EXHIBIT 10.71
EXECUTION COPY
SECURITY AGREEMENT
This SECURITY AGREEMENT (as amended, supplemented, amended and restated
or otherwise modified from time to time, this "Security Agreement"), dated as of
December 16, 2003 is made by Sweetheart Cup Company Inc., a Delaware corporation
(the "Issuer"), Sweetheart Holdings Inc., the parent of the Issuer (the
"Parent"), and each Domestic Subsidiary of the Issuer which may from time to
time hereafter become a party hereto pursuant to Section 7.4 (each,
individually, an "Additional Grantor", and collectively, the "Additional
Grantors", and together with the Issuer, the Parent, each such Domestic
Subsidiary, each, individually, a "Grantor", and collectively, the "Grantors"),
in favor of Xxxxx Fargo Bank Minnesota, National Association, as collateral
agent (together with its successor(s) thereto, in such capacity, the "Collateral
Agent") for each of the Secured Parties.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Issuer, the other Grantors and the Collateral Agent, as
trustee, have entered into an Indenture, dated as of December 16, 2003 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Indenture"), and in connection therewith, the Issuer has issued (the
"Notes Issuance") its 9 1/2% Series A Senior Secured Notes due 2007 (and, if
applicable, its 9 1/2% Series B Senior Secured Notes due 2007, issued in
exchange therefor) (collectively, the "Notes");
WHEREAS, as a condition precedent to the Notes Issuance, each Grantor
is required to execute and deliver this Security Agreement;
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this
Security Agreement inasmuch as such Grantor will derive substantial direct and
indirect benefits from proceeds of the Notes issued by the Issuer;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Holders
to acquire the Notes and maintain the Indebtedness evidenced thereby, each
Grantor agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Additional Grantor" and "Additional Grantors" are defined in the
preamble.
"Collateral" is defined in Section 2.1.
"Collateral Agent" is defined in the preamble.
"Excluded Assets" means (a) leasehold interests for any of the
properties set forth in Section 2.1 and (b) accounts, inventory, trademarks,
patents, copyrights, registrations or applications therefor or any other
intellectual property, any property used in any business unit of a Grantor other
than the Xxxxx Business Unit or any proceeds of any of the foregoing.
"Xxxxx Business Unit" means the business unit of the Issuer consisting
of the assets used to produce the "Xxxxx", "Xxxxxxxxxx" and "Creative
Expressions" brands, which brands are manufactured at the addresses set forth in
Section 2.1.
"Grantor" and "Grantors" are defined in the preamble.
"Indenture" is defined in the first recital.
"Issuer" is defined in the preamble.
"Master Deposit Account" means a deposit account of the Issuer to be
established and maintained with the Collateral Agent upon the occurrence of an
Event of Default.
"Notes" is defined in the first recital.
"Notes Issuance" is defined in the first recital.
"Related Documents" means the Indenture, the Notes, this Security
Agreement and the Mortgages.
"Secured Obligations" is defined in Section 2.2.
"Secured Parties" means the Collateral Agent, the Trustee and the
Holders.
"Security Agreement" is defined in the preamble.
"Termination Date" means the date on which (a) the Secured Obligations
are paid in full, in cash, (b) an amount sufficient to satisfy the Secured
Obligations is deposited, in cash, in an irrevocable trust for the Noteholders
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or (c) the Secured Obligations are otherwise satisfied in full in accordance
with the terms of the Indenture.
"U.C.C." means the Uniform Commercial Code as in effect from time to
time in the State of New York; provided, that if, with respect to any U.C.C.
financing statement or by reason of any provisions of law, the perfection or the
effect of perfection or non-perfection of the security interests granted to the
Collateral Agent pursuant to the applicable Related Document is governed by the
Uniform Commercial Code as in effect in a jurisdiction of the United States
other than New York, then "U.C.C." means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions of each Related Document and any U.C.C. financing statement relating
to such perfection or effect of perfection or non-perfection.
Section 1.2. Indenture Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Security Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.
Section 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
the Indenture or the context otherwise requires and whether or not capitalized,
terms for which meanings are provided in Article 8 or Article 9 of the U.C.C.
are used in this Security Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
SECURITY INTEREST
Section 2.1. Grant of Security Interest. Each Grantor hereby grants to
the Collateral Agent for the ratable benefit of each of the Secured Parties, a
continuing security interest in all of the following property, whether tangible
or intangible, whether now or hereafter existing, owned or acquired by such
Grantor, (collectively the "Collateral"):
(a) the equipment, structures and other improvements to any of
the foregoing of such Grantor located at each location set forth below
and, to the extent any of the following items of property constitute
fixtures and/or equipment under applicable laws, all fixtures,
fittings, appliances, apparatus, equipment, machinery, building and
construction materials and other articles of every kind and nature
whatsoever (including the intellectual property, technology and general
intangibles necessary to use and operate such assets) and all
replacements thereof constituting fixtures and/or equipment, now or
hereafter affixed or attached to, placed upon or used in any way in
connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the real
property of such Grantor or such buildings, structures and other
improvements, in each case, located at any of the following locations:
(i) 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxx;
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(ii) 0000 Xxxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx;
(iii) 00 Xxxxx Xxxxx Xxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxx
Xxxx;
(iv) 0000 Xxxxxxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxx;
(v) 0000 Xxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx;
(vi) 00 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxxx;
(vii) 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx;
(viii) 0000 Xxxxx Xxxxxxxx, Xx Xxxxx, Xxxxxxxxxx;
(ix) 0000 Xxxxxx Xxx, Xx Xxxxx, Xxxxxxxxxx;
(x) 0000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx;
(xi) 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx;
(xii) 00 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxxx;
and
(xiii) Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx; and
(b) all other equipment used exclusively in the Xxxxx Business
Unit that has not at any time been used by any other business unit of
the Issuer wherever located;
(c) all proceeds of and from any and all of the foregoing
Collateral and, to the extent not otherwise included, all payments
under insurance (whether or not the Collateral Agent is the loss payee
thereof), the Master Deposit Account, or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any Excluded
Assets.
Section 2.2. Security for Obligations. This Security Agreement secures
the payment of all Obligations of the Issuer now or hereafter existing under the
Indenture, the Notes and each other Related Document to which the Issuer is or
may become a party, whether for principal, interest, costs, fees, expenses or
otherwise, and all Obligations of each Grantor now or hereafter existing under
its Subsidiary Guarantee, this Security Agreement and each other Related
Document to which such Grantor is or may become a party (all such obligations of
such Grantor being the "Secured Obligations").
Section 2.3. Continuing Security Interest; Transfer of Notes. This
Security Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until the Termination
Date,
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(b) be binding upon each Grantor, its successors, transferees
and assigns, and
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and
each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Holder may
assign or otherwise transfer (in whole or in part) any Note held by it to any
other Person, and such other Person shall thereupon become vested with all the
rights and benefits in respect thereof granted to such Holder under any Related
Document (including this Security Agreement) or otherwise, subject, however, to
any contrary provisions in such assignment or transfer, and to the provisions of
Sections 2.01 and 2.06 of the Indenture. On the Termination Date, the security
interest granted herein shall terminate and all rights to the Collateral shall
revert to such Grantor. Upon any such termination, the Collateral Agent will, at
such Grantor's sole expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination. Upon (i)
the sale, transfer or other disposition of Collateral in accordance with the
terms of the Indenture or (ii) the occurrence of the Termination Date, the
security interests granted herein shall automatically terminate with respect to
(x) such Collateral (in the case of clause (i)) or (y) all Collateral (in the
case of clause (ii)). Upon any such sale, transfer, disposition or termination,
the Collateral Agent will, at such Grantor's sole expense, execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination.
Section 2.4. Security Interest Absolute. This Security Agreement shall
in all respects be a continuing, absolute, unconditional and irrevocable grant
of security interest, and shall remain in full force and effect until the
Termination Date. All rights of the Collateral Agent and the security interests
granted to the Collateral Agent (for its benefit and the ratable benefit of each
other Secured Party) hereunder, and all obligations of each Grantor hereunder,
shall be absolute and unconditional and irrevocable, irrespective of
(a) any lack of validity, legality or enforceability of the
Indenture, any Note or any other Related Document;
(b) the failure of any Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against the Issuer, any other Grantor or any
other Person under the provisions of the Indenture, any Note,
any other Related Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, debtor or obligor with respect to, or
collateral securing, any Secured Obligations;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other extension, compromise or renewal of any Secured Obligations;
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(d) any reduction, limitation, impairment or termination of
any Secured Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and each Grantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Indenture, any Note or any other Related Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Issuer,
any other Grantor, any surety or any guarantor, debtor or obligor.
Section 2.5 Postponement of Subrogation, etc. Each Grantor hereby
agrees that it will not exercise any rights which it may acquire by reason of
any payment made hereunder, whether by way of subrogation, reimbursement or
otherwise, until the Termination Date. Any amount paid to any Grantor on account
of any payment made hereunder prior to the Termination Date shall be held in
trust for the benefit of the Secured Parties and shall immediately be paid to
the Secured Parties and credited and applied against the Secured Obligations,
whether matured or unmatured, in accordance with the terms of the Indenture;
provided, however, that if
(a) such Grantor has made payment to the Secured Parties of
all or any part of the Secured Obligations, and
(b) the Termination Date has occurred,
each Secured Party agrees that, at the requesting Grantor's request and sole
expense, the Secured Parties will execute and deliver to such Grantor
appropriate documents (without recourse and without representation or warranty)
necessary to evidence the transfer by subrogation to such Grantor of an interest
in the Secured Obligations resulting from such payment by such Grantor. In
furtherance of the foregoing, for so long as any Secured Obligations remain
outstanding, each Grantor shall refrain from taking any action or commencing any
proceeding against the Issuer or any other Grantor (or its successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in respect of payments made under this Security Agreement to
any Secured Party.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties. Each Grantor represents
and warrants to each Secured Party insofar as the representations and warranties
contained herein are applicable to such Grantor and its properties, as set forth
in this Article III.
Section 3.2. Grantor Name, Location, etc. The jurisdiction in which
each Grantor is located for purposes of Sections 9-301 and 9-307 of the U.C.C.
is set forth in Item A of Schedule I hereto. During the past five years
preceding the date hereof, no Grantor has been known by any legal name different
from the one set forth on the signature page hereto, nor has such Grantor been
the subject of any merger or other corporate reorganization, except as set forth
in Item B of Schedule I hereto. The name set forth on the signature page is the
true and correct name of such Grantor. Each Grantor's federal taxpayer
identification number is (and, during the four months preceding the date hereof,
such Grantor has not had a federal taxpayer identification number different from
that) set forth in Item C of Schedule I hereto.
Section 3.3. Ownership, No Liens, etc. Such Grantor owns its Collateral
free and clear of any Lien, security interest, charge or encumbrance except for
the security interest created by this Security Agreement except as permitted by
the Indenture. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Collateral Agent
relating to this Security Agreement or as have been filed in connection with
Liens permitted pursuant to Section 4.12 of the Indenture or as to which a
termination statement or partial release relating to such financing statement or
other instrument has been delivered to the Collateral Agent on the Closing Date.
Section 3.4. Validity, etc. This Security Agreement creates a valid
continuing security interest in the Collateral constituting personal property
securing the payment of the Secured Obligations, and, subject to "Permitted
Liens", upon the filing in the jurisdiction of incorporation or formation of the
applicable Grantor Uniform Commercial Code financing statements delivered by the
Grantor to the Collateral Agent with respect to such Collateral in which a
security interest may be perfected by filing a UCC financing statement, such
security interest will be a valid first priority perfected security interest
(except to the extent a Uniform Commercial Code financing statement was
previously filed in connection with Permitted Liens and such financing statement
remains effective in respect of such Collateral). Each Grantor agrees to deliver
UCC-1 and UCC-3 financing statements to a filing agent acceptable to the
Collateral Agent and make any other filings reasonably necessary to perfect the
security interests contemplated hereby at the sole expense of such Grantor.
Section 3.5. Authorization, Approval, etc. Except as have been obtained
or made and are in full force and effect (or otherwise provided for to the
satisfaction of the Agents), no authorization, approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required either
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(a) for the grant by such Grantor of the security interest
granted hereby, the pledge by such Grantor of any Collateral pursuant
hereto or for the execution, delivery and performance of this Security
Agreement by such Grantor,
(b) for the perfection of or the exercise by the Collateral
Agent of its rights and remedies hereunder, or
(c) for the exercise by the Collateral Agent of the rights
provided for in this Security Agreement or the remedies in respect of
the Collateral pursuant to this Security Agreement.
Section 3.5. Xxxxx Fixed Assets Collateral. All of the Xxxxx Fixed
Assets Collateral (as defined in the Intercreditor Agreement) is located at the
addresses set forth in clause (a) of Section 2.1.
ARTICLE IV
COVENANTS
Section 4.1. Certain Covenants. Each Grantor covenants and agrees that,
so long as any portion of the Secured Obligations shall remain unpaid, such
Grantor will, unless the Trustee shall otherwise consent in writing, perform,
comply with and be bound by the obligations set forth in this Article IV.
SECTION 4.1.1. Name Changes. No Grantor will change its name or place
of incorporation or organization or federal taxpayer identification number
except upon 30 days' prior written notice to the Collateral Agent.
Section 4.2. As to Proceeds of Collateral. Error! Bookmark not defined.
Subject to Section 4.10 of the Indenture, all proceeds of Collateral received by
such Grantor shall be deposited into a deposit account of such Grantor, unless,
during the occurrence and continuance of an Event of Default, such Grantor is
otherwise notified in writing by the Collateral Agent (a "Deposit
Notification"). Following any such notice by the Collateral Agent to such
Grantor pursuant to this Section 4.2(a), all proceeds of Collateral received by
such Grantor shall be delivered in kind to the Master Deposit Account (which
shall be established by the Issuer with the Collateral Agent if such Master
Deposit Account is not then existing). Proceeds of Collateral received by such
Grantor shall, prior to deposit in the Master Deposit Account, be held separate
and apart from, and not commingled with, all other property and in express trust
for the benefit of the Collateral Agent until delivery thereof is made to the
Master Deposit Account.
(a) Following a Deposit Notification, such Grantor shall transfer all
funds constituting proceeds of Collateral out of each of its deposit accounts
that is not the Master Deposit Account (other than, in the aggregate, cash or
Cash Equivalent Investments in all deposit accounts (other than the Master
Deposit Account) that do not exceed at any time $10,000) for deposit into the
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Master Deposit Account at the close of business each day or, if not commercially
reasonable to do so, no less frequently than once every five Business Days.
(b) Following a Deposit Notification, the Collateral Agent shall have
the right to apply any amount constituting proceeds of Collateral in the Master
Deposit Account to the payment of any Secured Obligations which are due and
payable or payable upon demand or otherwise then due and payable.
(c) With respect to the Master Deposit Account, it is hereby agreed
that (i) deposits in the Master Deposit Account are subject to a security
interest as contemplated hereby, (ii) the Master Deposit Account shall be under
the sole dominion and control of the Collateral Agent and (iii) the Collateral
Agent shall have the sole right of withdrawal over the Master Deposit Account;
provided, however, that, unless the applicable Grantor receives a notice in
writing stating that no such Grantor shall withdraw any of the funds contained
in the Master Deposit Account, any such Grantor may at any time withdraw any of
the funds contained in the Master Deposit Account for use in any lawful manner
not inconsistent with the provisions of this Security Agreement, the Indenture
or any other Related Document.
(d) Following a Default of the nature set forth in clause (6) of
Section 6.01 of the Indenture or an Event of Default, the Collateral Agent is
authorized to endorse, in the name of such Grantor, any item, howsoever received
by the Collateral Agent, representing any payment on or other proceeds of any of
the Collateral.
Section 4.3. Insurance. Such Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Collateral) against such casualties and
contingencies and of such types and in such amounts as is required pursuant to
Section 4.16 of the Indenture and will, upon the request of the Collateral
Agent, furnish a certificate of a reputable insurance broker setting forth the
nature and extent of all insurance maintained by such Grantor in accordance with
this Section.
Section 4.4. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary to perfect and preserve any security interest granted or purported to
be granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, such Grantor will
(a) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including any assignment of claim form under or pursuant to
the federal assignment of claims statute, 31 U.S.C. ss. 3726, any
successor or amended version thereof or any regulation promulgated
under or pursuant to any version thereof), as may be necessary in order
to perfect and preserve the security interests and other rights granted
or purported to be granted to the Collateral Agent hereby; and
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(b) furnish to the Collateral Agent, from time to time at the
Collateral Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the 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 such Grantor where permitted
by law. A carbon, photographic or other reproduction of this Security Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
Section 4.4. Xxxxx Fixed Assets Collateral. Each Grantor agrees that it
will not take any action that would result in any of the Collateral no longer
being "Xxxxx Fixed Asset Collateral" (as defined in the Intercreditor
Agreement).
ARTICLE V
THE COLLATERAL AGENT
Section 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral
Agent's discretion, following the occurrence and during the continuation of a
Default of the nature set forth in clause (6) of Section 6.01 of the Indenture
or an Event of Default, to take any action and to execute any instrument which
the Collateral Agent may deem necessary or advisable to accomplish the purposes
of this Security Agreement, including:
(a) to ask, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
to enforce the rights of the Collateral Agent with respect to any of
the Collateral; and
(d) to perform the affirmative obligations of such Grantor
hereunder (including all obligations of such Grantor pursuant to
Section 4.4).
Such Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
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Section 5.2. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, during the continuance of the resulting
Event of Default, if any, the Collateral Agent may itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor pursuant to
Section 6.3.
Section 5.3. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or responsibility for
taking any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
Section 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as any Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
Section 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to 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 U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may
(i) require each Grantor to, and such Grantor hereby
agrees that it will, at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place to be designated
by the Collateral Agent which is reasonably convenient to both
parties, and
(ii) 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 the Collateral Agent's
offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent
may deem commercially reasonable. Each Grantor agrees that, to
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the extent notice of sale shall be required by law, at least
ten days' prior 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. The
Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
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.
(b) All cash proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon, all
or any part of the Collateral shall be applied by the Collateral Agent
as set forth in Section 6.10 of the Indenture.
(c) The Collateral Agent may,
(i) transfer all or any part of the Collateral into
the name of the Collateral Agent or its nominee, with or
without disclosing that such Collateral is subject to the lien
and security interest hereunder,
(ii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iii) endorse any checks, drafts, or other writings
in such Grantor's name to allow collection of the Collateral,
(iv) take control of any proceeds of the Collateral,
and
(v) execute (in the name, place and stead of such
Grantor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
Section 6.2. Compliance with Restrictions. Each Grantor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Collateral Agent is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and such Grantor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Collateral Agent be liable nor accountable to
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such Grantor for any discount allowed by the reason of the fact that such
Collateral is sold in compliance with any such limitation or restriction.
Section 6.3. Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to indemnify the
Collateral Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Security Agreement
(including enforcement of this Security Agreement), except claims,
losses or liabilities resulting from the Collateral Agent's gross
negligence or wilful misconduct.
(b) Each Grantor will upon demand pay to the Collateral Agent
the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with
(i) the administration of this Security 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 the Collateral Agent or the Secured Parties
hereunder, and
Section 6.4.the failure by any Grantor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Related Document. This Security Agreement is a Related
Document executed pursuant to the Indenture and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the provisions of Article I thereof. This Security Agreement is subject to
the terms of the Intercreditor Agreement.
Section 7.2. Amendments; etc. No amendment to or waiver of any
provision of this Security Agreement nor consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent (on behalf of (x) the Holders or (y) the
Holder or Holders of at least a majority in aggregate principal amount of the
outstanding Notes, as the case may be) and the Grantors, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
Section 7.3. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and, if to any Grantor, mailed or telecopied or delivered to it,
addressed to it in care of the Issuer at the address of the Issuer specified in
13
the Indenture, if to the Collateral Agent, mailed or telecopied or delivered to
it, addressed to it at the address of the Collateral Agent specified in the
Indenture. All such notices and other communications, when mailed and properly
addressed with postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any such notice or
communication, if transmitted by telecopier, shall be deemed given when
transmitted and electronically confirmed.
Section 7.4. Additional Grantors. Upon the execution and delivery by
any other Person of an instrument in the form of Annex I hereto, such Person
shall become a "Grantor" hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any such
instrument shall not require the consent of any other Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Security Agreement.
Section 7.5. Section Captions. Section captions used in this Security
Agreement are for convenience of reference only, and shall not affect the
construction of this Security Agreement.
Section 7.6. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
Section 7.7. Counterparts. This Security Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.
Section 7.8. Governing Law, Entire Agreement, etc. THIS SECURITY
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR 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. THIS SECURITY AGREEMENT AND THE OTHER RELATED DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR
ORAL, WITH RESPECT THERETO.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
14
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
SWEETHEART CUP COMPANY INC., a Delaware corporation
By
---------------------------------------------
Name:
Title:
SWEETHEART HOLDINGS INC. a Delaware corporation
By
---------------------------------------------
Name:
Title:
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Collateral Agent
By
---------------------------------------------
Name:
Title:
SCHEDULE I
to Security Agreement
([NAME OF GRANTOR])
Item A. Locations of each Grantor:
-------------------------------------- -----------------------------------------
Name of Grantor: Location for purposes of U.C.C.:
-------------------------------------- -----------------------------------------
[GRANTOR] [LOCATION]
-------------------------------------- -----------------------------------------
Item B. Merger or other corporate reorganization.
------------------------------------- ------------------------------------------
Name of Grantor: Merger or other corporate reorganization:
------------------------------------- ------------------------------------------
[GRANTOR]
------------------------------------- ------------------------------------------
Item C. Taxpayer ID numbers.
-------------------------------------- -----------------------------------------
Name of Grantor: Taxpayer ID numbers:
-------------------------------------- -----------------------------------------
[GRANTOR]
-------------------------------------- -----------------------------------------
ANNEX I
to Security Agreement
SUPPLEMENT TO SECURITY AGREEMENT
This SUPPLEMENT NO. ___, dated as of ________ __, ____ (this
"Supplement"), to the Security Agreement, dated as of December 16, 2003 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Security Agreement"), among the initial signatories thereto and each
other Person which from time to time thereafter became a party thereto pursuant
to Section 7.4 thereof (each, individually, a "Grantor", and, collectively, the
"Grantors"), in favor of Xxxxx Fargo Bank, National Association, as collateral
agent (together with its successor(s) thereto, in such capacity the "Collateral
Agent") for each of the Secured Parties (such and other capitalized terms being
used herein with the meanings provided, or incorporated by reference, in the
Security Agreement), is made by the undersigned.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Issuer, the other Grantors and the Collateral Agent, as
trustee, have entered into an Indenture, dated as of December 16, 2003 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Indenture"), and in connection therewith, the Issuer has issued (the
"Notes Issuance") its 9 1/2% Senior Secured Notes due 2007 (and, if applicable,
its 9 1/2%Senior Secured Notes due 2007, Series B issued in exchange therefor)
(collectively, the "Notes");
WHEREAS, the undersigned has duly authorized the execution, delivery
and performance of this Supplement and the Security Agreement;
WHEREAS, the Security Agreement provides that additional parties may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement;
WHEREAS, pursuant to the provisions of Section 7.4 of the Security
Agreement, the undersigned is becoming an Additional Grantor under the Security
Agreement; and
WHEREAS, the undersigned desires to become a Grantor under the Security
Agreement;
NOW, THEREFORE, the undersigned agrees, for the benefit of each Secured
Party, as follows:
SECTION 1. In accordance with the Security Agreement, the undersigned
by its signature below becomes a Grantor under the Security Agreement with the
same force and effect as if it were an original signatory thereto as a Grantor
and the undersigned hereby
(a) agrees to all the terms and provisions of the Security
Agreement applicable to it as a Grantor thereunder;
(b) grants to the Collateral Agent for its benefit and the
ratable benefit of each of the Secured Parties, a security interest in
all of the following, whether now or hereafter existing or acquired by
the undersigned (its "Collateral"):
(i) the equipment, structures and other improvements to any of
the foregoing of such Grantor located at each location set forth below
and, to the extent any of the following items of property constitute
fixtures and/or equipment under applicable laws, all fixtures,
fittings, appliances, apparatus, equipment, machinery, building and
construction materials and other articles of every kind and nature
whatsoever (including the intellectual property, technology and general
intangibles necessary to use and operate such assets) and all
replacements thereof constituting fixtures and/or equipment, now or
hereafter affixed or attached to, placed upon or used in any way in
connection with the complete and comfortable use, enjoyment,
occupation, operation, development and/or maintenance of the real
property of such Grantor or such buildings, structures and other
improvements, in each case, located at any of the following locations:
(1) 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx;
(2) 0000 Xxxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx;
(3) 00 Xxxxx Xxxxx Xxxxxxxxx Xxxx, Xxxxx Xxxxx,
Xxx Xxxx;
(4) 0000 Xxxxxxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxx;
(5) 0000 Xxxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx;
(6) 00 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxxx;
(7) 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx;
(8) 0000 Xxxxx Xxxxxxxx, Xx Xxxxx, Xxxxxxxxxx;
(9) 0000 Xxxxxx Xxx, Xx Xxxxx, Xxxxxxxxxx;
(10) 0000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx;
(11) 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx;
(12) 00 Xxxxx Xxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxxx; and
2
(13) Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx; and
(ii) all other equipment used exclusively in the Xxxxx
Business Unit that has not at any time been used by any other business
unit of the Issuer wherever located; and
(iii) all proceeds of and from any and all of the foregoing
Collateral and, to the extent not otherwise included, all payments
under insurance (whether or not the Collateral Agent is the loss payee
thereof), the Master Deposit Account, or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any Excluded
Assets.
(c) agrees that each of the Schedules attached hereto shall be
deemed to be a Schedule thereto; and
(d) represents and warrants that the representations and
warranties made by it as a Grantor thereunder are true and correct on
and as of the date hereof.
In furtherance of the foregoing, each reference to a "Grantor" or "Additional
Grantor" in the Security Agreement shall be deemed to include the undersigned.
SECTION 2. The undersigned hereby represents and warrants that this
Supplement has been duly authorized, executed and delivered by the undersigned
and constitutes a legal, valid and binding obligation of the undersigned,
enforceable against it in accordance with its terms.
SECTION 3. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect in accordance with its terms.
SECTION 4. In the event any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement shall not in any way be affected or
impaired.
SECTION 5. THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THIS SUPPLEMENT, THE SECURITY
AGREEMENT AND THE OTHER RELATED DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
3
SECTION 6. This Supplement hereby incorporates by reference the
provisions of the Security Agreement, which provisions are deemed to be a part
hereof, and this Supplement shall be deemed to be a part of the Security
Agreement. Unless otherwise defined herein or the context otherwise requires,
terms used in this Supplement, including its preamble and recitals, have the
meanings provided (or incorporated by reference) in the Security Agreement.
SECTION 7. This Supplement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement.
4
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF ADDITIONAL GRANTOR], a
------------ -----------
By:
---------------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED BY:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Collateral Agent
By:
---------------------------
Name:
Title:
5
SCHEDULE I
to Supplement No. __
to Security Agreement
([NAME OF ADDITIONAL GRANTOR])
Item A. Locations of each Grantor:
-------------------------------------- -----------------------------------------
Name of Grantor: Location for purposes of U.C.C.:
-------------------------------------- -----------------------------------------
[GRANTOR] [LOCATION]
-------------------------------------- -----------------------------------------
Item B. Merger or other corporate reorganization.
-------------------------------------- -----------------------------------------
Name of Grantor: Merger or other corporate reorganization:
-------------------------------------- -----------------------------------------
[GRANTOR]
-------------------------------------- -----------------------------------------
Item C. Taxpayer ID numbers.
-------------------------------------- -----------------------------------------
Name of Grantor: Taxpayer ID numbers:
-------------------------------------- -----------------------------------------
[GRANTOR]
-------------------------------------- -----------------------------------------
