EXHIBIT 4.28
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is dated as of
March __, 2004 and entered into by and among COVANTA POWER INTERNATIONAL
HOLDINGS, INC., a Delaware corporation ("CPIH" or "COMPANY"), each of THE OTHER
BORROWERS LISTED ON THE SIGNATURE PAGES HEREOF (Borrowers are sometimes
collectively referred to herein as "GRANTORS" and individually as a "GRANTOR")
and BANK OF AMERICA, N.A., in its capacity as collateral agent for and
representative of the Secured Parties (as defined in the Intercreditor Agreement
referred to below) (the "COLLATERAL AGENT"). All capitalized terms used but not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Intercreditor Agreement.
RECITALS
WHEREAS, pursuant to the Credit Agreement dated as of March
__, 2004 (said Credit Agreement or any credit agreement entered into by Revolver
Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness thereunder to the extent permitted
pursuant to the Term Loan Agreement (as defined below), as said Credit Agreement
or any replacement to said Credit Agreement may be amended, restated,
supplemented or otherwise modified from time to time, being the "REVOLVER CREDIT
AGREEMENT"), by and among Grantors as borrowers, the financial institutions from
time to time party thereto as lenders (the "REVOLVER LENDERS") and Deutsche Bank
AG, New York Branch, as administrative agent for the Revolver Lenders (the
"REVOLVER AGENT"), the Revolver Lenders have made certain commitments (each, a
"REVOLVER COMMITMENT"), subject to the terms and conditions set forth in the
Revolver Credit Agreement, to extend certain revolving credit facilities (each,
a "REVOLVER LOAN") to Grantors;
WHEREAS, pursuant to the Credit Agreement dated as of March
__, 2004, (said Credit Agreement or any credit agreement entered into by Term
Loan Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness thereunder to the extent permitted
pursuant to the Revolver Credit Agreement, as said Credit Agreement or any
replacement to said Credit Agreement may be amended, restated, supplemented or
otherwise modified from time to time, being the " TERM LOAN AGREEMENT"), by and
among Grantors as borrowers, the financial institutions listed therein as
lenders (the "TERM LOAN LENDERS"), Bank of America, N.A., as administrative
agent (in such capacity, the "TERM LOAN FACILITY AGENT") and Deutsche Bank
Securities, Inc., as documentation agent for the Term Loan Lenders (in such
capacity "TERM LOAN DOCUMENTATION AGENT," and together with the Term Loan
Facility Agent, the "TERM LOAN AGENTS" and collectively with the Revolver Agent,
the Revolver Lenders, the Term Loan Lenders and the Cash Management Bank (as
defined below), the "BENEFITED PARTIES"), the Term Loan Lenders have made
certain commitments (each, a "TERM LOAN COMMITMENT," and together with the
Revolver Commitments, collectively, the "COMMITMENTS"), subject to the terms and
conditions set forth in the Term Loan Agreement, to extend certain term loan
facilities (each, a "TERM LOAN," and together with the Revolver Loans, the
"LOANS") to the Term Loan Borrowers;
WHEREAS, in accordance with the terms of the Credit
Agreements, Borrowers are required to maintain the Cash Management System with
Bank of America (in such capacity, the "CASH MANAGEMENT BANK"), and it is
desired that the Cash Management Obligations be secured hereunder;
WHEREAS, Company, the Revolver Borrowers, the Term Loan
Borrowers, CEA, the Revolver Agent, the Revolver Lenders, the Term Loan Agents,
the Term Loan Lenders, the Cash Management Bank and Collateral Agent have
entered into that certain Intercreditor Agreement dated as of March __, 2004 (as
it may hereafter be amended, restated, supplemented or otherwise modified from
time to time, the "INTERCREDITOR AGREEMENT"), pursuant to which the Revolver
Agent, the Revolver Lenders, the Term Loan Agents, the Term Loan Lenders and
Cash Management Bank have appointed Collateral Agent, and Collateral Agent has
agreed to act, as collateral agent for the Revolver Agent, the Revolver Lenders,
the Term Loan Agents, the Term Loan Lenders and the Cash Management Bank
hereunder; and
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WHEREAS, it is a condition precedent to (i) the extension of
credit by the Revolver Lenders under the Revolver Credit Agreement and (ii) the
extension of credit by the Term Loan Lenders that the Grantors listed on the
signature pages hereof shall have granted the security interests and undertaken
the obligations contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Revolver Lenders to make extensions of credit from time to time
under the Revolver Credit Agreement, the Term Loan Lenders to continue to make
extensions of credit from time to time under the Term Loan Agreement, the Cash
Management Bank to provide cash management services to the Grantors and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, each Grantor hereby agrees with Collateral Agent as
follows:
SECTION 1. GRANT OF SECURITY.
Each Grantor hereby assigns and grants to Collateral Agent a
security interest, subject to the terms of the Intercreditor Agreement
(including, without limitation, the provisions regarding lien priority), in all
of such Grantor's right, title and interest in and to all of such Grantor's
personal property and fixture property of every kind and nature, and all
proceeds and products thereof, in each case whether now or hereafter acquired
and wherever the same may be located, including, without limitation, the
following (the "COLLATERAL"), to secure the obligations as set forth in Section
2 herein except as provided in the penultimate paragraph to this Section 1:
(a) all equipment, in all of its forms, all parts thereof and
all accessions thereto (any and all such equipment, parts and accessions being
the "EQUIPMENT");
(b) all inventory in all of its forms, including but not
limited to (i) all goods held by such Grantor for sale or lease or to be
furnished under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in such Grantor's
business, (iii) all goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind, and (iv) all goods which are
returned to or repossessed by such Grantor and all accessions thereto and
products thereof (collectively the "INVENTORY") and all negotiable and
non-negotiable documents of title (including without limitation, documents,
warehouse receipts, dock receipts and bills of lading) issued by any Person
covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles, letter-of-credit rights and other rights and
obligations of any kind owned by or owing to such Grantor and all rights in, to
and under all security agreements, leases and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel paper,
documents, instruments, general intangibles, letter-of-credit rights or other
rights and obligations (any and all such accounts, contract rights, chattel
paper, documents, instruments, general intangibles, letter of credit rights and
other rights and obligations being the "ACCOUNTS," and any and all such security
agreements, leases and other contracts being the "RELATED CONTRACTS").
(d) all deposit accounts and all the accounts and
concentration accounts which constitute the Cash Management System, together
with (i) all amounts on deposit from time to time in such deposit accounts and
(ii) all interest, cash, instruments, securities and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the foregoing (the "DEPOSIT ACCOUNTS");
(e) the "SECURITIES COLLATERAL," which term means:
(i) the shares of stock, partnership interests,
interests in joint ventures, limited liability company
interests and all other equity interests in any other Person,
including all securities convertible into, and rights,
warrants, options and other rights to purchase or otherwise
acquire, any of the foregoing now or hereafter owned by such
Grantor, including those owned on the date hereof and
described on Schedule 1(e)(i), and the certificates or other
instruments representing any of the foregoing and any interest
of such Grantor in the entries on the books of
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any securities intermediary pertaining thereto (the "PLEDGED
SHARES"), and all dividends, distributions, returns of
capital, cash, warrants, options, rights, instruments, rights
to vote or manage the business of such Person pursuant to
organizational documents governing the rights and obligations
of the stockholders, partners, members or other owners thereof
and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such Pledged Shares;
(ii) the indebtedness from time to time owed to such
Grantor by any obligor, and the instruments evidencing such
indebtedness (the "PLEDGED DEBT"), and all interest, cash,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Debt; and
(iii) all other investment property of such Grantor
not otherwise included in this clause (e) or the definition of
Investment Collateral below; provided, however, that the
Securities Collateral shall not include (1) any shares of
stock, partnership interests, interests in joint ventures,
limited liability company interests or other equity interests
of any Subsidiary that was not incorporated or organized under
the laws of the United States, any state thereof or the
District of Columbia (a "FOREIGN SUBSIDIARY") in excess of the
number of shares or other such interests of such issuer
possessing up to but not exceeding 65% of the voting power of
all classes of capital stock or other such interests entitled
to vote of such Foreign Subsidiary, or (2) any shares of
stock, partnership interests, interests in joint ventures,
limited liability company interests or all other equity
interests of those Subsidiaries the pledge of which would
constitute a violation of (A) a valid and enforceable
Contractual Obligation in favor of or for the benefit of a
Person other than Company or any of its Subsidiaries and their
respective Affiliates for which the required consents have not
been obtained, or (B) applicable law affecting such Grantor or
such Subsidiary;
(f) the "INVESTMENT COLLATERAL", which term means:
(i) all securities accounts, including any restricted
securities accounts established and maintained by Collateral
Agent pursuant to Section 14 herein, (ii) all credit balances
held from time to time in such securities accounts, (iii) any
property, including any Financial Assets (as defined in the
UCC) credited to any such securities account by Collateral
Agent and any other property acquired by Collateral Agent as
securities intermediary in exchange for, with proceeds from or
distributions on, or otherwise in respect of any of the
foregoing (any such property an "INVESTMENT") and any security
entitlements, securities (whether certificated or
uncertificated), instruments, accounts, chattel paper, general
intangibles and deposits representing or evidencing any
Investment, and (iv) all interest, dividends, cash,
instruments, securities and other property from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Investments.
(g) the "INTELLECTUAL PROPERTY COLLATERAL," which term means:
(i) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all
trademarks, service marks, designs, logos, indicia,
tradenames, trade dress, corporate names, company names,
business names, fictitious business names, trade styles and/or
other source and/or business identifiers and applications
pertaining thereto, owned by such Grantor, or hereafter
adopted and used, in its business (including, without
limitation, the trademarks specifically identified in Schedule
1(g)(i), as the same may be amended pursuant hereto from time
to time) (collectively, the "TRADEMARKS"), all registrations
that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in
foreign countries (including, without limitation, the
registrations and applications specifically identified in
Schedule 1(g)(i), as the same may be amended pursuant hereto
from time to time) (the "TRADEMARK REGISTRATIONS"), all common
law and other rights in and to the Trademarks in the United
States and any state thereof and in foreign countries (the
"TRADEMARK RIGHTS"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith
(the "ASSOCIATED GOODWILL");
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(ii) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all
patents and patent applications and rights and interests in
patents and patent applications under any domestic or foreign
law that are presently, or in the future may be, owned or held
by such Grantor and all patents and patent applications and
rights, title and interests in patents and patent applications
under any domestic or foreign law that are presently, or in
the future may be, owned by such Grantor in whole or in part
(including, without limitation, the patents and patent
applications listed in Schedule 1(g)(ii), as the same may be
amended pursuant hereto from time to time), all rights
corresponding thereto (including, without limitation, the
right, exercisable only upon the occurrence and during the
continuation of an Event of Default, to xxx for past, present
and future infringements in the name of such Grantor or in the
name of Collateral Agent, the Revolver Lenders or the Term
Loan Lenders and/or any other Benefited Parties), and all
re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being
collectively referred to as the "PATENTS"); it being
understood that the rights and interests included in the
Intellectual Property Collateral hereby shall include, without
limitation, all rights and interests pursuant to licensing or
other contracts in favor of such Grantor pertaining to patent
applications and patents presently or in the future owned or
used by third parties but, in the case of third parties which
are not Affiliates of such Grantor, only to the extent
permitted by such licensing or other contracts and, if not so
permitted, only with the consent of such third parties; and
(iii) all rights, title and interest (including
rights acquired pursuant to a license or otherwise) under
copyright in various published and unpublished works of
authorship including, without limitation, computer programs,
computer data bases, other computer software, layouts, trade
dress, drawings, designs, writings, and formulas owned by such
Grantor (including, without limitation, the works listed on
Schedule 1(g)(iii), as the same may be amended pursuant hereto
from time to time) (collectively, the "COPYRIGHTS"), all
copyright registrations issued to such Grantor and
applications for copyright registration that have been or may
hereafter be issued or applied for thereon by such Grantor in
the United States and any state thereof and in foreign
countries (including, without limitation, the registrations
listed on Schedule 1(g)(iii), as the same may be amended
pursuant hereto from time to time) (collectively, the
"COPYRIGHT REGISTRATIONS"), all common law and other rights in
and to the Copyrights in the United States and any state
thereof and in foreign countries including all copyright
licenses (but with respect to such copyright licenses, only to
the extent permitted by such licensing arrangements) (the
"COPYRIGHT RIGHTS"), including, without limitation, each of
the Copyrights, rights, titles and interests in and to the
Copyrights, all derivative works and other works protectable
by copyright, which are presently, or in the future may be,
owned, created (as a work for hire for the benefit of such
Grantor), authored (as a work for hire for the benefit of such
Grantor), or acquired by such Grantor, in whole or in part,
and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter
granted or applied for, and all renewals and extensions
thereof, throughout the world, including all proceeds thereof
(such as, by way of example and not by limitation, license
royalties and proceeds of infringement suits), the right to
renew and extend such Copyright Registrations and Copyright
Rights and to register works protectable by copyright and the
right to xxx for past, present and future infringements of the
Copyrights and Copyright Rights;
(h) all information used or useful or arising from the
business including all goodwill, trade secrets, trade secret rights, know-how,
customer lists, processes of production, ideas, confidential business
information, techniques, processes, formulas, and all other proprietary
information;
(i) all licenses, contracts and agreements, as each such
license, contract and agreement may be amended, restated, supplemented or
otherwise modified from time to time (said agreements, as so amended, restated,
supplemented or otherwise modified, being referred to herein individually as an
"ASSIGNED AGREEMENT" and collectively as the "ASSIGNED AGREEMENTS"), including,
without limitation, (i) all rights of such Grantor to receive moneys due or to
become due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) all claims of such Grantor for
damages arising out of any breach of or default under the Assigned Agreements,
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and (iv) all rights of such Grantor to terminate, amend, supplement, modify or
exercise rights or options under the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder;
(j) to the extent not included in any other paragraph of this
Section 1, each Grantor's commercial tort claims (as defined under Article 9 of
the UCC), potential claims, causes of action and potential causes of action,
including, but not limited to, those listed on Schedule 1(j) (collectively, the
"COMMERCIAL TORT CLAIMS"), and all general intangibles (including, without
limitation, tax refunds, payment intangibles, other rights to payment or
performance, choses in action, software and judgments taken on any rights or
claims included in the Collateral);
(k) all plant fixtures, business fixtures and other fixtures,
and storage and office facilities, and all accessions thereto and products
thereof;
(l) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(m) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance related to the Collateral (whether or not
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral. For purposes of this Agreement, the term
"PROCEEDS" includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Collateral include, and no Grantor shall be deemed to have granted a
security interest in (i) any of such Grantor's rights or interests in any
license, contract or agreement to which such Grantor is a party or any of its
rights or interests thereunder, to the extent, but only to the extent, that such
a grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under the
provisions of any license, contract or agreement to which such Grantor is a
party on the date hereof (other than to the extent that any such provision would
be rendered ineffective pursuant to the UCC or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Collateral, or (ii) any real property leasehold, unless a Grantor has executed a
leasehold mortgage or leasehold deed of trust covering such real property
leasehold.
Each item of Collateral listed in this Section 1 that is
defined in Articles 8 or 9 of the UCC shall also include the meanings set forth
in the UCC, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range
of assets.
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral assigned by each
Grantor is collateral security for, the Secured Obligations.
SECTION 3. GRANTORS REMAIN LIABLE.
Anything contained herein to the contrary notwithstanding, (a)
each Grantor shall remain liable under any contracts, licenses and agreements
included in the Collateral, to the extent set forth therein, to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Collateral Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts, licenses and agreements included in the Collateral, and (c)
Collateral Agent shall not
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have any obligation or liability under any contracts, licenses, and agreements
included in the Collateral by reason of this Agreement, nor shall Collateral
Agent be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Grantor represents and warrants as follows:
(a) OWNERSHIP OF COLLATERAL. Except as expressly permitted by
the Credit Documents, such Grantor owns the Collateral owned by such Grantor
free and clear of any Lien. Except as expressly permitted by the Credit
Documents and such as may have been filed in favor of Collateral Agent in
connection with this Agreement, no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office.
(b) LOCATIONS OF EQUIPMENT AND INVENTORY. All of the Equipment
and Inventory having a value in excess of $500,000 is, as of the date hereof,
located at the places specified in Schedule 4(b), except for Equipment that is
temporarily moved from places specified in Schedule 4(b) to undergo repair or
Inventory which, in the ordinary course of business, is in transit either (i)
from a supplier to a Grantor, (ii) between the locations specified in Schedule
4(b), or (iii) to customers of a Grantor.
(c) NEGOTIABLE DOCUMENTS OF TITLE. Except as set forth on
Schedule 4(c), no Negotiable Documents of Title are outstanding with respect to
any of the Inventory with a value in excess of $50,000.
(d) OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION.
The chief place of business, the chief executive office and the office where
such Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts are, as of the date hereof, and, except as
described on Schedule 4(d), have been for the four-month period preceding the
date hereof, located at the locations described on Schedule 4(d); such Grantor's
type (i.e., corporation, limited partnership, etc.) and jurisdiction of
organization are listed on Schedule 4(d); and no Grantor is an unregistered
entity.
(e) NAMES. No Grantor (or predecessor by merger or otherwise
of such Grantor) has, within the four-month period preceding the date hereof,
had a different name from the name of such Grantor listed on the signature pages
hereof, except the names listed in Schedule 4(e) annexed hereto.
(f) DELIVERY OF CERTAIN COLLATERAL. All certificates or
instruments (excluding checks) evidencing, comprising or representing the
Collateral (including, without limitation, the Securities Collateral) have been
or, when required pursuant to this Agreement will be, delivered to Collateral
Agent duly endorsed or accompanied by duly executed instruments of transfer or
assignment in blank.
(g) SECURITIES COLLATERAL. (i) All of the Pledged Shares
described on Schedule 1(e)(i) have been duly authorized and validly issued in
compliance with all applicable federal and state securities laws and, in the
case of capital stock, are fully paid and non-assessable; (ii) all of the
Pledged Debt issued by Company or any of its Subsidiaries has been duly
authorized, authenticated or issued, and delivered and is the legal, valid and
binding obligation of the issuers thereof and is not in default; (iii) except as
described more fully on Schedule 1(e)(i), the Pledged Shares constitute all of
the issued and outstanding shares of stock or other equity interests of each
issuer thereof (subject to the proviso to Section 1(e)(iii) with respect to
shares of a Foreign Subsidiary), and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares, except pursuant to any Contractual
Obligation set forth on Schedule 4(g); (iv) the Pledged Debt issued by Company
or any of its Subsidiaries constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note; and (v) Schedule
1(e)(i) sets forth all of the Pledged Shares owned by each Grantor on the date
hereof.
(h) INTELLECTUAL PROPERTY COLLATERAL.
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(i) a true and complete list of all Trademark
Registrations and Trademark applications owned, held (whether
pursuant to a license or otherwise) or used by such Grantor,
in whole or in part, is set forth in Schedule 1(g)(i);
(ii) a true and complete list of all Patents owned,
held (whether pursuant to a license or otherwise) or used by
such Grantor, in whole or in part, is set forth in Schedule
1(g)(ii);
(iii) a true and complete list of all Copyright
Registrations and applications for Copyright Registrations
held (whether pursuant to a license or otherwise) by such
Grantor, in whole or in part, is set forth in Schedule
1(g)(iii);
(iv) after reasonable inquiry, such Grantor is not
aware of any pending or threatened claim by any third party
that any of the Intellectual Property Collateral owned, held
or used by such Grantor is invalid or unenforceable; and
(v) except as expressly permitted by each Credit
Document, no effective security interest or other Lien
covering all or any part of the Intellectual Property
Collateral is on file in the United States Patent and
Trademark Office or the United States Copyright Office.
(i) PERFECTION. The security interest in the Collateral is
granted to Collateral Agent on the basis described in Section 2 hereof and
constitutes a valid security interest (except for the security interest
purported to be granted in commercial tort claims other than those listed on
Schedule 1(j)), to the extent the UCC or United States patent, trademark or
copyright statutes are applicable thereto, securing the payment of the
applicable Secured Obligations. Upon (i) the filing of UCC financing statements
naming each Grantor as "debtor," naming Collateral Agent as "secured party" and
describing the Collateral in the filing office with respect to such Grantor set
forth on Schedule 4(i), (ii) in the case of the Securities Collateral consisting
of certificated securities or evidenced by instruments, delivery of the
certificates representing such certificated securities and delivery of such
instruments to Collateral Agent, in each case duly endorsed or accompanied by
duly executed instruments of assignment or transfer in blank, and (iii) in the
case of the Intellectual Property Collateral listed on Schedules 1g(i), (ii) and
(iii) hereto, excluding the Intellectual Property held under foreign law, in
addition to the filing of such UCC financing statements, the filing of a Grant
of Trademark Security Interest, substantially in the form of Exhibit I, and a
Grant of Patent Security Interest, substantially in the form of Exhibit II, with
the United States Patent and Trademark Office and the filing of a Grant of
Copyright Security Interest, substantially in the form of Exhibit III, with the
United States Copyright Office (each such Grant of Trademark Security Interest,
Grant of Patent Security Interest and Grant of Copyright Security Interest being
referred to herein as a "GRANT"), the security interest in the Collateral
referred to in the immediately preceding sentence in each case will constitute a
perfected security interest therein (except for the security interest purported
to be granted in commercial tort claims other than those listed on Schedule
1(j)), to the extent the UCC or United States patent, trademark or copyright
statutes are applicable thereto, prior to all other Liens (except for Liens
otherwise permitted under any Credit Document to the extent such Liens are
permitted to be senior in priority to the Liens in favor of the Collateral
Agent, the Cash Management Bank, the Revolver Agent and the Revolver Lenders,
the Term Loan Agents and the Term Loan Lenders, as the case may be), and all
filings and other actions in the United States necessary or desirable to perfect
and protect such security interest have been duly made or taken. In the case of
Intellectual Property held under foreign law, after the occurrence of an Event
of Default, all actions necessary or desirable to perfect and protect such
security interest shall be taken.
(j) COMMERCIAL TORT CLAIMS. Schedule 1(j) identifies with
specificity each claim or cause of action that any Grantor may have, which
arises in tort, for which a related action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration ("PROCEEDING") has been initiated by any Person.
(k) ROLLING STOCK. The rolling stock of the Grantors
(collectively) as of the date hereof has an aggregate book value of less than
$500,000.00.
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SECTION 5. FURTHER ASSURANCES.
(a) GENERALLY. Each Grantor agrees that from time to time, at
the expense of Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect the security interest granted or purported to be
granted hereby under the UCC or United States patent, trademark or copyright
statutes or to enable Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) at the request of Collateral
Agent, upon the occurrence and continuation of an Event of Default, xxxx
conspicuously each item of chattel paper included in the Accounts, each Related
Contract and, at the request of Collateral Agent, each of its records pertaining
to the Collateral, with a legend, in form and substance satisfactory to
Collateral Agent, indicating that such Collateral is subject to the security
interests granted hereby, (ii) at the request of Collateral Agent, upon the
occurrence and continuation of an Event of Default, deliver and pledge to
Collateral Agent hereunder all instruments (including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Collateral Agent, (iii) execute and file such
financing or continuation statements, or amendments thereto, and execute and
deliver such agreements establishing that Collateral Agent has control of
specified items of Collateral and such other instruments or notices, as may be
necessary, or as Collateral Agent may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
under the UCC or United States patent, trademark or copyright statutes, (iv)
furnish to Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Collateral Agent may reasonably request, all in
reasonable detail, (v) upon the reasonable request of Collateral Agent, execute
and file with the registrar of motor vehicles or other appropriate authority in
such jurisdiction an application or other document requesting the notation or
other indication of the security interest created hereunder on such certificate
of title or any item of Equipment that is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, (vi) at any time during normal business hours, upon reasonable request
by Collateral Agent, exhibit the Collateral in its existing location to, and
allow inspection of the Collateral by, Collateral Agent, or persons designated
by Collateral Agent, (vii) at Collateral Agent's request, appear in and defend
any action or proceeding that may affect such Grantor's title to, or Collateral
Agent's security interest in all or any material part of, the Collateral, except
for Intellectual Property Collateral; provided, however, that the foregoing
exception for Intellectual Property Collateral shall not apply if such
Intellectual Property is of material value as determined by Collateral Agent in
its sole and absolute discretion; (viii) use commercially reasonable efforts to
obtain any necessary consents of third parties to the assignment and perfection
of a security interest to Collateral Agent with respect to any Collateral, and
(ix) at Collateral Agent's reasonable request, Grantors shall promptly deliver,
execute and file any and all documents, instruments and certificates that
Collateral Agent deems necessary or desirable, and in each case in form and
substance satisfactory to Collateral Agent. Notwithstanding the foregoing
sentence, no Grantor shall be required to amend or otherwise modify the
description of the Collateral to provide a description of any claim or cause of
action which arises in tort unless and until a Proceeding relating to such claim
or cause of action has been initiated by any Person. Each Grantor hereby
authorizes Collateral Agent to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of any Grantor. Each Grantor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed or authenticated by such Grantor shall be sufficient
authorization to file a financing statement and may be filed as a financing
statement in any and all jurisdictions.
(b) SECURITIES COLLATERAL. Without limiting the generality of
the foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other equity or debt securities required to be
pledged hereunder, immediately (and in any event within five (5) Business Days)
deliver to Collateral Agent a Pledge Supplement, duly executed by such Grantor,
in substantially the form of Exhibit IV (a "PLEDGE SUPPLEMENT"), in respect of
the additional Pledged Shares or Pledged Debt (to the extent issued by Company
or any of its Subsidiaries) to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Supplement to Collateral Agent, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) hereof shall be deemed
to have been made by such Grantor as to the Securities Collateral described in
such Pledge Supplement as of the date thereof. Each Grantor hereby authorizes
Collateral Agent to attach each Pledge Supplement to this Agreement and agrees
that all Pledged Shares or Pledged Debt of such Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of such
Grantor; provided that the failure of any Grantor to
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execute a Pledge Supplement with respect to any additional Pledged Shares or
Pledged Debt pledged pursuant to this Agreement shall not impair the security
interest of Collateral Agent therein or otherwise adversely affect the rights
and remedies of Collateral Agent hereunder with respect thereto.
(c) INTELLECTUAL PROPERTY COLLATERAL. Without limiting the
generality of the foregoing Section 5(a), each Grantor shall execute and deliver
to Collateral Agent contemporaneous with its execution and delivery of this
Agreement (i) with respect to all of such Grantor's Trademark Collateral, a
Grant of Trademark Security Interest, substantially in the form of Exhibit I,
(ii) with respect to all of such Grantor's Patent Collateral, a Grant of Patent
Security Interest, substantially in the form of Exhibit II, and (iii) with
respect to all of such Grantor's Copyright Collateral, a Grant of Copyright
Security Interest, substantially in the form of Exhibit III. In addition, if any
Grantor shall hereafter obtain rights to any new Intellectual Property
Collateral or become entitled to the benefit of (i) any patent application or
patent or any reissue, division, continuation, renewal, extension or
continuation-in-part of any Patent or any improvement of any Patent or (ii) any
material Copyright Registration, application for Copyright Registration or
renewals or extension of any material Copyright, then in any such case, the
provisions of this Agreement shall automatically apply thereto. Each Grantor
shall promptly notify Collateral Agent in writing of any of the foregoing rights
acquired by such Grantor after the date hereof and of (i) any Trademark
Registrations issued or application for a Trademark Registration or application
for a Patent made, and (ii) any Copyright Registrations issued or applications
for Copyright Registration made, in any such case, after the date hereof.
Promptly after the filing of an application for any material (1) Trademark
Registration; (2) Patent; or (3) Copyright Registration, each Grantor shall
execute and deliver to Collateral Agent and record in all places where a Grant
is recorded an IP Supplement, substantially in the form of Exhibit V (an "IP
SUPPLEMENT"), pursuant to which such Grantor shall grant to Collateral Agent a
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Collateral Agent, such
Grantor shall give written notice to Collateral Agent as soon as reasonably
practicable and the filing shall instead be undertaken as soon as practicable
but in no case later than immediately following the grant of the applicable
Trademark Registration or Copyright Registration, as the case may be. Upon
delivery to Collateral Agent of an IP Supplement, Schedules 1(g)(i), 1(g)(ii),
and 1(g)(iii) hereto and Schedule A to each Grant, as applicable, shall be
deemed modified to include reference to any right, title or interest in any
existing Intellectual Property Collateral or any Intellectual Property
Collateral included on Schedule A to such IP Supplement. Each Grantor hereby
authorizes Collateral Agent to modify this Agreement without the signature or
consent of any Grantor by attaching Schedules 1(g)(i), 1(g)(ii), and 1(g)(iii),
as applicable, that have been modified to include such Intellectual Property
Collateral or to delete any reference to any right, title or interest in any
Intellectual Property Collateral in which any Grantor no longer has or claims
any right, title or interest; provided, the failure of any Grantor to execute an
IP Supplement with respect to any additional Intellectual Property Collateral
pledged pursuant to this Agreement shall not impair the security interests of
Collateral Agent therein or otherwise adversely affect the rights and remedies
of Collateral Agent hereunder with respect thereto.
SECTION 6. CERTAIN COVENANTS OF GRANTORS.
Each Grantor shall:
(a) not use or permit any material Collateral under its
control to be used unlawfully or in violation of any provision of this Agreement
or any applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral;
(b) notify Collateral Agent of any change in such Grantor's
name, identity or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of (i)
any change in such Grantor's chief place of business, chief executive office or
offices where such Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts or (ii) reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization, incorporation, formation or "location" of such Grantor under the
UCC;
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(d) if Collateral Agent gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes;
(e) except as expressly permitted by each Credit Document, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral; provided that no such
tax, assessment, charge, levy or claim need be paid if it is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as (i) such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor and
(ii) in the case of a tax, assessment, charge, levy or claim which has or may
become a Lien against any of the Collateral, such proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim; provided however, that notwithstanding the foregoing proviso, such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against such Grantor or
any of the Collateral as a result of the failure to make such payment; and
(f) after the date hereof, give Collateral Agent prompt notice
with sufficient particularity of any claim or cause of action of any Grantor
arising in tort and not otherwise identified on Schedule 1(j) relating to a
Proceeding that has been initiated by any Person.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Each Grantor shall:
(a) keep the items of Equipment and Inventory owned by such
Grantor having a value in excess of $500,000 at its main place of business or
the places therefor specified on Schedule 4(b) or, upon 30 days' prior written
notice to Collateral Agent, at such other places in jurisdictions where all
action that may be necessary or desirable, or that Collateral Agent may
reasonably request, in order to perfect and protect the security interest
granted or purported to be granted hereby, or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder, with respect to such
Equipment and Inventory shall have been taken;
(b) promptly furnish to Collateral Agent a statement
respecting any material loss or damage to any of the material Equipment owned by
such Grantor;
(c) keep correct and accurate records of Inventory owned by
such Grantor, in accordance with such Grantor's customary practices;
(d) if any Inventory is in possession or control of any of
such Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $250,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Collateral Agent and subject to the instructions of Collateral Agent;
(e) after an Event of Default has occurred and is continuing,
promptly upon the issuance and delivery to such Grantor of any Negotiable
Document of Title, deliver such Negotiable Document of Title to Collateral
Agent; and
(f) at its own expense, maintain insurance with respect to the
Equipment and Inventory in accordance with the terms of the Credit Documents.
SECTION 8. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED CONTRACTS.
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper in such
Grantor's possession that evidence Accounts, at the locations therefor set forth
on Schedule 4(d) or upon 30 days' prior written notice to Collateral Agent, at
such other location in a jurisdiction where all action that may be necessary, or
that Collateral Agent may reasonably request, in order to perfect and protect
the security interest
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granted or purported to be granted hereby, or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder, with respect to such
Accounts and Related Contracts shall have been taken. Each Grantor will hold and
preserve such records and chattel paper and will permit representatives of
Collateral Agent, upon reasonable notice during normal business hours, to
inspect and make abstracts from such records and chattel paper, and each Grantor
agrees to render to Collateral Agent, at Grantor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto. Promptly upon the reasonable request of Collateral Agent, each Grantor
shall deliver to Collateral Agent complete and correct copies of each Related
Contract.
(b) Each Grantor shall maintain (i) complete records of each
Account, in accordance with its customary business practices, including records
of all payments received, credits granted and merchandise returned, and (ii) all
documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Collateral
Agent's direction, shall take) such action as such Grantor or Collateral Agent
may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Collateral Agent shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default and upon written notice to such Grantor of its intention to
do so, to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to Collateral Agent and, to the extent such Grantor
is not legally or contractually prohibited from doing so and such contractual
prohibitions are enforceable under applicable law, to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to Collateral Agent, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Collateral Agent and, upon such notification and at the expense of Grantors, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by such Grantor of the notice from
Collateral Agent referred to in the proviso to the preceding sentence, (i) all
amounts and proceeds (including checks and other instruments) received by such
Grantor in respect of the Accounts and the Related Contracts shall be received
in trust for the benefit of Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over or delivered to
Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section 20
hereof, and (ii) such Grantor shall not adjust, settle or compromise the amount
or payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO THE SECURITIES COLLATERAL.
(a) DELIVERY. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Collateral Agent pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to Collateral Agent. Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing such Securities Collateral for certificates or instruments of smaller
or larger denominations. Nothing in this Section 9(a) shall apply to Pledged
Shares held by a Grantor in a Person in whom Borrowers in the aggregate hold
less than 10% (whether in voting power or economic value or both) of the shares
of stock or other equity interests.
(b) COVENANTS. Each Grantor shall (i) not, except as expressly
permitted by each of the Credit Documents, permit any issuer of Pledged Shares
that is a Subsidiary or an Affiliate of any Grantor to merge or consolidate
unless all the outstanding capital stock or other equity interests of the
surviving or resulting Person is, upon such merger or consolidation, pledged
hereunder and no cash, securities or other property is distributed in respect of
the outstanding shares of any other constituent corporation; provided, if the
surviving or resulting Person upon any such merger or consolidation involving an
issuer of Pledged Shares which is a Foreign Subsidiary is a Foreign Subsidiary
then such Grantor shall only be required to pledge outstanding capital stock of
such surviving or resulting Person possessing up to but not exceeding 65% of the
voting power of all classes of capital stock or other
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equity interests of such issuer entitled to vote; (ii) to the extent legally
able to do so, cause each issuer of Pledged Shares that is controlled by such
Grantor not to issue any stock, other equity interests or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor or unless such stock, equity interests or securities
received by the Grantor are pledged hereunder; (iii) pledge hereunder, and
deliver to Collateral Agent as soon as practicable (but in no event later than
three Business Days) upon its acquisition (directly or indirectly) thereof, any
and all additional shares of stock, other equity interests or other securities
of each issuer of Pledged Shares; (iv) pledge hereunder, and deliver to
Collateral Agent as soon as practicable (but in no event later than three
Business Days) upon its acquisition (directly or indirectly) thereof, any and
all shares of stock or other equity interests of any Person that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of such Grantor; provided that, notwithstanding anything contained in this
clause (iv) to the contrary, such Grantor shall only be required to pledge the
outstanding capital stock or other equity interests of a Foreign Subsidiary up
to but not exceeding 65% of the voting power of all classes of capital stock or
other equity interests of such Foreign Subsidiary entitled to vote; (v) pledge
hereunder, as soon as practicable (but in no event later than five Business
Days) upon their issuance, any and all instruments or other evidences of
additional indebtedness from time to time owed to such Grantor by any obligor on
the Pledged Debt (to the extent issued by Company or any of its Subsidiaries);
(vi) pledge hereunder, as soon as practicable (but in no event later than five
Business Days) upon their issuance, any and all instruments or other evidences
of indebtedness from time to time owed to such Grantor by any Person that after
the date of this Agreement becomes, as a result of any occurrence, a direct or
indirect Subsidiary of such Grantor; and (vii) at the request of Collateral
Agent, promptly execute and deliver to Collateral Agent an agreement providing
for the control, as that term is defined in the UCC, by Collateral Agent of all
securities entitlements and securities accounts of such Grantor; provided,
however, that nothing in this Section 9(b) shall be construed as a waiver of the
prohibitions and restrictions on the Grantors with respect to investments as set
forth in any applicable Credit Document.
(c) VOTING AND DISTRIBUTIONS. So long as no Event of Default
shall have occurred and be continuing, (i) each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement, the Revolver Credit Agreement, or the Term Loan
Agreement; provided, no Grantor shall exercise or refrain from exercising any
such right if Collateral Agent shall have notified such Grantor that, in
Collateral Agent's judgment, such action would have a material adverse effect on
the value of the Securities Collateral or any part thereof; and provided
further, such Grantor shall give Collateral Agent at least five Business Days'
prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right if exercising, or
refraining from exercising, such right would reasonably be expected to have a
material adverse effect on the value of the Securities Collateral or any part
thereof (it being understood, however, that neither (among other things) (A) the
voting by such Grantor of any Pledged Shares for or such Grantor's consent to
the election of directors or other members of a governing body of an issuer of
Pledged Shares at a regularly scheduled annual or other meeting of stockholders
or holders of equity interests or with respect to incidental matters at any such
meeting, nor (B) such Grantor's consent to or approval of any action otherwise
permitted under this Agreement, the Revolver Credit Agreement or the Term Loan
Agreement shall be deemed inconsistent with the terms of this Agreement, the
Revolver Credit Agreement or the Term Loan Agreement, respectively, within the
meaning of this Section 9(c), and no notice of any such voting or consent need
be given to Collateral Agent) and (ii) each Grantor shall be entitled to receive
and retain, and to utilize any and all dividends, other distributions and
interest paid in respect of the Securities Collateral to the extent permitted
under the Credit Documents; provided, that except as otherwise provided in the
Credit Documents, any and all (A) dividends, distributions and interest 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 Securities Collateral, (B) dividends and other distributions paid or payable
in cash in respect of any Securities Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange for any
Securities Collateral, shall be, and shall forthwith be delivered to Collateral
Agent to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Collateral Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Collateral
Agent as Securities Collateral in the same form as so received (with all
necessary endorsements).
Upon the occurrence and during the continuation of an Event of
Default, (x) all rights of such Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
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12
hereto shall cease, and all such rights shall thereupon become vested in
Collateral Agent who shall thereupon have the sole right to exercise such voting
and other consensual rights; (y) all rights of such Grantor to receive the
dividends, other distributions and interest payments which it would otherwise be
authorized to receive and retain pursuant hereto shall cease, and all such
rights shall thereupon become vested in Collateral Agent who shall thereupon
have the sole right to receive and hold as Securities Collateral such dividends,
other distributions and interest payments; and (z) all dividends, principal,
interest payments and other distributions which are received by such Grantor
contrary to the provisions of clause (ii) of the immediately preceding paragraph
or clause (y) above shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of such Grantor and shall forthwith
be paid over to Collateral Agent as Securities Collateral in the same form as so
received (with any necessary endorsements).
(d) IRREVOCABLE PROXY. In order to permit Collateral Agent to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends, principal or interest
payments and other distributions which it may be entitled to receive hereunder,
(I) each Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to Collateral Agent all such proxies, dividend payment orders and
other instruments as Collateral Agent may from time to time request, and (II)
without limiting the effect of clause (I) above, each Grantor hereby grants to
Collateral Agent an IRREVOCABLE PROXY to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including giving or withholding written
consents of shareholders or other holders of equity interests, calling special
meetings of shareholders or other holders of equity interests and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence and
during the continuance of an Event of Default and which proxy shall only
terminate upon the Payment in Full of all Secured Obligations.
SECTION 10. SPECIAL COVENANTS WITH RESPECT TO THE INTELLECTUAL PROPERTY
COLLATERAL.
(a) Each Grantor shall:
(i) use commercially reasonable efforts so as not to
permit the inclusion in any contract to which it hereafter
becomes a party of any provision that could or might in any
way impair or prevent the creation of a security interest in,
or the assignment of, such Grantor's rights and interests in
any property that is material Intellectual Property Collateral
acquired under such contracts; and
(ii) furnish to Collateral Agent from time to time at
Collateral Agent's reasonable request statements and schedules
further identifying and describing any material Intellectual
Property Collateral and such other reports in connection with
such Collateral, all in reasonable detail.
(b) Except as otherwise provided in this Section 10, each
Grantor shall continue to collect in accordance with its customary business
practice, at its own expense, all amounts due or to become due to such Grantor
in respect of the material Intellectual Property Collateral or any portion
thereof. In connection with such collections, each Grantor may take (and, after
the occurrence and during the continuance of any Event of Default at Collateral
Agent's reasonable direction, shall take) such action as such Grantor or
Collateral Agent may deem reasonably necessary or advisable to enforce
collection of such amounts; provided, Collateral Agent shall have the right (but
not the obligation) at any time, upon the occurrence and during the continuation
of an Event of Default, to notify the obligors with respect to any such amounts
of the existence of the security interests created hereby and to direct such
obligors to make payment of all such amounts directly to Collateral Agent, and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such amounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. Upon the occurrence and during the continuation of any Event of Default,
(i) all amounts and proceeds (including checks and other instruments) received
by each Grantor in respect of amounts due to such Grantor in respect of the
Intellectual Property Collateral or any portion thereof shall be received in
trust for the benefit of Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over or delivered to
Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and
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13
applied as provided by Section 20 herein, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.
(c) Each Grantor shall give Collateral Agent 10 Business Days
prior written notice of any abandonment of any material Intellectual Property
Collateral (it being understood that no such notice needs to be given by such
Grantor of the abandonment of non-material Intellectual Property) or any pending
patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution, misappropriation or other
damage, or reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Each Grantor shall promptly, following its
becoming aware thereof, notify Collateral Agent of the institution of, or of any
adverse determination in, any proceeding (whether in the United States Patent
and Trademark Office, the United States Copyright Office or any federal, state,
local or foreign court) regarding such Grantor's ownership, right to use, or
interest in any material Intellectual Property Collateral. Each Grantor shall
provide to Collateral Agent any information with respect thereto requested by
Collateral Agent.
(e) In addition to, and not by way of limitation of, the
granting of a security interest in the Collateral pursuant hereto, each Grantor,
effective upon the occurrence and during the continuation of an Event of
Default, hereby assigns, transfers and conveys to Collateral Agent the
nonexclusive right and license to use all trademarks, tradenames, copyrights,
patents or technical processes (including, without limitation, the Intellectual
Property Collateral) owned or used by such Grantor that relate to the Collateral
and any other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable Collateral Agent to realize on the Collateral in accordance
with this Agreement and to enable any transferee or assignee of the Collateral
to enjoy the benefits of the Collateral. This right shall inure to the benefit
of all successors, assigns and transferees of Collateral Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license shall be granted free of charge, without
requirement that any monetary payment whatsoever be made to such Grantor.
SECTION 11. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED AGREEMENTS.
(a) Each Grantor shall at its expense:
(i) if consistent with sound business practices,
perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the
Assigned Agreements in accordance with such Grantor's
customary business practice; and
(ii) after the occurrence and during the continuation
of an Event of Default and upon the request of Collateral
Agent, furnish to Collateral Agent, promptly upon receipt
thereof, copies of all notices, requests and other material
documents received by such Grantor under or pursuant to the
Assigned Agreements, and from time to time (A) furnish to
Collateral Agent such information and reports regarding the
Assigned Agreements as Collateral Agent may reasonably request
and (B) upon request of Collateral Agent make to the parties
to such Assigned Agreements such demands and requests for
information and reports or for action as such Grantor is
entitled to make under the Assigned Agreements.
(b) Upon the occurrence and during the continuance of an Event
of Default, no Grantor shall:
(i) cancel or terminate any of the Assigned
Agreements or consent to or accept any cancellation or
termination thereof;
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14
(ii) amend or otherwise modify the Assigned
Agreements or give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the
Assigned Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned
Agreements, except as expressly provided therein; or
(v) take any other action in connection with the
Assigned Agreements that could reasonably be expected to
materially impair the value of the interest or rights of such
Grantor thereunder or that could reasonably be expected to
materially impair the interest or rights of Collateral Agent.
SECTION 12. [INTENTIONALLY OMITTED.]
SECTION 13. [INTENTIONALLY OMITTED.]
SECTION 14. SPECIAL PROVISIONS WITH RESPECT TO THE COLLATERAL ACCOUNTS.
Collateral Agent is hereby authorized to establish and
maintain at its offices restricted deposit accounts and restricted securities
accounts which shall be in the names of Grantors, jointly or each individually,
and under the sole dominion and control of Collateral Agent. Each Grantor agrees
that from time to time, at the expense of Grantors, such Grantor will promptly
execute and deliver account control agreements in form and substance
satisfactory to Collateral Agent and take all further action that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect the security interest granted or purported to be
granted hereby in such accounts or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any such accounts.
SECTION 15. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints Collateral Agent as
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor, Collateral Agent or otherwise,
from time to time in Collateral Agent's discretion to take any action and to
execute any instrument that Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) upon the occurrence and during the continuance of an Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Collateral Agent pursuant to Section 7 hereof;
(b) upon the occurrence and during the continuance of an Event
of Default, to ask for, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or each of the Credit Documents) levied or placed
upon the Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by Collateral Agent in its sole
discretion, any such payments made
Security Agreement
15
by Collateral Agent to become obligations of such Grantor to Collateral Agent,
due and payable immediately without demand;
(f) upon the occurrence and during the continuance of an Event
of Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Collateral Agent were the absolute owner thereof for all purposes, and to
do, at Collateral Agent's option and Grantors' expense, at any time or from time
to time, all acts and things that Collateral Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and Collateral Agent's security
interests therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
SECTION 16. COLLATERAL AGENT MAY PERFORM.
If any Grantor fails to perform any agreement contained
herein, Collateral Agent may itself perform, or cause performance of (but shall
not be obligated to perform or cause the performance of), such agreement, and
the expenses of Collateral Agent incurred in connection therewith shall be
payable by Grantors under Section 21(b) hereof.
SECTION 17. STANDARD OF CARE.
The powers conferred on Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
property.
SECTION 18. REMEDIES.
(a) GENERALLY. Subject to the terms of the Intercreditor
Agreement, if any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Collateral), and also may (i) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent reasonably deems appropriate, (iv) take possession
of any Grantor's premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of such Grantor's equipment for
the purpose of completing any work in process, taking any actions described in
the preceding clause (iii) and collecting any Secured Obligation, (v) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as Collateral Agent may
deem commercially reasonable, (vi) exercise dominion and control over and refuse
to permit further withdrawals from any Deposit Account maintained with
Collateral Agent or any Benefited Party and provide instructions directing the
disposition of funds in Deposit Accounts not maintained with Collateral Agent or
any Benefited Party and (vii) provide entitlement orders with respect to
securities entitlements and other investment property constituting a part of the
Collateral and with notice to the relevant Grantor, transfer to or register in
the name of Collateral Agent or any of its nominees any or all of the Securities
Collateral. Collateral Agent or any Benefited Party (subject to the terms of the
Intercreditor Agreement)
Security Agreement
16
may be the purchaser of any or all of the Collateral at any such sale and
Collateral Agent, as agent for and representative of the Benefited Parties (but
not any Benefited Party in its individual capacity unless Requisite Obligees
shall otherwise agree in writing), shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Collateral Agent at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Collateral Agent 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. To the extent permitted by applicable law, each Grantor hereby waives
any claims against Collateral Agent arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree. If the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all the Secured Obligations, Grantors shall
be jointly and severally liable for the deficiency and the fees of any attorneys
employed by Collateral Agent to collect such deficiency. Each Grantor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to Collateral Agent, that Collateral Agent has no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section shall be specifically
enforceable against such Grantor, and each Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
(b) SECURITIES COLLATERAL.
(i) Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and
applicable state securities laws, Collateral Agent may be
compelled, with respect to any sale of all or any part of the
Securities Collateral conducted without prior registration or
qualification of such Securities Collateral under the
Securities Act and/or such state securities laws, to limit
purchasers to those who will agree, among other things, to
acquire the Securities Collateral for their own account, for
investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sales
may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such
circumstances and the registration rights granted to
Collateral Agent by such Grantor pursuant hereto and
notwithstanding the provisions of Section 9-610(c) of the UCC,
which each Grantor hereby waives to the extent permitted by
applicable law, each Grantor agrees that any such private sale
shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of
any Securities Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would,
or should, agree to so register it. If Collateral Agent
determines to exercise its right to sell any or all of the
Securities Collateral, upon written request, each Grantor
shall and shall cause each issuer of any Pledged Shares to be
sold hereunder from time to time to furnish to Collateral
Agent all such information as Collateral Agent may request in
order to determine the number of shares and other instruments
included in the Securities Collateral which may be sold by
Collateral Agent in exempt transactions under the Securities
Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to
time in effect and to otherwise comply with the Securities Act
and such rules and regulations in connection with such sale.
Security Agreement
17
(ii) If Collateral Agent shall determine to exercise
its right to sell all or any of the Securities Collateral
pursuant to this Section, each Grantor agrees that, upon
request of Collateral Agent (which request may be made by
Collateral Agent in its sole discretion), such Grantor will,
at its own expense (A) execute and deliver, and cause each
issuer of the Securities Collateral contemplated to be sold
and the directors and officers thereof to execute and deliver,
all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the
opinion of Collateral Agent, advisable to register such
Securities Collateral under the provisions of the Securities
Act and to cause the registration statement relating thereto
to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related
prospectus which, in the opinion of Collateral Agent, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission
applicable thereto; (B) use its best efforts to qualify the
Securities Collateral under all applicable state securities or
"Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Securities Collateral, as
requested by Collateral Agent; (C) cause each such issuer to
make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act; (D) do or
cause to be done all such other acts and things as may be
necessary to make such sale of the Securities Collateral or
any part thereof valid and binding and in compliance with
applicable law; and (E) bear all costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations
under this Section.
(iii) Without limiting the generality of those
provisions of the Revolver Credit Agreement (or any successor
provisions thereto) and the Term Loan Agreement (or any
successor provisions thereto) that require one or more of the
Grantors to reimburse expenses of or indemnify the Collateral
Agent or any Benefited Party in the event of any public sale
described herein, each Grantor agrees to indemnify and hold
harmless Collateral Agent and the Benefited Parties and each
of their respective directors, officers, employees and agents
from and against any loss, fee, cost, expense, damage,
liability or claim, joint or several, to which any such
Persons may become subject or for which any of them may be
liable, under the Securities Act or otherwise, insofar as such
losses, fees, costs, expenses, damages, liabilities or claims
(or any litigation commenced or threatened in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or
other such document published or filed in connection with such
public sale, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
will reimburse Collateral Agent and such other Persons for any
legal or other expenses reasonably incurred by Collateral
Agent and such other Persons in connection with any
litigation, of any nature whatsoever, commenced or threatened
in respect thereof (including any and all fees, costs and
expenses whatsoever reasonably incurred by Collateral Agent
and such other Persons and counsel for Collateral Agent and
such other Persons in investigating, preparing for, defending
against or providing evidence, producing documents or taking
any other action in respect of, any such commenced or
threatened litigation or any claims asserted). This indemnity
shall be in addition to any liability which any Grantor may
otherwise have and shall extend upon the same terms and
conditions to each Person, if any, that controls Collateral
Agent or such Persons within the meaning of the Securities
Act.
(c) REMEDIES WITH RESPECT TO BORROWERS. Furthermore, upon the
occurrence and during the continuance of any Event of Default, Collateral Agent
may revoke each Grantor's rights to use cash collateral in which Collateral
Agent has an interest; provided that, any other provision of this Agreement or
any other Credit Document to the contrary notwithstanding, with respect to the
foregoing, Collateral Agent shall give each Loan Party five Business Days prior
written notice (which notice shall be delivered by facsimile or overnight
courier) of the exercise of its rights and remedies with respect to the
Collateral. The enumeration of the foregoing rights and remedies is not intended
to be exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative and
not alternative. Each Grantor hereby waives (i) presentment, demand and protest
and notice of presentment, dishonor, notice of intent to accelerate, notice of
Security Agreement
18
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties or other
property at any time held by Collateral Agent and any Benefited Party on which
Loan Parties may in any way be liable and hereby ratify and confirm whatever
Collateral Agent and the Benefited Parties may lawfully do in this regard, (ii)
subject to the notice provisions of the preceding paragraph, all rights to
notice and hearing prior to Collateral Agent's taking possession or control of,
or to the reply of Collateral Agent or any Benefited Party, attachment or levy
upon, the Collateral, or any bond or security which might be required by any
court prior to allowing Collateral Agent or any Benefited Party to exercise any
of their remedies, and (iii) the benefit of all valuation, appraisal and
exemption laws. Each Grantor acknowledges they have been advised by counsel of
their choice with respect to the effect of the foregoing waivers and this
Agreement, the Credit Documents and the transactions evidenced by this Agreement
and the Credit Documents.
SECTION 19. ADDITIONAL REMEDIES FOR INTELLECTUAL PROPERTY COLLATERAL.
(a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, (i)
Collateral Agent shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, Collateral Agent or otherwise, to enforce any
Intellectual Property Collateral, in which event each Grantor shall, at the
request of Collateral Agent, do any and all lawful acts and execute any and all
documents required by Collateral Agent in aid of such enforcement and each
Grantor shall promptly, upon demand, reimburse and indemnify Collateral Agent as
provided in those provisions of the Revolver Credit Agreement (or any successor
provisions thereto) or the Term Loan Agreement (or any successor provisions
thereto) that require one or more of the Grantors to reimburse expenses of or
indemnify the Collateral Agent or the Benefited Parties and as provided in
Section 21 hereof, as applicable, in connection with the exercise of its rights
under this Section, and, to the extent that Collateral Agent shall elect not to
bring suit to enforce any Intellectual Property Collateral as provided in this
Section, each Grantor agrees to use all reasonable measures, whether by action,
suit, proceeding or otherwise, to prevent the infringement of any of the
Intellectual Property Collateral by others and for that purpose agrees to use
its commercially reasonable judgment in maintaining any action, suit or
proceeding against any Person so infringing reasonably necessary to prevent such
infringement; (ii) upon written demand from Collateral Agent, each Grantor shall
execute and deliver to Collateral Agent an assignment or assignments of the
Intellectual Property Collateral and such other documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement; (iii) each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that Collateral
Agent (or any Revolver Lender or Term Loan Lender, subject to the terms of the
Intercreditor Agreement) receives cash proceeds in respect of the sale of, or
other realization upon, the Intellectual Property Collateral; and (iv) within
five Business Days after written notice from Collateral Agent, each Grantor
shall make available to Collateral Agent, to the extent within such Grantor's
power and authority, such personnel in such Grantor's employ on the date of such
Event of Default as Collateral Agent may reasonably designate, by name, title or
job responsibility, to permit such Grantor to continue, directly or indirectly,
to produce, advertise and sell the products and services sold or delivered by
such Grantor under or in connection with the Trademarks, Trademark Registrations
and Trademark Rights, such persons to be available to perform their prior
functions on Collateral Agent's behalf and to be compensated by Collateral Agent
at such Grantor's expense on a per diem, pro-rata basis consistent with the
salary and benefit structure applicable to each as of the date of such Event of
Default.
(b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Collateral Agent of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, Collateral
Agent shall promptly execute and deliver to such Grantor, at such Grantor's cost
and expense, such assignments as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Collateral
Agent as aforesaid, subject to any disposition thereof that may have been made
by Collateral Agent; provided, after giving effect to such reassignment,
Collateral Agent's security interests granted pursuant hereto, as well as all
other rights and remedies of Collateral Agent granted hereunder, shall continue
to be in full force and effect; and provided further, the rights, title and
interests so reassigned shall be free and clear of all Liens other than Liens
(if any) encumbering such rights, title and interest at the time of their
assignment to Collateral Agent and Liens permitted under the relevant provisions
of the Credit Documents.
Security Agreement
19
SECTION 20. APPLICATION OF PROCEEDS.
All proceeds received by Collateral Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied in accordance with the Intercreditor Agreement.
SECTION 21. INDEMNITY AND EXPENSES.
(a) Grantors jointly and severally agree to indemnify
Collateral Agent, the Revolver Agent, each Revolver Lender, each Term Loan
Agent, each Term Loan Lender, and each other Benefited Party from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including without limitation enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Collateral Agent's
or such Revolver Agent's, Revolver Lender's, Term Loan Agent's, Term Loan
Lender's or Benefited Party's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Collateral
Agent upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Collateral Agent hereunder, or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof.
(c) The obligations of Grantors in this Section 21 shall
survive the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Revolver Credit Agreement and the Term
Loan Agreement (subject to the terms of the Intercreditor Agreement).
SECTION 22. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION AND
RELEASE.
(a) This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
Payment in Full of all Secured Obligations, (ii) be binding upon Grantors and
their respective successors and assigns, and (iii) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), but subject to the relevant assignment
provisions set forth in each of the Credit Documents and the Intercreditor
Agreement, (A) the Revolver Agent or any Revolver Lender may assign or otherwise
transfer its rights under the Revolver Credit Agreement to any other Person, and
in each case such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Revolver Agent or Revolver Lenders, as
applicable, herein or otherwise (subject to the terms of the Intercreditor
Agreement) and (B) any Term Loan Agent and any Term Loan Lender may assign or
otherwise transfer its rights under the Term Loan Agreement to any other Person,
and in each case such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Term Loan Agent or such Term Loan
Lender, as applicable, herein or otherwise (subject to the terms of the
Intercreditor Agreement).
(b) Upon the Payment in Full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantors. Upon any such termination
Collateral Agent will, at Grantors' expense, execute and deliver to Grantors
such documents as Grantors shall reasonably request to evidence such
termination. In addition, upon the proposed sale, transfer or other disposition
of any Collateral by a Grantor in accordance with the relevant provisions of
each Credit Document for which such Grantor desires to obtain a security
interest release from Collateral Agent, such Grantor shall deliver an Officer's
Certificate (x) stating that the Collateral subject to such disposition is being
sold, transferred or otherwise disposed of in compliance with the terms of the
Credit Documents and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such
Officer's Certificate and so long as no Event of Default has occurred and is
continuing or would result from the proposed disposition of the Collateral and
so long as the proceeds from such disposition are applied in accordance with the
Credit Documents, Collateral Agent shall, at Grantor's expense, so long as
Collateral Agent believes in good faith that the Officer's Certificate delivered
by such Grantor with respect to such sale is true, correct and complete, execute
and deliver such releases
Security Agreement
20
of its security interest in such Collateral which is to be so sold, transferred
or disposed of, as may be reasonably requested by such Grantor.
SECTION 23. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral
Agent hereunder by the Revolver Agent, the Revolver Lenders, the Term Loan
Agents, the Term Loan Lenders and the Cash Management Bank. Collateral Agent
shall be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including without limitation the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Documents.
(b) Collateral Agent shall at all times be the same Person
that is the Collateral Agent under the Intercreditor Agreement. Written notice
of resignation by Collateral Agent pursuant to subsections 6.1(h) or (i) of the
Intercreditor Agreement shall also constitute notice of resignation as
Collateral Agent under this Agreement; removal of Collateral Agent pursuant to
subsections 6.1(h) or (i) of the Intercreditor Agreement shall also constitute
removal as Collateral Agent under this Agreement; and appointment of a successor
Collateral Agent pursuant to subsections 6.1(h) or (i) of the Intercreditor
Agreement shall also constitute appointment of a successor Collateral Agent
under this Agreement. Upon the acceptance of any appointment as Collateral Agent
under subsections 6.1(h) or (i) of the Intercreditor Agreement by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
or removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, and (ii) execute and deliver to such
successor Collateral Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interests created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.
SECTION 24. [INTENTIONALLY OMITTED.]
SECTION 25. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantors. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given. In
the event of any refinancing, replacement or extension of the Term Loan
Agreement or Revolver Credit Agreement, references in this Agreement to sections
or subsections of the Term Loan Agreement and Revolver Credit Agreement shall
refer to the functionally equivalent sections or subsections in such refinanced,
replaced or extended agreement as the context requires.
SECTION 26. NOTICES.
Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Collateral Agent shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature page hereof or such other address as shall be designated by
such party in a written notice delivered to the other parties hereto. Electronic
mail and Internet and intranet websites may be used to distribute routine
communications, provided, however, that no signature with respect to any notice,
request, agreement, waiver, amendment or other document or any notice that is
intended to have a binding effect may be sent by electronic mail.
Security Agreement
21
SECTION 27. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Collateral Agent in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
SECTION 28. SEVERABILITY.
In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 29. HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 30. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Documents, terms used in Articles 8 and 9 of the
UCC are used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Revolver Credit Agreement shall be applicable to this
Agreement mutatis mutandis.
SECTION 31. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN XXX XXXXX,
XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 26 HEREOF; (IV) AGREES THAT SERVICE
AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT
SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 31 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT
PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
Security Agreement
22
SECTION 32. WAIVER OF JURY TRIAL.
GRANTORS AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Each Grantor and Collateral Agent acknowledge that this
waiver is a material inducement for Grantors and Collateral Agent to enter into
a business relationship, that Grantors and Collateral Agent have already relied
on this waiver in entering into this Agreement and that each will continue to
rely on this waiver in their related future dealings. Each Grantor and
Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 32
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart thereof.
[Remainder of page intentionally left blank]
Security Agreement
23
IN WITNESS WHEREOF, Grantors and Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
GRANTORS:
COVANTA POWER INTERNATIONAL HOLDINGS, INC.
By:______________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
Notice Address:
c/o Covanta Energy Group, Inc.
00 Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
COVANTA POWER DEVELOPMENT, INC.
COVANTA POWER DEVELOPMENT OF BOLIVIA, INC.
COVANTA WASTE TO ENERGY OF ITALY, INC.,
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
Notice Address for Borrowers:
c/o Covanta Energy Group, Inc.
00 Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
Security Agreement
BANK OF AMERICA, N.A.,
as Collateral Agent
By:______________________________
Name:
Title:
Notice Address:
Bank of America, N.A., as Collateral Agent
555 So. Flower Street, 17th Floor
CA9-706-17-54
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, Vice President
Voice: (000) 000-0000
Fax: (000) 000-0000
email: xxxxx.xxxxx@xxxxxxxxxxxxx.xxx
Security Agreement
SCHEDULE 1(e)(i) TO
SECURITY AGREEMENT
PLEDGED SHARES
CLASS OF PERCENTAGE OF
PLEDGED PAR NUMBER OF OUTSTANDING
ISSUER OF PLEDGED SHARES SHARES CERTIFICATE NOS. VALUE PLEDGED SHARES PLEDGED SHARES
Security Agreement
1(e)(i)-1
SCHEDULE 1(g)(i) TO
SECURITY AGREEMENT
U.S. TRADEMARKS:
Trademark Registration Registration
Registered Owner Description Number Date
FOREIGN TRADEMARKS:
Trademark Registration Registration
Registered Owner Description Number Date
Security Agreement
1(g)(i)-1
SCHEDULE 1(g)(ii) TO
SECURITY AGREEMENT
U.S. PATENTS ISSUED:
Patent No. Issue Date Invention Inventor
U.S. PATENTS PENDING:
Applicant's Date Application
Name Filed Number Invention Inventor
FOREIGN PATENTS ISSUED:
Patent No. Issue Date Invention Inventor
Security Agreement
1(g)(ii)-1
FOREIGN PATENTS PENDING:
Applicant's Date Application
Name Filed Number Invention Inventor
Security Agreement
1(g)(ii)-2
SCHEDULE 1(g)(iii) TO
SECURITY AGREEMENT
U.S. COPYRIGHTS:
Title Registration No. Date of Issue Registered Owner
FOREIGN COPYRIGHT REGISTRATIONS:
Country Title Registration No. Date of Issue
PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:
Title Reference No. Date of Application Copyright Claimant
PENDING FOREIGN COPYRIGHT REGISTRATIONS & APPLICATIONS:
Country Title Registration No. Date of Issue
Security Agreement
1(g)(iii)-1
SCHEDULE 1(j)
TO
SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
Security Agreement
1(j)-1
SCHEDULE 4(b)
TO
SECURITY AGREEMENT
LOCATIONS OF EQUIPMENT AND INVENTORY
NAME OF GRANTOR LOCATIONS OF EQUIPMENT AND INVENTORY
Security Agreement
4(b)-1
SCHEDULE 4(d)
TO
SECURITY AGREEMENT
OFFICE LOCATIONS, TYPE AND JURISDICTION OF ORGANIZATION
JURISDICTION OF
NAME OF GRANTOR TYPE OF ORGANIZATION OFFICE LOCATIONS ORGANIZATION
Security Agreement
4(d)-1
SCHEDULE 4(e)
TO
SECURITY AGREEMENT
OTHER NAMES
NAME OF GRANTOR OTHER NAMES
Security Agreement
4(e)-1
SCHEDULE 4(g)
TO
SECURITY AGREEMENT
CERTAIN CONTRACTUAL OBLIGATIONS
Security Agreement
4(g)-1
SCHEDULE 4(i)
TO
SECURITY AGREEMENT
FILING OFFICES
Grantor Filing Offices
Security Agreement
4(i)-1
EXHIBIT I TO
SECURITY AGREEMENT
[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]
GRANT OF TRADEMARK SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Trademark Collateral (as defined
below);
WHEREAS, COVANTA POWER INTERNATIONAL HOLDINGS, INC., a
Delaware corporation ("COMPANY") and the Subsidiaries of Company listed on the
signature pages thereof (collectively, Company and such Subsidiaries of Company
are "BORROWERS" and each a "BORROWER") have entered into certain Credit
Agreement dated as of March __, 2004 (said Credit Agreement or any credit
agreement entered into by Revolver Borrowers to refinance, replace, renew or
extend, in whole or in part, said Credit Agreement and the indebtedness
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "REVOLVER CREDIT AGREEMENT") with the financial institutions listed on
the signature pages thereof as Lenders (collectively, together with their
respective successors and assigns party to the Revolver Credit Agreement from
time to time, the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), pursuant to which the Revolver Lenders have made certain commitments,
subject to the terms and conditions set forth in the Revolver Credit Agreement,
to extend certain revolving credit facilities to Borrowers;
WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by Term Loan Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness thereunder, as said
Credit Agreement or any replacement to said Credit Agreement may be amended,
restated, supplemented or otherwise modified from time to time, being the "TERM
LOAN AGREEMENT") with the financial institutions listed on the signature pages
thereof as Lenders (collectively, together with their respective successors and
assigns party to the Term Loan Agreement from time to time, the "TERM LOAN
LENDERS"), Bank of America, N.A., as Administrative Agent (in such capacity, the
"TERM LOAN FACILITY AGENT") and Deutsche Bank Securities, Inc. as Documentation
Agent for the Term Loan Lenders (in such capacity, the "TERM LOAN DOCUMENTATION
AGENT," and together with the Term Loan Facility Agent, the "TERM LOAN AGENTS"),
pursuant to which the Term Loan Lenders have made certain commitments, subject
to the terms and conditions set forth in the Term Loan Agreement, to extend
certain term loan facilities to Borrowers;
WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the Term Loan Agreement and the Revolver Credit
Agreement) with Collateral Agent (in such capacity, the "CASH MANAGEMENT BANK")
and the obligations of Borrowers to the Cash Management Bank arising from or
relating to the Cash Management System are secured under the Security Agreement
(as defined below); and
WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among Grantor, the other grantors named therein and Bank
of America, N.A., in its capacity as collateral agent for and representative of
the Secured Parties (as defined in the Intercreditor Agreement referred to
below) (the "COLLATERAL AGENT"), Grantor has granted in favor of Collateral
Agent a secured and protected interest in, and Collateral Agent has agreed to
become a secured creditor with respect to, the Trademark Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
a security interest, (subject to the terms of the Intercreditor Agreement (as
defined in the Security Agreement) (including, without limitation, the
provisions regarding lien priority)), in all of Grantor's right, title and
Security Agreement
I-1
interest in and to the following, in each case whether now or hereafter existing
or in which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "TRADEMARK COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all
trademarks, service marks, designs, logos, indicia, tradenames, trade
dress, corporate names, company names, business names, fictitious
business names, trade styles and/or other source and/or business
identifiers and applications pertaining thereto, owned by such Grantor,
or hereafter adopted and used, in its business (including, without
limitation, the trademarks specifically identified in Schedule A)
(collectively, the "TRADEMARKS"), all registrations that have been or
may hereafter be issued or applied for thereon in the United States and
any state thereof and in foreign countries (including, without
limitation, the registrations and applications specifically identified
in Schedule A) (the "TRADEMARK REGISTRATIONS"), all common law and
other rights (but in no event any of the obligations) in and to the
Trademarks in the United States and any state thereof and in foreign
countries (the "TRADEMARK RIGHTS"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith (the
"ASSOCIATED GOODWILL"); and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Trademark Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Collateral Agent
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Trademark Collateral. For purposes of this Grant of
Trademark Security Interest, the term "PROCEEDS" includes whatever is
receivable or received when Trademark Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Trademark Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and Grantor shall be deemed
to have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Trademark Collateral.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
in the Trademark Collateral granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
Security Agreement
I-2
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the __ day of _______, 200__.
[NAME OF GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
Security Agreement
I-S-1
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
United States
Trademark Registration Registration
Registered Owner Description Number Date
Security Agreement
I-A-1
EXHIBIT II TO
SECURITY AGREEMENT
[FORM OF GRANT OF PATENT SECURITY INTEREST]
GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Patent Collateral (as defined
below);
WHEREAS, COVANTA POWER INTERNATIONAL HOLDINGS, INC., a
Delaware corporation ("COMPANY") and the Subsidiaries of Company listed on the
signature pages thereof (collectively, Company and such Subsidiaries of Company
are "BORROWERS" and each a "BORROWER") have entered into certain Credit
Agreement dated as of March __, 2004 (said Credit Agreement or any credit
agreement entered into by Revolver Borrowers to refinance, replace, renew or
extend, in whole or in part, said Credit Agreement and the indebtedness
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "REVOLVER CREDIT AGREEMENT") with the financial institutions listed on
the signature pages thereof as Lenders (collectively, together with their
respective successors and assigns party to the Revolver Credit Agreement from
time to time, the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), pursuant to which the Revolver Lenders have made certain commitments,
subject to the terms and conditions set forth in the Revolver Credit Agreement,
to extend certain revolving credit facilities to Borrowers;
WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by Term Loan Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness thereunder, as said
Credit Agreement or any replacement to said Credit Agreement may be amended,
restated, supplemented or otherwise modified from time to time, being the "TERM
LOAN AGREEMENT") with the financial institutions listed on the signature pages
thereof as Lenders (collectively, together with their respective successors and
assigns party to the Term Loan Agreement from time to time, the "TERM LOAN
LENDERS"), Bank of America, N.A., as Administrative Agent (in such capacity, the
"TERM LOAN FACILITY AGENT") and Deutsche Bank Securities, Inc. as Documentation
Agent for the Term Loan Lenders (in such capacity, the "TERM LOAN DOCUMENTATION
AGENT," and together with the Term Loan Facility Agent, the "TERM LOAN AGENTS"),
pursuant to which the Term Loan Lenders have made certain commitments, subject
to the terms and conditions set forth in the Term Loan Agreement, to extend
certain term loan facilities to Borrowers;
WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the Term Loan Agreement and the Revolver Credit
Agreement) with Collateral Agent (in such capacity, the "CASH MANAGEMENT BANK")
and the obligations of Borrowers to the Cash Management Bank arising from or
relating to the Cash Management System are secured under the Security Agreement
(as defined below); and
WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among Grantor, the other grantors named therein and Bank
of America, N.A., in its capacity as collateral agent for and representative of
the Secured Parties (as defined in the Intercreditor Agreement referred to
below) (the "COLLATERAL AGENT"), Grantor has granted in favor of Collateral
Agent a secured and protected interest in, and Collateral Agent has agreed to
become a secured creditor with respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
four separate security interests, (subject to the terms of the Intercreditor
Agreement (as defined in the Security Agreement) (including, without limitation,
the provisions regarding lien priority)), in all of Grantor's
Security Agreement
II-1
right, title and interest in and to the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located (the "PATENT COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all patents
and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or
in the future may be, owned or held by such Grantor and all patents and
patent applications and rights, title and interests in patents and
patent applications under any domestic or foreign law that are
presently, or in the future may be, owned by such Grantor in whole or
in part (including, without limitation, the patents and patent
applications listed in Schedule A), all rights (but not obligations)
corresponding thereto to xxx for past, present and future infringements
and all re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively
referred to as the "PATENTS"); and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Patent Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Collateral Agent
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Patent Collateral. For purposes of this Grant of
Patent Security Interest, the term "PROCEEDS" includes whatever is
receivable or received when Patent Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Patent Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and Grantor shall be deemed to
have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Patent Collateral.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
in the Patent Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
[The remainder of this page intentionally left blank.]
Security Agreement
II-2
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent
Security Interest to be duly executed and delivered by its officer
thereunto duly authorized as of the ___ day of ____________, 200__.
[NAME OF GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
Security Agreement
II-S-1
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
PATENTS ISSUED:
Patent No. Issue Date Invention Inventor
PATENTS PENDING:
Applicant's Date Application
Name Filed Number Invention Inventor
Security Agreement
II-A-1
EXHIBIT III TO
SECURITY AGREEMENT
[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]
GRANT OF COPYRIGHT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Copyright Collateral (as defined
below);
WHEREAS, COVANTA POWER INTERNATIONAL HOLDINGS, INC., a
Delaware corporation ("COMPANY") and the Subsidiaries of Company listed on the
signature pages thereof (collectively, Company and such Subsidiaries of Company
are "BORROWERS" and each a "BORROWER") have entered into certain Credit
Agreement dated as of March __, 2004 (said Credit Agreement or any credit
agreement entered into by Revolver Borrowers to refinance, replace, renew or
extend, in whole or in part, said Credit Agreement and the indebtedness
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "REVOLVER CREDIT AGREEMENT") with the financial institutions listed on
the signature pages thereof as Lenders (collectively, together with their
respective successors and assigns party to the Revolver Credit Agreement from
time to time, the "REVOLVER LENDERS"), and Deutsche Bank AG, New York Branch, as
Administrative Agent for the Revolver Lenders (in such capacity, the "REVOLVER
AGENT"), pursuant to which the Revolver Lenders have made certain commitments,
subject to the terms and conditions set forth in the Revolver Credit Agreement,
to extend certain revolving credit facilities to Borrowers;
WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by Term Loan Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness thereunder, as said
Credit Agreement or any replacement to said Credit Agreement may be amended,
restated, supplemented or otherwise modified from time to time, being the "TERM
LOAN AGREEMENT") with the financial institutions listed on the signature pages
thereof as Lenders (collectively, together with their respective successors and
assigns party to the Term Loan Agreement from time to time, the "TERM LOAN
LENDERS"), Bank of America, N.A., as Administrative Agent (in such capacity, the
"TERM LOAN FACILITY AGENT") and Deutsche Bank Securities, Inc. as Documentation
Agent for the Term Loan Lenders (in such capacity, the "TERM LOAN DOCUMENTATION
AGENT," and together with the Term Loan Facility Agent, the "TERM LOAN AGENTS"),
pursuant to which the Term Loan Lenders have made certain commitments, subject
to the terms and conditions set forth in the Term Loan Agreement, to extend
certain term loan facilities to Borrowers;
WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the Term Loan Agreement and the Revolver Credit
Agreement) with Collateral Agent (in such capacity, the "CASH MANAGEMENT BANK")
and the obligations of Borrowers to the Cash Management Bank arising from or
relating to the Cash Management System are secured under the Security Agreement
(as defined below); and
WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among Grantor, the other grantors named therein and Bank
of America, N.A., in its capacity as collateral agent for and representative of
the Secured Parties (as defined in the Intercreditor Agreement referred to
below) (the "COLLATERAL AGENT"), Grantor has granted in favor of Collateral
Agent a secured and protected interest in, and Collateral Agent has agreed to
become a secured creditor with respect to, the Copyright Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
four separate security interests, (subject to the terms of the Intercreditor
Agreement (as defined in the Security Agreement) (including, without limitation,
the provisions regarding lien priority)), in all of Grantor's
Security Agreement
III-1
right, title and interest in and to the following, in each case whether now or
hereafter existing or in which Grantor now has or hereafter acquires an interest
and wherever the same may be located (the "COPYRIGHT COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) under copyright in
various published and unpublished works of authorship including,
without limitation, computer programs, computer data bases, other
computer software layouts, trade dress, drawings, designs, writings,
and formulas (including, without limitation, the works listed on
Schedule A, as the same may be amended pursuant hereto from time to
time) (collectively, the "COPYRIGHTS"), all copyright registrations
issued to Grantor and applications for copyright registration that have
been or may hereafter be issued or applied for thereon in the United
States and any state thereof and in foreign countries (including,
without limitation, the registrations listed on Schedule A, as the same
may be amended pursuant hereto from time to time) (collectively, the
"COPYRIGHT REGISTRATIONS"), all common law and other rights in and to
the Copyrights in the United States and any state thereof and in
foreign countries including all copyright licenses (but with respect to
such copyright licenses, only to the extent permitted by such licensing
arrangements) (the "COPYRIGHT RIGHTS"), including, without limitation,
each of the Copyrights, rights, titles and interests in and to the
Copyrights, all derivative works and other works protectable by
copyright, which are presently, or in the future may be, owned, created
(as a work for hire for the benefit of Grantor), authored (as a work
for hire for the benefit of Grantor), or acquired by Grantor, in whole
or in part, and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter granted or
applied for, and all renewals and extensions thereof, throughout the
world, including all proceeds thereof (such as, by way of example and
not by limitation, license royalties and proceeds of infringement
suits), the right (but not the obligation) to renew and extend such
Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right (but not the obligation) to xxx
in the name of such Grantor or in the name of Collateral Agent or
Lenders for past, present and future infringements of the Copyrights
and Copyright Rights; and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Copyright Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Collateral Agent
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Copyright Collateral. For purposes of this Grant of
Copyright Security Interest, the term "PROCEEDS" includes whatever is
receivable or received when Copyright Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Copyright Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and Grantor shall be deemed
to have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Copyright Collateral.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
in the Copyright Collateral granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
Security Agreement
[The remainder of this page intentionally left blank.]
III-2
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the ___ day of ___________, 200__.
[NAME OF GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
Security Agreement
III-S-1
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. COPYRIGHTS:
Title Registration No. Date of Issue Registered Owner
PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:
Title Reference No. Date of Application Copyright Claimant
Security Agreement
III-A-1
EXHIBIT IV TO
SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This Pledge Supplement, dated as of _________________, 200__
is delivered pursuant to the Security Agreement, dated as of March __, 2004
among ____________, a ____________ ("GRANTOR"), the other Grantors named
therein, and Bank of America, N.A., as Collateral Agent (as it may heretofore
have been and as it may from time to time hereafter be amended, restated,
supplemented or otherwise modified, the "SECURITY AGREEMENT"). Capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
thereto in the Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt]
listed on the schedule attached hereto shall be deemed to be part of the
[Pledged Shares] [Pledged Debt] and shall become part of the Securities
Collateral and shall secure all Secured Obligations.
IN WITNESS WHEREOF, Grantor has caused this Amendment to be
duly executed and delivered by its duly authorized officer as of
_______________, 200__.
[GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
Security Agreement
IV-1
EXHIBIT V TO
SECURITY AGREEMENT
IP SUPPLEMENT
This IP SUPPLEMENT, dated as of ____________, 200__ is
delivered pursuant to and supplements (i) the Security Agreement, dated as of
March __, 2004 (as it may heretofore have been and as it may from time to time
hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among _______________ ("GRANTOR"), the other Grantors
named therein, and Bank of America, N.A., as Collateral Agent, and (ii) the
[Grant of Trademark Security Interest] [Grant of Patent Security Interest]
[Grant of Copyright Security Interest] dated as of ___________, 200__ (the
"GRANT") executed by Grantor. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Grant.
Grantor grants to Collateral Agent some separate security
interests (as set forth in the Security Agreement) in all of Grantor's right,
title and interest in and to the [Trademark Collateral] [Patent Collateral]
[Copyright Collateral] listed on Schedule A attached hereto. All such [Trademark
Collateral] [Patent Collateral] [Copyright Collateral] shall be deemed to be
part of the [Trademark Collateral] [Patent Collateral] [Copyright Collateral]
and shall be hereafter subject to each of the terms and conditions of the
Security Agreement and the Grant.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be
duly executed and delivered by its duly authorized officer as of ______________,
200__.
[GRANTOR]
By:_____________________________
Name:_________________________
Title:__________________________
[Attach Schedule A]
Security Agreement
V-1
