EXHIBIT 10.7
S&S DRAFT
4/30/01
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT dated as of April 30, 2001 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, this "AGREEMENT"), among U.S. INDUSTRIES, INC. (formerly known as USI,
Inc.), a Delaware corporation ("USI"), USI GLOBAL CORP., a Delaware corporation
("USI GLOBAL"), USI AMERICAN HOLDINGS, INC., a Delaware corporation ("USI
AMERICAN"; USI, USI Global and USI American are each referred to herein,
individually, as a "BORROWER", and, collectively, as the "BORROWERS"), each
Subsidiary (as hereinafter defined) of USI which is listed on the signature
pages of this Agreement (together with the Borrowers, each, individually, an
"INITIAL PLEDGOR", and, collectively, the "INITIAL Pledgors"), each Subsidiary
of USI which hereafter becomes a party to this Agreement pursuant to Section
19(b) hereof (together with the Initial Pledgors, each, individually, a
"PLEDGOR" and, collectively, the "PLEDGORS"), [WILMINGTON TRUST COMPANY], a
Delaware banking corporation (together with any successor corporate trustee
appointed pursuant to Article 7 of the Collateral Trust Agreement referred to
below, the "CORPORATE TRUSTEE"), and [NAME OF INDIVIDUAL TRUSTEE], an individual
residing in the State of [Delaware] (together with any successor individual
trustee appointed pursuant to Article 7 of the Collateral Trust Agreement, the
"INDIVIDUAL TRUSTEE"; and, together with the Corporate Trustee, the "COLLATERAL
TRUSTEES"), the foregoing trustees being trustees for the Secured Holders (as
hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Borrowers have entered into (i) a Credit Agreement dated as
of December 12, 1996 (as amended, supplemented or otherwise modified and in
effect on the date hereof and as the same may hereafter be further amended,
amended and restated, supplemented or otherwise modified from time to time, the
"5-YEAR CREDIT AGREEMENT"), with the 5-Year Credit Parties (as defined in the
Collateral Trust Agreement referred to below), and (ii) a Credit Agreement dated
as of the date hereof (as amended, supplemented or otherwise modified and in
effect on the date hereof and as the same may hereafter be further amended,
amended and restated, supplemented or otherwise modified from time to time, the
"364-DAY CREDIT AGREEMENT"; and together with the 5-Year Credit Agreement,
collectively, the "CREDIT AGREEMENTS"), with the 364-Day Credit Parties (as
defined in the Collateral Trust Agreement; and together with the 5-Year Credit
Parties, collectively, the "CREDIT Parties"). Each Pledgor which is a Subsidiary
of a Borrower will derive substantial direct or indirect benefit from the credit
extended to such Borrower pursuant to the Credit Agreements.
(2) Pursuant to the Credit Agreements, each Borrower has agreed (i)
to grant to the Collateral Trustees for the benefit of the Credit Parties and
the other Secured Holders pursuant to the Collateral Documents (as defined in
the Collateral Trust Agreement) liens on and security interests in certain of
such Borrower's assets and property from time to time owned by it and (ii) to
cause its domestic Subsidiaries to grant to the Collateral Trustees for the
benefit of the Credit Parties and the other Secured Holders pursuant to the
Collateral Documents liens on and security interests in certain of such
Subsidiaries' assets and property from time to time owned by them.
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(3) USI, USI Global and USI American are joint and several
co-obligors with respect to those certain 7-1/4% Senior Notes due December 1,
2006 (as amended, supplemented or otherwise modified and in effect on the date
hereof and as the same may hereafter be further amended, modified, extended,
renewed, replaced, restated or supplemented from time to time pursuant to the
terms thereof, the "7-1/4% NOTES"), issued pursuant to that certain Indenture,
dated as of December 12, 1996 (as amended, supplemented or otherwise modified
and in effect on the date hereof and as the same may hereafter be further
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time pursuant to the terms thereof, the "7-1/4% NOTES INDENTURE").
(4) USI, USI Global and USI American are joint and several
co-obligors with respect to those certain 7-1/8% Senior Notes due October 15,
2003 (as amended, supplemented or otherwise modified and in effect on the
date hereof and as the same may hereafter be further amended, modified,
extended, renewed, replaced, restated or supplemented from time to time
pursuant to the terms thereof, the "7-1/8% NOTES"), issued pursuant to that
certain Indenture, dated as of October 27, 1998 (as amended, supplemented or
otherwise modified and in effect on the date hereof and as the same may
hereafter be further amended, modified, extended, renewed, replaced,
restated, or supplemented from time to time pursuant to the terms thereof,
the "7-1/8% NOTES INDENTURE").
(5) USI and USI Global have also previously entered into a
Guaranty dated as of March 24, 2000 (as amended, supplemented or otherwise
modified and in effect on the date hereof and as the same may hereafter be
further amended, amended and restated, supplemented or otherwise modified
from time to time pursuant to the terms thereof, the "REXAIR GUARANTY"; the
7-1/4% Notes, the 7-1/4% Indenture, the 7-1/8% Notes, the 7-1/8% Notes
Indenture And the Rexair Guaranty are each referred to herein, individually,
as an "EXISTING INDEBTEDNESS AGREEMENT", and, collectively, as the "EXISTING
INDEBTEDNESS AGREEMENTS"), in favor of the Secured Creditors (as defined in
the Rexair Guaranty, such Secured Creditors being referred to herein as the
"REXAIR CREDITORS") in respect of Rexair, Inc.'s obligation under its Credit
Agreement, dated as of March 24, 2000, as amended.
(6) Pursuant to each of the Existing Indebtedness Agreements, each
Borrower has agreed not to incur, and not to permit certain of its Subsidiaries
to incur, certain Liens (as therein defined) upon any of its property or assets
to secure certain Debt (as therein defined) without making effective provision
whereby the obligations under such Existing Indebtedness Agreement shall be
secured equally and ratably with the Debt secured by such Liens for so long as
such Debt shall be so secured.
(7) Each Borrower and each other Initial Pledgor are entering into
this Agreement and that certain Collateral Trust Agreement dated as of the date
hereof (as amended, amended and restated, supplemented or otherwise modified
from time to time, the "COLLATERAL TRUST AGREEMENT"), with the Collateral
Trustees, in order to grant to the Collateral Trustees for their benefit and in
trust for the equal and ratable benefit of the Representatives and the Secured
Holders (each as defined in the Collateral Trust Agreement) a lien on and
security interest in all of their respective personal properties and fixtures
now owned or hereafter acquired.
(8) Each Pledgor is the owner of the shares (the "INITIAL PLEDGED
SHARES") of stock set forth opposite such Pledgor's name on and as otherwise
described in Part A of Schedule I hereto and issued by the corporations named
therein and of the indebtedness (the "INITIAL PLEDGED Debt") set forth opposite
such Pledgor's name on and as otherwise described in Part B of Schedule I hereto
and issued by the obligors named therein.
(9) Each Pledgor has security entitlements (the "PLEDGED SECURITY
ENTITLEMENTS") with respect to all the financial assets (the "PLEDGED FINANCIAL
ASSETS") credited from time to time to each securities account (each a
"SECURITIES ACCOUNT") set forth opposite such Pledgor's name on and as
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otherwise described in Part C of Schedule I hereto, as such schedule may
hereafter be supplemented pursuant to Section 4(c) hereof.
(10) The Pledgors have opened the Collateral Account (as defined in
the Collateral Trust Agreement) with the Corporate Trustee.
(11) Each Pledgor has the operating and other deposit accounts (each
a "PLEDGED ACCOUNT") set forth opposite such Pledgor's name on and as otherwise
described in Schedule V hereto, as such schedule may hereafter be supplemented
pursuant to Section 5(c) hereof.
(12) As a condition to the agreement of the Credit Parties to
continue to make Loans to the Borrowers under the Credit Agreements and issue
Letters of Credit for the account of the Borrowers under the 5-Year Credit
Agreement and the entry into Secured Hedge Agreements by the Hedge Banks (each
as defined in the Collateral Trust Agreement) from time to time, the Pledgors
shall have granted the assignment and security interest and made the pledge and
assignment contemplated by this Agreement.
(13) Terms defined in the Collateral Trust Agreement and not
otherwise defined in this Agreement are used in this Agreement as defined in the
Collateral Trust Agreement. Further, unless otherwise defined in this Agreement
or the Collateral Trust Agreement, terms defined in Article 8 or 9 of the
Uniform Commercial Code in effect in the State of New York ("N.Y. UNIFORM
COMMERCIAL CODE") are used in this Agreement as such terms are defined in such
Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Credit Parties to continue to make Loans to the Borrowers under the
Credit Agreements and issue Letters of Credit for the account of the Borrowers
under the 5-Year Credit Agreement and to induce the Hedge Banks to enter into
Secured Hedge Agreements from time to time, each Pledgor hereby agrees with the
Collateral Trustees for the equal and ratable benefit of the Representatives and
the Secured Holders as follows:
SECTION 1. GRANT OF SECURITY. Each Pledgor hereby assigns and
pledges to the Collateral Trustees for their benefit and in trust for the equal
and ratable benefit of the Representatives and the Secured Holders to the extent
set forth in Section 2 of this Agreement, and hereby grants to the Collateral
Trustees for their benefit and in trust for the equal and ratable benefit of the
Representatives and the Secured Holders, a lien on and a security interest in,
such Pledgor's right, title and interest in and to the following, in each case,
as to each type of property described below, whether now owned or hereafter
acquired by such Pledgor, wherever located, and whether now or hereafter
existing or arising (collectively, the "COLLATERAL"):
(a) all equipment in all of its forms (including, without
limitation, all manufacturing equipment, all office equipment and all
motor vehicles and other distribution equipment), all fixtures and all
parts thereof and all accessions thereto (any and all such equipment,
fixtures, parts and accessions being the "EQUIPMENT");
(b) all inventory in all of its forms, (including, without
limitation, (i) all raw materials and work in process therefor, finished
goods thereof and materials used or consumed in the manufacture,
production, preparation or shipping thereof, (ii) goods in which such
Pledgor has an interest in mass or a joint or other interest or right of
any kind (including, without limitation, goods in which such Pledgor has
an interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Pledgor), and all accessions
thereto
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and products thereof and documents therefor (any and all such inventory,
accessions, products and documents being the "INVENTORY");
(c) all accounts, chattel paper, instruments, deposit accounts,
general intangibles and other obligations of any kind, whether or not
arising out of or in connection with the sale or lease of goods or the
rendering of services and whether or not earned by performance (including,
without limitation, (i) all rights of such Pledgor to receive moneys due
and to become due under or pursuant to any contract or agreement, (ii) all
rights of such Pledgor to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to any such contract or agreement, (iii)
claims of such Pledgor for damages arising out of or for breach of or
default under any such contract or agreement, and (iv) the right of such
Pledgor to terminate any such contract or agreement, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder),
and all rights now or hereafter existing in and to all security
agreements, leases and other contracts securing or otherwise relating to
any such accounts, chattel paper, instruments, deposit accounts, general
intangibles or obligation (any and all such accounts, chattel paper,
instruments, deposit accounts, general intangibles and obligations, to the
extent not referred to in clause (d), (e) or (f)(vi) below, being the
"Receivables", and any and all such security agreements, leases and other
contracts being the "RELATED CONTRACTS");
(d) the following (the "SECURITY COLLATERAL"):
(i) the Initial Pledged Shares and the certificates, if any,
representing the Initial Pledged Shares, and all dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Initial Pledged Shares;
(ii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Initial Pledged Debt;
(iii) all additional shares of stock or other equity interests
in any Person from time to time acquired by such Pledgor in any
manner (such shares and other interests, together with the Initial
Pledged Shares, being the "PLEDGED SHARES"), and the certificates,
if any, representing such additional shares or other interests, and
all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares or other interests;
PROVIDED that such Pledgor shall not be required to pledge, and the
terms "PLEDGED SHARES" and "SECURITY COLLATERAL" used in this
Agreement shall not include, any shares of stock in any Foreign
Corporation (as hereinafter defined) owned or otherwise held thereby
which, when aggregated with all of the other shares of stock in such
Foreign Corporation pledged by such Pledgor, would result in 66% or
more of the shares of stock in such Foreign Corporation entitled to
vote (within the meaning of Treasury Regulation Section
1.956-2(c)(2) promulgated under the Internal Revenue Code) (the
"VOTING FOREIGN STOCK") (on a fully diluted basis) being pledged to
the Secured Holders under this Agreement (although all of the shares
of stock in such Foreign Corporation not entitled to vote (within
the meaning of Treasury Regulation Section 1.956-2(c)(2) promulgated
under the Internal Revenue Code) (the "NON-VOTING FOREIGN STOCK")
shall be pledged by the Pledgor); PROVIDED FURTHER that, if, as a
result of any change in the tax laws of the United States of America
after the date of this Agreement, the pledge by the Pledgors of any
additional shares of stock in any such
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Foreign Corporation to the Secured Holders under this Agreement
would not result in an increase in the net tax liabilities of such
Pledgors, then, promptly after the change in such laws, all such
additional shares of stock shall be so pledged under this Agreement
(for purposes of this Section 1(d)(iii), "FOREIGN CORPORATION"
means, at any time, any direct or indirect Subsidiary of each
Pledgor organized outside of the laws of the United States or any
state or other political subdivision thereof at such time that
constitutes a "controlled foreign corporation" under Section 957 of
the Internal Revenue Code);
(iv) all additional indebtedness from time to time owed to
such Pledgor (such indebtedness, together with the Initial Pledged
Debt, being the "PLEDGED DEBT") and the instruments, if any,
evidencing such indebtedness, and all interest, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such indebtedness;
(v) all Securities Accounts of such Pledgor, all Pledged
Security Entitlements with respect to all Pledged Financial Assets
from time to time credited to such Securities Accounts, and all
Pledged Financial Assets, and all dividends, interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such Pledged Security Entitlements or such Pledged
Financial Assets; and
(vi) all other investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, (C) securities accounts,
(D) commodity contracts and (E) commodity accounts) in which such
Pledgor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment
property, and all dividends, interest, distributions, value, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such investment property;
(e) the following (collectively, the "ACCOUNT COLLATERAL"):
(i) the Collateral Account, all financial assets from time to
time credited to the Collateral Account (including, without
limitation, all Cash Equivalents from time to time credited to the
Collateral Account), and all dividends, interest, cash, instruments
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such financial assets;
(ii) all Pledged Accounts of such Pledgor, all funds held
therein and all certificates and instruments, if any, from time to
time representing or evidencing such Pledged Accounts;
(iii) all other deposit accounts of such Pledgor from time to
time, all funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing such deposit
accounts;
(iv) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time delivered to or
otherwise possessed by the Collateral Trustees for or on behalf of
such Pledgor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the
then existing Account Collateral; and
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(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral;
(f) the following (collectively, the "INTELLECTUAL PROPERTY
COLLATERAL"):
(i) all United States, international and foreign patents,
patent applications and statutory invention registrations,
including, without limitation, the patents and patent applications
set forth in Part A of Schedule IV hereto (as such Schedule IV may
be supplemented from time to time by supplements to this Agreement,
each such supplement being in substantially the form of Exhibit F
hereto (an "IP SECURITY AGREEMENT SUPPLEMENT"), executed and
delivered by such Pledgor to the Collateral Trustees from time to
time), together with all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof, all
inventions therein, all rights therein provided by international
treaties or conventions and all improvements thereto, and all other
rights of any kind whatsoever of such Pledgor accruing thereunder or
pertaining thereto (the "PATENTS");
(ii) all trademarks (including, without limitation, service
marks), certification marks, collective marks, trade dress, logos,
domain names, product configurations, trade names, business names,
corporate names and other source identifiers, whether or not
registered, whether currently in use or not, including, without
limitation, all common law rights and registrations and applications
for registration thereof, including, without limitation, the
trademark registrations and trademark applications set forth in Part
B of Schedule IV hereto (as such Schedule IV may be supplemented
from time to time by IP Security Agreement Supplements executed and
delivered by such Pledgor to the Collateral Trustees from time to
time), and all other marks registered in the U.S. Patent and
Trademark Office or in any office or agency of any State or
Territory of the United States or any foreign country (but excluding
any United States intent-to-use trademark application prior to the
filing and acceptance of a Statement of Use or an Amendment to
allege use in connection therewith to the extent that a valid
security interest may not be taken in such an intent-to-use
trademark application under applicable law), and all rights therein
provided by international treaties or conventions, all reissues,
extensions and renewals of any of the foregoing, together in each
case with the goodwill of the business connected therewith and
symbolized thereby, and all rights corresponding thereto throughout
the world and all other rights of any kind whatsoever of such
Pledgor accruing thereunder or pertaining thereto (the
"TRADEMARKS");
(iii) all copyrights, copyright applications, copyright
registrations and like protections in each work of authorship,
whether statutory or common law, whether published or unpublished,
any renewals or extensions thereof, all copyrights of works based
on, incorporated in, derived from, or relating to works covered by
such copyrights, including, without limitation, the copyright
registrations and copyright applications set forth in Part C of
Schedule IV hereto (as such Schedule IV may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Pledgor to the Collateral Trustees from time to
time), together with all rights corresponding thereto throughout the
world and all other rights of any kind whatsoever of such Pledgor
accruing thereunder or pertaining thereto (the "Copyrights");
(iv) all confidential and proprietary information, including,
without limitation, know-how, trade secrets, manufacturing and
production processes and
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techniques, inventions, research and development information,
technical data, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and
supplier lists and information (the "TRADE SECRETS");
(v) all computer software programs and databases (including,
without limitation, source code, object code and all related
applications and data files), firmware, and documentation and
materials relating thereto, and all rights with respect to the
foregoing, together with any and all options, warranties, service
contracts, program services, test rights, maintenance rights,
improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any
of the foregoing (the "COMPUTER SOFTWARE");
(vi) all license agreements, permits, authorizations and
franchises, whether with respect to the Patents, Trademarks,
Copyrights, Trade Secrets or Computer Software, or with respect to
the patents, trademarks, copyrights, trade secrets, computer
software or other proprietary right of any other Person, including,
without limitation, the license agreements set forth in Part D of
Schedule IV hereto (as such Schedule IV may be supplemented from
time to time by IP Security Agreement Supplements executed and
delivered by such Pledgor to the Collateral Trustees from time to
time), and all income, royalties and other payments now or hereafter
due and/or payable with respect thereto, subject, in each case, to
the terms of such license agreements, permits, authorizations and
franchises, (the "LICENSES"); and
(vii) any and all claims for damages for past, present and
future infringement, misappropriation or breach with respect to the
Patents, Trademarks, Copyrights, Trade Secrets, Computer Software or
Licenses, with the right, but not the obligation, to xxx for and
collect, or otherwise recover, such damages; and
(g) all proceeds of any and all of the Collateral (including,
without limitation, proceeds that constitute property of the types
described in clauses (a) through (f) of this Section 1 and this clause
(g)) and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Collateral Trustees are the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of
loss or damage to or otherwise with respect to any of the foregoing
Collateral and (ii) cash.
Notwithstanding anything to the contrary contained in this Section
1, the following property shall be excluded from the lien and security interest
granted hereunder:
(i) any contract, agreement or other document (and any contract
rights arising thereunder) to which any of the Pledgors is a party on the
date hereof and any similar contract or agreement entered into by any
Pledgor after the date hereof with the prior written consent of the
Required Representatives, in each case, shall be excluded from the lien
and security interest granted by such Pledgor under this Section 1 to the
extent that the assignment thereof, or the creation of a lien and security
interest therein, would constitute a breach of the terms of such contract,
agreement or other document, or would permit any party to such contract,
agreement or other document to terminate such contract rights or agreement
(all such contracts, agreements and other documents being the "EXCLUDED
AGREEMENTS"); PROVIDED, HOWEVER, that (1) the exclusion from the lien and
security interest granted by such Pledgor hereunder of any contract rights
of any of the Pledgors under one or more of the Excluded Agreements shall
not limit, restrict or impair the grant by such Pledgor of the lien and
security interest in any accounts or receivables arising under any such
Excluded Agreement or any payments due or to become due thereunder, and
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(2) any of the Excluded Agreements shall cease to be excluded from this
Section 1, if, at any time, (A) the prohibition of assignment or of the
creation of a lien and security interest in such agreement is no longer in
effect, or (B) the applicable Pledgor has obtained the consent of the
other parties to such agreement to the assignment of, or creation of a
lien and security interest in, the contract rights of such Pledgor
thereunder;
(ii) any license, permit or authorization from any Governmental
Authority in favor of any Pledgor shall be excluded from the lien and
security interest granted by such Pledgor under this Section 1 to the
extent that the assignment thereof or the creation of a lien and security
interest therein would constitute a breach of the terms of such license,
permit or authorization or would require any separate license, permit or
authorization or would otherwise terminate such license, permit or
authorization (all of the licenses, permits and authorizations referred to
herein being the "EXCLUDED AUTHORIZATIONS"); PROVIDED, HOWEVER, that any
of the Excluded Authorizations shall cease to be excluded from this
Section 1, if, at any time (1) the prohibition of assignment or of the
creation of a lien and security interest in such license, permit or
authorization is no longer in effect or (2) the applicable Pledgor has
obtained the consent of the applicable Governmental Authority to the
assignment of, or creation of a lien and security interest in, such
license, permit or authorization of such Pledgor; and
(iii) any property of a Pledgor which is subject to any Lien which
such Pledgor is permitted to enter into pursuant to the terms of Section
8.01(h) of the 5-Year Credit Agreement, to the extent that such Pledgor
has agreed not to further encumber such property (all such property being
"OTHER EXCLUDED PROPERTY"), shall be excluded from the lien and security
interest granted by such Pledgor under this Section 1; PROVIDED, HOWEVER,
that any such Other Excluded Property shall cease to be excluded from this
Section 1, if, at any time, the prohibition of assignment or the creation
of a lien and security interest in such property is no longer in effect by
reason of an amendment, waiver or other modification of the applicable
Security Instrument or the release or satisfaction of such Security
Instrument.
In addition, nothing in this Agreement shall be deemed to require
any Pledgor to seek the consent of any Person or Governmental Authority to the
assignment of, or the creation of a lien on or a security interest in, any
Excluded Agreement, Excluded Authorization or Other Excluded Property.
SECTION 2. SECURITY FOR SECURED OBLIGATIONS. This Agreement secures,
(a) in the case of each Pledgor that is not an Unrestricted Subsidiary Pledgor,
the payment of all the Secured Obligations by the Borrowers now or hereafter
existing under the Secured Agreements and (b) in the case of each Unrestricted
Subsidiary Pledgor, the payment of all the Secured Obligations by the Borrowers
now or hereafter existing under the Secured Agreements other than Secured
Obligations arising under the 7-1/4% Notes and the 7-1/8% Notes.
SECTION 3. PLEDGORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Pledgor shall remain liable under the contracts and
agreements included in such Pledgor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral
Trustees of any of the rights hereunder shall not release any Pledgor from any
of its duties or obligations under the contracts and agreements included in the
Collateral and (c) neither the Collateral Trustees nor any Secured Holder shall
have any obligation or liability under the contracts and agreements included in
the Collateral by reason of this Agreement or any Secured Agreement, nor shall
the Collateral Trustees or any Secured Holder be obligated to perform any of the
obligations or duties of any Pledgor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
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SECTION 4. DELIVERY AND CONTROL OF SECURITY COLLATERAL. (a) All
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Trustees pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Collateral Trustees. Upon the
occurrence and during the continuance of an Actionable Default, the Collateral
Trustees shall have the right, at any time in their discretion and without
notice to any Pledgor, to transfer to or to register in the name of the
Collateral Trustees or any of their nominees any or all of the Security
Collateral, subject only to the revocable rights specified in Section 12(a). In
addition, the Collateral Trustees shall have the right at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations. Also, the
Collateral Trustees shall have the right at any time to convert Security
Collateral consisting of financial assets credited to any Securities Account of
any Pledgor to Security Collateral consisting of financial assets held directly
by the Collateral Trustees, and to convert Security Collateral consisting of
financial assets held directly by the Collateral Trustees to Security Collateral
consisting of financial assets credited to such Securities Account.
(b) Subject to Section 5(e)(ii) of the 5-year Credit Agreement
Amendment, with respect to any Security Collateral in which any Pledgor has any
right, title or interest and that constitutes an uncertificated security, such
Pledgor will cause the issuer thereof either (i) to register the Collateral
Trustees as the registered owner of such security or (ii) to agree in writing
with such Pledgor and the Collateral Trustees that such issuer will comply with
instructions with respect to such security originated by the Collateral Trustees
without further consent of such Pledgor, such agreement to be in form and
substance satisfactory to the Collateral Trustees. Each Pledgor which has issued
any Security Collateral to any other Pledgor hereby agrees with such other
Pledgor and the Collateral Trustees that it will comply with instructions with
respect to such Security Collateral originated by the Collateral Trustees
without further consent of such other Pledgor.
(c) Subject to Section 5(e)(ii) of the 5-year Credit Agreement
Amendment, with respect to any Security Collateral in which any Pledgor has any
right, title or interest and that constitutes a security entitlement, such
Pledgor will cause the securities intermediary with respect to such security
entitlement either (i) to identify in its records the Collateral Trustees as the
entitlement holder of such security entitlement against such securities
intermediary or (ii) to agree in writing with such Pledgor and the Collateral
Trustees that such securities intermediary will comply with entitlement orders
(that is, notifications communicated to such securities intermediary directing
transfer or redemption of the financial asset to which such Pledgor has a
security entitlement) originated by the Collateral Trustees without further
consent of such Pledgor, such agreement to be in substantially the form of
Exhibit D hereto or otherwise in form and substance satisfactory to the
Collateral Trustees (such agreement being a "SECURITIES ACCOUNT CONTROL
AGREEMENT"). Each Pledgor agrees that it will not establish or open any
additional securities account in addition to those listed in Part C of Schedule
I hereto, unless the Collateral Trustee shall have received at least 10 days'
prior written notice of such addition and shall have received a Securities
Account Control Agreement (or a supplement to an existing Securities Account
Control Agreement) covering such new securities account, and upon the receipt by
the Collateral Trustees of such Securities Account Control Agreement (or
supplement), Part C of Schedule I hereto shall be automatically amended to
include such securities account. Each Pledgor agrees that it will not terminate
any Securities Account unless the Collateral Trustees and the Required
Representatives shall have received at least 10 days' prior written notice of
such termination (and, upon such termination, Part C of Schedule I hereto shall
be automatically amended to delete such Securities Account.)
(d) No Pledgor will change or add any securities intermediary that
maintains any securities account in which any of the Collateral is credited or
carried, or change or add any such
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securities account, in each case without first complying with the above
provisions of this Section 4 in order to perfect the security interest granted
hereunder in such Collateral.
SECTION 5. MAINTAINING THE PLEDGED ACCOUNTS. (a) At the written
request of the Required Representatives delivered after the occurrence and
during the continuance of one of the events specified in Section 6 of the 5-Year
Credit Agreement Amendment, each Pledgor will maintain all deposit accounts
including, without limitation, the Pledged Accounts, only with banks (the
"PLEDGED ACCOUNT BANKS") that have entered into letter agreements in
substantially the form of Exhibit B hereto (or otherwise in form and substance
satisfactory to the Required Representatives) with such Pledgor and the
Collateral Trustees (the "PLEDGED ACCOUNT LETTERS").
(b) At the request of the Collateral Trustees after the occurrence
and during the continuance of an Actionable Default, each Pledgor will instruct
each Pledged Account Bank to transfer to the Collateral Account, at the end of
each Business Day, in same day funds, an amount equal to the credit balance of
each Pledged Account in such Pledged Account Bank. If any Pledgor shall fail to
give any such instructions to any Pledged Account Bank, the Collateral Trustees
may do so without further notice to any Pledgor.
(c) At all times after a request has been delivered as provided in
subsection (a) of this Section 5, each Pledgor agrees that it will not add any
bank as a Pledged Account Bank or add any account as a Pledged Account to those
listed in Schedule V hereto, unless the Collateral Trustees shall have received
at least 10 days' prior written notice of such addition and in accordance with
the provisions of Section 6 of the 5-Year Credit Agreement Amendment shall have
received a Pledged Account Letter executed by such new Pledged Account Bank and
such Pledgor or a supplement to an existing Pledged Account Letter covering such
new Pledged Account, as the case may be (and, upon the receipt by the Collateral
Trustees of such Pledged Account Letter or supplement, Schedule V hereto shall
be automatically amended to include such Pledged Account Bank or Pledged
Account); and each Pledgor agrees that it will not terminate any bank as a
Pledged Account Bank or terminate any account as a Pledged Account, unless the
Collateral Trustees and the Required Representatives shall have received at
least 10 days' prior written notice of such termination (and, upon such
termination, Schedule V hereto shall be automatically amended to delete such
Pledged Account Bank or Pledged Account).
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents
and warrants as follows:
(a) All of the Equipment and Inventory of such Pledgor are located
at the places specified in Schedule II hereto, as such Schedule II may be
amended from time to time pursuant to Section 8(a). Set forth in Part A of
Schedule II for each Pledgor is a complete and accurate list of all real
property owned by such Pledgor, showing as of the date hereof the street
address, county or other relevant jurisdiction, state, record owner and
book value thereof. Set forth in Part B of Schedule II for each Pledgor is
a complete and accurate list of all leases of real property under which
any Pledgor is the lessee, showing as of the date hereof the street
address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof. Set forth in Part C of
Schedule II for each Pledgor is a complete and accurate list of all
warehouses and other locations (other than as set forth in Parts A or B of
such Schedule II) where such Pledgor stores any of its Inventory or
Equipment, showing as of the date hereof the street address, county or
other relevant jurisdiction, for such warehouseman or other bailee, and
the nature of its contractual or other relationship with such Pledgor. The
chief executive office of such Pledgor and the original copies of each
Related Contract to which such Pledgor is a party (to the extent possessed
by such Pledgor) and all originals of all chattel paper that evidence
Receivables of such Pledgor, are located at the address specified therefor
in Schedule III hereto, as such Schedule III
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may be amended from time to time pursuant to Section 10(a). Such Pledgor's
state of organization and its federal tax identification number are set
forth opposite such Pledgor's name in Schedule III hereto. All Security
Collateral consisting of certificated securities and instruments have been
delivered to the Collateral Trustees. None of the Receivables or Related
Contract is evidenced by a promissory note or other instrument that has
not been delivered to the Collateral Trustees.
(b) Such Pledgor is the legal and beneficial owner of the Collateral
of such Pledgor free and clear of any Lien, claim, option or right of
others, except for the security interest created under this Agreement and
other Liens permitted to exist under the Credit Agreements. No effective
financing statement or other instrument similar in effect covering all or
any part of such Collateral or listing such Pledgor or any trade name of
such Pledgor as debtor is on file in any recording office, except such as
may have been filed in favor of the Collateral Trustees relating to the
Collateral Documents. Such Pledgor has the trade names listed on Part B of
Schedule IV hereto.
(c) Such Pledgor has exclusive possession and control of the
Equipment and Inventory, other than Inventory and Equipment stored at any
locations specified in Part B and C of Schedule II (as such Schedule II
may be amended from time to time pursuant to Section 8(a)), in which case
such Pledgor shall seek to obtain a landlord's or warehouseman's agreement
substantially in the form of Exhibit C hereto (or otherwise in form and
substance satisfactory to the Required Representatives) in accordance with
the provisions of Sections 5 or 6 of the 5-Year Credit Agreement
Amendment, if such an agreement has been requested by the Required
Representatives.
(d) The Pledged Shares issued by Affiliates of such Pledgor and
pledged by such Pledgor hereunder have been duly authorized and validly
issued and are fully paid and non-assessable. The Pledged Debt issued by
Affiliates of such Pledgor and pledged by such Pledgor hereunder has been
duly authorized, authenticated or issued and delivered, is the legal,
valid and binding obligation of the issuers thereof, is evidenced by one
or more promissary notes (which notes have been delivered to the
Collateral Trustees) and is not in default.
(e) The Initial Pledged Shares constitute the percentage of the
issued and outstanding shares of stock of the issuers thereof indicated on
Schedule I hereto as of the date hereof. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Pledgor by
the issuers thereof and is outstanding, as of the date hereof, in the
principal amount indicated on Schedule I hereto as of the date hereof.
(f) All of the investment property owned by such Pledgor as of the
date hereof is listed on Schedule I hereto.
(g) As of the date hereof, such Pledgor has no Pledged Accounts or
other deposit accounts other than the Pledged Accounts listed on Schedule
V hereto and the Collateral Account.
(h) All filings and other actions necessary or reasonably desirable
to perfect and protect the security interest in the Collateral of such
Pledgor created under this Agreement have been duly made or taken and are
in full force and effect, or shall be duly made or taken or instruments
therefore shall have been delivered to the Collateral Trustee and shall be
in full force and effect within the time period specified in Sections 5, 6
or 7 of the 5-Year Credit Agreement Amendment, and this Agreement creates
in favor of the Collateral Trustees for the equal and
12
ratable benefit of the Secured Holders a valid and, together with such
filings and other actions, perfected security interest in the Collateral
of such Pledgor, securing the payment of the Secured Obligations, subject
only to Permitted Liens.
(i) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other third party is required for (i) the grant by such Pledgor of the
assignment, pledge and security interest granted hereunder or for the
execution, delivery or performance of this Agreement and the Collateral
Trust Agreement by such Pledgor, (ii) the perfection or maintenance of the
assignment, pledge and security interest created hereunder (including the
first priority nature of such assignment, pledge or security interest),
except for (A) the filing of financing and continuation statements under
the Uniform Commercial Code, which financing statements have been duly
filed and are in full force and effect, or shall be duly filed or
instruments therefor shall have been provided to the Collateral Trustee
and shall be in full force and effect within the time period specified in
Section 5 of the 5-Year Credit Agreement Amendment, (B) the recordation of
the Intellectual Property Security Agreements referred to in Section 11(f)
with the U.S. Patent and Trademark Office and the U.S. Copyright Office,
which Agreements have been duly recorded and are in full force and effect,
or shall have been provided to the Collateral Trustee and shall be duly
recorded and shall be in full force and effect within the time period
specified in Section 5 of the 5-Year Credit Agreement Amendment, (C) the
actions described in Section 4 with respect to Security Collateral, which
actions have been taken and are in full force and effect or shall be taken
within the time period specified in Section 5 of the 5-Year Credit
Agreement Amendment, and (D) the execution of Pledged Account Letters by
the Pledged Account Banks, which actions shall be taken within the time
period specified in Section 6 of the 5-Year Credit Agreement Amendment, or
(iii) for the exercise by the Collateral Trustees of their voting or other
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of any portion of the Security Collateral
by laws affecting the offering and sale of securities generally.
(j) The Inventory that has been produced or distributed by such
Pledgor has been produced in all material respects in compliance with all
requirements of applicable law, including, without limitation, to the
extent applicable, the Fair Labor Standards Act.
(k) As to itself and its Intellectual Property Collateral:
(i) Except with respect to any Immaterial IP Collateral (as
hereinafter defined), the rights of such Pledgor in or to the
Intellectual Property Collateral do not conflict with,
misappropriate or infringe upon the intellectual property rights of
any third party, and no claim has been asserted that the use of such
Intellectual Property Collateral does or may infringe upon the
intellectual property rights of any third party.
(ii) Such Pledgor is the exclusive owner of the entire and
unencumbered right, title and interest in and to its Intellectual
Property Collateral, as described on Schedule IV hereto, and is
entitled to use all such Intellectual Property Collateral without
limitation, subject only to the license terms of the Licenses.
(iii) The Intellectual Property Collateral set forth on
Schedule IV hereto includes all of the patents, patent applications,
trademark registrations and applications, copyright registrations
and applications and Licenses owned by such Pledgor.
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(iv) The Intellectual Property Collateral is subsisting and
has not been adjudged invalid or unenforceable in whole or part, and
to the best of such Pledgor's knowledge, is valid and enforceable.
Such Pledgor is not aware of any uses of any item of Intellectual
Property Collateral that could be expected to lead to such item
becoming invalid or unenforceable.
(v) Except with respect to (A) any Immaterial IP Collateral or
(B) any other Intellectual Property Collateral as to which the
Required Representatives have determined pursuant to Section 5 of
the 5-Year Credit Agreement Amendment or otherwise that the cost and
expense of perfecting and maintaining the lien hereunder is
disproportionately high relative to the fair market value of such
Intellectual Property Collateral as determined in good faith by USI,
such Pledgor has made or performed, or shall have made or performed
within the time period specified in Section 5 of the 5-Year Credit
Agreement Amendment, all filings, recordings and other acts and has
paid, or shall have paid within such time period, all required fees
and taxes to maintain and protect its interest in each and every
item of Intellectual Property Collateral in full force and effect
throughout the world, and to protect and maintain its interest
therein including, without limitation, recordations of any of its
interests in the Patents and Trademarks with the U.S. Patent and
Trademark Office and in corresponding national and international
patent offices, and recordation of any of its interests in the
Copyrights with the U.S. Copyright Office and in corresponding
national and international copyright offices. Such Pledgor has used
proper statutory notice in connection with its use of each patent,
trademark and copyright of the Intellectual Property Collateral.
(vi) Except with respect to any Immaterial IP Collateral, no
action, suit, investigation, litigation or proceeding has been
asserted or is pending or threatened against such Pledgor (i) based
upon or challenging or seeking to deny or restrict the use of any of
the Intellectual Property Collateral, or (ii) alleging that any
services provided by, processes used by, or products manufactured or
sold by, such Pledgor infringe upon or misappropriate any patent,
trademark, copyright or any other proprietary right of any third
party. To the best of such Pledgor's knowledge, no Person is
engaging in any activity that infringes upon or misappropriates the
Intellectual Property Collateral, other than any Immaterial IP
Collateral, or upon the rights of such Pledgor therein. Except as
set forth on Schedule IV hereto, such Pledgor has not granted any
license, release, covenant not to xxx, non-assertion assurance, or
other right to any Person with respect to any part of the
Intellectual Property Collateral. The consummation of the
transactions contemplated by the Collateral Trust Agreement will not
result in the termination or impairment of any of the Intellectual
Property Collateral, other than any Immaterial IP Collateral.
(vii) Standardized Commercial licenses not subject to
substantial negotiation or with respect to each License, other than
any such License that constitutes or exists in respect of Immaterial
IP Collateral: (A) to the best of such Pledgor's knowledge, such
License is valid and binding and in full force and effect and
represents the entire agreement between the respective licensor and
licensee with respect to the subject matter of such License; (B)
with respect only to each License entered into after the date
hereof, except Standardized Commercial licenses not subject to
substantial negotiation or as otherwise may be agreed to in writing
by the Required Representatives, such License is not an Excluded
Agreement or Other Excluded Property and such License will not cease
to be valid and binding and in full force and effect on terms
identical to those currently in effect as a result of the rights and
interest granted herein, nor will the grant of such rights
14
and interest constitute a breach or default under such License or
otherwise give the licensor or licensee a right to terminate such
License; (C) such Pledgor has not received any notice of termination
or cancellation under such License; (D) such Pledgor has not
received any notice of a breach or default under such License, which
breach or default has not been cured; (E) such Pledgor has not
granted to any other third party any rights, adverse or otherwise,
under such License; and (F) neither such Pledgor nor any other party
to such License is in breach or default in any material respect, and
no event has occurred that, with notice or lapse of time or both,
would constitute such a breach or default or permit termination,
modification or acceleration under such License.
(viii) To the best of such Pledgor's knowledge, (A) none of
the Trade Secrets of such Pledgor has been used, divulged, disclosed
or appropriated to the detriment of such Pledgor for the benefit of
any other Person other than such Pledgor; (B) no employee,
independent contractor or agent of such Pledgor has misappropriated
any trade secrets of any other Person in the course of the
performance of his or her duties as an employee, independent
contractor or agent of such Pledgor; and (C) no employee,
independent contractor or agent of such Pledgor is in default or
breach of any term of any employment agreement, non-disclosure
agreement, assignment of inventions agreement or similar agreement
or contract relating in any way to the protection, ownership,
development, use or transfer of such Pledgor's Intellectual Property
Collateral.
(ix) Certain items of Intellectual Property Collateral, the
fair market value of which does not individually exceed $25,000 or
in the aggregate exceed $500,000 (as reasonably determined in good
faith by USI as of the date hereof, and as of each date on which
Schedule IV is supplemented pursuant to the terms hereof), have been
designated as such on Schedule IV hereto, such items, together with
such other Intellectual Property Collateral as the 5-Year Agent and
USI agree are not material (the "IMMATERIAL IP COLLATERAL"). The
Immaterial IP Collateral, both individually and in the aggregate, is
not necessary in any material respect to the continued conduct by
any Pledgor of its business as such business is conducted on the
date hereof or as the same may hereafter be conducted from time to
time.
SECTION 7. FURTHER ASSURANCES. (a) Each Pledgor agrees that from
time to time, at the expense of such Pledgor, such Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or reasonably desirable, or that the Collateral Trustees
may reasonably request, in order to perfect and protect any pledge, assignment
or security interest granted or purported to be granted by such Pledgor
hereunder or to enable the Collateral Trustees to exercise and enforce their
rights and remedies hereunder with respect to any Collateral of such Pledgor.
Without limiting the generality of the foregoing, each Pledgor will promptly
with respect to Collateral of such Pledgor: (i) xxxx conspicuously each document
included in Inventory, each chattel paper included in Receivables, each Related
Contract and, at the request of the Collateral Trustees or the Required
Representatives, each of its records pertaining to such Collateral with a
legend, in form and substance satisfactory to the Collateral Trustees,
indicating that such document, chattel paper, Related Contract or Collateral is
subject to the security interest granted hereby; (ii) if any such Collateral
shall be evidenced by a promissory note or other instrument, deliver and pledge
to the Collateral Trustees hereunder such note or instrument duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Collateral Trustees; (iii) execute and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or reasonably desirable, or as the
Collateral Trustees may reasonably request, in order to perfect and preserve the
security interest granted or purported to be granted by such Pledgor hereunder;
(iv) deliver and pledge to the Collateral Trustees for benefit of the Secured
Holders
15
certificates representing Security Collateral that constitutes certificated
securities, accompanied by undated stock or bond powers executed in blank; and
(v) deliver to the Collateral Trustees evidence that all other action that the
Collateral Trustees may deem reasonably necessary or desirable in order to
perfect and protect the security interest created by such Pledgor under this
Agreement has been taken.
(b) Each Pledgor hereby authorizes the Collateral Trustees to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral of such Pledgor without the
signature of such Pledgor where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Pledgor will furnish to the Collateral Trustees from time
to time statements and schedules further identifying and describing the
Collateral of such Pledgor and such other reports in connection with such
Collateral as the Collateral Trustees may reasonably request, all in reasonable
detail.
(d) The Borrowers will furnish to the Collateral Trustees, on or
prior to each of the first and the fifth anniversary of the Perfection Date (but
not more than six months prior thereto), an opinion of counsel acceptable to the
Required Representatives to the effect that all financing or continuation
statements have been filed, and all other action has been taken, to perfect
continuously from the date which is 90 days from the date hereof the security
interest granted hereunder.
SECTION 8. AS TO EQUIPMENT AND INVENTORY. (a) Each Pledgor will keep
the Equipment and Inventory of such Pledgor (other than Inventory sold in the
ordinary course of business) at the places therefor specified in Section 6(a)
or, upon 30 days' prior written notice to the Collateral Trustees, at such other
places in a jurisdiction where all action required by Section 7 shall have been
taken with respect to such Equipment and Inventory (and, upon the taking of such
action in such jurisdiction, Schedule II hereto shall be automatically amended
to include such other places).
(b) Each Pledgor will cause the Equipment of such Pledgor to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and will forthwith, or in the case of any loss or damage to any of such
Equipment as soon as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements and other improvements in connection therewith
that are necessary or desirable to such end. Each Pledgor will promptly furnish
to the Collateral Trustees and the Representatives a statement respecting any
loss or damage exceeding $5,000,000 to any of the Equipment or Inventory of such
Pledgor.
(c) Each Pledgor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Pledgor, except to the extent
payment thereof is not required by Section 7.06 the 5-Year Credit Agreement. In
producing its Inventory, each Pledgor will comply with all requirements of
applicable law, including, without limitation, to the extent applicable, the
Fair Labor Standards Act.
SECTION 9. INSURANCE. (a) Each Pledgor will, at its own expense,
maintain insurance with respect to the Equipment and Inventory of such Pledgor
in such amounts, against such risks, in such form and with such insurers, as is
customarily maintained by companies similarly situated to such Pledgor. Each
such policy shall within a reasonable time follows the Perfection Date as
defined in the 5-Year Credit Agreement Amendment (i) name such Pledgor and the
Collateral Trustees as insured parties thereunder (without any representation or
warranty by or obligation upon the Collateral Trustees) as their interests may
appear, (ii) contain the agreement by the insurer that any loss thereunder shall
be payable to
16
the Collateral Trustees following notice from the Collateral Trustees of an
Actionable Default, notwithstanding any action, inaction or breach of
representation or warranty by such Pledgor, (iii) provide that there shall be no
recourse against the Collateral Trustees for payment of premiums or other
amounts with respect thereto and (iv) provide that at least 30 days' prior
written notice of cancellation or of lapse shall be given to the Collateral
Trustees by the insurer. Each Pledgor will, if so requested by the Collateral
Trustees, deliver to the Collateral Trustees original or duplicate policies of
such insurance and, as often as the Collateral Trustees may reasonably request,
a report of a reputable insurance broker with respect to such insurance.
Further, each Pledgor will, at the request of the Collateral Trustees, duly
execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 7 and cause the insurers to acknowledge
notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any
Pledgor pursuant to this Section 9 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 9 is not
applicable, the applicable Pledgor will make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Pledgor shall be used by such
Pledgor, except as otherwise required hereunder or by the Credit Agreements, to
pay or as reimbursement for the costs of such repairs or replacements.
(c) So long as no Actionable Default shall have occurred and be
continuing, all insurance payments received by the Collateral Trustees in
connection with any loss, damage or destruction of any Inventory or Equipment
will be released by the Collateral Trustees to the applicable Pledgor. Upon the
occurrence and during the continuance of any Actionable Default, all insurance
payments in respect of such Equipment or Inventory shall be paid to the
Collateral Trustees and shall, in the Collateral Trustees' sole discretion, (i)
be released to the applicable Pledgor to be applied as set forth in the first
sentence of this subsection (c) or (ii) be held as additional Collateral
hereunder or applied as specified in Section 17(b).
SECTION 10. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES.
(a) Each Pledgor (i) will preserve its current place of organization and (ii)
will keep its chief executive office, originals of the Related Contracts to
which such Pledgor is a party and all originals of all chattel paper that
evidence Receivables of such Pledgor, at the locations therefor specified in
Section 6(a) or, upon 30 days' prior written notice to the Collateral Trustees,
at such other locations in a jurisdiction where all actions required by Section
7 shall have been taken with respect to the Collateral of such Pledgor (and,
upon the taking of such action in such jurisdiction, Schedule III hereto shall
be automatically amended to include such other locations). Each Pledgor will
hold and preserve its records relating to the Collateral, the Related Contracts
and chattel paper and will permit representatives of the Collateral Trustees at
any time during normal business hours to inspect and make abstracts from such
records and other documents.
(b) Except as otherwise provided in this subsection (b), each
Pledgor will continue to collect, at its own expense, all amounts due or to
become due such Pledgor under the Receivables and the Related Contracts. In
connection with such collections, such Pledgor may take (and, at the Collateral
Trustees' direction, will take) such action as such Pledgor or the Collateral
Trustees may reasonably deem necessary or advisable to enforce collection of the
Receivables and the Related Contracts; PROVIDED, HOWEVER, that the Collateral
Trustees shall have the right at any time, upon the occurrence and during the
continuance of an Actionable Default and upon written notice to such Pledgor of
its intention to do so, to notify the Account Obligors under any Receivables or
Related Contracts of the assignment of such Receivables or Related Contracts to
the Collateral Trustees and to direct such Account Obligors to make payment of
all amounts due or to become due to such Pledgor thereunder directly to the
Collateral Trustees and, upon such notification and at the expense of such
Pledgor, to enforce collection of any such Receivables or Related Contracts, and
to adjust, settle or compromise the amount or payment thereof, in
17
the same manner and to the same extent as such Pledgor might have done. After
receipt by any Pledgor of the notice from the Collateral Trustees referred to in
the proviso to the preceding sentence, (i) all amounts and proceeds (including
instruments) received by such Pledgor in respect of the Receivables and the
Related Contracts of such Pledgor shall be received in trust for the benefit of
the Collateral Trustees hereunder, shall be segregated from other funds of such
Pledgor and shall be forthwith paid over to the Collateral Trustees in the same
form as so received (with any necessary indorsement) to be deposited in the
Collateral Account and (ii) such Pledgor will not adjust, settle or compromise
the amount or payment of any Receivable, release wholly or partly any Account
Obligor thereof, or allow any credit or discount thereon. No Pledgor will permit
or consent to the subordination of its right to payment under any of the
Receivables or the Related Contracts to any other indebtedness or obligations of
the Account Obligor thereof.
SECTION 11. AS TO INTELLECTUAL PROPERTY COLLATERAL. (a) With respect
to each item of its Intellectual Property Collateral set forth on Schedule IV,
other than any Immaterial IP Collateral, each Pledgor agrees to take, at its
expense, all necessary steps, including, without limitation, in the U.S. Patent
and Trademark Office, the U.S. Copyright Office and any other governmental
authority, to (i) maintain the validity and enforceability of each such item of
Intellectual Property Collateral and maintain each such item of Intellectual
Property Collateral in full force and effect, and (ii) pursue the registration
and maintenance of each patent, trademark, or copyright registration or
application, now or hereafter included in such Intellectual Property Collateral
of such Pledgor, including, without limitation, the payment of required fees and
taxes, the filing of responses to office actions issued by the U.S. Patent and
Trademark Office, the U.S. Copyright Office or other governmental authorities,
the filing of applications for renewal or extension, the filing of affidavits
under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional,
continuation, continuation-in-part, reissue and renewal applications or
extensions, the payment of maintenance fees and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings. No Pledgor shall, without the written consent of
the Required Representatives, discontinue use of or otherwise abandon any
Intellectual Property Collateral, other than any Immaterial IP Collateral, or
abandon any right to file an application for letters patent, trademark, or
copyright, unless such Pledgor shall have previously determined that such use or
the pursuit or maintenance of such Intellectual Property Collateral is no longer
desirable in the conduct of such Pledgor's business and that the loss thereof
would not be reasonably likely to have a Material Adverse Effect (as defined in
the Credit Agreements), in which case, such Pledgor will give prompt notice of
any such abandonment to the Collateral Trustees and the Representatives.
(b) Each Pledgor agrees promptly (and, in any case, on or prior to
the date of the next quarterly compliance certificate delivered pursuant to
Section 7.02(a) of the 5-Year Credit Agreement) to notify the Collateral
Trustees and the Representatives if such Pledgor learns (i) that any item of the
Intellectual Property Collateral may have become abandoned, placed in the public
domain, invalid or unenforceable, or of any adverse determination or development
regarding such Pledgor's ownership of any of the Intellectual Property
Collateral or its right to register the same or to keep and maintain and enforce
the same, or (ii) of any adverse determination or the institution of any
proceeding (including, without limitation, the institution of any proceeding in
the U.S. Patent and Trademark Office or any court) regarding any item of the
Intellectual Property Collateral.
(c) Except with respect to any Immaterial IP Collateral, in the
event that any Pledgor becomes aware that any item of the Intellectual Property
Collateral is being infringed or misappropriated by a third party, such Pledgor
shall promptly (and, in any case, on or prior to the date of the next quarterly
compliance certificate delivered pursuant to Section 7.02(a) of the 5-Year
Credit Agreement) notify the Collateral Trustees and the Representatives and
shall take such actions, at its expense, as such Pledgor or the Required
Representatives deems reasonable and appropriate under the circumstances to
protect such
18
Intellectual Property Collateral, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation.
(d) Each Pledgor shall use proper statutory notice in connection
with its use of each item of its Intellectual Property Collateral, other than
any Immaterial IP Collateral. No Pledgor shall do or permit any act or knowingly
omit to do any act whereby any of its Intellectual Property Collateral, other
than any Immaterial IP Collateral, may lapse or become invalid or unenforceable
or placed in the public domain.
(e) Each Pledgor shall take all steps which it or the Collateral
Trustees or the Required Representatives deem reasonable and appropriate under
the circumstances to preserve and protect each item of its Intellectual Property
Collateral, other than any Immaterial IP Collateral, including, without
limitation, maintaining the quality of any and all products or services used or
provided in connection with any of the Trademarks, consistent with the quality
of the products and services as of the date hereof, and taking all steps
necessary to ensure that all licensed users of any of the Trademarks use such
consistent standards of quality.
(f) With respect to its Intellectual Property Collateral, each
Pledgor agrees to execute an agreement, in substantially the form set forth in
Exhibit E hereto (an "INTELLECTUAL PROPERTY SECURITY AGREEMENT"), for recording
the security interest granted hereunder to the Collateral Trustees in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.
(g) Each Pledgor agrees that, should it obtain an ownership interest
in any item of the type set forth in Section 1(f) which is not on the date
hereof a part of the Intellectual Property Collateral (the "AFTER-ACQUIRED
INTELLECTUAL PROPERTY"), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Pledgor shall give prompt (and, in any case, on or prior to
the date of the next quarterly compliance certificate delivered pursuant to
Section 7.02(a) of the 5-Year Credit Agreement) written notice thereof to the
Collateral Trustees in accordance herewith and (iv) such Pledgor shall execute
and deliver to the Collateral Trustees an IP Security Agreement Supplement in
substantially the form of Exhibit F hereto covering such After-Acquired
Intellectual Property as "Additional Collateral" thereunder and as defined
therein, and shall record such IP Security Agreement Supplement with the U.S.
Patent and Trademark Office, the U.S. Copyright Office and any other
governmental authorities necessary to perfect the security interest hereunder in
such After-Acquired Intellectual Property. The Schedules to each such IP
Security Agreement Supplement may indicate any such After-Acquired Intellectual
Property which such Pledgor shall have reasonably determined in good faith
constitutes Immaterial IP Collateral as provided pursuant to Section 6(k)(ix).
SECTION 12. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no
Actionable Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to any Security Collateral of such
Pledgor for any purpose; PROVIDED, HOWEVER, that such Pledgor will not
exercise or refrain from exercising any such right if such action would
have a material adverse effect on the value of such Security Collateral.
19
(ii) Each Pledgor shall be entitled to receive and retain any and
all dividends, interest and other distributions paid in respect of the
Security Collateral of such Pledgor if and to the extent that the payment
thereof is not otherwise prohibited by the terms of the Secured
Agreements; PROVIDED, HOWEVER, that any and all dividends, interest and
other distributions paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security Collateral,
shall be, and shall be forthwith delivered to the Collateral Trustees to
hold as, Security Collateral and shall, if received by such Pledgor, be
received in trust for the benefit of the Collateral Trustees, be
segregated from the other property or funds of such Pledgor and be
forthwith delivered to the Collateral Trustees as Security Collateral in
the same form as so received (with any necessary indorsement).
(iii) The Collateral Trustees will execute and deliver (or cause to
be executed and delivered) to each Pledgor all such proxies and other
instruments as such Pledgor may reasonably request for the purpose of
enabling such Pledgor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Actionable
Default:
(i) All rights of each Pledgor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 12(a)(i) shall, upon notice to
such Pledgor by the Collateral Trustees, cease and (y) to receive the
dividends, interest and other distributions that it would otherwise be
authorized to receive and retain pursuant to Section 12(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in
the Collateral Trustees, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual
rights and to receive and hold as Security Collateral such dividends,
interest and other distributions.
(ii) All dividends, interest and other distributions that are
received by any Pledgor contrary to the provisions of paragraph (i) of
this Section 12(b) shall be received in trust for the benefit of the
Collateral Trustees, shall be segregated from other funds of such Pledgor
and shall be forthwith paid over to the Collateral Trustees as Security
Collateral in the same form as so received (with any necessary
indorsement).
(iii) The Collateral Trustees shall be authorized to send to each
Securities Intermediary as defined in and under any Control Agreement a
Notice of Exclusive Control as defined in and under such Control
Agreement.
SECTION 13. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. (a) Each
Pledgor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Secured Agreements, or (ii) create
or suffer to exist any Lien upon or with respect to any of the Collateral of
such Pledgor, except for the pledge, assignment and security interest created
under this Agreement and Liens permitted under the Secured Agreements.
(b) Each Pledgor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Pledgor not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Pledgor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities of each issuer of the Pledged Shares.
20
SECTION 14. COLLATERAL TRUSTEES APPOINTED ATTORNEY-IN-FACT. Each
Pledgor hereby irrevocably appoints the Collateral Trustees such Pledgor's
attorneys-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, from time to time, upon the
occurrence and during the continuance of an Actionable Default, in the
Collateral Trustees' discretion, to take any action and to execute any
instrument that the Collateral Trustees may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Trustees pursuant to Section 9,
(b) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Trustees may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
compliance with the terms and conditions of any Related Contract or the
rights of the Collateral Trustees with respect to any of the Collateral.
SECTION 15. COLLATERAL TRUSTEES MAY PERFORM. If any Pledgor fails to
perform any agreement contained herein, the Collateral Trustees may, but without
any obligation to do so and without notice, itself perform, or cause performance
of, such agreement, and the expenses of the Collateral Trustees incurred in
connection therewith shall be payable by the Borrowers under Section 18(b).
SECTION 16. COLLATERAL TRUSTEES' DUTIES. The powers conferred on the
Collateral Trustees hereunder are solely to protect the Secured Holders'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Trustees shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Holder has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Trustees shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
their possession if such Collateral is accorded treatment substantially equal to
that which they accord their own property.
SECTION 17. REMEDIES. If any Actionable Default shall have occurred
and be continuing:
(a) The Collateral Trustees may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to them, all the rights and remedies of a secured
party upon default under the N.Y. Uniform Commercial Code (whether or not
the N.Y. Uniform Commercial Code applies to the affected Collateral) and
also may: (i) require each Pledgor to, and each Pledgor hereby agrees that
it will at its expense and upon request of the Collateral Trustees
forthwith, assemble all or part of the Collateral as directed by the
Collateral Trustees and make it available to the Collateral Trustees at a
place and time to be designated by the Collateral Trustees that is
reasonably convenient to both parties; (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at
21
public or private sale, at any of the Collateral Trustees' offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Trustees may deem commercially reasonable; (iii)
occupy any premises owned or leased by any of the Pledgors where the
Collateral or any part thereof is assembled or located for a reasonable
period in order to effectuate its rights and remedies hereunder or under
law, without obligation to such Pledgor in respect of such occupation; and
(iv) exercise any and all rights and remedies of any of the Pledgors under
or in connection with the Receivables and the Related Contracts or
otherwise in respect of the Collateral, including, without limitation, any
and all rights of such Pledgor to demand or otherwise require payment of
any amount under, or performance of any provision of, the Receivables and
the Related Contracts. Each Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Pledgor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Collateral Trustees shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Trustees
may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Collateral Trustees and all
cash proceeds received by or on behalf of the Collateral Trustees in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may be deposited to the Collateral Account and
disbursed pursuant to the Collateral Trust Agreement.
(c) All payments received by any Pledgor under or in connection with
any Receivables or Related Contracts or otherwise in respect of the
Collateral shall be received in trust for the benefit of the Collateral
Trustees, shall be segregated from other funds of such Pledgor and shall
be forthwith paid over to the Collateral Trustees in the same form as so
received (with any necessary indorsement).
(d) The Collateral Trustees may, without notice to any Pledgor,
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against any funds held in the Collateral Account or in any deposit account
related thereto.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Pledgor, the goodwill of the
business connected with, and symbolized by, any Trademarks subject to such
sale or other disposition shall be included therein, and such Pledgor
shall supply to the Collateral Trustees or its designee such Pledgor's
know-how and expertise, and documents and things relating to any
Intellectual Property Collateral subject to such sale or other
disposition, and such Pledgor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services
of such Pledgor.
SECTION 18. INDEMNITY AND EXPENSES. (a) Each Borrower agrees to
indemnify, defend and save and hold harmless each Collateral Trustee, each
Representative and each Secured Holder and each of their Affiliates and their
respective officers, directors, employees, agents and advisors (each, an
"INDEMNIFIED PARTY") from and against, and shall pay on demand, any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except to the extent such claim,
damage, loss, liability or expense is found in a final, non-
22
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or willful misconduct.
(b) Each Borrower will upon demand pay to each Collateral Trustee
the amount of any and all reasonable expenses, including, without limitation,
the reasonable fees and expenses of its counsel and of any experts and agents,
that such Collateral Trustee may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Collateral of
such Pledgor, (iii) the exercise or enforcement of any of the rights of such
Collateral Trustee any Representative or any Secured Holder hereunder or (iv)
the failure by such Pledgor to perform or observe any of the provisions hereof.
SECTION 19. AMENDMENTS; WAIVERS; ADDITIONAL PLEDGORS; ETC. (a) No
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Trustees, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Collateral
Trustees or any other Secured Holder to exercise, and no delay in exercising any
right hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.
(b) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
"SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to as an
"ADDITIONAL PLEDGOR" and shall be and become a Pledgor hereunder and each
reference in this Agreement and the other Loan Documents to "Pledgor" shall also
mean and be a reference to such Additional Pledgor, and (ii) the supplemental
schedules I, II, III, IV and V attached to each Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I, II,
III, IV and V, respectively, hereto, and the Collateral Trustees may attach such
supplemental schedules to such Schedules; and each reference to such Schedules
shall mean and be a reference to such Schedules as supplemented pursuant to each
Security Agreement Supplement.
SECTION 20. NOTICES; ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopier or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
as provided in the Collateral Trust Agreement.
SECTION 21. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
CREDIT AGREEMENTS. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until released as
provided in Section 8.02 of the Collateral Trust Agreement, (b) be binding upon
each Pledgor, its successors and assigns and (c) inure, together with the rights
and remedies of the Collateral Trustees hereunder, to the equal and ratable
benefit of the Secured Holders and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any Credit
Party may assign or otherwise transfer all or any portion of its rights and
obligations under each of the Credit Agreements (including, without limitation,
all or any portion of its Commitments, the Loans owing to it and the Note or
Notes, if any, held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Credit Party herein or otherwise, in each case as provided in the applicable
provisions of each of the Credit Agreements.
SECTION 22. RELEASE; TERMINATION. All or any portion of the
Collateral shall be released by the Collateral Trustees solely on the terms and
subject to the conditions set forth in Article VIII of the Collateral Trust.
23
SECTION 23. SECURITY INTEREST ABSOLUTE. The obligations of each
Pledgor (other than any Borrower) under this Agreement are independent of the
Secured Obligations of any Borrower under or in respect of the Secured
Agreements, and a separate action or actions may be brought and prosecuted
against each such Pledgor to enforce this Agreement, irrespective of whether any
action is brought against any Borrower or whether such Pledgor or any other
Pledgor is joined in any such action or actions. All rights of the Collateral
Trustees, the Representatives and the other Secured Holders and the pledge,
assignment and security interest hereunder, and all obligations of each such
Pledgor hereunder, shall be irrevocable, absolute and unconditional irrespective
of, and each such Pledgor hereby irrevocably waives (to the maximum extent
permitted by applicable law) any defenses it may now have or may hereafter
acquire in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Secured Agreement
or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations of any Borrower under
or in respect of the Secured Agreements or any other amendment or waiver
of or any consent to any departure from any Secured Agreement, including,
without limitation, any increase in the Secured Obligations resulting from
the extension of additional credit to any Borrower or any of its
Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral or any other collateral, or any taking, release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured Obligations,
or any manner of sale or other disposition of any Collateral or any other
collateral for all or any of the Secured Obligations under or in respect
of the Secured Agreements or any other assets of any Borrower or any of
its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Borrower or any of its Subsidiaries;
(f) any failure of any Secured Holder or any Representative to
disclose to any Pledgor any information relating to the business,
condition (financial or otherwise), operations, performance, assets,
nature of assets, liabilities or prospects of any other Pledgor now or
hereafter known to such Secured Holder or such Representative (each
Pledgor waiving any duty on the part of the Secured Holders or any
Representative to disclose such information);
(g) the failure of any other Person to execute this Agreement or any
other Collateral Document, guaranty or agreement or the release or
reduction of liability of any Pledgor with respect to the Secured
Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by any Secured Holder that might otherwise constitute a
defense available to, or a discharge of, such Pledgor or any other Pledgor
or a third party pledgor of a security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured
24
Holder or by any other Person upon the insolvency, bankruptcy or reorganization
of any Borrower or otherwise, all as though such payment had not been made.
SECTION 24. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.
SECTION 25. MORTGAGES. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
mortgage and the terms of such mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such mortgage
shall be controlling in the case of fixtures and real estate leases, letting and
licenses of, and contracts and agreements relating to the lease of, real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.
SECTION 26. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
25
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
XXXX TRUE TEMPER PROPERTIES, INC.
XXXX TRUE TEMPER, INC.
ARCHITECTURAL AREA LIGHTING, INC.
ARROW CONSOLIDATED CORPORATION
ASTERIA COMPANY
BATHCRAFT INC.
XXXXXX BROTHERS, INC.
XXXXXXXX MANUFACTURING CORP.
CARLSBAD CORP.
COLUMBIA LIGHTING, INC.
COLUMBIA LIGHTING-LCA, INC.
COLUMBIA LIGHTING MFG., CO.
COLUMBIA LIGHTING PROPERTIES, INC.
COLUMBIA MATERIALS, LLC
COMPAX CORP.
DUAL-LITE INC.
DUAL-LITE MANUFACTURING, INC.
ELJER INDUSTRIES, INC.
ELJER PLUMBINGWARE, INC.
ENVIRONMENTAL ENERGY COMPANY
EZ HOLDINGS, INC.
XXXX CONCRETE PRODUCTS, INC.
GATSBY SPAS, INC.
HL CAPITAL CORP.
IXL MANUFACTURING COMPANY, INC.
JACUZZI INC.
JACUZZI WHIRLPOOL BATH, INC.
JUSI HOLDINGS, INC.
XXX LIGHTING INC.
KLI, INC.
LCA GROUP INC.
LCA (NS) INC.
LIGHTING CORPORATION OF AMERICA, INC.
LOKELANI DEVELOPMENT CORPORATION
LUXOR INDUSTRIES, INC.
MAILI KAI LAND DEVELOPMENT CORPORATION
MOBILITE INC.
NEPCO OF AUSTRALIA, INC.
NEPCO OF CANADA, INC.
NEPCO OF FORD HEIGHTS, INC.
NEPCO OF XXXXXX, INC.
NEPCO OF PAKISTAN, INC.
XXXXXX UNIVERSAL HOLDINGS INC.
OUTDOOR PRODUCTS LLC
PH PROPERTY DEVELOPMENT COMPANY
26
PRESCOLITE LITE CONTROLS, INC.
PRESCOLITE, INC.
PROGRESS LIGHTING, INC.
PROGRESSIVE LIGHTING, INC. (NC)
PROGRESSIVE LIGHTING, INC. (SC)
PROGRESS LIGHTING PROPERTIES, INC.
REDMONT, INC.
SANITARY-DASH MANUFACTURING CO., INC
SELKIRK CANADA U.S.A., INC.
SELKIRK EUROPE U.S.A., INC.
SELKIRK, INC.
XXXXXXXXX LIGHTING, INC.
STRATEGIC CAPITAL MANAGEMENT, INC.
STREAMWOOD CORPORATION
SUNDANCE SPAS, INC.
TA LIQUIDATION CORP.
TRIMFOOT CO.
TT LIQUIDATION CORP.
UGE LIQUIDATION INC.
UNITED STATES BRASS CORP.
U.S. INDUSTRIES, INC.
USI AMERICAN HOLDINGS, INC.
USI ATLANTIC CORP.
USI CAPITAL, INC.
USI FUNDING, INC.
USI GLOBAL CORP.
USI PROPERTIES, INC.
USI REALTY CORP.
ZURCO, INC.
ZURNACQ OF CALIFORNIA, INC.
XXXX (CAYMAN ISLANDS), INC.
XXXX CONSTRUCTORS, INC.
XXXX DEVCO, INC.
XXXX XXX SERVICES, INC.
XXXX GOLF HOLDING CORPORATION
XXXX INDUSTRIES, INC.
By
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
SCHEDULE I TO THE PLEDGE AND
SECURITY AGREEMENT
PLEDGED SHARES; PLEDGED DEBT; SECURITIES ACCOUNTS
PART A
PLEDGED SHARES
===============================================================================
PERCENTAGE
STOCK OF
STOCK CLASS OF PAR CERTIFICATE NUMBER OUTSTANDING
PLEDGOR ISSUER STOCK VALUE NO(S) OF SHARES SHARES
===============================================================================
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===============================================================================
PART B
PLEDGED DEBT
================================================================================
OUTSTANDING
DEBT DESCRIPTION OF DEBT CERTIFICATE FINAL PRINCIPAL
PLEDGOR ISSUER DEBT NO(S). MATURITY AMOUNT
================================================================================
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PART C
SECURITIES ACCOUNTS
================================================================================
NAME AND ADDRESS OF SECURITIES ACCOUNT
PLEDGOR SECURITIES ACCOUNT INSTITUTION NAME AND NUMBER
================================================================================
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SCHEDULE II TO THE PLEDGE AND
SECURITY AGREEMENT
LOCATIONS OF EQUIPMENT AND INVENTORY
[NAME OF PLEDGOR]
A. OWNED LOCATIONS:
B. LEASED LOCATIONS:
C. OTHER LOCATIONS (DESCRIBE):
[NAME OF PLEDGOR]
A. OWNED LOCATIONS:
B. LEASED LOCATIONS:
C. OTHER LOCATIONS (DESCRIBE):
[ETC.]
SCHEDULE III TO THE PLEDGE AND
SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICE, PLACE OF ORGANIZATION
AND FEDERAL TAX IDENTIFICATION NUMBER
FEDERAL TAX
PLEDGOR JURISDICTION OF CHIEF EXECUTIVE IDENTIFICATION
ORGANIZATION OFFICE NUMBER
SCHEDULE IV TO THE PLEDGE AND
SECURITY AGREEMENT
PATENTS, TRADEMARKS AND
TRADE NAMES, COPYRIGHTS AND LICENSES
PART A
PLEDGOR PATENTS COUNTRY PATENT NO. APPLIC. NO. FILING DATE ISSUE DATE
------- ------- ------- ---------- ----------- ----------- ----------
PART B
TRADEMARKS AND REG. APPLIC. FILING ISSUE
--------------- ----- ------- ------ -----
PLEDGOR TRADE NAMES COUNTRY XXXX NO. NO. DATE DATE
------- ----------- ------- ---- --- --- ---- ----
PART C
FILING ISSUE
PLEDGOR COPYRIGHTS COUNTRY TITLE REG. NO. APPLIC. NO. DATE DATE
------- ---------- ------- ----- -------- ----------- ---- ----
PART D
PLEDGOR LICENSES TITLE DATE PARTIES
------- -------- ----- ---- -------
SCHEDULE V TO THE PLEDGE AND
SECURITY AGREEMENT
PLEDGED ACCOUNTS
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NAME AND ADDRESS OF
PLEDGOR PLEDGED ACCOUNT BANK ACCOUNT NUMBER
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SCHEDULE VI TO THE PLEDGE AND
SECURITY AGREEMENT
EXISTING SECURITY INSTRUMENTS
S&S DRAFT: 04/30/01
PLEDGE AND SECURITY AGREEMENT
Dated as of April 30, 2001,
From
The Pledgors referred to herein
AS PLEDGORS
to
[WILMINGTON TRUST COMPANY]
AS COLLATERAL TRUSTEES
T A B L E O F C O N T E N T S
SECTION PAGE
Section 1. GRANT OF SECURITY................................................3
Section 2. SECURITY FOR SECURED OBLIGATIONS.................................8
Section 3. PLEDGORS REMAIN LIABLE...........................................8
Section 4. DELIVERY AND CONTROL OF SECURITY COLLATERAL......................9
Section 5. MAINTAINING THE PLEDGED ACCOUNTS................................10
Section 6. REPRESENTATIONS AND WARRANTIES..................................10
Section 7. FURTHER ASSURANCES..............................................14
Section 8. AS TO EQUIPMENT AND INVENTORY...................................15
Section 9. INSURANCE.......................................................15
Section 10. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES.........16
Section 11. AS TO INTELLECTUAL PROPERTY COLLATERAL..........................17
Section 12. VOTING RIGHTS; DIVIDENDS; ETC...................................18
Section 13. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES....................19
Section 14. COLLATERAL TRUSTEES APPOINTED ATTORNEY-IN-FACT..................20
Section 15. COLLATERAL TRUSTEES MAY PERFORM.................................20
Section 16. COLLATERAL TRUSTEES' DUTIES.....................................20
Section 17. REMEDIES........................................................20
Section 18. INDEMNITY AND EXPENSES..........................................21
Section 19. AMENDMENTS; WAIVERS; ADDITIONAL PLEDGORS; ETC...................22
Section 20. NOTICES; ETC....................................................22
Section 21. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT
AGREEMENTS.............................................................22
Section 22. RELEASE; TERMINATION............................................22
Section 23. SECURITY INTEREST ABSOLUTE......................................23
Section 24. EXECUTION IN COUNTERPARTS.......................................24
Section 25. MORTGAGES.......................................................24
Section 26. GOVERNING LAW...................................................24
Schedules
Schedule I - Pledged Shares; Pledged Debt; and Securities Accounts
Schedule II - Locations of Equipment and Inventory
Schedule III - Chief Executive Office; Jurisdiction of Organization; and
Federal Tax Identification Number
Schedule IV - Patents, Trademarks and Trade Names, Copyrights and Licenses
Schedule V - Pledged Accounts
Schedule VI - Existing Security Instruments
Exhibits
Exhibit A - Form of Security Agreement Supplement
Exhibit B - Form of Pledged Account Letter
Exhibit C - Form of Landlord's Consent and Agreement
Exhibit D - Form of Control Agreement (Securities Account)
Exhibit E - Form of Intellectual Property Security Agreement
Exhibit F - Form of Intellectual Property Security Agreement Supplement
