SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 21, 1997 (as amended, modified, or
supplemented from time to time, "this Agreement"), among each of the undersigned
(each, together with its successors and assigns, an "Assignor" and collectively,
the "Assignors"), and KEYBANK NATIONAL ASSOCIATION, a national banking
association, as collateral agent (herein, together with its successors and
assigns in such capacity, the "Collateral Agent"), for the benefit of the
Secured Creditors (as defined below):
PRELIMINARY STATEMENTS:
(1) Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement (as defined below) shall be used herein as therein
defined.
(2) This Agreement is made pursuant to the Credit Agreement, dated as
of the date hereof (herein, as amended or otherwise modified from time to time,
the "Credit Agreement"), among Safety Components International, Inc., a Delaware
corporation (herein, together with its successors and assigns, the "Company"),
the other Borrowers named therein, the financial institutions named as lenders
therein, and KeyBank National Association, as the Administrative Agent for the
Lenders (as defined in the Credit Agreement), providing, among other things, for
loans or advances or other extensions of credit to or for the benefit of the
Borrowers of up to $27,000,000, with such loans or advances being evidenced by
promissory notes (the "Notes", such term to include all notes and other
securities issued in exchange therefor or in replacement thereof).
(3) The Company or any of its Subsidiaries may from time to time be
party to one or more Designated Hedge Agreements (as defined in the Credit
Agreement). Any institution that participates, and in each case their subsequent
assigns, as a counterparty to any Designated Hedge Agreement (collectively, the
"Hedge Creditors," and the Hedge Creditors together with the Lenders,
collectively the "Secured Creditors" ), shall benefit hereunder as herein
provided.
(4) Pursuant to the Subsidiary Guaranty, each Subsidiary Guarantor has
jointly and severally guaranteed to the Secured Creditors the payment when due
of the Guaranteed Obligations (as defined in the Subsidiary Guaranty).
(5) It is a condition precedent to the making of Loans and the issuance
of, and participation in, Letters of Credit under the Credit Agreement that each
Assignor shall have executed and delivered to the Collateral Agent this
Agreement.
(6) Each Assignor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph.
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NOW, THEREFORE, in consideration of the benefit accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties and hereby
covenants and agrees as follows:
1. SECURITY INTERESTS.
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations, each
Assignor does hereby sell, assign and transfer unto the Collateral Agent, and
does hereby grant to the Collateral Agent, for the benefit of the Secured
Creditors, a continuing security interest of first priority in, all of the
right, title and interest of such Assignor in, to and under all of the
following, whether now existing or hereafter from time to time acquired
(collectively, the "Collateral"):
(i) each and every Receivable,
(ii) all Contracts, together with all Contract Rights arising
thereunder,
(iii) all Inventory,
(iv) all Equipment,
(v) all Marks, together with the registrations and right to
all renewals thereof, and the goodwill of the business of such Assignor
symbolized by the Marks,
(vi) all Patents and Copyrights,
(vii) all computer programs of such Assignor and all
intellectual property rights therein and all other Proprietary Information of
such Assignor, including, but not limited to, Trade Secrets,
(viii) all Permits,
(ix) the Cash Collateral Account and all monies, securities
and instruments deposited or required to be deposited in such Cash Collateral
Account,
(x) all other Goods, General Intangibles, Chattel Paper,
Documents and Instruments (other than the Securities and Equity Interests, as
defined in, and which are pledged, or not required to be pledged, pursuant to
the Pledge Agreement), and
(xi) all Proceeds and products of any and all of the
foregoing.
(b) The security interest of the Collateral Agent under this Agreement
extends to all Collateral of the kind which is the subject of this Agreement
which any Assignor may acquire at any
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time during the continuation of this Agreement, provided that no security
interest is granted under this Agreement with respect to any Equipment subject
on the date hereof to any secured installment purchase agreement that by its
terms prohibits the creation of additional liens on such Equipment unless
consent has been obtained and provided further that the Company shall use its
commercially reasonable efforts to obtain such consent, it being understood that
the Company shall not be required to pay more than the nominal fee for such
consent. Upon the payment of all amounts owing under such installment purchase
agreement or the removal of any prohibition on the creation of a lien on the
Equipment subject thereto, such Equipment shall constitute collateral hereunder.
1.2. Power of Attorney. Each Assignor hereby constitutes and appoints
the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all monies and claims for monies due
or to become due to the Assignor under or arising out of the Collateral to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable in the premises, which
appointment as attorney is coupled with an interest.
2. GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. Assuming the filing in the appropriate filing
offices of those UCC-1 financing statements delivered to the Collateral Agent
pursuant to section 6.1(d) of the Credit Agreement and the filings of the
patent, trademark and copyright security agreements with the United States
Patent and Trademark Office and the United States Copyright Office, all filings,
registrations and recordings necessary or appropriate to create, preserve,
protect and perfect the security interest granted by such Assignor to the
Collateral Agent hereby in respect of the Collateral have been accomplished and
the security interest granted to the Collateral Agent pursuant to this Agreement
in and to the Collateral constitutes a perfected security interest therein
superior and prior to the rights of all other persons therein (except that the
Collateral may be subject to the security interests evidenced by the financing
statements disclosed on Annex A hereto (the "Permitted Filings")) and subject to
no other Liens (except Permitted Liens) and is entitled to all the rights,
priorities and benefits afforded by the Uniform Commercial Code or other
relevant law as enacted in any relevant jurisdiction to perfected security
interests, subject to compliance with the Assignment of Claims Act of 1940, as
amended, and subject to the limitations on assignments of payments pursuant to
42 C.F.R. ss. 447.10 (Medicaid), or other applicable legal requirements related
to directed payments to assignees under federal and state payment or
reimbursement programs.
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2.2. No Liens. Each Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any person (other than evidenced by the Permitted Filings
and Liens permitted under the Credit Agreement), and such Assignor shall defend
the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. There is no financing statement (or
similar statement or instrument of registration under the law of any
jurisdiction) covering or purporting to cover any interest of any kind in the
Collateral except as disclosed in Annex A hereto and so long as the Total
Commitment has not been terminated or any Letter of Credit remains outstanding
or any of the Obligations remain unpaid or any Designated Hedge Agreement
remains in effect, no Assignor will execute or authorize to be filed in any
public office any financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral, except financing statements filed or to be filed in respect of and
covering the security interests granted hereby such Assignor or as otherwise
permitted by the Credit Agreement.
2.4. Chief Executive Office, etc; Records. The chief executive office
(and the registered office of each Assignor which is a corporation) of each
Assignor is located at the address indicated on Annex B hereto. No Assignor will
move its chief executive office (or registered office in the case of an Assignor
which is a corporation) except to such new location as such Assignor may
establish in accordance with the last sentence of this section 2.4. The
originals of all documents evidencing all Receivables and Contract Rights of
such Assignor and the only original books of account and records of such
Assignor relating thereto are, and will continue to be, kept at such chief
executive office, or at such new locations as such Assignor may establish in
accordance with the last sentence of this section 2.4. All Receivables and
Contract Rights of such Assignor are, and will continue to be, maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from, the office locations described above, or such new
locations as such Assignor may establish in accordance with the last sentence of
this section 2.4. No Assignor shall establish new locations for such offices
until (i) it shall have given to the Collateral Agent not less than 30 days'
prior written notice (or such lesser notice as shall be acceptable to the
Collateral Agent in the case of a new record location to be established in
connection with newly acquired Contracts) of its intention so to do, clearly
describing such new location and providing such other information in connection
therewith as the Collateral Agent may reasonably request, and (ii) with respect
to such new location, it shall have taken all action, satisfactory to the
Collateral Agent, to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and Equipment
held on the date hereof by each Assignor is located at one of the locations
shown on Annex C attached hereto. Each Assignor agrees that all Inventory and
Equipment now held or subsequently acquired by it shall be kept at (or shall be
in transport to or from) any one of the locations shown on Annex C hereto, or
such new location as such Assignor may establish in accordance with the last
sentence of this
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section 2.5. An Assignor may establish a new location for Inventory and
Equipment only if (i) it shall have given to the Collateral Agent not less than
30 days' prior written notice of its intention so to do, clearly describing such
new location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, and (ii) with respect to such new
location, it shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times in fully perfected and
in full force and effect.
2.6. Trade Names; Change of Name. No Assignor has or operates in any
jurisdiction under, or in the preceding five years has had or has operated in
any jurisdiction under, any trade names, fictitious names or other names
(including, without limitation, any names of divisions or operations) except its
legal name and such other trade, fictitious or other names as are listed on
Annex D hereto. Each Assignor has only operated under each name set forth in
Annex D in the jurisdiction or jurisdictions set forth opposite each such name
on Annex D. No Assignor shall change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex D hereto in the jurisdictions listed with respect to such names and new
names (including, without limitation, any names of divisions or operations)
and/or jurisdictions established in accordance with the last sentence of this
section 2.6. No Assignor shall assume or operate in any jurisdiction under any
new trade, fictitious or other name or operate under any existing name in any
additional jurisdiction until (i) it shall have given to the Collateral Agent
not less than 30 days' prior written notice of its intention so to do, clearly
describing in such new name and/or jurisdiction and, in the case of a new name,
the jurisdictions in which such new name shall be used and providing such other
information in connection therewith as the Collateral Agent may reasonably
request, and (ii) with respect to such new name and/or new jurisdiction, it
shall have taken all action to maintain the security interest of the Collateral
Agent in the Collateral intended to be granted hereby at all times fully
perfected and in full force and effect.
2.7. Recourse. This Agreement is made with full recourse to the
relevant Assignor and pursuant to and upon all the warranties, representations,
covenants, and agreements on the part of such Assignor contained herein, in the
Designated Hedge Agreements and otherwise in writing in connection herewith or
therewith.
3. SPECIAL PROVISIONS CONCERNING RECEIVABLES; CONTRACT
RIGHTS; INSTRUMENTS.
3.1. Additional Representations and Warranties. As of the time when
each of its accounts receivable arises, each Assignor shall be deemed to have
represented and warranted that, except in such respects as do not impair in any
material respect the value or collectibility of its accounts receivable taken as
a whole, and except in such other respects as may from time be disclosed by such
Assignor to the Administrative Agent in writing: such receivable, and all
records, papers and documents relating thereto (if any) are, to the best
knowledge of the Assignor after due inquiry, genuine and in all respects what
they purport to be, and that all papers and documents (if any) relating thereto,
to the best knowledge of the Assignor after due inquiry, (i) will represent the
genuine, legal,
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valid and binding obligation of the account debtor, subject to adjustments
customary in the business of such Assignor, and evidencing indebtedness unpaid
and owed by the respective account debtor arising out of the performance of
labor or services or the sale or lease and delivery of the merchandise listed
therein, or both, (ii) will be the only original writings evidencing and
embodying such obligation of the account debtor named therein (other than copies
created for general accounting purposes), (iii) will evidence true and valid
obligations, enforceable in accordance with their respective terms, subject to
adjustments customary in the business of such Assignor and (iv) will be in
compliance and Will conform with all applicable federal, state and local laws
and applicable laws of any relevant foreign jurisdiction.
3.2. Maintenance of Records. Each Assignor Will keep and maintain at
its own cost and expense satisfactory and complete records of its Receivables
and Contracts, including, but not limited to, the originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available to the
Collateral Agent for inspection, at such Assignor's own cost and expense, at any
and all reasonable times upon demand and upon reasonable advance notice. Each
Assignor shall, at its own cost and expense, deliver all tangible evidence of
its Receivables and Contract Rights (including, without limitation, copies of
all documents evidencing the Receivables and all Contracts, such copies, if
requested by the Collateral Agent while an Event of Default is in existence, to
be certified as true and complete by an appropriate officer of such Assignor)
and such books and records to the Collateral Agent or to its representatives
(copies of which evidence and books and records may be retained by such
Assignor) at any time upon its demand. If the Collateral Agent so directs, each
Assignor shall legend, in form and manner reasonably satisfactory to the
Collateral Agent, the Receivables and Contracts, as well as books, records and
documents of such Assignor evidencing or pertaining to the Receivables with an
appropriate reference to the fact that the Receivables and Contracts have been
assigned to the Collateral Agent and that the Collateral Agent has a security
interest therein.
3.3. Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify
any term thereof or make any adjustment with respect thereto, or extend or renew
the same, or compromise or settle any material dispute, claim, suit or legal
proceeding relating thereto, or sell any Receivable or Contract, or interest
therein, without the prior written consent of the Collateral Agent, except (i)
as permitted by section 3.4 hereof and (ii) so long as no Event of Default is
then in existence in respect of which the Collateral Agent has given notice that
this exception is no longer applicable, the Assignor may rescind, cancel,
modify, make adjustments with respect to, extend or renew any Contracts or
indebtedness evidenced by any Receivable, or compromise or settle any such
dispute, claim, suit, or legal proceeding, or sell any Receivable or Contract or
interest therein, in the ordinary course of business. Each Assignor will duly
fulfill all obligations on its part to be fulfilled under or in connection with
the Receivables and Contracts and will do nothing to materially impair the
rights of the Collateral Agent in the Receivables or Contracts.
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3.4. Collection. Each Assignor shall endeavor to cause to be collected
from the account debtor named in each of its Receivables or obligor under any
Contract, as and when due (including, without limitation, amounts which are
delinquent, such amounts to be collected in accordance with generally accepted
lawful collection procedures) any and all amounts owing under or on account of
such Receivable or Contract, and apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such Receivable or
under such Contract, except that, so long as no Event of Default is then in
existence in respect of which the Collateral Agent has given notice that this
exception is no longer applicable, such Assignor may allow in the ordinary
course of business as adjustments to amounts owing under its Receivables and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Assignor finds
appropriate in accordance with sound business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise or improperly
performed services. The reasonable out-of-pocket costs and expenses (including,
without limitation, attorneys' fees) of collection, whether incurred by such
Assignor or the Collateral Agent, shall be borne by such Assignor.
3.5. Direction to Account Debtors, etc. Upon the occurrence and during
the continuance of an Event of Default, and if the Collateral Agent so directs
the relevant Assignor, to the extent permitted by applicable law, such Assignor
agrees (x) to cause all payments on account of the Receivables to be made
directly to the Cash Collateral Account, (y) that the Collateral Agent may, at
its option, directly notify the obligors with respect to any Receivables to make
payments with respect thereto as provided in preceding clause (x), and (z) that
the Collateral Agent may enforce collection of any such Receivables and may
adjust, settle or compromise the amount of payment thereof. The Collateral Agent
may apply any or all amounts then in, or thereafter deposited in, the Cash
Collateral Account in the manner provided in section 7.4 of this Agreement. The
reasonable out-of-pocket costs and expenses (including attorneys' fees) of
collection, whether incurred by such Assignor or the Collateral Agent, shall be
borne by such Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument, such
Assignor will within 10 days notify the Collateral Agent thereof, and upon
request by the Collateral Agent promptly deliver such statement to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent as
further security hereunder.
3.7. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require to give effect to the purposes of this Agreement.
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4. SPECIAL PROVISIONS CONCERNING TRADEMARKS.
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of the
Marks listed in Annex E attached hereto and that said listed Marks constitute
all the marks registered in the United States Patent and Trademark Office that
such Assignor now owns or uses in connection with its business. Each Assignor
represents and warrants that it owns or is licensed to use all Marks that it
uses, and that it owns all of the registrations listed on Annex E. Each Assignor
further warrants that it is aware of no third party claim that any aspect of
such Assignor's present or contemplated business operations infringes or will
infringe any trademark or service xxxx in a manner which could have a material
effect on the financial condition, business or property of such Assignor.
4.2. Licenses and Assignments. Each Assignor hereby agrees not to
divest itself of any right under a Xxxx other than in the ordinary course of
business absent prior written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who may be infringing or otherwise violating any of such Assignor's
rights in and to any Xxxx that has a material effect on the financial condition,
business or property of such Assignor taken as a whole (each such Xxxx, a
"Significant Xxxx"), or with respect to any party claiming that such Assignor's
use of any Significant Xxxx violates any property right of that party, to the
extent that such infringement or violation could have a material effect on the
financial condition, business or property of such Assignor. Each Assignor
further agrees, unless otherwise directed by the Collateral Agent, diligently to
prosecute any person infringing any Significant Xxxx in a manner consistent with
its past practice and in the ordinary course of business.
4.4. Preservation of Marks. Each Assignor agrees to use or license the
use of its Significant Marks in interstate commerce during the time in which
this Agreement is in effect, sufficiently to preserve such Marks as trademarks
or service marks registered under the laws of the United States.
4.5. Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. ss.ss.1051 et seq. to maintain trademark registration which would
reasonably be expected to have a Material Adverse Effect, including but not
limited to affidavits of use and applications for renewals of registration in
the United States Patent and Trademark Office for all of its Marks pursuant to
15 U.S.C. ss.ss.1058(a), 1059 and 1065, and shall pay all fees and disbursements
in connection therewith, and shall not abandon any such filing of affidavit of
use or any such application of renewal prior to the exhaustion of all
administrative and judicial remedies without prior written consent of the
Collateral Agent, which consent shall not be unreasonably withheld.
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4.6. Future Registered Marks. If any xxxx registration issues hereafter
to an Assignor as a result of any application now or hereafter pending before
the United States Patent and Trademark Office, within 30 days of receipt of such
certificate such Assignor shall deliver a copy of such certificate, and a grant
of security in such xxxx to the Collateral Agent, confirming the grant thereof
hereunder, the form of such confirmatory grant to be substantially the same as
the form hereof.
4.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested, in which event
such rights, title and interest shall immediately vest, in the Collateral Agent
for the benefit of the Secured Creditors, in which case such Assignor agrees to
execute an assignment in form and substance reasonably satisfactory to the
Collateral Agent, of all its rights, title and interest in and to the Marks to
the Collateral Agent for the benefit of the Secured Creditors; (ii) take and use
or sell the Marks and the goodwill of such Assignor's business symbolized by the
Marks and the right to carry on the business and use the assets of the Assignor
in connection with which the Marks have been used; and (iii) direct such
Assignor to refrain, in which event such Assignor shall refrain, from using the
Marks in any manner whatsoever, directly or indirectly, and, if requested by the
Collateral Agent, change such Assignor's corporate name to eliminate therefrom
any use of any Xxxx and execute such other and further documents that the
Collateral Agent may request to further confirm this and to transfer ownership
of the Marks and registrations and any pending trademark application in the
United States Patent and Trademark Office to the Collateral Agent.
5. SPECIAL PROVISIONS CONCERNING PATENTS AND COPYRIGHTS.
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner or licensee of all
rights in the Patents listed in Annex F attached hereto and in the Copyright
registrations listed in Annex G attached hereto, that said Patents constitute
all the United States patents and applications for United States patents that
such Assignor now owns and that said Copyrights constitute all the registered
United States copyrights that such Assignor now owns. Each Assignor represents
and warrants that it owns or is licensed to practice under all Patents and
Copyright registrations that it now owns, uses or practices under. Each Assignor
further warrants that it is aware of no third party claim that any aspect of
such Assignor's present or contemplated business operations infringes or will
infringe any patent or any copyright in a manner which could have a material
effect on the financial condition, business or property of such Assignor.
5.2. Licenses and Assignments. Each Assignor hereby agrees not to
divest itself of any right under a Patent or Copyright other than in the
ordinary course of business absent prior written approval of the Collateral
Agent, which such approval shall not be unreasonably withheld.
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5.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement or other
violation of such Assignor's rights in any Patent that has a material effect on
the financial condition, business or property of such Assignor taken as a whole
(each such Patent, a "Significant Patent') or Copyright, or with respect to any
claim that practice of any Significant Patent or Copyright violates any property
right of that party, to the extent that such infringement or violation could
have a material effect on the financial condition, business or property of such
Assignor. Each Assignor further agrees, absent direction of the Collateral Agent
to the contrary, diligently to prosecute any person infringing any Significant
Patent or Copyright about which it has knowledge in a manner consistent with its
past practice and in the ordinary course of business.
5.4. Maintenance of Patents. At its own expense, each Assignor shall
make timely payment of all post issuance fees required pursuant to 35 U.S.C. ss.
41 to maintain in force rights under each Patent.
5.5. Prosecution of Patent Applications. At its own expense, each
Assignor shall diligently prosecute all applications for United States patents
listed on Annex F hereto, and shall not abandon any such application, except in
favor of a continuation application based on such application, prior to
exhaustion of all administrative and judicial remedies, absent written consent
of the Collateral Agent, which such consent shall not be unreasonably withheld.
5.6. Other Patents and Copyrights. Within 30 days of acquisition of a
United States Patent or Copyright, or of filing of an application for a United
States Patent or Copyright, the relevant Assignor shall deliver to the
Collateral Agent a copy of said Patent or Copyright, as the case may be, with a
grant of security as to such Patent or Copyright, as the case may be, confirming
the grant thereof hereunder, the form of such confirmatory grant to be
substantially the same as the form hereof.
5.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor take any or
all of the following actions: (i) declare the entire right, title and interest
of such Assignor in each of the Patents and Copyrights vested, in which event
such right, title and interest shall immediately vest in the Collateral Agent
for the benefit of the Secured Creditors, in which case such Assignor agrees to
execute an assignment in form and substance reasonably satisfactory to the
Collateral Agent of all its right, title, and interest to such Patents and
Copyrights to the Collateral Agent for the benefit of the Secured Creditors;
(ii) take and practice or sell the Patents and Copyrights; (iii) direct such
Assignor to refrain in which event such Assignor shall refrain, from practicing
the Patents and Copyrights directly or indirectly, and such Assignor shall
execute such other and further documents as the Collateral Agent may request
further to confirm this and to transfer ownership of the Patents and Copyrights
to the Collateral Agent for the benefit of the Secured Creditors.
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6. PROVISIONS CONCERNING ALL COLLATERAL.
6.1. Protection of Collateral Agent's Security. Each Assignor will do
nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insurance in favor
of the Collateral Agent, at its own expense, to the extent required by the
Credit Agreement against fee, theft and all other risks to which such Collateral
may be subject; all policies or certificates with respect to such insurance
shall be endorsed to the Collateral Agent's satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as an additional insured and loss payee) and copies thereof shall be delivered
upon request to the Collateral Agent. If an Assignor shall fail to insure such
Inventory and/or Equipment to the extent required by the Credit Agreement, or if
such Assignor shall fail to so endorse all policies or certificates with respect
thereto, the Collateral Agent shall have the right (but shall be under no
obligation) to procure such insurance and such Assignor agrees to reimburse the
Collateral Agent for all costs and expenses of procuring such insurance. The
Collateral Agent may apply any proceeds of such insurance in accordance with
section 7.4, it being understood and agreed that the Assignor shall be permitted
to first use any such proceeds to repair and/or replace the relevant Collateral.
Each Assignor assumes all Ability and responsibility in connection with the
Collateral acquired by it and the liability of such Assignor to pay its
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law).
6.3. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which tie Collateral Agent
reasonably deems appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral.
6.4. Financing Statements. Each Assignor agrees to sign and deliver to
the Collateral Agent such financing statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are necessary or desirable in the opinion of the Collateral Agent
to establish and maintain a valid, enforceable, first priority security interest
in the Collateral as provided herein and the other rights ant security
contemplated hereby all in accordance with the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or any other relevant law. Each
Assignor will pay any applicable filing fees and elated expenses. Each Assignor
11
authorizes the Collateral Agent to file any such financing statements without he
signature of such Assignor.
7. REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, subject to any mandatory requirements of applicable law
then in effect, the Collateral Agent, in addition to any rights now or hereafter
existing under applicable law, shall have all rights as a secured creditor under
the Uniform Commercial Code in all relevant jurisdictions and may
(i) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from such Assignor or
any other person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon
such Assignor's premises where any of the Collateral is located and
remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables) constituting the Collateral to make any payment required
by the terms of such instrument or agreement directly to the Collateral
Agent;
(iii) sell, assign or otherwise liquidate, or direct such
Assignor to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of
any such sale or liquidation;
(iv) withdraw any or all monies, securities and/or instruments
in the Cash Collateral Account for application to the Obligations in
accordance with section 7.4 hereof; and
(v) take possession of the Collateral or any part thereof, by
directing such Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense;
(A) forthwith cause the same to be moved to the place
or places so designated by the Collateral Agent and there
delivered to the Collateral Agent,
(B) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further
action by the Collateral Agent as provided in section 7.2, and
12
(C) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain
them in good condition;
it being understood that such Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by the Assignor of said obligation.
7.2. Remedies; Disposition of the Collateral. Upon the occurrence and
continuance of an Event of Default, any Collateral repossessed by the Collateral
Agent under or pursuant to section 7.1 and any other Collateral whether or not
so repossessed by the Collateral Agent, may be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale of the property to be sold, and
in general in such manner, at such time or times, at such place or places and on
such terms as the Collateral Agent may, in compliance with any mandatory
requirements of applicable able how, determine to be commercially reasonable.
Any of the Collateral may be sold, leased or otherwise disposed of in condition
in which the same existed when taken by the Collateral Agent or after any
overhaul or repair which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to such Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of the relevant Assignor to
acquire the Collateral involved at a price or for such other consideration at
least equal to the intended sale price or other consideration so specified. Any
such disposition which shall be a public sale permitted by such requirements
shall be made upon not less than 10 days' written notice to the relevant
Assignor specifying the time and place of such sale and, in the absence of
applicable requirements of law, shall be by public auction (which may, at the
Collateral Agent's option, be subject to reserve), after publication of notice
of such auction not less than 10 days prior thereto in two newspapers in general
circulation in the city where such Collateral is located. To the extent
permitted by any such requirement of law, the Collateral Agent on behalf of the
Secured Creditors (or certain of them) may bid for and become the purchaser (by
bidding in Obligations or otherwise) of the Collateral or any item thereof,
offered for sale in accordance with this section without accountability to the
relevant Assignor (except to the extent of surplus money received as provided in
section 7.4). If, under mandatory requirements of applicable law, the Collateral
Agent shall be required to make disposition of the Collateral within a period of
time which does not permit the giving of notice to the Assignor as hereinabove
specified, the Collateral Agent need give the relevant Assignor only such notice
of disposition as shall be reasonably practicable in view of such mandatory
requirements of applicable law.
13
7.3. Waiver, or Claims. Except as otherwise provided in this Agreement,
EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE
AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING POSSESSION
OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE ASSIGNOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and
each Assignor hereby further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except
any damages which are the direct result of the Collateral Agent's gross
negligence or wilful misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's rights here-under; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable
law in order to prevent or delay the enforcement of this Agreement or
the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against the
relevant Assignor and against any and all persons claiming or attempting to
claim the Collateral so sold, optioned or realized upon, or any part thereof,
from through and under the relevant Assignor.
7.4. Application or Proceeds. (a) The proceeds of any Collateral
obtained pursuant to section 7.1 or disposed of pursuant to section 7.2 shall be
applied as follows:
(i) first, to the payment of all Obligations to the Collateral
Agent of the type described in clauses (iii) and (iv) of the definition
of "Obligations" contained in section 9 hereof
(ii) second, to the extent proceeds remain after the
application pursuant to preceding clause (i), an amount equal to the
outstanding Obligations to the Secured Creditors shall be paid to the
Secured Creditors as provided in section 7.4(c) with each Secured
Creditor receiving an amount equal to its outstanding Obligations or,
if the proceeds are insufficient to pay in full all such Obligations,
its Pro Rata Share of the amount remaining to be distributed; and
14
(iii) third, to the extent remaining after the application
pursuant to the preceding clauses (i) and (ii) or following the
termination of this Agreement pursuant to section 10.9 hereof, to the
relevant Assignor or to whomever may be lawfully entitled to receive
such payment.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the (i) Lenders hereunder shall
be made to the Administrative Agent for the account of the respective Lenders
and (ii) Hedge Creditors hereunder shall be made to the paying agent under the
applicable Designated Hedge Agreement or, in the case of Designated Hedge
Agreements without a paying agent, directly to the applicable Hedge Creditor.
(d) For purposes of applying payments received in accordance with this
section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent for a determination (which the Administrative Agent agrees
to provide upon request to the Collateral Agent) of the outstanding Credit
Document Obligations and (ii) upon any Hedge Creditor for determination (which
each Hedge) Creditor agrees to provide upon request to the Collateral Agent) of
the outstanding Hedge Obligations owed to such Hedge Creditor. Unless it has
actual knowledge (including by way of written notice from a Secured Creditor) to
the contrary, the Administrative Agent under the Credit Agreement, in furnishing
information pursuant to the preceding sentence, and the Collateral Agent, in
acting hereunder, shall be entitled to assume that (x) no Credit Document
Obligations other than principal, interest and regularly accruing fees are owing
to any Lender and (y) no Designated Hedge Agreements or any Hedge Obligations
with respect thereto are in existence.
(e) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between (x) the amount of the
proceeds of the Collateral and the amount of the sum referred to in clause
(a)(i) and (ii) of this section 7.4 and (y) the aggregate outstanding amount of
the Obligations.
7.5. Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to the Collateral Agent shall be in addition to every other
right, power and remedy specifically given under this Agreement, any Designated
Hedge Agreement or the other Credit Documents or now or thereafter existing at
law or in equity, or by statute and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time or simultaneously and as often and in such order as may be deemed
expedient by the Collateral Agent. All such rights, powers and remedies shall be
cumulative and the exercise or the beginning of exercise of one shall not be
deemed a waiver of the right to exercise of any other or others. No delay or
omission of the Collateral Agent in the exercise of any such right, power or
remedy and no renewal or extension of any of the Obligations shall impair any
such right, power or remedy or shall be
15
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. In the event that the Collateral Agent shall bring any suit to enforce
any of its rights hereunder and shall be entitled to judgment, then in such suit
the Collateral Agent may recover reasonable expenses, including attorneys' fees,
and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent shall
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the relevant
Assignor, the Collateral Agent and each holder of any of the Obligations shall
be restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Collateral Agent shall continue as if no
such proceeding had been instituted.
7.7. Collateral Agent to Act on Behalf of Secured Creditors. The
Secured Creditors agree by their acceptance of the benefits hereof that this
Agreement may be enforced on their behalf only by the action of the Collateral
Agent, acting upon the instructions of the Required Lenders (or, after all
Credit Document Obligations have been paid in full, instructions of the holders
of at least the majority of the outstanding Hedge Obligations) and that no other
Secured Creditor shall have any right individually to seek to enforce or to
enforce this Agreement or to realize upon the security to be granted hereby, it
being understood and agreed that such rights and remedies may be exercised by
the Collateral Agent, for the benefit of the Secured Creditors, upon the terms
of this Agreement.
8. INDEMNITY.
8.1. Indemnity. (a) The Assignors jointly and severally agree to
indemnify, reimburse and hold the Collateral Agent, each Secured Creditor and
its respective successors, assigns, employees, agents and servants (hereinafter
in this section 8.1 referred to individually as "Indemnitee," and collectively
as "Indemnitees" harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, suits, judgments and any and all
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and expenses) (for the purposes of this section 8. 1 the foregoing are
collectively called "expenses") of whatsoever kind and nature imposed on,
asserted against or incurred by any of the Indemnities in any way relating to or
arising out of this Agreement, any Designated Hedge Agreement, any other Credit
Document or the documents executed in connection herewith and therewith or in
any other way connected with the enforcement of any of the terms of, or the
preservation of any rights under any thereof, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws of any country, state or other governmental body or unit, any tort
(including, without limitation, claims arising or imposed under the doctrine of
strict liability, or for or on account of injury to or the death of any person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this section 8.1(a) for
losses,
16
damages or liabilities to the extent caused by the gross negligence or wilful
misconduct of such person to be indemnified or of any other Indemnitee who is
such person or an affiliate of such person. If any claim is asserted against any
Indemnitee, such Indemnitee shall promptly notify the Assignor and each
Indemnitee may, and if requested by the Assignor shall, in good faith, contest
the validity, applicability and amount of such claim with counsel selected by
such Indemnitee, and shall permit the Assignor to participate in such contest.
In addition, in connection with any claim covered by this section 8.1 against
more than one Indemnitee, all such Indemnitees shall be represented by the same
legal counsel selected by such Indemnitees; provided, however, that if such
legal counsel determines in good faith that representing all such Indemnitees
would or could result in a conflict of interest ,under the laws or ethical
principles applicable to such legal counsel or that a defense or counterclaim is
available to an Indemnitee that is not available to all such Indemnitees, then
to the extent reasonably necessary to avoid such a conflict of interest or to
permit unqualified assertion of such defense or counterclaim, each Indemnitee
shall be entitled to separate representation by a legal counsel selected by that
Indemnitee. Each Assignor agrees that upon written notice by any Indemnitee of
the assertion of such a liability, obligation, loss, damage, penalty, claim,
demand, action, judgment or suit, such Assignor shall assume full responsibility
for the defense thereof. Each Indemnitee agrees to use its best efforts to
promptly notify the relevant Assignor of any such assertion of which such
Indemnitee has knowledge.
(b) Without limiting the application of section 8.1(a), the Assignors
jointly and severally agree to pay, or reimburse the Collateral Agent for (if
the Collateral Agent shall have incurred fees, costs or expenses because an
Assignor shall have failed to comply with its obligations under this Agreement
or any Credit Document), any and all out-of-pocket fees, costs and expenses of
whatever kind or nature incurred in connection with the creation, preservation
or protection of the Collateral Agent's Liens on, and security interest in, the
Collateral, including, without limitation, all fees and taxes in connection with
the recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral,
premiums for insurance with respect to the Collateral and all other fees, costs
and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of section 8.1(a) or (b), the
Assignors jointly and severally agree to pay, indemnify and hold each Indemnitee
harmless from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out of any
material misrepresentation by an Assignor in this Agreement, or in any statement
or writing contemplated by or made or delivered pursuant to or in connection
with this Agreement.
(d) If and to the extent that the obligations of any Assignor under
this section 8.1 are unenforceable for any reason, each Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
17
8.2. Indemnity Obligations Secured by Collateral; Survival. Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Assignors contained in this section 8 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement and all of the other Obligations and
notwithstanding the discharge thereof.
9. DEFINITIONS.
The following terms shall have the meanings herein specified unless the
context otherwise requires. Such definitions shall be equally applicable to the
singular and plural forms of the terms defined.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning specified in the first paragraph of
this Agreement.
"Business Day" means any day excluding Saturday, Sunday and any day
which shall be in New York, New York a legal holiday or a day on which banking
institutions are authorized by law to close.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors (such cash collateral account shall be
interest bearing if it is the general policy of the Collateral Agent in
syndicated credit agreements in which it acts as collateral agent to establish
such cash collateral accounts as interest bearing accounts; otherwise such cash
collateral account shall be non-interest bearing).
"Chattel Paper" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Collateral" shall have the meaning provided in section 1.1(a).
"Collateral Agent" shall have the meaning specified in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of an Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between an Assignor and one or
more additional parties (but shall include Cash Equivalents).
18
"Copyrights" shall mean any U.S. copyright to which an Assignor now or
hereafter has title, as well as any application for a U.S. copyright hereafter
made by such Assignor.
"Credit Agreement" shall have the meaning provided in the Preliminary
Statements of this Agreement.
"Documents" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by an Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, fixtures and
vehicles now or hereafter owned by an Assignor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement, or any payment default, after any applicable
grace period, under any Designated Hedge Agreement.
"General Intangibles" shall have the meaning assigned that term under
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.
"Goods" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Hedge Creditors" shall have the meaning provided in the Preliminary
Statements of this Agreement.
"Indemnitee" shall have the meaning provided in section 8.1.
"Instrument" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect on the date hereof in the State of New York
(but shall not include Cash Equivalents).
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and , replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and
19
any portion thereof which may be returned, rejected, reclaimed or repossessed by
the Collateral Agent from an Assignor's customers, and shall specifically
include all "inventory" as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York, now or hereafter owned
by the Assignor.
"Lender" shall have the meaning provided in the Preliminary Statements
of this Agreement.
"Marks" shall mean any trademarks and service marks now held or
hereafter acquired by an Assignor, which are registered in the United States
Patent and Trademark Office, as well as any unregistered marks used by an
Assignor in the United States and trade dress including logos and/or designs in
connection with which any of these registered or unregistered marks are used.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
section 362(a) of the Bankruptcy Code, would become due) of each Assignor to the
Lenders, whether now existing or hereafter incurred under, arising out of or in
connection with the Credit Agreement and the other Credit Documents to which
such Assignor is a party (including without limitation (x) in the case of any
Borrower, all such obligations and indebtedness of such Borrower under the
Credit Agreement and (y) in the case of each other Assignor, all such
obligations and indebtedness under the Subsidiary Guaranty to which such
Assignor is a party which relate to any of the foregoing), and the due
performance and compliance by each Assignor with all of the terms, conditions
and agreements contained in the Credit Agreement and such other Credit Documents
(all such obligations and liabilities under this clause (i), being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under section 362(a) of the Bankruptcy Code, would become due) and liabilities
of each Assignor or any other Subsidiary of the Company now existing or
hereafter incurred under, arising out of or in connection with any Designated
Hedge Agreement with any of the Secured Creditors including, in the case of
Assignors other than the Company, all obligations of such Assignor under the
Subsidiary Guaranty in respect of any Designated Hedge Agreement, and the due
performance and compliance by such Assignor with all of the terms, conditions
and agreements contained therein (all such obligations and liabilities under
this clause ((ii) being herein collectively called the "Hedge Obligations");
(iii) any and all sums advanced by the Collateral Agent in order to preserve the
Collateral or preserve its security interest in the Collateral; and (iv) in the
event of any proceeding for the collection or enforcement of any indebtedness,
obligations, or liabilities of any Assignor referred to in clauses (i) and (ii)
above, after an Event of Default shall have occurred and be continuing, the
reasonable expenses of re-taking, holding, preparing for sale or lease, selling
or otherwise disposing of or realizing on the Collateral, or of any exercise by
the Collateral Agent of its rights hereunder, together with reasonable
attorneys' fees and court costs.
"Patents" shall mean any U.S. patent to which an Assignor now or
hereafter has title, as well as any application for a U.S. patent now or
hereafter made by an Assignor.
20
"Permits" shall mean, to the extent permitted to be assigned by the
terms thereof of by applicable law, all licenses, permits, rights, orders,
variances, franchises or authorizations of or from any governmental authority or
agency.
"Proceeds" shall have the meaning assigned that term under the Uniform
Commercial Code as in effect the State of New York on the date hereof or under
other relevant law and, in any event, shall include, but not be limited to, (i)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to the Collateral Agent or an Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to an Assignor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Proprietary Information" means all information and know-how worldwide,
including, without limitation, technical data; manufacturing data; research and
development data; data relating to compositions, processes and formulations
manufacturing and production know-how and experience; management know-how;
training programs; manufacturing, engineering and other drawings;
specifications; performance criteria; operating instructions; maintenance
manuals; technology; technical information; software; engineering and computer
data and databases; design and engineering specifications; catalogs; promotional
literature; financial, business and marketing plans; inventions and invention
disclosures.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by an Assignor and, in any event, shall include,
but shall not be limited to, all of an Assignor's rights to payment for goods
sold or leased or services performed by an Assignor, whether now in existence or
arising from time to time hereafter, including, without limitation rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted or held by an Assignor to secure the
foregoing, (b) all of an Assignor's right, title and interest in and to any
goods the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto, and (h) all other writings
related in any way to the foregoing.
"Secured Creditors" shall have the meaning provided in the Preliminary
Statements of this Agreement.
21
"Significant Xxxx" shall have the meaning provided in section 4.3 of
this Agreement.
Significant Patent" shall have the meaning provided in section 5.3 of
this Agreement.
"Trade Secrets" means any secretly held existing engineering and other
data, information, production procedures and other know-how relating to the
design, manufacture, assembly, installation, use, operation, marketing, sale and
servicing of any products or business of an Assignor worldwide whether written
or not written.
10. MISCELLANEOUS.
10.1. Notices. All notices and other communications hereunder shall be
in writing and shall be delivered or mailed by first class mail, postage
prepaid, addressed:
(i) if to any Assignor, at its address contained in the Credit
Agreement or the Subsidiary Guaranty, as the case may be;
(ii) if to the Collateral Agent, at:
KeyBank of New York,
as Collateral Agent
0 Xxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx Xxxxxxxx
Senior Market Manager
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000;
with copies to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn.: Xxxx X. Xxxxx, Esq.
Te1. No.: (000) 000-0000
Fax No.: (000) 000-0000
(iii) if to any Lender (other than the Collateral Agent), at
such address as such Lender shall have specified in the Credit
Agreement;
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(iv) if to any Hedge Creditor, at such address as such Hedge
Creditor shall have specified in writing to each Assignor and the
Collateral Agent;
or at such other address as shall have been furnished in writing by any person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. (a) None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor and the Collateral Agent (with
the consent of the Required Lenders or, to the extent required by section 13.12
of the Credit Agreement, all of the Lenders), provided, however, that no such
change, waiver, modification or variance shall be made to section 7.4 hereof or
this section 10.2 without the consent of each Secured Creditor adversely
affected thereby, provided further that any change, waiver, modification or
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement, the term "Class" mean each class
of Secured Creditors, i.e whether (x) the Lenders as holders of the Credit
Document Obligations or (y) the Hedge Creditors as holders of the Hedge
Obligations. For the purpose of this Agreement, the term "Requisite Creditors"
of any Class shall mean each of (x) with respect to the Credit Document
Obligations, the Required Lenders and (y) with respect to the Hedge Obligations,
the holders of 51% of all obligations outstanding from time to time under the
Designated Hedge Agreements.
(b) No delay on the part of the Collateral Agent in exercising any of
its rights, remedies, powers and privileges hereunder or partial or single
exercise thereof, shall constitute a waiver thereof. No notice to or demand on
any Assignor in any case shall entitle it to any other or further notice or
demand in similar or other circumstances or constitute a waiver of any of the
rights of the Collateral Agent to any other or further action in any
circumstances without notice or demand.
10.3. Obligations Absolute. The obligations of each Assignor under this
Agreement shall be absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from other Credit Documents or
any Designated Hedge Agreement, or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of any such agreement or
instrument or this Agreement except as expressly provided in such
renewal, extension, amendment, modification, addition, supplement,
assignment or transfer;
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(iii) any furnishing of any additional security to the
Collateral Agent or its assignee or any acceptance thereof or any
release of any security by the Collateral Agent or its assignee;
(iv) any limitation on any person's liability or obligations
under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating
to an Assignor or any Subsidiary of an Assignor, or any action take
with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not an Assignor shall have
notice or knowledge of any of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon each
Assignor and its successors and assigns and shall inure to the benefit of the
Collateral Agent and its successors and assigns, provided that no Assignor may
transfer or assign any or all of its rights or obligations hereunder without the
written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by each Assignor herein or in any
certificate or other instrument delivered by such Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement and the
other Credit Documents regardless of any investigation made by the Secured
Creditors on their behalf.
10.5. Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
10.8. Assignors' Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the
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Collateral Agent be required or obligated in any manner to perform or fulfill
any of the obligations of an Assignor under or with respect to any Collateral.
10.9. Termination: Release. (a) After the termination of the Total
Commitment and all Designated Hedge Agreements, when no Note nor Letter of
Credit is outstanding and when all Loans and other Obligations have been paid in
full, this Agreement shall terminate, and the Collateral Agent, at the request
and expense of the Assignors, will execute and deliver to the relevant Assignor
a proper instrument or instruments (including Uniform Commercial Code
termination statements on form UCC-3) acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to the
relevant Assignor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Collateral Agent and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement.
(b) So long as no payment default on any of the Obligations is in
existence or would exist after the application of proceeds as provided below,
the Collateral Agent shall, at the request of the relevant Assignor, release any
or all of the Collateral, provided that (x) such release is permitted by the
terms of the Credit Agreement (it being agreed for such purposes that a release
will be deemed "permitted by the terms of the Credit Agreement" if the proposed
transaction constitutes an exception contained in section 9.2 of the Credit
Agreement) or otherwise has been approved in writing by the Required Lenders and
(y) the proceeds of such Collateral are to be applied as required pursuant to
the Credit Agreement or any consent or waiver entered into with respect thereto.
(c) At any time that an Assignor desires that the Collateral Agent take
any action to give effect to any release of Collateral pursuant to the foregoing
section 10.9(a) or (b), it shall deliver to the Collateral Agent a certificate
signed by a principal executive officer stating that the release of the
respective Collateral is permitted pursuant to section 10.9(a) or (b). In the
event that any part of the Collateral is released as provided in section
10.9(b), the Collateral Agent, at the request and expense of an Assignor, will
duly release such Collateral and assign, transfer and deliver to such Assignor
(without recourse and without any representation or warranty) such the of the
Collateral as is then being (or has been) so sold and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement. The Collateral Agent shall have no liability
whatsoever to any Secured Creditor as the result of any release of Collateral by
it as permitted by this section 10.9. Upon any release of Collateral pursuant to
section 10.9(a) or (b), none of the Secured Creditors shall have any continuing
right or interest in such Collateral, or the proceeds thereof.
10.10. Collateral Agent. By accepting the benefits of this Agreement,
each Secured Creditor acknowledges and agrees that the rights and obligations of
the Collateral Agent shall be as set forth in section of the Credit Agreement.
Notwithstanding anything to the contrary contained in section 10.2 of this
Agreement or section 13.12 of the Credit Agreement, this section 10.10, and the
duties and obligations of the Collateral Agent set forth in this section 10.10,
may not be amended or modified without the consent of the Collateral Agent.
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11. WAIVER OF JURY TRIAL.
Each Assignor and the Collateral Agent each hereby irrevocably waives
all right to a trial by jury in any section, proceeding or counterclaim arising
out of or relating to this Agreement or the transactions contemplated hereby.
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