Parties shall have no
liability or responsibility to any Obligor for acceptance of a check, draft
or other order for payment of money bearing the legend "payment in full" or
words of similar import or any other restrictive legend or endorsement or
be responsible for determining the correctness of any
17
remittance. Each Obligor hereby agrees to indemnify the Administrative
Agent and the Secured Parties from and against all liabilities, damages,
losses, actions, claims, judgments, costs, expenses, charges and reasonable
attorneys' fees suffered or incurred by the Administrative Agent or the
Secured Parties (each, an "Indemnified Party") because of the maintenance
of the foregoing arrangements except as relating to or arising out of the
gross negligence or willful misconduct of an Indemnified Party or its
officers, employees or agents. In the case of any investigation, litigation
or other proceeding, the foregoing indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by an Obligor,
its directors, shareholders or creditors or an Indemnified Party or any
other Person or any other Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuation thereof, the
Obligors shall provide the Administrative Agent with access to the
Collateral, without cost or charge to the Administrative Agent, and the
reasonable use of the same, together with materials, supplies, books and
records of the Obligors for the purpose of collecting and liquidating the
Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise (except to the
extent such activities are specifically restricted by the terms of any
lease; provided, if the foregoing activities are specifically restricted by
the terms of any lease, the Obligors shall promptly take all reasonable
steps to move the Collateral at such lease location to a new location
satisfactory to the Administrative Agent). In addition, the Administrative
Agent may remove Collateral, or any part thereof, from such premises and/or
any records with respect thereto, in order to effectively collect or
liquidate such Collateral. If the Administrative Agent exercises its right
to take possession of the Collateral, each Obligor shall also at its
expense perform any and all other steps reasonably requested by the
Administrative Agent to preserve and protect the security interest hereby
granted in the Collateral, such as placing and maintaining signs indicating
the security interest of the Administrative Agent, appointing overseers for
the Collateral and maintaining inventory records.
(d) Nonexclusive Nature of Remedies. Failure by the Administrative
Agent or the Secured Parties to exercise any right, remedy or option under
this Security Agreement, any other Credit Document, any Hedging Agreement
or as provided by law, or any delay by the Administrative Agent or the
Secured Parties in exercising the same, shall not operate as a waiver of
any such right, remedy or option. No waiver hereunder shall be effective
unless it is in writing, signed by the party against whom such waiver is
sought to be enforced and then only to the extent specifically stated,
which in the case of the Administrative Agent or the Secured Parties shall
only be granted as provided herein. To the extent permitted by law, neither
the Administrative Agent, the Secured Parties, nor any party acting as
attorney for the Administrative Agent or the Secured Parties, shall be
liable hereunder for any acts or omissions or for any error of judgment or
mistake of fact or law other than their gross negligence or willful
misconduct hereunder. The rights and remedies of the Administrative Agent
and the Secured Parties under this Security
18
Agreement shall be cumulative and not exclusive of any other right or
remedy which the Administrative Agent or the Secured Parties may have.
(e) Retention of Collateral. IN addition to the rights and remedies
hereunder, upon the occurrence and continuance of an Event of Default, the
Administrative Agent may, after providing the notices required by Sections
9-620 and 9-621 (or similar provision) of the UCC (or any successor
sections of the UCC) or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, accept or retain the
Collateral in satisfaction of the Secured Obligations. Unless and until the
Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have retained any Collateral in
satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale, collection
or realization are insufficient to pay all amounts to which the
Administrative Agent or the Secured Parties are legally entitled, the
Obligors shall be jointly and severally liable for the deficiency, together
with interest thereon at the default rate for Alternate Base Rate Loans set
forth in Section 2.11 of the Credit Agreement, together with the reasonable
costs of collection and the reasonable fees of any attorneys employed by
the Administrative Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations shall be
returned to the Obligors or to whomsoever a court of competent jurisdiction
shall determine to be entitled thereto.
(g) Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by an
Obligor), or by a guarantee, endorsement or property of any other Person,
then the Administrative Agent shall have the right to proceed against such
other property, guarantee or endorsement upon the occurrence of any Event
of Default, and the Administrative Agent have the right, in its sole
discretion, to determine which rights, security, Liens, security interests
or remedies the Administrative Agent shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way
modifying or affecting any of them or any of the Administrative Agent's and
the Secured Parties' rights or the Secured Obligations under this Security
Agreement, under any other of the Credit Documents or under any Hedging
Agreement (to the extent the obligations of such Obligor thereunder
constitute Secured Obligations).
11. Rights of the Administrative Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Obligor hereby designates and appoints the
Administrative Agent, on behalf of the Secured Parties, and each of its
designees or agents, as attorney-in-fact of such Obligor, irrevocably and
with power of substitution, with authority to take any or all of
19
the following actions upon the occurrence and during the continuation of an
Event of Default:
(i) to demand, collect, settle, compromise, adjust, give
discharges and releases, all as the Administrative Agent may
reasonably determine with respect to the Collateral;
(ii) to commence and prosecute any actions at any court for the
purposes of collecting any Collateral and enforcing any other right in
respect thereof;
(iii) to defend, settle, adjust or compromise any action, suit or
proceeding brought and, in connection therewith, give such discharge
or release as the Administrative Agent may deem reasonably appropriate
with respect to the Collateral;
(iv) to receive, open and dispose of mail addressed to an Obligor
and endorse checks, notes, drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or documents
evidencing payment, shipment or storage of the goods giving rise to
the Collateral of such Obligor, or securing or relating to such
Collateral, on behalf of and in the name of such Obligor;
(v) to sell, assign, transfer, make any agreement in respect of,
or otherwise deal with or exercise rights in respect of, any
Collateral or the goods or services which have given rise thereto, as
fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes;
(vi) to adjust and settle claims under any insurance policy
relating to the Collateral;
(vii) to execute and deliver all assignments, conveyances,
statements, financing statements, continuation statements, security
agreements, affidavits, notices and other agreements, instruments and
documents that the Administrative Agent may determine necessary in
order to perfect and maintain the security interests and Liens granted
in this Security Agreement and in order to fully consummate all of the
transactions contemplated herein;
(viii) to institute any foreclosure proceedings that the
Administrative Agent may deem appropriate;
20
(ix) to do and perform all such other acts and things as the
Administrative Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral; and
(x) to execute any document or instrument, and to take any
action, necessary under applicable law (including the Federal
Assignment of Claims Act) in order for the Administrative Agent to
exercise its rights and remedies (or to be able to exercise its rights
and remedies at some future date) with respect to any Account of an
Obligor where the account debtor is a Governmental Authority.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations remain
outstanding (other than contingent indemnity or reimbursement obligations)
or any Credit Document or Hedging Agreement is in effect, and until all of
the Commitments shall have been terminated. The Administrative Agent shall
be under no duty to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly granted to the
Administrative Agent in this Security Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Administrative Agent
shall not be liable for any act or omission or for any error of judgment or
any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on
the Administrative Agent solely to protect, preserve and realize upon its
security interest in the Collateral.
(b) Assignment by the Administrative Agent. The Administrative Agent
may from time to time assign the Secured Obligations and any portion
thereof and/or the Collateral and any portion thereof, and the assignee
shall be entitled to all of the rights and remedies of the Administrative
Agent under this Security Agreement in relation thereto.
(c) The Administrative Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the Collateral while being
held by the Administrative Agent hereunder, the Administrative Agent shall
have no duty or liability to preserve rights pertaining thereto, it being
understood and agreed that the Obligors shall be responsible for
preservation of all rights in the Collateral, and the Administrative Agent
shall be relieved of all responsibility for the Collateral upon
surrendering it or tendering the surrender of it to the Obligors. The
Administrative Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Administrative Agent accords its own property, which shall be no less than
the treatment employed by a reasonable and prudent agent in the industry,
it being understood that the Administrative Agent shall not have
responsibility for taking any necessary steps to preserve rights against
any parties with respect to any of the Collateral. In the event of a
21
public or private sale of Collateral pursuant to Section 9 hereof, the
Administrative Agent shall have no obligation to clean-up, repair or
otherwise prepare the Collateral for sale.
12. Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the
Administrative Agent or any of the Secured Parties in cash or its equivalent,
will be applied in reduction of the Secured Obligations in the order set forth
in Section 2.13(b) of the Credit Agreement, and each Obligor irrevocably waives
the right to direct the application of such payments and proceeds and
acknowledges and agrees that the Administrative Agent shall have the continuing
and exclusive right to apply and reapply any and all such payments and proceeds
in the Administrative Agent's sole discretion (but subject in all events to
Section 2.13(b) of the Credit Agreement), notwithstanding any entry to the
contrary upon any of its books and records.
13. Costs of Counsel. If at any time hereafter, whether upon the occurrence
of an Event of Default or not, the Administrative Agent employs counsel to
prepare or consider amendments, waivers or consents with respect to this
Security Agreement, or to take action or make a response in or with respect to
any legal or arbitral proceeding relating to this Security Agreement or relating
to the Collateral, or to protect the Collateral or exercise any rights or
remedies under this Security Agreement or with respect to the Collateral, then
the Obligors agree to promptly pay upon demand any and all such reasonable
documented costs and expenses of the Administrative Agent, all of which costs
and expenses shall constitute Secured Obligations hereunder.
14. Continuing Agreement.
(a) Upon this Security Agreement becoming effective in accordance with
the terms hereof and of the other Credit Documents, the Existing Security
Agreements shall be deemed amended and restated by this Security Agreement.
This Security Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect so long as any of the Secured
Obligations remain outstanding (other than contingent indemnity or
reimbursement obligations) or any Credit Document or Hedging Agreement is
in effect, and until all of the Commitments shall have been terminated.
Upon such payment and termination, this Security Agreement shall be
automatically terminated and the Administrative Agent and the Secured
Parties shall, upon the request and at the expense of the Obligors,
forthwith release all of their Liens and security interests hereunder and
shall execute and deliver all UCC termination statements and/or other
documents reasonably requested by the Obligors evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the
22
Administrative Agent or any Secured Party as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law,
all as though such payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is rescinded or must
be restored or returned, all reasonable costs and expenses (including
without limitation any reasonable legal fees and disbursements) incurred by
the Administrative Agent or any Secured Party in defending and enforcing
such reinstatement shall be deemed to be included as a part of the Secured
Obligations.
15. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
16. Successors in Interest; Release. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Administrative Agent and the Secured Parties hereunder, to
the benefit of the Administrative Agent and the Secured Parties and their
successors and permitted assigns; provided, however, that none of the Obligors
may assign its rights or delegate its duties hereunder without the prior written
consent of each Secured Party or the Required Secured Parties, as required by
the Credit Agreement. To the fullest extent permitted by law, each Obligor
hereby releases the Administrative Agent and each Secured Party, each of their
respective officers, employees and agents and each of their respective
successors and assigns, from any liability for any act or omission relating to
this Security Agreement or the Collateral, except for any liability arising from
the gross negligence or willful misconduct of the Administrative Agent or such
Secured Party or their respective officers, employees and agents.
17. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
18. Counterparts. This Security Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
19. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Security Agreement.
20. Governing Law; Submission to Jurisdiction and Service of Process;
Waivers. THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. Each of the Obligors agrees that Sections
5-1401 and 5-1402 of the General Obligations law of the State of New York shall
apply to this Security Agreement. Each Obligor agrees not to assert any claim
against the Administrative Agent, any Secured Party (including the Issuing
Secured
23
Party), any of their Affiliates, or any of their respective directors, officers,
employees, attorneys or agents, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to any of the transactions contemplated herein or in any other Credit Document.
The terms of Sections 9.14 and 9.17 of the Credit Agreement are incorporated
herein by reference, mutatis mutandis, and the parties hereto agree to such
terms.
21. Severability. If any provision of this Security Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
22. Entirety. This Security Agreement, the other Credit Documents and the
Hedging Agreements represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to the
Credit Documents, the Hedging Agreements or the transactions contemplated herein
and therein.
23. Survival. All representations and warranties of the Obligors hereunder
shall survive the execution and delivery of this Security Agreement, the other
Credit Documents and the Hedging Agreements, the delivery of the Notes and the
making of the Loans and the issuance of the Letters of Credit under the Credit
Agreement.
24. Obligations of Obligors.
(a) Each of the Guarantors is entering into this Security Agreement in
consideration of the financial accommodation to be provided by the Secured
Parties under the Credit Agreement, for the mutual benefit, directly and
indirectly, of each of the Obligors and in consideration of the joint and
several undertakings of each of the Guarantors under the Guaranty provided
pursuant to Article X of the Credit Agreement, and each Guarantor is
granting the security interests in the Collateral of such Guarantor
pursuant to this Security Agreement in support of its obligations under the
Guaranty.
(b) Notwithstanding any provision to the contrary contained herein or
in any other of the Credit Documents, to the extent the obligations of an
Obligor shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal
law relating to fraudulent conveyances or transfers) then the obligations
of such Obligor hereunder shall be limited to the maximum amount that is
permissible under applicable law (whether federal or state and including,
without limitation, the Bankruptcy Code).
[remainder of page intentionally left blank]
24
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
OBLIGORS: THE PANTRY, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer,
Vice-President Finance and
Secretary
R & H MAXXON, INC.,
a South Carolina corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice-President
and Assistant Secretary
KANGAROO, INC.,
a Georgia corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: Executive Vice-President and
Assistant Secretary
Accepted and agreed to as of the date first above written.
WACHOVIA BANK, NATIONAL ASSOCIATION
as Administrative Agent
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
SCHEDULE 2(a)
COMMERCIAL TORT CLAIMS
SCHEDULE 4(a)
NAME CHANGES/CHANGES IN
CORPORATE STRUCTURE/TRADENAMES
SCHEDULE 5(f)(i)
NOTICE OF
GRANT OF SECURITY INTEREST
IN COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Amended and Restated Security
Agreement dated as of April 14, 2003 (as the same may be amended, modified,
extended or restated from time to time, the "Security Agreement") by and among
the Obligors thereto (each an "Obligor" and collectively, the "Obligors") and
Wachovia Bank, National Association, as Administrative Agent (the
"Administrative Agent") for the lenders referenced therein (the "Secured
Parties"), the undersigned Obligor has granted a continuing security interest in
and continuing Lien upon, the copyrights and copyright applications shown below
to the Administrative Agent for the ratable benefit of the Secured Parties:
COPYRIGHTS
Description of
Copyright No. Copyright Date of Copyright
------------- -------------- -----------------
COPYRIGHT APPLICATIONS
Description of Copyright Date of Copyright
Copyright Application No. Applied For Application
------------------------- ------------------------ -----------------
The Obligors and the Administrative Agent, on behalf of the Secured
Parties, hereby acknowledge and agree that the security interest in the
foregoing copyrights and copyright applications (i) may only be terminated in
accordance with the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any copyright or copyright application.
Very truly yours,
---------------------------------------
[Obligor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and Accepted:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SCHEDULE 5(f)(ii)
NOTICE OF
GRANT OF SECURITY INTEREST
IN PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Amended and Restated Security
Agreement dated as of April 14, 2003 (the "Security Agreement") by and among the
Obligors thereto (each an "Obligor" and collectively, the "Obligors") and
Wachovia Bank, National Association, as Administrative Agent (the
"Administrative Agent") for the lenders referenced therein (the "Secured
Parties"), the undersigned Obligor has granted a continuing security interest in
and continuing Lien upon, the patents and patent applications shown below to the
Administrative Agent for the ratable benefit of the Secured Parties:
PATENTS
Description of
Patent No. Patent Date of Patent
--------- -------------- --------------
PATENT APPLICATIONS
Description of Patent Date of Patent
Patent Application No. Applied For Application
--------------------- --------------------- -------------
The Obligors and the Administrative Agent, on behalf of the Secured
Parties, hereby acknowledge and agree that the security interest in the
foregoing trademarks and trademark applications (i) may only be terminated in
accordance with the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any trademark or trademark application.
Very truly yours,
----------------------------------
[Obligor]
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Acknowledged and Accepted:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-2-
SCHEDULE 5(f)(iii)
NOTICE OF
GRANT OF SECURITY INTEREST
IN TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Amended and Restated Security
Agreement dated as of April 14, 2003 (the "Security Agreement") by and among the
Obligors thereto (each an "Obligor" and collectively, the "Obligors") and
Wachovia Bank, National Association, as Administrative Agent (the
"Administrative Agent") for the lenders referenced therein (the "Secured
Parties"), the undersigned Obligor has granted a continuing security interest in
and continuing Lien upon, the trademarks and trademark applications shown below
to the Administrative Agent for the ratable benefit of the Secured Parties:
TRADEMARKS
Description of
Trademark No. Trademark Date of Trademark
------------ -------------- -----------------
TRADEMARK APPLICATIONS
Description of Trademark Date of Trademark
Trademark Application No. Applied For Application
------------------------ ------------------------ -----------------
The Obligors and the Administrative Agent, on behalf of the Secured
Parties, hereby acknowledge and agree that the security interest in the
foregoing patents and patent applications (i) may only be terminated in
accordance with the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any patent or patent application.
Very truly yours,
---------------------------------------
[Obligor]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and Accepted:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
-1-
