EXHIBIT 4.4.2
EXECUTION
PLEDGE AND SECURITY AGREEMENT
DATED AS OF AUGUST 6, 2004
BETWEEN
EACH OF THE GRANTORS PARTY HERETO
AND
XXXXXXX XXXXX CREDIT PARTNERS L.P.
AS THE TERM COLLATERAL AGENT
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS.................................................................................. 1
1.1 GENERAL DEFINITIONS............................................................................ 1
1.2 DEFINITIONS; INTERPRETATION.................................................................... 10
SECTION 2. GRANT OF SECURITY............................................................................ 11
2.1 GRANT OF SECURITY.............................................................................. 11
2.2 CERTAIN LIMITED EXCLUSIONS..................................................................... 11
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE............................................. 11
3.1 SECURITY FOR OBLIGATIONS....................................................................... 11
3.2 CONTINUING LIABILITY UNDER COLLATERAL.......................................................... 12
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS................................................. 12
4.1 GENERALLY...................................................................................... 12
4.2 EQUIPMENT AND INVENTORY........................................................................ 15
4.3 RECEIVABLES.................................................................................... 17
4.4 INVESTMENT RELATED PROPERTY.................................................................... 19
4.5 MATERIAL CONTRACTS............................................................................. 25
4.6 LETTER OF CREDIT RIGHTS........................................................................ 26
4.7 INTELLECTUAL PROPERTY.......................................................................... 27
4.8 COMMERCIAL TORT CLAIMS......................................................................... 30
SECTION 5. FURTHER ASSURANCES; ADDITIONAL GRANTORS...................................................... 30
5.1 FURTHER ASSURANCES............................................................................. 30
5.2 ADDITIONAL GRANTORS............................................................................ 31
SECTION 6. REVOLVING COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT........................................ 31
6.1 POWER OF ATTORNEY.............................................................................. 31
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES..................................... 32
SECTION 7. REMEDIES..................................................................................... 33
7.1 GENERALLY...................................................................................... 33
7.2 APPLICATION OF PROCEEDS........................................................................ 34
7.3 SALES ON CREDIT................................................................................ 34
7.4 DEPOSIT ACCOUNTS............................................................................... 34
7.5 INVESTMENT RELATED PROPERTY.................................................................... 34
7.6 INTELLECTUAL PROPERTY.......................................................................... 35
7.7 CASH PROCEEDS.................................................................................. 36
SECTION 8. REVOLVING COLLATERAL AGENT; AGREEMENT AMONG AGENTS........................................... 37
8.1 THE REVOLVING COLLATERAL AGENT................................................................. 37
8.2 AGREEMENT AMONG AGENTS AND GRANTORS............................................................ 37
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.............................................. 37
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.............................................. 38
SECTION 11. MISCELLANEOUS............................................................................... 38
SCHEDULE 4.1 -- GENERAL INFORMATION
SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY
SCHEDULE 4.4 -- INVESTMENT RELATED PROPERTY
SCHEDULE 4.5 -- MATERIAL CONTRACTS
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SCHEDULE 4.6 -- DESCRIPTION OF LETTERS OF CREDIT
SCHEDULE 4.7 -- INTELLECTUAL PROPERTY
SCHEDULE 4.8 -- COMMERCIAL TORT CLAIMS
EXHIBIT A -- PLEDGE SUPPLEMENT
EXHIBIT B -- UNCERTIFICATED SECURITIES CONTROL AGREEMENT
EXHIBIT C -- SECURITIES ACCOUNT CONTROL AGREEMENT
EXHIBIT D-1 -- DEPOSIT ACCOUNT CONTROL AGREEMENT
EXHIBIT D-2 -- ASSET SALE PROCEEDS ACCOUNT CONTROL AGREEMENT
EXHIBIT E -- TRADEMARK SECURITY AGREEMENT
EXHIBIT F -- COPYRIGHT SECURITY AGREEMENT
EXHIBIT G -- PATENT SECURITY AGREEMENT
The Company agrees to furnish supplementally a copy of any omitted schedule or
exhibit to the Commission upon request.
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This PLEDGE AND SECURITY AGREEMENT, dated as of August 6, 2004 (this
"AGREEMENT"), between EACH OF THE UNDERSIGNED, whether as an original signatory
hereto or as an Additional Grantor (as herein defined) (each, a "GRANTOR"), and
XXXXXXX XXXXX CREDIT PARTNERS L.P., as collateral agent for the Term Secured
Parties (as herein defined) (in such capacity, together with its successors and
assigns, the "TERM COLLATERAL AGENT").
RECITALS:
WHEREAS, reference is made to that certain Credit and Guaranty
Agreement, dated as of the date hereof (as it may be amended, restated,
supplemented or otherwise modified from time to time, the "TERM CREDIT
Agreement"), by and among STANADYNE CORPORATION ("BORROWER"), STANADYNE
AUTOMOTIVE HOLDING CORP., ("HOLDINGS") certain subsidiaries of Borrower, as
Guarantors, the lenders party thereto from time to time (the "TERM Lenders"),
XXXXXXX SACHS CREDIT PARTNERS L.P., as Administrative Agent, the Term Collateral
Agent, and XXXXXXX XXXXX CREDIT PARTNERS L.P., as Lead Arranger, Sole Bookrunner
and Syndication Agent;
WHEREAS, subject to the terms and conditions of the Term Credit
Agreement, certain Grantors may enter into one or more Hedge Agreements with one
or more Lender Counterparties;
WHEREAS, in consideration of the extensions of credit and other
accommodations of Lenders and Lender Counterparties as set forth in the Term
Credit Agreement and the Hedge Agreements, respectively, each Grantor has agreed
to secure such Grantor's obligations under the Term Credit Documents and the
Hedge Agreements as set forth herein; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, each Grantor and the Term Collateral
Agent agree as follows:
SECTION 1. DEFINITIONS.
1.1 GENERAL DEFINITIONS. In this Agreement, the following terms shall
have the following meanings:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9
of the UCC, whether now owned or hereafter acquired, including, without
limitation, all present and future rights of such Credit Party to payment of a
monetary obligation, whether or not earned by performance, which is not
evidenced by chattel paper or an instrument, (a) for property that has been or
is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with such a card.
"ADDITIONAL GRANTORS" shall have the meaning assigned in
Section 5.2.
"AGREEMENT" shall have the meaning set forth in the preamble.
"BANKRUPTCY CODE" shall mean Title 11 of the United States
Code entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BORROWER" shall have the meaning set forth in the preamble.
"CASH PROCEEDS" shall mean all proceeds of any Collateral
received by any Grantor consisting of cash and checks.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in
Article 9 of the UCC, including, without limitation, "electronic chattel paper"
or "tangible chattel paper", as each term is defined in Article 9 of the UCC.
"COLLATERAL" shall mean all of the assets and property of any
Grantor, whether real, personal or mixed, constituting either Fixed Collateral
or Liquid Collateral.
"COLLATERAL RECORDS" shall mean books, records, ledger cards,
files, correspondence, customer lists, blueprints, technical specifications,
manuals, computer software, computer printouts, tapes, disks and related data
processing software and similar items 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.
"COLLATERAL SUPPORT" shall mean all property (real or
personal) assigned, hypothecated or otherwise securing any Collateral and shall
include any security agreement or other agreement granting a lien or security
interest in such real or personal property.
"COMMERCIAL TORT CLAIMS" shall mean all "commercial tort
claims" as defined in Article 9 of the UCC asserted by any Grantor, including,
without limitation, all commercial tort claims listed on Schedule 4.8 (as such
schedule may be amended or supplemented from time to time).
"COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts"
as defined in Article 9 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4 under the heading "COMMODITIES
ACCOUNTS" (as such schedule may be amended or supplemented from time to time).
"CONTROLLED FOREIGN CORPORATION" shall mean "controlled
foreign corporation" as defined in the Tax Code.
"COPYRIGHT LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Copyrights (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(B) (as such schedule may be amended or
supplemented from time to time).
"COPYRIGHTS" shall mean all United States, and foreign
copyrights (including Community designs), including but not limited to
copyrights in software and databases, and all Mask Works (as defined under 17
U.S.C. 901 of the U.S. Copyright Act), whether registered or not registered,
and, with respect to any and all of the foregoing: (i) all registrations and
applications therefor including, without limitation, registrations and
applications referred to in Schedule 4.7(A) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions and renewals thereof, (iii)
all rights corresponding thereto throughout the world, (iv) all rights to xxx
for past, present and future infringements thereof, and (v) all Proceeds of the
foregoing, including, without limitation, licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"DE MINIMIS DEPOSIT ACCOUNTS" shall have the meaning set forth
in Section 4.1 (a)(vii).
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"DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
of the accounts listed on Schedule 4.4 under the heading "Deposit Accounts" (as
such schedule may be amended or supplemented from time to time).
"DISCHARGE OF REVOLVING OBLIGATIONS" shall have the meaning
given to such term in the Intercreditor Agreement.
"DOCUMENTS" shall mean all "documents" as defined in Article 9
of the UCC.
"EQUIPMENT" shall mean: (i) all "equipment" as defined in
Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data
processing equipment, computers, office equipment, furnishings, furniture,
appliances, fixtures and tools (in each case, regardless of whether
characterized as equipment under the UCC) and (iii) all accessions or additions
thereto, all parts thereof, whether or not at any time of determination
incorporated or installed therein or attached thereto, and all replacements
therefor, wherever located, now or hereafter existing, including any fixtures.
"FIXED COLLATERAL" shall mean the following, in each case
whether now owned or existing or hereafter acquired or arising and wherever
located, including (1) all rights of each Grantor to receive moneys due and to
become due under or pursuant to the following, (2) all rights of each Grantor to
receive return of any premiums for or proceeds of any insurance, indemnity,
warranty or guaranty with respect to the following or to receive condemnation
proceeds, (3) all claims of each Grantor for damages arising out of or for
breach of or default under any of the following, and (4) all rights of each
Grantor to terminate, amend, supplement, modify or waive performance under any
of the following, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder:
(i) the Asset Sale Proceeds Account
(ii) all Equipment;
(iii) all Fixtures;
(iv) all General Intangibles, including, without limitation,
Material Contracts (in each case other than General
Intangibles evidencing or governing Liquid Collateral);
(v) all Instruments (other than Instruments evidencing or
governing Liquid Collateral);
(vi) all Letter of Credit Rights (other than Letter of Credit
Rights addressed in clause (v) of the definition of "Liquid
Collateral" herein);
(vii) all Pledged Equity Interests;
(viii) all Pledged Debt (other than any Supporting Obligations
supporting Liquid Collateral);
(ix) all Intellectual Property;
(x) all Commercial Tort Claims;
(xi) except to the extent relating to the Liquid Collateral,
all other personal property of such Grantor;
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(xii) to the extent relating to any of the items referred to
in the preceding clauses (i) through (xi), all Documents and
Insurance; provided that to the extent any of the foregoing
also relates to Liquid Collateral only that portion related to
the items referred to in the preceding clauses (i) through
(xi) as being included in the Fixed Collateral shall be
included in the Fixed Collateral;
(xiii) to the extent relating to any of the items referred to
in the preceding clauses (i) through (xii), all Supporting
Obligations; provided that to the extent any of the foregoing
also relates to Liquid Collateral only that portion related to
the items referred to in the preceding clauses (i) through
(xii) as being included in the Fixed Collateral shall be
included in the Fixed Collateral;
(xiv) all books, Records and Collateral Records relating to
the foregoing (including without limitation all books,
databases, customer lists, engineer drawings, Records and
Collateral Records, whether tangible or electronic, which
contain any information relating to any of the foregoing); and
(xv) all Cash Proceeds and, solely to the extent not
constituting Liquid Collateral, non-Cash Proceeds, products,
accessions, rents and profits of or in respect of any of the
foregoing and all collateral security, guarantees and other
Collateral Support given by any Person with respect to any of
the foregoing.
"FIXTURES" means all "fixtures" as defined in Article 9 of the
UCC.
"GENERAL INTANGIBLES" (i) shall mean all "general intangibles"
as defined in Article 9 of the UCC, including "payment intangibles" also as
defined in Article 9 of the UCC and (ii) shall include, without limitation, all
interest rate or currency protection or hedging arrangements, all tax refunds,
all licenses, permits, concessions and authorizations, all Assigned Agreements
and all Intellectual Property (in each case, regardless of whether characterized
as general intangibles under the UCC).
"GOODS" (i) shall mean all "goods" as defined in Article 9 of
the UCC and (ii) shall include, without limitation, all Inventory and Equipment
(in each case, regardless of whether characterized as goods under the UCC).
"GRANTORS" shall have the meaning set forth in the preamble.
"INSTRUMENTS" shall mean all "instruments" as defined in
Article 9 of the UCC.
"INSURANCE" shall mean (i) all insurance policies covering any
or all of the Collateral (regardless of whether the Term Collateral Agent is the
loss payee thereof) and (ii) any key man life insurance policies.
"INTELLECTUAL PROPERTY" shall mean, collectively, the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret
Licenses.
"INTERCREDITOR AGREEMENT" shall mean that certain
Intercreditor Agreement, dated as of the date hereof, by and among the Revolving
Collateral Agent, the Term Collateral Agent and the Grantors.
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"INVENTORY" shall mean: (i) all "inventory" as defined in
Article 9 of the UCC and (ii) all goods held for sale or lease or to be
furnished under contracts of service or so leased or furnished, 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 any Grantor's
business; all goods in which any Grantor has an interest in mass or a joint or
other interest or right of any kind; and all goods which are returned to or
repossessed by any Grantor, all computer programs embedded in any goods and all
accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).
"INVESTMENT ACCOUNTS" shall mean Securities Accounts,
Commodities Accounts and Deposit Accounts.
"INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment
property" (as such term is defined in Article 9 of the UCC) and (ii) all of the
following (regardless of whether classified as investment property under the
UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and
certificates of deposit.
"LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right"
as defined in Article 9 of the UCC.
"LIQUID COLLATERAL" shall mean the following, in each case
whether now owned or existing or hereafter acquired or arising and wherever
located, including (1) all rights of each Grantor to receive moneys due and to
become due under or pursuant to the following, (2) all rights of each Grantor to
receive return of any premiums for or proceeds of any insurance, indemnity,
warranty or guaranty with respect to the following or to receive condemnation
proceeds, (3) all claims of each Grantor for damages arising out of or for
breach of or default under any of the following, and (4) all rights of each
Grantor to terminate, amend, supplement, modify or waive performance under any
of the following, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder:
(i) all Accounts and Receivables;
(ii) all Chattel Paper;
(iii) (x) all Deposit Accounts (other than the Asset Sale
Proceeds Account, to the extent that it constitutes a Deposit
Account) and all cash, checks, and other property held therein
or credited thereto, (y) all Money and (z) all Securities
(other than Pledged Equity Interests and Pledged Debt (except
for Pledged Debt constituting a Supporting Obligation
supporting other Liquid Collateral)), Security Entitlements,
and Securities Accounts (other than the Asset Sale Proceeds
Account, to the extent that it constitutes a Securities
Account), and all cash, checks, securities, financial assets
or other property held therein or credited thereto;
(iv) all Inventory;
(v) to the extent evidencing or governing any of the items
referred to in the preceding clauses (i) through (iv), all
General Intangibles, Instruments (including, without
limitation, Promissory Notes) and Letter of Credit Rights,
provided that to the extent any of the foregoing also relates
to Fixed Collateral, only that portion related to the items
referred to in the preceding clauses (i) through (iv) as being
included in the Liquid Collateral shall be included in the
Liquid Collateral;
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(vi) to the extent relating to any of the items referred to in
the preceding clauses (i) through (v), all Documents and
Insurance; provided that to the extent any of the foregoing
also relates to Fixed Collateral only that portion related to
the items referred to in the preceding clauses (i) through (v)
as being included in the Liquid Collateral shall be included
in the Liquid Collateral;
(vii) to the extent relating to any of the items referred to
in the preceding clauses (i) through (vi), all Supporting
Obligations; provided that to the extent any of the foregoing
also relates to Fixed Collateral only that portion related to
the items referred to in the preceding clauses (i) through
(vi) as being included in the Liquid Collateral shall be
included in the Liquid Collateral;
(viii) all books, Records, Receivables Records and Collateral
Records relating to the foregoing (including without
limitation all books, databases, customer lists, engineer
drawings, Records, Receivables Records and Collateral Records,
whether tangible or electronic, which contain any information
relating to any of the foregoing); and
(ix) all Cash Proceeds, products, accessions, rents and
profits of or in respect of any of the foregoing (including
without limitation, all insurance proceeds) and all collateral
security, guarantees and other Collateral Support given by any
Person with respect to any of the foregoing.
"MATERIAL CONTRACT" shall mean those contracts listed on
Schedule 4.5 hereto.
"MATERIAL RECEIVABLE" shall have the meaning set forth in
Section 4.3(b)(iv).
"MONEY" shall mean "money" as defined in the UCC.
"NON-ASSIGNABLE CONTRACT" shall mean any agreement, contract
or license to which any Grantor is a party that by its terms purports to
restrict or prevent the assignment or granting of a security interest therein
(either by its terms or by any federal or state statutory prohibition or
otherwise irrespective of whether such prohibition or restriction is enforceable
under Section 9-406 through 409 of the UCC).
"PATENT LICENSES" shall mean all agreements providing for the
granting of any right in or to Patents (whether such Grantor is licensee or
licensor thereunder) including, without limitation, each agreement referred to
in Schedule 4.7(D) (as such schedule may be amended or supplemented from time to
time).
"PATENTS" shall mean all United States and foreign patents and
certificates of invention, or similar industrial property rights, and
applications for any of the foregoing, including, but not limited to: (i) each
patent and patent application referred to in Schedule 4.7(C) hereto (as such
schedule may be amended or supplemented from time to time), (ii) all reissues,
divisions, continuations, continuations-in-part, extensions, renewals, and
reexaminations thereof, (ii) all rights corresponding thereto throughout the
world, (ii) all inventions and improvements described therein, (iv) all rights
to xxx for past, present and future infringements thereof, (v) all licenses,
claims, damages, and proceeds of suit arising therefrom, and (v) all Proceeds of
the foregoing, including, without limitation, licenses, royalties, income,
payments, claims, damages, and proceeds of suit.
"PERMITTED SALE" shall mean those sales, transfers or
assignments permitted by the Term Credit Agreement.
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"PLEDGED DEBT" shall mean all Indebtedness owed to such
Grantor, including, without limitation, all Indebtedness described on Schedule
4.4(A) under the heading "Pledged Debt" (as such schedule may be amended or
supplemented from time to time), issued by the obligors named therein, the
instruments evidencing such Indebtedness, 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 such
Indebtedness.
"PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock,
Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust
Interests.
"PLEDGED LLC INTERESTS" shall mean all interests in any
limited liability company including, without limitation, all limited liability
company interests listed on Schedule 4.4(A) under the heading "Pledged LLC
Interests" (as such schedule may be amended or supplemented from time to time)
and the certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of such
limited liability company or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities 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 limited liability company
interests.
"PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in
any general partnership, limited partnership, limited liability partnership or
other partnership including, without limitation, all partnership interests
listed on Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as
such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such partnership interests and any interest
of such Grantor on the books and records of such partnership or on the books and
records of any securities intermediary pertaining to such interest and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities 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
partnership interests.
"PLEDGED STOCK" shall mean all shares of capital stock owned
by such Grantor, including, without limitation, all shares of capital stock
described on Schedule 4.4(A) under the heading "Pledged Stock" (as such schedule
may be amended or supplemented from time to time), and the certificates, if any,
representing such shares and any interest of such Grantor in the entries on the
books of the issuer of such shares or on the books of any securities
intermediary pertaining to such shares, and all dividends, distributions, cash,
warrants, rights, options, instruments, securities 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 shares.
"PLEDGED TRUST INTERESTS" shall mean all interests in a
Delaware business trust or other trust including, without limitation, all trust
interests listed on Schedule 4.4(A) under the heading "Pledged Trust Interests"
(as such schedule may be amended or supplemented from time to time) and the
certificates, if any, representing such trust interests and any interest of such
Grantor on the books and records of such trust or on the books and records of
any securities intermediary pertaining to such interest and all dividends,
distributions, cash, warrants, rights, options, instruments, securities 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 trust interests.
"PLEDGE SUPPLEMENT" shall mean any supplement to this
agreement in substantially the form of Exhibit A.
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"PROCEEDS" shall mean (i) all "proceeds" as defined in Article
9 of the UCC, (ii) payments or distributions made with respect to any Investment
Related Property and (iii) whatever is receivable or received when Collateral or
proceeds are sold, leased, licensed, exchanged, collected or otherwise disposed
of, whether such disposition is voluntary or involuntary.
"PROMISSORY NOTE" shall mean a "promissory note" as defined in
Article 9 of the UCC.
"RECEIVABLES" shall mean all rights to payment, whether or not
earned by performance, for goods or other property sold, leased, licensed,
assigned or otherwise disposed of, or services rendered or to be rendered,
including, without limitation all such rights constituting or evidenced by any
Account, Chattel Paper, Instrument, General Intangible or Investment Related
Property, together with all of Grantor's rights, if any, in any goods or other
property giving rise to such right to payment and all Collateral Support and
Supporting Obligations related thereto and all Receivables Records.
"RECEIVABLES RECORDS" shall mean (i) all original copies of
all documents, instruments or other writings or electronic records or other
Records evidencing the Receivables, (ii) all books, correspondence, credit or
other files, Records, ledger sheets or cards, invoices, and other papers
relating to Receivables, including, without limitation, all tapes, cards,
computer tapes, computer discs, computer runs, record keeping systems and other
papers and documents relating to the Receivables, whether in the possession or
under the control of Grantor or any computer bureau or agent from time to time
acting for Grantor or otherwise, (iii) all evidences of the filing of financing
statements and the registration of other instruments in connection therewith,
and amendments, supplements or other modifications thereto, notices to other
creditors or secured parties, and certificates, acknowledgments, or other
writings, including, without limitation, lien search reports, from filing or
other registration officers, (iv) all credit information, reports and memoranda
relating thereto and (v) all other written or nonwritten forms of information
related in any way to the foregoing or any Receivable.
"RECORD" shall have the meaning specified in Article 9 of the
UCC.
"REVOLVING COLLATERAL AGENT" shall mean The CIT Group/Business
Credit, Inc., in its capacity as Collateral Agent under the Revolving Credit
Agreement and the Revolving Security Agreement, and shall include its successors
and assigns.
"REVOLVING CREDIT AGREEMENT" shall mean that certain Credit
and Guaranty Agreement, dated as of the date hereof (as it may be amended,
restated, supplemented or otherwise modified from time to time), by and among
the Borrower, Holdings, certain subsidiaries of the Borrower as Guarantors, the
lenders party thereto from time to time, Xxxxxxx Xxxxx Credit Partners L.P., as
Lead Arranger, Sole Bookrunner and Syndication Agent, and The CIT Group/Business
Credit, Inc., as Administrative Agent and Collateral Agent.
"REVOLVING SECURITY AGREEMENT" shall mean that certain
Revolving Loan Pledge and Security Agreement, dated as of the date hereof, by
and among the Grantors party thereto and the Revolving Collateral Agent.
"REVOLVING SECURED PARTIES" shall mean the Revolving Lenders
and the Lender Counterparties and shall include, without limitation, all former
Revolving Lenders and Lender Counterparties to the extent that any Obligations
owing to such Persons were incurred while such Persons were Revolving Lenders or
Lender Counterparties and such Obligations have not been paid or satisfied in
full, provided that any Lender Counterparty which would otherwise qualify as
both a Revolving Secured Party and a Term Secured Party shall not be deemed to
be a Revolving Secured Party with respect to any obligations under any Hedge
Agreement to which it is a party if the aggregate outstanding principal
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amount of its interest in the Term Obligations exceeds the aggregate outstanding
principal amount of its interest in the Revolving Obligations (all capitalized
terms in this definition (other than "Term Secured Party" and "Term
Obligations") having the definitions given such terms in the Revolving Credit
Agreement).
"SECURED OBLIGATIONS" shall have the meaning assigned in
Section 3.1.
"SECURED PARTIES" shall mean the Revolving Secured Parties and
the Term Secured Parties.
"SECURITIES" shall mean all "securities" as defined in Article
8 of the UCC, any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"SECURITIES ACCOUNTS" (i) shall mean all "securities accounts"
as defined in Article 8 of the UCC and (ii) shall include, without limitation,
all of the accounts listed on Schedule 4.4(A) under the heading "Securities
Accounts" (as such schedule may be amended or supplemented from time to time).
"SECURITIES ENTITLEMENTS" shall mean all "securities
entitlements" as defined in Article 8 of the UCC.
"SUPPORTING OBLIGATION" shall mean all "supporting
obligations" as defined in Article 9 of the UCC.
"TAX CODE" shall mean the United States Internal Revenue Code
of 1986, as amended from time to time.
"TERM COLLATERAL AGENT" shall have the meaning set forth in
the preamble, and shall include its successors and assigns.
"TERM CREDIT AGREEMENT" shall have the meaning set forth in
the recitals.
"TERM LENDER" shall have the meaning set forth in the
recitals.
"TERM SECURED PARTIES" shall mean the Term Lenders and the
Lender Counterparties and shall include, without limitation, all former Term
Lenders and Lender Counterparties to the extent that any Obligations owing to
such Persons were incurred while such Persons were Term Lenders or Lender
Counterparties and such Obligations have not been paid or satisfied in full,
provided that any Lender Counterparty which would otherwise qualify as both a
Revolving Secured Party and a Term Secured Party shall not be deemed to be a
Term Secured Party with respect to any obligations under any Hedge Agreement to
which it is a party if the aggregate outstanding principal amount of its
interest in the Revolving Obligations exceeds the aggregate outstanding
principal amount of its interest in the Term Obligations.
"TRADEMARK LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Trademarks (whether such
Grantor is licensee or licensor thereunder) including, without
9
limitation, each agreement referred to in Schedule 4.7(F) (as such schedule may
be amended or supplemented from time to time).
"TRADEMARKS" shall mean all United States, and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, Internet domain names, service marks, certification
marks, collective marks, logos, other source or business identifiers, designs
and general intangibles of a like nature, all registrations and applications for
any of the foregoing including, but not limited to: (i) the registrations and
applications referred to in Schedule 4.7(E) (as such schedule may be amended or
supplemented from time to time), (ii) all extensions or renewals of any of the
foregoing, (iii) all of the goodwill of the business connected with the use of
and symbolized by the foregoing, (iv) the right to xxx for past, present and
future infringement or dilution of any of the foregoing or for any injury to
goodwill, and (v) all Proceeds of the foregoing, including, without limitation,
licenses, royalties, income, payments, claims, damages, and proceeds of suit.
"TRADE SECRET LICENSES" shall mean any and all agreements
providing for the granting of any right in or to Trade Secrets (whether such
Grantor is licensee or licensor thereunder) including, without limitation, each
agreement referred to in Schedule 4.7(G) (as such schedule may be amended or
supplemented from time to time).
"TRADE SECRETS" shall mean all trade secrets and all other
confidential or proprietary information and know-how whether or not such Trade
Secret has been reduced to a writing or other tangible form, including all
documents and things embodying, incorporating, or referring in any way to such
Trade Secret, including but not limited to: (i) the right to xxx for past,
present and future misappropriation or other violation of any Trade Secret, and
(ii) all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.
"UNITED STATES" shall mean the United States of America.
1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Term Credit Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Agreement unless otherwise specifically provided. Section 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. Any of the terms defined herein may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible scope
of such general statement, term or matter. Notwithstanding anything herein to
the contrary, the lien and security interest granted to the Term Collateral
Agent pursuant to this Agreement in any Liquid Collateral, and the exercise of
any right or remedy by the Term Collateral Agent with respect to any Liquid
Collateral hereunder are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern and
10
control. All references herein to provisions of the UCC shall include all
successor provisions under any subsequent version or amendment to any Article of
the UCC.
SECTION 2. GRANT OF SECURITY.
2.1 GRANT OF SECURITY.
(a) Each Grantor hereby grants to the Term Collateral Agent,
for the benefit of the Term Secured Parties, a continuing lien on and security
interest in all of such Grantor's right, title and interest in, to and under the
Fixed Collateral. Each Grantor hereby agrees that such Lien shall be a First
Priority Lien with respect to such Fixed Collateral.
(b) Each Grantor hereby grants to the Term Collateral Agent,
for the benefit of the Term Secured Parties, a continuing lien on and security
interest in all of such Grantor's right, title and interest in, to and under the
Liquid Collateral. Each Grantor hereby agrees that such Lien shall be a Second
Priority Lien with respect to such Liquid Collateral.
2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the
contrary, in no event shall the security interests granted under Section 2.1
hereof attach to (a) any lease, license, contract, property rights or agreement
to which any Grantor is a party or any of its rights or interests thereunder if
and for so long as the grant of such security interest shall constitute or
result in (i) the abandonment, invalidation or unenforceability of any right,
title or interest of any Grantor therein or (ii) in a breach or termination
pursuant to the terms of, or a default under, any such lease, license, contract,
property rights or agreement (other than to the extent that any such term is
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of
equity), provided however that such security interest shall attach immediately
and automatically at such time as the condition causing such abandonment,
invalidation or unenforceability shall be remedied and to the extent severable,
shall attach immediately to any portion of such Lease, license, contract,
property rights or agreement that does not result in any of the consequences
specified in (i) or (ii) above; (b) any of the outstanding capital stock of a
Controlled Foreign Corporation in excess of 65% of the voting power of all
classes of capital stock of such Controlled Foreign Corporation entitled to
vote; provided that immediately upon the amendment of the Tax Code to allow the
pledge of a greater percentage of the voting power of capital stock in a
Controlled Foreign Corporation without resulting in repatriation of earnings,
the Collateral shall include, and the security interest granted by each Grantor
shall attach to, such greater percentage of capital stock of each Controlled
Foreign Corporation; (c) any of the equity interests held by any Grantor in
Stanadyne Amalgamations, Pte Ltd, provided that if, at any time after the date
hereof, the restrictions upon the pledge of stock of Stanadyne Amalgamations Pte
Ltd are removed or curtailed, the Collateral shall include, and the security
interest granted by each Grantor shall attach to, the full percentage of the
equity interests of Stanadyne Amalgamations Pte Ltd so permitted to be pledged,
subject to the limitations of subsection (b) of this Section 2.2; or (d) any of
the equity interests held by any Grantor in any Immaterial Subsidiary, provided
that if, at any time after the date hereof, the total assets or total revenues
of such Subsidiary exceed the amounts set forth in the definition of "Immaterial
Subsidiary" in the Credit Agreement, the Collateral shall include, and the
security interest granted by each Grantor shall attach to, the full percentage
of the equity interests of such Subsidiary, subject to the limitations of
subsection (b) of this Section 2.2.
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt and complete payment or
performance in full when due, whether at stated
11
maturity, by required prepayment, declaration, acceleration, demand or otherwise
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a) (and any successor provision thereof)), of all Term Obligations
with respect to every Grantor (including, without limitation, the due and
punctual payment and performance of all obligations in respect of overdrafts and
related liabilities owed to any Agent or its Affiliates arising from or in
connection with treasury, depositary or cash management services or in
connection with any automated clearinghouse transfer of funds) (the "SECURED
OBLIGATIONS").
3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything
herein to the contrary, (i) each Grantor shall remain liable for all obligations
under the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Term Collateral Agent, the Administrative Agent or
any Term Secured Party, (ii) each Grantor shall remain liable under each of the
agreements included in the Collateral, including, without limitation, any
agreements relating to Pledged Partnership Interests or Pledged LLC Interests,
to perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and neither the Term
Collateral Agent, the Administrative Agent nor any Term Secured Party shall have
any obligation or liability under any of such agreements by reason of or arising
out of this Agreement or any other document related thereto nor shall the Term
Collateral Agent, the Administrative Agent nor any Term Secured Party have any
obligation to make any inquiry as to the nature or sufficiency of any payment
received by it or have any obligation to take any action to collect or enforce
any rights under any agreement included in the Collateral, including, without
limitation, any agreements relating to Pledged Partnership Interests or Pledged
LLC Interests and (iii) the exercise by the Term Collateral Agent of any of its
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 GENERALLY.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) it owns the Collateral purported to be owned by
it or otherwise has the rights it purports to have in each item of
Collateral and, as to all Collateral whether now existing or hereafter
acquired, will continue to own or have such rights in each item of the
Collateral, free and clear of any and all Liens, rights or claims of
all other Persons, including, without limitation, liens arising as a
result of such Grantor becoming bound (as a result of merger or
otherwise) as debtor under a security agreement entered into by another
Person, other than Permitted Liens;
(ii) it has indicated on Schedule 4.1(A)(as such
schedule may be amended or supplemented from time to time): (w) the
type of organization of such Grantor, (x) the jurisdiction of
organization of such Grantor, (y) its organizational identification
number, if any, and (z) the jurisdiction where the chief executive
office or its sole place of business is (or the principal residence if
such Grantor is a natural person), and for the one-year period
preceding the date hereof has been, located;
(iii) the full legal name of such Grantor is as set
forth on Schedule 4.1(A) and it has not done, in the five (5) years
prior to the each making of the representations and warranties herein,
business under any other name (including any trade-name or fictitious
business
12
name) except for those names set forth on Schedule 4.1(B) (as such
schedule may be amended or supplemented from time to time);
(iv) except as provided on Schedule 4.1(C), it has
not changed its name, jurisdiction of organization, chief executive
office or sole place of business (or principal residence if such
Grantor is a natural person) or its corporate structure in any way
(e.g., by merger, consolidation, change in corporate form or otherwise)
within the five (5) years prior to each making of the representations
and warranties herein;
(v) it has not, within the five (5) years prior to
each making of the representations and warranties herein, become bound
(whether as a result of merger or otherwise) as debtor under a security
agreement entered into by another Person, which has not heretofore been
terminated other than the agreements identified on Schedule 4.1(D)
hereof (as such schedule may be amended or supplemented from time to
time);
(vi) with respect to each agreement identified on
Schedule 4.1(D), it has indicated on Schedule 4.1 (A) and Schedule
4.1(B) the information required pursuant to Section 4.1(a)(ii), (iii)
and (iv) with respect to the debtor under each such agreement;
(vii) upon the filing of all UCC financing statements
naming each Grantor as "debtor" and the Term Collateral Agent as
"secured party" and describing the Collateral in the filing offices set
forth opposite such Grantor's name on Schedule 4.1(E) hereof (as such
schedule may be amended or supplemented from time to time), the
security interests granted to the Term Collateral Agent in the
Collateral hereunder constitute (i) valid and perfected First Priority
Liens for the benefit of the Term Secured Parties (subject in the case
of priority only to Permitted Liens (other than the Lien in favor of
the Revolving Collateral Agent for the benefit of the Revolving Secured
Parties)) on all of the Fixed Collateral, and (ii) valid and perfected
Second Priority Liens for the benefit of the Term Secured Parties
(subject in priority only to Permitted Liens) on all of the Liquid
Collateral to the extent that such security interests can be perfected
under the UCC by the filing of a financing statement;
(viii) in addition, without limiting the
representation and warranty in clause (vii) above, upon (1) delivery to
the Revolving Collateral Agent or the Term Collateral Agent, as
applicable, of all Chattel Paper, Instruments, certificated Pledged
Equity Interests and Pledged Debt; (2) execution of control agreements
in the form of Exhibits C, D-1 or D-2 hereto (or such other control
agreement in form and substance reasonably satisfactory to the Term
Collateral Agent), establishing the "control" of the Revolving
Collateral Agent or the Term Collateral Agent, as the case may be, with
respect to each Securities Account and Deposit Account (other than
Deposit Accounts with an aggregate outstanding balance no greater than
$500,000 individually or in the aggregate at any time for any Grantor
(the "DE MINIMIS DEPOSIT ACCOUNTS")) in accordance with Section 4.4.4
hereof, (3) consent of the issuer with respect to Letter of Credit
Rights that are not Supporting Obligations, and (4) the recordation of
a copyright security agreement in the United States Copyright Office
with respect to registered copyrights, the security interests granted
to the Term Collateral Agent in such Collateral (other than the De
Minimis Deposit Accounts) hereunder constitute valid and perfected
First Priority Liens for the benefit of the Term Secured Parties on all
of the foregoing constituting Fixed Collateral, and (ii) valid and
perfected Second Priority Liens for the benefit of the Term Secured
Parties on all of the foregoing constituting Liquid Collateral;
(ix) all actions and consents, including all filings,
notices, registrations and recordings necessary or desirable for the
exercise by the Term Collateral Agent of the voting
13
or other rights provided for in this Agreement or the exercise of
remedies, in accordance with the terms of the Intercreditor Agreement,
in respect of the Liquid Collateral and the Fixed Collateral have been
made or obtained;
(x) other than the financing statements filed in
favor of the Term Collateral Agent or for which termination statements
are being provided, no effective UCC financing statement, fixture
filing or other instrument similar in effect under any applicable law
covering all or any part of the Collateral is on file in any filing or
recording office except for (i) financing statements for which proper
termination statements have been delivered to the Term Collateral Agent
for filing and (ii) financing statements filed in connection with
Permitted Liens;
(xi) no authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority or
regulatory body is required for either (i) the pledge or grant by any
Grantor of the Liens purported to be created in favor of the Term
Collateral Agent hereunder or (ii) the exercise by the Term Collateral
Agent, in accordance with the terms of the Intercreditor Agreement, of
any rights or remedies in respect of any Collateral (whether
specifically granted or created hereunder or created or provided for by
applicable law), except (A) for the filings contemplated by clause
(vii) above and (B) as may be required, in connection with the
disposition of any Investment Related Property, by laws generally
affecting the offering and sale of Securities;
(xii) all information supplied by any Grantor with
respect to any of the Collateral (in each case taken as a whole with
respect to any particular Collateral) is accurate and complete in all
material respects;
(xiii) none of the Collateral constitutes, or is the
Proceeds of, "farm products" (as defined in the UCC);
(xiv) it does not own any "as extracted collateral"
(as defined in the UCC) or any timber to be cut;
(xv) except as described on Schedule 4.1(D), such
Grantor has not become bound as a debtor, either by contract or by
operation of law, by a security agreement previously entered into by
another Person; and
(xvi) such Grantor has been duly organized as an
entity of the type as set forth opposite such Grantor's name on
Schedule 4.1(A) solely under the laws of the jurisdiction as set forth
opposite such Grantor's name on Schedule 4.1(A) and remains duly
existing as such. Such Grantor has not filed any certificates of
domestication, transfer or continuance in any other jurisdiction.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(i) except for the security interest created by this
Agreement, it shall not create or suffer to exist any Lien upon or with
respect to any of the Collateral, except Permitted Liens, and such
Grantor shall defend the Collateral against all Persons at any time
claiming any interest therein;
(ii) it shall not produce, use or permit any
Collateral to be used in violation of any provision of this Agreement
or in any material respect unlawfully or in violation
14
of any applicable statute, regulation or ordinance or any policy of
insurance covering the Collateral;
(iii) it shall not change such Grantor's name,
identity, corporate structure (e.g., by merger, consolidation, change
in corporate form or otherwise), sole place of business (or principal
residence if such Grantor is a natural person), chief executive office,
type of organization or jurisdiction of organization or establish any
trade names unless it shall have (a) notified the Term Collateral Agent
in writing, by executing and delivering to the Term Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto, at
least thirty (30) days prior to any such change or establishment
(unless the Term Collateral Agent, in its reasonable discretion,
consents to a shorter period of notice after the fact), identifying
such new proposed name, identity, corporate structure, sole place of
business (or principal residence if such Grantor is a natural person),
chief executive office, jurisdiction of organization or trade name and
providing such other information in connection therewith as the Term
Collateral Agent may reasonably request and (b) taken all actions
reasonably requested by the Revolving Collateral Agent to maintain the
continuous validity, perfection and the same or better priority of the
Term Collateral Agent's security interest in the Collateral intended to
be granted and agreed to hereby;
(iv) if the Term Collateral Agent or any Term Secured
Party gives value to enable Grantor to acquire rights in or the use of
any Collateral, it shall use such value for such purposes and such
Grantor further agrees that repayment of any Obligation shall apply on
a "first-in, first-out" basis so that the portion of the value used to
acquire rights in any Collateral shall be paid in the chronological
order such Grantor acquired rights therein;
(v) it shall not take or permit any action which
could impair the Term Collateral Agent's rights in the Collateral other
than Permitted Sales and the granting of Permitted Liens;
(vi) it shall not sell, transfer or assign (by
operation of law or otherwise) any Collateral except as Permitted
Sales; and
(vii) within thirty (30) days after the Closing Date,
it will establish a deposit account to be the Asset Sale Proceeds
Account, and upon such establishment the Borrower will be the sole
owner thereof, and the Borrower shall, within such thirty (30) day time
period deliver to the Term Collateral Agent a legal opinion in form and
substance reasonably satisfactory to it, that the Term Collateral Agent
has a valid and perfected security interest in the Asset Sale Proceeds
Account.
4.2 EQUIPMENT AND INVENTORY.
(a) Representations and Warranties. Each Grantor represents
and warrants, on the Closing Date and on each Credit Date, that:
(i) all of the Inventory and all of the Equipment was
kept, for five (5) years prior to each making of the representations
and warranties herein, only at the locations specified in Schedule 4.2
(as such schedule may be amended or supplemented from time to time) or
in the possession of salesmen, processors or repairmen or in transit in
the ordinary course of business;
15
(ii) any Goods now or hereafter produced by any
Grantor included in the Collateral have been and will be produced in
compliance with the requirements of the Fair Labor Standards Act, as
amended; and
(iii) none of the Inventory or Equipment is in the
possession of an issuer of a negotiable document (as defined in Section
7-104 of the UCC) therefor, other than with respect to any similar
negotiable documents in the possession or control of the Term
Collateral Agent or, prior to the Discharge of Revolving Obligations,
with respect to negotiable documents relating to Inventory, in the
possession or control of the Revolving Collateral Agent. Additionally,
no Equipment or Inventory in excess of $500,000 individually or
$1,500,000 in the aggregate (other than Equipment or Inventory for
which a bailee letter has been obtained) is in the possession of any
other bailee or warehouseman.
(b) Covenants and Agreements. Each Grantor covenants and
agrees that:
(i) it shall notify the Term Collateral Agent in
writing annually and at such other times as the Term Collateral Agent
may reasonably request (but in no event more than four times per year)
by executing and delivering to the Term Collateral Agent the annual
collateral verification required by Section 5.1(o) of the Term Credit
Agreement or an amendment or supplement to Schedule 4.2, as applicable,
of any change in location of any Equipment or Inventory or any Document
evidencing any Equipment or Inventory, identifying such new locations
and providing such other information in connection therewith as the
Term Collateral Agent may reasonably request and (b) take all actions
necessary or advisable to maintain the continuous validity, perfection
and the same or better priority of the Term Collateral Agent's security
interest in the Collateral intended to be granted and agreed to hereby,
or to enable the Term Collateral Agent to exercise and enforce its
rights and remedies hereunder (subject to the terms of the
Intercreditor Agreement), with respect to such Equipment and Inventory;
(ii) it shall keep correct and accurate records of
the Inventory, as is customarily maintained under similar circumstances
by Persons of established reputation engaged in similar business, and
in any event in conformity with GAAP;
(iii) it shall not deliver any Document evidencing
any Equipment and Inventory to any Person other than (x) the issuer of
such Document to claim the Goods evidenced therefor, (y) with respect
to Inventory, the Revolving Collateral Agent and (z) with respect to
Equipment, the Term Collateral Agent;
(iv) if any Equipment or Inventory is in possession
or control of any third party, each Grantor shall join with the Term
Collateral Agent in notifying the third party of the Term Collateral
Agent's security interest therein and obtaining an acknowledgment from
the third party that it is holding the Equipment and Inventory for the
benefit of the Term Collateral Agent;
(v) whenever reasonably requested or required by the
Term Collateral Agent in accordance with any applicable law, with
respect to any item of Equipment in excess of $100,000 individually or
$500,000 in the aggregate which 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, each Grantor shall (A) provide information with
respect to any such Equipment, (B) 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 and under the
Revolving Security Agreement on such certificate of title, and (C)
deliver to the Term Collateral
16
Agent copies of all such applications or other documents filed during
such calendar quarter and copies of all such certificates of title
issued during such calendar quarter indicating the security interest
created hereunder in the items of Equipment covered thereby; and
(vi) it shall notify the Term Collateral Agent
promptly and in any event within thirty (30) days of any Inventory or
Equipment in excess of $100,000 individually or $500,000 in the
aggregate coming in the possession of an issuer of a negotiable
document (as defined in Section 7-104 of the UCC) therefor, and shall,
at the request of the Term Collateral Agent (in accordance with the
terms of the Intercreditor Agreement), deliver any negotiable document
evidencing or governing such Inventory or Equipment to the Term
Collateral Agent, or establish the Term Collateral Agent's control over
any electronic negotiable documents; provided, however, that prior to
the Discharge of Revolving Obligations the Grantor may satisfy this
requirement with respect to documents relating to Inventory by causing
the Revolving Collateral Agent to obtain possession or control thereof.
4.3 RECEIVABLES
(a) Representations and Warranties. Each Grantor represents
and warrants, on the Closing Date and on each Credit Date, that:
(i) each Receivable arose from bona fide transactions
in the ordinary course of business;
(ii) none of the Account Debtors in respect of any
Receivable in excess of $500,000 in the aggregate is the government of
the United States, any agency or instrumentality thereof, any state or
municipality or any foreign sovereign. No Receivable in excess of
$500,000 in the aggregate requires the consent of the Account Debtor in
respect thereof in connection with the pledge hereunder, except any
consent which has been obtained;
(iii) no Material Receivable is evidenced by, or
constitutes, an Instrument or Chattel Paper which has not been
delivered to, or otherwise subjected to the control of, the Revolving
Collateral Agent, to the extent required by, and in accordance with,
Section 4.3(c); and
(iv) each Grantor has delivered to the Term
Collateral Agent a complete and correct copy of each standard form of
document under which a Receivable may arise.
(b) Covenants and Agreements: Each Grantor hereby covenants
and agrees that:
(i) it shall keep and maintain at its own cost and
expense accurate and complete records of the Receivables as are
customarily maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, and in any event
in conformity with GAAP;
(ii) it shall xxxx conspicuously, in form and manner
reasonably satisfactory to each of the Revolving Collateral Agent and
the Term Collateral Agent, all Chattel Paper and Instruments evidencing
Receivables (other than any delivered to the Revolving Collateral Agent
as provided herein), as well as the Receivables Records relating
thereto with an appropriate reference to the fact that each of the
Revolving Collateral Agent and the Term Collateral Agent has a security
interest therein;
17
(iii) it shall perform in all material respects all
of its obligations with respect to the Receivables;
(iv) other than in the ordinary course of business,
it shall not amend, modify, terminate or waive any provision of any
Receivable in excess of $250,000 individually for any invoice or
$1,000,000 in the aggregate for any account ("MATERIAL RECEIVABLE") in
any manner which could reasonably be expected to have a Material
Adverse Effect on the value of such Material Receivable as Collateral.
Other than in the ordinary course of business, and except as otherwise
provided in subsection (v) below, after the occurrence and during the
continuation of an Event of Default, such Grantor shall not (w) grant
any extension or renewal of the time of payment of any Material
Receivable, (x) compromise or settle any dispute, claim or legal
proceeding with respect to any Material Receivable for less than the
total unpaid balance thereof, (y) release, wholly or partially, any
Person liable for the payment thereof, or (z) allow any credit or
discount thereon;
(v) except as otherwise provided in this subsection,
each Grantor may continue to collect all amounts due or to become due
to such Grantor under the Receivables and any Supporting Obligation and
may exercise each right it may have under any Receivable, any
Supporting Obligation or Collateral Support, in each case, at its own
expense; provided however, at any time following the occurrence and
during the continuation of an Event of Default, the Term Collateral
Agent may, subject to the terms of the Intercreditor Agreement: (1)
direct the Account Debtors under any Receivables to make payment of all
amounts due or to become due to such Grantor thereunder directly to the
Term Collateral Agent; (2) notify, or require any Grantor to notify,
each Person maintaining a lockbox or similar arrangement to which
Account Debtors under any Receivables 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 the Term Collateral Agent; and
(3) enforce, at the expense of such Grantor, collection of any such
Receivables 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. If the Term Collateral Agent notifies any Grantor that
it has elected to collect the Receivables in accordance with the
preceding sentence, any payments of Receivables received by such
Grantor shall be forthwith (and in any event within one (1) Business
Day) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Term Collateral Agent if required, in a
Securities Account or Deposit Account subject to a control agreement in
the form of Exhibit C or Exhibit D-1, or such other control agreement
in form and substance reasonably satisfactory to the Term Collateral
Agent, and until so turned over, all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of
the Receivables, any Supporting Obligation or Collateral Support shall
be received in trust for the benefit of the Term Collateral Agent
hereunder and shall be segregated from other funds of such Grantor and
such Grantor shall not adjust, settle or compromise the amount or
payment of any Receivable, or release wholly or partly any Account
Debtor or obligor thereof, or allow any credit or discount thereon;
provided, further, that, prior to the Discharge of Revolving
Obligations, and except as otherwise may be set forth in the
Intercreditor Agreement, the Term Collateral Agent shall not have the
right to exercise its rights under this subsection unless the Revolving
Security Agent shall have first exercised its rights under the related
provision in the Revolving Security Agreement;
(vi) except as it shall determine otherwise in the
ordinary course of business, it shall use its best efforts to keep in
full force and effect any Supporting Obligation or Collateral Support
relating to any Receivable; and
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(vii) it shall notify the Term Collateral Agent in
writing promptly and in any event within ten (10) days after receipt of
any Material Receivable in respect of which the Account Debtor is the
government of the United States, any agency or instrumentality thereof,
any state or municipality or any foreign sovereign.
(c) Delivery and Control of Receivables. With respect to any
Material Receivable that is evidenced by, or constitutes, Chattel Paper or
Instruments, each Grantor shall cause each originally executed copy thereof to
be delivered to the Term Collateral Agent (or its agent or designee)
appropriately indorsed to the Term Collateral Agent or indorsed in blank: (i)
with respect to any such Receivables in existence on the date hereof, on or
prior to the date hereof and (ii) with respect to any such Receivables hereafter
arising, within thirty (30) days of such Grantor acquiring rights therein. With
respect to any Material Receivable which would constitute "electronic chattel
paper" under Article 9 of the UCC, each Grantor shall take all steps necessary
to give the Term Collateral Agent control over such Receivables (within the
meaning of Section 9-105 of the UCC): (i) with respect to any such Receivables
in existence on the date hereof, on or prior to the date hereof and (ii) with
respect to any such Receivables hereafter arising, within thirty (30) days of
such Grantor acquiring rights therein. Any Receivable not otherwise required to
be delivered or subjected to the control of the Term Collateral Agent in
accordance with this subsection (c) shall be delivered or subjected to such
control upon reasonable request of the Revolving Collateral Agent; provided,
however, that to the extent that any such Material Receivable constitutes Liquid
Collateral, prior to the Discharge of Revolving Obligations, the Grantor shall
satisfy the requirements of this subsection relating to indorsement, delivery
and control by making such indorsement, establishing such control and delivering
such property to the Revolving Collateral Agent in accordance with the terms of
the Intercreditor Agreement, and by using commercially reasonable efforts to
separately establish the Term Collateral Agent's independent control where
possible.
4.4 INVESTMENT RELATED PROPERTY.
4.4.1 INVESTMENT RELATED PROPERTY GENERALLY.
(a) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(i) in the event it acquires rights in any Investment
Related Property after the date hereof, it shall deliver to the Term
Collateral Agent, no less frequently than on a quarterly basis, a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements to Schedules thereto,
reflecting such new Investment Related Property and all other
Investment Related Property. Notwithstanding the foregoing, it is
understood and agreed that the applicable security interest of the Term
Collateral Agent shall attach to all Investment Related Property
immediately upon any Grantor's acquisition of rights therein and shall
not be affected by the failure of any Grantor to deliver a supplement
to Schedule 4.4 as required hereby;
(ii) except as provided in the next sentence, in the
event such Grantor receives any dividends, interest or distributions on
any Investment Related Property, or any securities or other property
upon the merger, consolidation, liquidation or dissolution of any
issuer of any Investment Related Property, then (a) such dividends,
interest or distributions and securities or other property shall be
included in the definition of Collateral without further action and (b)
such Grantor shall, subject to the terms of the Intercreditor
Agreement, immediately take all steps reasonably requested by the Term
Collateral Agent to ensure the validity, perfection and priority of the
security interest purported to be granted hereby to the Term Collateral
Agent in such Investment Related Property, and the control of the Term
Collateral Agent over such Investment Related Property (including,
without limitation, delivery thereof to the Term
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Collateral Agent), and pending any such action such Grantor shall be
deemed to hold such dividends, interest, distributions, securities or
other property in trust for the benefit of the Term Collateral Agent
and shall segregate such dividends, distributions, Securities or other
property from all other property of such Grantor, provided, however,
that to the extent that any such Investment Related Property
constitutes Liquid Collateral, prior to the Discharge of Revolving
Obligations, the Grantor shall satisfy the requirements of this
subsection relating to delivery and control by establishing such
control and delivering such property to the Revolving Collateral Agent
in accordance with the terms of the Intercreditor Agreement, and by
using commercially reasonable efforts to separately establish the Term
Collateral Agent's independent control where possible. Notwithstanding
the foregoing, so long as no Event of Default shall have occurred and
be continuing, the Term Collateral Agent authorizes each Grantor to
retain all cash dividends and distributions and all payments of
interest; and
(iii) each Grantor consents to the grant by each
other Grantor of a Security Interest in all Investment Related Property
to the Term Collateral Agent.
(b) Delivery and Control.
Each Grantor agrees that with respect to any
Investment Related Property in which it currently has rights it shall
comply with the provisions of this Section 4.4.1(b) on or before the
Credit Date and with respect to any Investment Related Property
hereafter acquired by such Grantor it shall comply with the provisions
of this Section 4.4.1(b) within thirty (30) days of acquiring rights
therein, in each case in form and substance satisfactory to the Term
Collateral Agent. With respect to any Investment Related Property that
is represented by a certificate or that is an "instrument" (other than
any Investment Related Property credited to a Securities Account) it
shall cause such certificate or instrument to be delivered to the
Revolving Collateral Agent, indorsed in blank by an "effective
indorsement" (as defined in Section 8-107 of the UCC), regardless of
whether such certificate constitutes a "certificated security" for
purposes of the UCC. With respect to any Investment Related Property
that is an "uncertificated security" for purposes of the UCC (other
than any "uncertificated securities" credited to a Securities Account,
it shall cause any issuer of such uncertificated security which is a
Subsidiary, and shall use commercially reasonable efforts to cause any
issuer of such uncertificated security which is not a Subsidiary, to
either (i) register the Term Collateral Agent as the registered owner
thereof on the books and records of the issuer or (ii) execute an
agreement substantially in the form of Exhibit B hereto, pursuant to
which such issuer agrees to comply (subject to the provisions thereof)
with the Term Collateral Agent's instructions with respect to such
uncertificated security without further consent by such Grantor,
provided, however, that to the extent that any such Investment Related
Property constitutes Liquid Collateral, prior to the Discharge of
Revolving Obligations, the Grantor shall satisfy the requirements of
this subsection relating to delivery and control by establishing such
control and delivering such property to the Revolving Collateral Agent
in accordance with the terms of the Intercreditor Agreement, and by
using commercially reasonable efforts to separately establish the Term
Collateral Agent's independent control where possible.
(c) Voting and Distributions.
(i) So long as no Event of Default shall have
occurred and be continuing and no notice shall be given pursuant to
clause (ii) below:
(1) except as otherwise provided under the covenants and
agreements relating to investment related property in this
Agreement, the Term Credit Agreement or the Intercreditor
Agreement, each Grantor shall be entitled to exercise or
refrain from exercising any and
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all voting and other consensual rights pertaining to the
Investment Related Property or any part thereof for any
purpose not inconsistent with the terms of this Agreement, the
Term Credit Agreement or the Intercreditor Agreement; it being
understood, however, that neither the voting by such Grantor
of any Pledged Stock for, or such Grantor's consent to, the
election of directors (or similar governing body) at a
regularly scheduled annual or other meeting of stockholders or
with respect to incidental matters at any such meeting, nor
such Grantor's consent to or approval of any action otherwise
permitted under this Agreement, the Term Credit Agreement or
the Intercreditor Agreement, shall be deemed inconsistent with
the terms of this Agreement, the Term Credit Agreement or the
Intercreditor Agreement within the meaning of this Section
4.4.1(c)(i)(1), and no notice of any such voting or consent
need be given to the Term Collateral Agent; and
(2) the Term Collateral Agent shall promptly execute and deliver
(or cause to be executed and delivered) to each Grantor all
proxies, and other instruments as such Grantor may from time
to time reasonably request for the purpose of enabling such
Grantor to exercise the voting and other consensual rights
when and to the extent which it is entitled to exercise
pursuant to clause (1) above;
(ii) Upon either delivery by any Grantor to the Term
Collateral Agent of written notice that an Event of Default has
occurred and is continuing, or delivery by the Term Collateral Agent or
the Administrative Agent to each Grantor of written notice that an
Event of Default exists:
(A) all rights of each Grantor to exercise or refrain
from exercising the voting and other consensual
rights which it would otherwise be entitled to
exercise pursuant hereto shall cease and all such
rights shall thereupon become vested in the Term
Collateral Agent who shall, subject to the terms of
the Intercreditor Agreement, thereupon have the
right, subject to the terms of the Intercreditor
Agreement, to exercise such voting and other
consensual rights; and
(B) in order to permit the Term Collateral Agent to
exercise the voting and other consensual rights which
it may be entitled to exercise pursuant hereto and to
the Intercreditor Agreement, and to receive all
dividends and other distributions which it may be
entitled to receive hereunder: (1) each Grantor shall
promptly execute and deliver (or cause to be executed
and delivered) to the Term Collateral Agent all
proxies, dividend payment orders and other
instruments as the Term Collateral Agent may from
time to time reasonably request and (2) each Grantor
acknowledges that the Term Collateral Agent may,
subject to the terms of the Intercreditor Agreement,
utilize the power of attorney set forth in Section
6.1.
4.4.2 PLEDGED EQUITY INTERESTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.4(A) (as such schedule may be amended
or supplemented from time to time) sets forth under the headings
"Pledged Stock, "Pledged LLC Interests," "Pledged Partnership
Interests" and "Pledged Trust Interests," respectively, all of the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and
Pledged Trust Interests owned by any Grantor and such Pledged Equity
Interests constitute the percentage of issued and outstanding
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shares of stock, percentage of membership interests, percentage of
partnership interests or percentage of beneficial interest of the
respective issuers thereof indicated on such Schedule, all of which is
true, accurate and complete as of the Closing Date or thereafter, as of
the date on which financial statements were required to be provided
under the Revolving Credit Agreement for the last Fiscal Quarter then
ended; (ii) except as set forth on Schedule 4.4(B), it has not acquired
any equity interests of another entity or substantially all the assets
of another entity within the five (5) years prior to each making of the
representations and warranties herein;
(iii) it is the record and beneficial owner of the
Pledged Equity Interests free of all Liens, rights or claims of other
Persons other than Permitted Liens and there are no outstanding
warrants, options or other rights to purchase, or shareholder, voting
trust or similar agreements outstanding with respect to, or property
that is convertible into, or that requires the issuance or sale of, any
Pledged Equity Interests;
(iv) no material consent of any Person including any
other general or limited partner, any other member of a limited
liability company, any other shareholder or any other trust beneficiary
is necessary in connection with the creation, perfection or First
Priority status of the security interest of the Term Collateral Agent
in any Pledged Equity Interests or the exercise, subject to the terms
of the Intercreditor Agreement, by the Term Collateral Agent of the
voting or other rights provided for in this Agreement or the exercise,
subject to the terms of the Intercreditor Agreement, of remedies in
respect thereof; and
(v) except as otherwise set forth in Schedule 4.4
hereto, none of the Pledged LLC Interests nor Pledged Partnership
Interests issued by any Grantor or any Subsidiary thereof are or
represent interests in issuers that: (a) are registered as investment
companies or (b) are dealt in or traded on securities exchanges or
markets;
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(i) unless otherwise permitted under the Term Credit
Agreement, without the prior written consent of the Term Collateral
Agent (which shall not be unreasonably withheld), it shall not vote to
enable or take any other action to: (a) amend or terminate any
partnership agreement, limited liability company agreement, certificate
of incorporation, by-laws or other organizational documents in any way
that adversely affects the validity, perfection or priority of the Term
Collateral Agent's security interest except for Permitted Liens and
Permitted Sales, (b) permit any issuer of any Pledged Equity Interest
that is a Grantor or a Subsidiary thereof to issue any additional
stock, partnership interests, limited liability company interests or
other equity interests of any nature or to issue securities convertible
into or granting the right of purchase or exchange for any stock or
other equity interest of any nature of such issuer unless such stock or
interests is pledged hereunder, (c) other than as permitted under the
Term Credit Agreement, permit any issuer of any Pledged Equity Interest
that is a Subsidiary to dispose of all or a material portion of its
assets, (d) waive any default under or breach of any terms of any
organizational document relating to the issuer of any Pledged Equity
Interest or the terms of any Pledged Debt that would individually or in
the aggregate cause a Material Adverse Effect, or (e) cause any
Subsidiary of Holdings that is an issuer of any Pledged Partnership
Interests or Pledged LLC Interests which are not securities (for
purposes of the UCC) on the date hereof to elect or otherwise take any
action to cause such Pledged Partnership Interests or Pledged LLC
Interests to be treated as securities for purposes of the UCC;
provided, however, notwithstanding the foregoing, if any issuer of any
Pledged Partnership Interests or Pledged LLC Interests takes any
22
such action in violation of the foregoing in this clause (e), such
Grantor shall promptly notify the Term Collateral Agent in writing of
any such election or action and, in such event, shall take all steps
reasonably requested by the Term Collateral Agent to establish the Term
Collateral Agent's "control" thereof;
(ii) it shall comply with all of its obligations
under any partnership agreement or limited liability company agreement
relating to Pledged Partnership Interests or Pledged LLC Interests and
shall enforce all of its rights with respect to any Investment Related
Property, except to the extent that the noncompliance or
non-enforcement of which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(iii) it consents to the grant by each other Grantor
of a security interest in all Investment Related Property to the Term
Collateral Agent and, without limiting the foregoing, consents to the
transfer of any Pledged Partnership Interest and any Pledged LLC
Interest to the Term Collateral Agent or its nominee, subject to the
terms of the Intercreditor Agreement, following the occurrence and
during the continuance of an Event of Default and to the substitution
of the Term Collateral Agent or its nominee, subject to the terms of
the Intercreditor Agreement, as a partner in any partnership or as a
member in any limited liability company with all the rights and powers
related thereto; and
(iv) it shall notify the Term Collateral Agent in
writing, by executing and delivering to the Term Collateral Agent a
completed Pledge Supplement, substantially in the form of Exhibit A
attached hereto, together with all Supplements or Schedules thereto,
promptly if any issuer of Pledged LLC Interests or Pledged Partnership
Interests that is a Grantor or a Subsidiary thereof has not opted to be
treated as securities under the UCC of any jurisdiction.
4.4.3 PLEDGED DEBT
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that Schedule
4.4 (as such schedule may be amended or supplemented from time to time) sets
forth under the heading "Pledged Debt" all of the Pledged Debt owned by any
Grantor as of the Closing Date or, thereafter, as of the date on which financial
statements were required to be provided under the Term Credit Agreement for the
last Fiscal Quarter then ended, and all of such Pledged Debt 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 and constitutes
all of the issued and outstanding inter-company Indebtedness;
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that it shall notify the Term Collateral Agent of any default under
any Pledged Debt that has caused, either in any individual case or in the
aggregate, a Material Adverse Effect.
4.4.4 INVESTMENT ACCOUNTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and each Credit Date, that:
(i) Schedule 4.4 hereto (as such schedule may be
amended or supplemented from time to time) sets forth under the
headings "Securities Accounts" and "Commodities Accounts,"
respectively, all of the Securities Accounts and Commodities Accounts
in which each Grantor has an interest as of the Closing Date or,
thereafter, as of the date on which financial statements were required
to be provided under the Term Credit Agreement for the last
23
Fiscal Quarter then ended. Each Grantor is the sole entitlement holder
of each such Securities Account and Commodity Account, and such Grantor
has not consented to, and is not otherwise aware of, any Person (other
than the Term Collateral Agent pursuant hereto or the Revolving
Collateral Agent pursuant to the Revolving Security Agreement) having
"control" (within the meanings of Sections 8-106 and 9-106 of the UCC)
over, or any other interest in, any such Securities Account or
Commodity Account or securities or other property credited thereto;
(ii) Schedule 4.4 hereto (as such schedule may be
amended or supplemented from time to time) sets forth under the
headings "Deposit Accounts" all of the Deposit Accounts (other than the
Asset Sale Proceeds Account) in which each Grantor has an interest as
of the Closing Date or, thereafter, as of the date on which financial
statements were required to be provided under the Term Credit Agreement
for the last Fiscal Quarter then ended. Each Grantor is the sole
account holder of each such Deposit Account and such Grantor has not
consented to, and is not otherwise aware of, any Person (other than the
Term Collateral Agent pursuant hereto or the Revolving Collateral Agent
pursuant to the Revolving Security Agreement) having either sole
dominion and control (within the meaning of common law) or "control"
(within the meanings of Section 9-104 of the UCC) over, or any other
interest in, any such Deposit Account or any money or other property
deposited therein;
(iii) Each Grantor has taken all actions reasonably
requested by the Term Collateral Agent, including those specified in
Section 4.4.4(b), to: (a) establish the Revolving Collateral Agent's
"control" (within the meanings of Sections 8-106 and 9-106 of the UCC)
over any portion of the Investment Related Property constituting
Certificated Securities or Uncertificated Securities, Securities
Accounts, Securities Entitlements or Commodities Accounts (each as
defined in the UCC), (b) establish the Revolving Collateral Agent's
"control" (within the meaning of Section 9-104 of the UCC) over all
Deposit Accounts, (c) establish the Term Collateral Agent's "control"
(within the meaning of Section 9-104 of the UCC) over the Asset Sale
Proceeds Account, and (d) deliver all Instruments to (i) the Revolving
Collateral Agent, in the case of Instruments constituting Liquid
Collateral, and (ii) the Term Collateral Agent, in the case of
Instruments constituting Fixed Collateral, provided, however, that to
the extent that any such Investment Related Property constitutes Liquid
Collateral, prior to the Discharge of Revolving Obligations, the
Grantor shall satisfy the requirements of this subsection relating to
delivery and control by establishing such control and delivering such
property to, and registering as owner of any uncertificated securities,
the Revolving Collateral Agent in accordance with the terms of the
Intercreditor Agreement, and by using commercially reasonable efforts
to separately establish the Term Collateral Agent's independent control
where possible.
(b) Delivery and Control
(i) With respect to any Investment Related Property
consisting of Securities Accounts or Securities Entitlements, within
thirty (30) days after the creation or acquisition thereof, it shall
cause the securities intermediary maintaining such Securities Account
or Securities Entitlement to enter into an agreement substantially in
the form of Exhibit C hereto pursuant to which it shall agree to comply
(subject to the provisions thereof) with the Term Collateral Agent's
"entitlement orders" without further consent by such Grantor. With
respect to any Investment Related Property that is a "Deposit Account"
(other than De Minimis Deposit Accounts), within thirty (30) days after
the creation or acquisition thereof, it shall cause the depositary
institution maintaining such account to enter into an agreement
substantially in the form of Exhibit D-1 (or, with respect to the Asset
Sale Proceeds Account, Exhibit D-2) hereto (or such other control
agreement in form and substance reasonably satisfactory to the Term
Collateral Agent), pursuant to which the Term Collateral Agent (subject
to the provisions thereof) shall have
24
both dominion and control over such Deposit Account (within the meaning
of the common law) and "control" (within the meaning of Section 9-104
of the UCC) over such Deposit Account, provided, however, that to the
extent that any such Investment Related Property constitutes Liquid
Collateral, prior to the Discharge of Revolving Obligations, the
Grantor shall satisfy the requirements of this subsection by
establishing the control of the Revolving Collateral Agent over such
Deposit Account in accordance with the terms of the Intercreditor
Agreement, and by using commercially reasonable efforts to separately
establish the Term Collateral Agent's independent control where
possible. Each Grantor shall have entered into such control agreement
or agreements with respect to: (i) any Securities Accounts, Securities
Entitlements or Deposit Accounts that exist on the Closing Date, as of
or prior to the Closing Date, (ii) the Asset Sale Proceeds Account
within thirty (30) days of the Closing Date and (iii) any other
Securities Accounts, Securities Entitlements or Deposit Accounts that
are created or acquired after the Closing Date, within thirty (30) days
after the deposit or transfer of any such Securities Entitlements or
funds, whether constituting moneys or investments, into such Securities
Accounts or Deposit Accounts.
(ii) In addition to the foregoing, if any issuer of
any Investment Related Property is located in a jurisdiction outside of
the United States, if requested by Term Collateral Agent, each Grantor
shall take such additional actions, including, without limitation,
causing the issuer to register the pledge on its books and records or
making such filings or recordings, in each case as may be reasonably
requested by the Term Collateral Agent, under the laws of such issuer's
jurisdiction to insure the validity, perfection and priority purported
to be granted hereby of the security interest of the Term Collateral
Agent. Upon the occurrence and during the continuance of an Event of
Default, the Term Collateral Agent shall have the right, without notice
to any Grantor, but subject to the terms of the Intercreditor
Agreement, to transfer all or any portion of the Investment Related
Property to its name or the name of its nominee or agent. In addition,
the Term Collateral Agent shall have the right at any time, without
notice to any Grantor, to exchange any certificates or instruments
representing any Investment Related Property for certificates or
instruments of smaller or larger denominations.
4.5 MATERIAL CONTRACTS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) Schedule 4.5 (as such schedule may be amended or
supplemented from time to time) sets forth all of the Material
Contracts to which such Grantor has rights;
(ii) the Material Contracts, true and complete copies
(including any amendments or supplements thereof) of which have been
furnished to the Term Collateral Agent, have been duly authorized,
executed and delivered by the Grantors party thereto, are in full force
and effect and are binding upon and enforceable against the Grantors
party thereto in accordance with their respective terms. There exists
no material default under any Material Contract by any party thereto.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that:
(i) in addition to any rights under the Section of
this Agreement relating to Receivables, upon the occurrence and during
the continuation of an Event of Default, the Term Collateral Agent may
at any time notify, or require any Grantor to so notify, the
counterparty on any Material Contract of the security interest of the
Term Collateral Agent therein. In addition,
25
after the occurrence and during the continuance of an Event of Default,
the Term Collateral Agent may upon written notice to the applicable
Grantor, but subject to the terms of the Intercreditor Agreement,
notify, or require any Grantor to notify, the counterparty to make all
payments under the Material Contracts directly to the Term Collateral
Agent;
(ii) each Grantor shall deliver promptly to the Term
Collateral Agent a copy of each material written demand, notice or
document received by it relating in any way to any Material Contract;
(iii) each Grantor shall deliver promptly to the Term
Collateral Agent, and in any event within ten (10) Business Days, after
(1) any Material Contract of such Grantor is terminated or amended in a
manner that is materially adverse to such Grantor or (2) any new
Material Contract is entered into by such Grantor, a written statement
describing such event, with copies of such material amendments or new
contracts (to the extent such delivery is permitted by the terms of any
such Material Contract, provided, no prohibition on delivery shall be
effective if it were bargained for by such Grantor with the intent of
avoiding compliance with this Section 4.5(b)(iii)), and an explanation
of any actions being taken with respect thereto;
(iv) it shall perform in all material respects all of
its obligations with respect to the Material Contracts in a manner
consistent with its reasonable business judgment;
(v) it shall promptly and diligently exercise each
material right (except the right of termination) it may have under any
Material Contract, any Supporting Obligation or Collateral Support, in
each case, at its own expense, and pursuant to its reasonable business
judgment, and in connection with such collections and exercise, such
Grantor shall take such action as such Grantor or the Term Collateral
Agent may deem necessary or advisable;
(vi) it shall use its reasonable efforts to keep in
full force and effect any Supporting Obligation or Collateral Support
relating to any Material Contract; and
(vii) each Grantor shall, within thirty (30) days of
the date hereof with respect to any material Non-Assignable Contract in
effect on the date hereof and within thirty (30) days after entering
into any material Non-Assignable Contract after the Closing Date,
request in writing the consent of the counterparty or counterparties to
such Non-Assignable Contract pursuant to the terms of such
Non-Assignable Contract or applicable law to the assignment or granting
of a security interest in such Non-Assignable Contract to the Term
Collateral Agent and use its reasonable efforts to obtain such consent
as soon as practicable thereafter.
4.6 LETTER OF CREDIT RIGHTS.
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that:
(i) all material letters of credit to which such
Grantor has rights as of the Closing Date, or thereafter, as of the
date on which financial statements were required to be provided under
the Term Credit Agreement for the last Fiscal Quarter then ended, are
listed on Schedule 4.6 (as such schedule may be amended or supplemented
from time to time) hereto; and
(ii) it has obtained the consent of each issuer of
any material letter of credit to the assignment of the proceeds of the
letter of credit to the Term Collateral Agent.
26
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that with respect to any material letter of credit hereafter arising
it shall promptly and in no event later than ten (10) days of its obtaining
rights in such material letter of credit rights obtain the consent of the issuer
thereof to the assignment of the proceeds of the letter of credit to the Term
Collateral Agent and shall deliver to the Term Collateral Agent a completed
Pledge Supplement, substantially in the form of Exhibit A attached hereto,
together with all Supplements to Schedules thereto.
4.7 INTELLECTUAL PROPERTY.
(a) Representations and Warranties. Except as disclosed in
Schedule 4.7(H) (as such schedule may be amended or supplemented from time to
time), each Grantor hereby represents and warrants, on the Closing Date and on
each Credit Date, that:
(i) Schedule 4.7 (as such schedule may be amended or
supplemented from time to time) sets forth a true and complete list of
(i) all United States, state and foreign registrations of and
applications for Patents, Trademarks, and Copyrights owned by each
Grantor and (ii) all Patent Licenses, Trademark Licenses, Trade Secret
Licenses and Copyright Licenses material to the business of such
Grantor as of the Closing Date or thereafter, as of the date on which
financial statements were required to be provided under the Term Credit
Agreement for the last Fiscal Quarter then ended;
(ii) it is the sole and exclusive owner of the entire
right, title, and interest in and to all Intellectual Property listed
on Schedule 4.7 that it purports to own (as such schedule may be
amended or supplemented from time to time) and owns or has the valid
right to use all other Intellectual Property used in or necessary to
conduct its business, free and clear of all Liens, claims, encumbrances
and licenses, except for Permitted Liens and the licenses set forth on
Schedule 4.7(B), (D), (F) and (G) (as each may be amended or
supplemented from time to time);
(iii) all Intellectual Property is subsisting and has
not been adjudged invalid or unenforceable, in whole or in part, and
each Grantor has performed all acts and has paid all renewal,
maintenance, and other fees and taxes required to maintain each and
every registration and application of Copyrights, Patents and
Trademarks in full force and effect;
(iv) all Intellectual Property is valid and
enforceable; no holding, decision, or judgment has been rendered in any
action or proceeding before any court or administrative authority
challenging the validity of, such Grantor's right to register, or such
Grantor's rights to own or use, any Intellectual Property and no such
action or proceeding is pending or, to the best of such Grantor's
knowledge, threatened;
(v) all registrations and applications for
Copyrights, Patents and Trademarks are standing in the name of each
Grantor, and none of the Trademarks, Patents, Copyrights or Trade
Secrets has been licensed by any Grantor to any Affiliate or third
party, except as disclosed in Schedule 4.7(B), (D), (F), or (G) (as
each may be amended or supplemented from time to time);
(vi) each Grantor uses adequate standards of quality
in the manufacture, distribution, and sale of all products sold and in
the provision of all services rendered under or in connection with all
Trademark Collateral and has taken all action necessary to insure that
all licensees of the Trademark Collateral owned by such Grantor use
such adequate standards of quality;
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(vii) to such Grantor's knowledge, the conduct of
such Grantor's business does not infringe upon or otherwise violate any
trademark, patent, copyright, trade secret or other intellectual
property right owned or controlled by a third party in a manner
reasonably likely to result in a Material Adverse Effect; no written
claim has been made that the use of any Intellectual Property owned or
used by Grantor (or any of its respective licensees) violates the
asserted rights of any third party;
(viii) to the best of each Grantor's knowledge, no
third party is infringing upon or otherwise violating any rights in any
Intellectual Property owned or used by such Grantor, or any of its
respective licensees in a manner reasonably likely to result in a
Material Adverse Effect;
(ix) no settlements or consents, covenants not to
xxx, nonassertion assurances, or releases have been entered into by
Grantor or exist to which Grantor is bound that adversely affect
Grantor's rights to own or use any Intellectual Property; and
(x) such Grantor has not made a previous assignment,
sale, transfer or agreement constituting a present or future
assignment, sale, transfer or agreement of any Intellectual Property
that has not been terminated or released. There is no effective
financing statement or other document or instrument now executed, or on
file or recorded in any public office, granting a security interest in
or otherwise encumbering any part of the Intellectual Property, other
than the financing statements filed in favor of the Revolving
Collateral Agent and the Term Collateral Agent.
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees as follows:
(i) it shall not do any act or omit to do any act
whereby any of the Intellectual Property which is material to the
business of Grantor may lapse, or become abandoned, dedicated to the
public, or unenforceable, or which would adversely affect the validity,
grant, or enforceability of the security interest granted therein;
(ii) it shall not, with respect to any Trademarks
which are material to the business of any Grantor, cease the use of any
of such Trademarks or fail to maintain the level of the quality of
products sold and services rendered under any of such Trademark at a
level at least substantially consistent with the quality of such
products and services as of the date hereof, and each Grantor shall
take all steps reasonably necessary to insure that licensees of such
Trademarks use such consistent standards of quality;
(iii) it shall, within thirty (30) days of the
creation or acquisition of any Copyrightable work which is material to
the business of Grantor, apply to register the Copyright in the United
States Copyright Office except for works with respect to which the
Grantor has determined with the exercise of its commercially reasonable
judgment that it shall not so apply; it shall promptly notify the Term
Collateral Agent if it knows or has reason to know that any item of the
Intellectual Property that is material to the business of any Grantor
may become (a) abandoned or dedicated to the public or placed in the
public domain, (b) invalid or unenforceable, or (c) subject to any
adverse determination or development (including the institution of
proceedings) in any action or proceeding in the United States Patent
and Trademark Office, the United States Copyright Office, any state
registry, any foreign counterpart of the foregoing, or any court;
except for works with respect to which the Grantor has reasonably
determined are of diminishing value and not used in or needed for the
conduct of its business;
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(iv) it shall take all reasonable steps in the United
States Patent and Trademark Office, the United States Copyright Office,
any state registry or any foreign counterpart of the foregoing, to
pursue any application and maintain any registration of each Trademark,
Patent, and Copyright owned by any Grantor and material to its business
which is now or shall become included in the Intellectual Property
including, but not limited to, those items on Schedule 4.7(A), (C) and
(E) (as each may be amended or supplemented from time to time) except
for works that the Grantor has reasonably determined are of diminishing
value and not used in or needed for the conduct of its business;
(v) in the event that any Intellectual Property owned
by or exclusively licensed to any Grantor that is of significant value
or is material to the business of any Grantor is, to such Grantor's
knowledge, infringed, misappropriated, or diluted by a third party,
such Grantor shall promptly take all reasonable actions to stop such
infringement, misappropriation, or dilution and protect its rights in
such Intellectual Property including, but not limited to, the
initiation of a suit for injunctive relief and to recover damages
(except for works that the Grantor has reasonably determined are of
diminishing value and not used in or needed for the conduct of its
business;);
(vi) it shall promptly (but in no event more than ten
(10) days before in the case of any Copyrights and otherwise no more
than thirty (30) days after any Grantor obtains knowledge thereof)
report to the Term Collateral Agent (i) the filing of any application
to register any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office, or any state
registry or foreign counterpart of the foregoing (whether such
application is filed by such Grantor or through any agent, employee,
licensee, or designee thereof) and (ii) the registration of any
Intellectual Property by any such office, in each case by executing and
delivering to the Term Collateral Agent a completed Pledge Supplement,
substantially in the form of Exhibit A attached hereto, together with
all Supplements to Schedules thereto;
(vii) it shall, promptly upon the reasonable request
of the Term Collateral Agent, execute and deliver to the Term
Collateral Agent any document required to acknowledge, confirm,
register, record, or perfect the Term Collateral Agent's interest in
any part of the Intellectual Property, whether now owned or hereafter
acquired;
(viii) except with the prior consent of the Term
Collateral Agent (not to be unreasonably withheld) or as permitted
under the Term Credit Agreement, each Grantor shall not execute, and
there will not be on file in any public office, any financing statement
or other document or instruments (other than financing statements,
documents or instruments filed in respect of Permitted Liens) and each
Grantor shall not sell, assign, transfer, license, grant any option or
create or suffer to exist any Lien upon or with respect to the
Intellectual Property, except for (1) the Lien created by and under
this Agreement and the other Credit Documents, and (2) Permitted Liens;
(ix) it shall hereafter use commercially reasonable
efforts so as not to permit the inclusion in, or omission from, any
Material Contract to which it hereafter becomes a party of any
provision that could or might in any way materially impair or prevent
the creation of a security interest in, or the assignment of, such
Grantor's rights and interests in any property included within the
definitions of any Intellectual Property acquired under such contracts;
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(x) it shall take all steps reasonably necessary to
protect the secrecy of all Trade Secrets, including, without
limitation, entering into confidentiality agreements with employees and
labeling and restricting access to secret information and documents;
(xi) it shall use proper statutory notice in
connection with its use of any of the Intellectual Property; and
(xii) it shall continue to collect, at its own
expense, all amounts due or to become due to such Grantor in respect of
the Intellectual Property or any portion thereof. In connection with
such collections, each Grantor may take (and, at the Term Collateral
Agent's reasonable direction (subject to the terms of the Intercreditor
Agreement), shall take) such action as such Grantor or the Term
Collateral Agent may deem reasonably necessary or advisable to enforce
collection of such amounts. Notwithstanding the foregoing, the Term
Collateral Agent shall have the right (subject to the terms of the
Intercreditor Agreement) at any time to notify, or require any Grantor
to notify, any obligors with respect to any such amounts of the
existence of the security interest created hereby.
4.8 COMMERCIAL TORT CLAIMS
(a) Representations and Warranties. Each Grantor hereby
represents and warrants, on the Closing Date and on each Credit Date, that
Schedule 4.8 (as such schedule may be amended or supplemented from time to time)
sets forth all Commercial Tort Claims of each Grantor in excess of $500,000
individually or $1,000,000 in the aggregate as of the date on which financial
statements were required to be provided under the Term Credit Agreement for the
last Fiscal Quarter then ended; and
(b) Covenants and Agreements. Each Grantor hereby covenants
and agrees that with respect to any Commercial Tort Claim in excess of $500,000
individually or $1,000,000 in the aggregate hereafter arising it shall promptly
and in no event later than ten (10) days of it acquiring rights in such
Commercial Tort Claims deliver to the Term Collateral Agent a completed Pledge
Supplement, substantially in the form of Exhibit A attached hereto, together
with all Supplements to Schedules thereto, identifying such new Commercial Tort
Claims.
SECTION 5. FURTHER ASSURANCES; ADDITIONAL GRANTORS.
5.1 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense
of such Grantor, it shall promptly execute and deliver all further instruments
and documents, and take all further action that the Term Collateral Agent may
reasonably request, in order to create and/or maintain the validity, perfection
or priority of and protect any security interest granted hereby or to enable the
Term Collateral Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral, subject to the terms of the Intercreditor
Agreement. Without limiting the generality of the foregoing, each Grantor shall:
(i) file such financing or continuation statements,
or amendments thereto, and execute and deliver such other agreements,
instruments, endorsements, powers of attorney or notices as the Term
Collateral Agent may reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted
hereby; and
(ii) take all actions necessary to ensure the
recordation of appropriate evidence of the liens and security interest
granted hereunder in the Intellectual Property with any
30
intellectual property registry in which said Intellectual Property is
registered or in which an application for registration is pending
including, without limitation, the United States Patent and Trademark
Office, the United States Copyright Office, the various Secretaries of
State, and the foreign counterparts on any of the foregoing.
(b) Each Grantor hereby authorizes the Term Collateral Agent
to file a Record or Records, including, without limitation, financing or
continuation statements, and amendments thereto, in any jurisdictions and with
any filing offices as the Term Collateral Agent may determine, in its sole
discretion, are necessary to perfect the security interest granted to the Term
Collateral Agent herein. Such financing statements may describe the Collateral
in the same manner as described herein or may contain an indication or
description of collateral that describes such property in any other manner as
the Term Collateral Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
Collateral granted to the Term Collateral Agent herein, including, without
limitation, describing such property as "all assets" or "all personal property,
whether now owned or hereafter acquired."
(c) In addition, each Grantor hereby ratifies and approves the
authorization of the Term Collateral Agent to file, for the benefit of the Term
Secured Parties, any financing statements which may have been filed prior to the
date hereof by the Term Collateral Agent with respect to the Collateral. In the
event that the description of the Collateral in any such financing statement
includes assets that do not constitute Collateral, the filing of such financing
statement shall nonetheless be deemed authorized by such Grantor to the extent
of the Collateral included in such description, and any such inaccuracy in such
financing statement shall not render the financing statement ineffective as to
any of the Collateral. Each Grantor irrevocably and unconditionally authorizes
the Term Collateral Agent to adopt on its behalf any symbol required for
authenticating any electronic filing. Nothing contained herein shall be
construed to in any manner limit any other authorization by any Grantor of the
filing of financing statements by or on such Grantor's behalf or for the benefit
of the Term Secured Parties.
(d) Each Grantor hereby authorizes the Term Collateral Agent
to modify this Agreement after obtaining such Grantor's approval of or signature
to such modification by amending Schedule 4.7 (as such schedule may be amended
or supplemented from time to time) to include reference to any right, title or
interest in any existing Intellectual Property or any Intellectual Property
acquired or developed by any Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Intellectual Property in which
any Grantor no longer has or claims any right, title or interest.
5.2 ADDITIONAL GRANTORS. From time to time subsequent to the date
hereof, additional Persons may become parties hereto as additional Grantors
(each, an "ADDITIONAL GRANTOR"), by executing a Counterpart Agreement. Upon
delivery of any such Counterpart Agreement to the Term Collateral Agent, notice
of which is hereby waived by Grantors, each Additional Grantor shall be a
Grantor and shall be as fully a party hereto as if Additional Grantor were an
original signatory hereto. Each Grantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Grantor hereunder, nor by any election of Term Collateral Agent not
to cause any Subsidiary of Borrower to become an Additional Grantor hereunder.
This Agreement shall be fully effective as to any Grantor that is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Grantor hereunder.
SECTION 6. TERM COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY. To the fullest extent permitted by law, each
Grantor hereby irrevocably appoints the Term Collateral Agent (such appointment
being coupled with an interest) as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of
31
such Grantor, the Term Collateral Agent or otherwise, from time to time in the
Term Collateral Agent's discretion to take any action and to execute any
instrument that the Term Collateral Agent may, subject to the terms of the
Intercreditor Agreement, deem reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, the following:
(a) upon the occurrence and during the continuance of any
Event of Default, to obtain and adjust insurance required to be maintained by
such Grantor or paid to the Term Collateral Agent pursuant to the Term Credit
Agreement;
(b) upon the occurrence and during the continuance of any
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 any
Event of Default, to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (b) above;
(d) upon the occurrence and during the continuance of any
Event of Default, to file any claims or take any action or institute any
proceedings that the Term Collateral Agent may reasonably request for the
collection of any of the Collateral or otherwise to enforce the rights of the
Term Collateral Agent with respect to any of the Collateral;
(e) to prepare and file any UCC financing statements against
such Grantor as debtor;
(f) to prepare, sign, and file for recordation in any
intellectual property registry, appropriate evidence of the lien and security
interest granted herein in the Intellectual Property in the name of such Grantor
as debtor;
(g) upon the occurrence and during the continuance of an Event
of Default, to take or cause to be taken all actions necessary to perform or
comply or cause performance or compliance with the terms of this Agreement,
including, without limitation, actions to pay or discharge taxes or Liens (other
than Permitted Liens) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Term Collateral Agent in its sole
discretion, any such payments made by the Term Collateral Agent to become
obligations of such Grantor to the Term Collateral Agent, due and payable
immediately without demand; and
(h) 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 the Term Collateral Agent were the absolute owner thereof for all
purposes, and to do, at the Term Collateral Agent's option and such Grantor's
expense, at any time or from time to time, all acts and things that the Term
Collateral Agent deems reasonably necessary to protect, preserve or realize upon
the Collateral and the Term Collateral Agent's security interest therein in
order to effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
6.2 NO DUTY ON THE PART OF COLLATERAL AGENT OR SECURED PARTIES. The
powers conferred on the Term Collateral Agent hereunder are solely to protect
the interests of the Term Secured Parties in the Collateral and shall not impose
any duty upon the Term Collateral Agent, Administrative Agent or any Term
Secured Party to exercise any such powers. The Term Collateral Agent,
Administrative Agent and the Term Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents
32
shall be responsible to any Grantor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.
SECTION 7. REMEDIES.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be
continuing, the Term 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 at law or in equity but subject to the terms of the
Intercreditor Agreement, all the rights and remedies of the Term Collateral
Agent on default under the UCC (whether or not the UCC applies to the affected
Collateral) to collect, enforce or satisfy any Secured Obligations then owing,
whether by acceleration or otherwise, and also may to the fullest extent
permitted by applicable law, but subject to the terms of the Intercreditor
Agreement, pursue any of the following separately, successively or
simultaneously:
(i) require any Grantor to, and each Grantor hereby
agrees that it shall at its expense and promptly upon request of the
Term Collateral Agent forthwith, assemble all or part of the Collateral
as directed by the Term Collateral Agent and make it available to the
Term Collateral Agent at a place to be designated by the Term
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 the
Term Collateral Agent deems appropriate; and
(iv) without notice except as specified below or
under the UCC, sell, assign, lease, license (on an exclusive or
nonexclusive basis) or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Term 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 the Term Collateral Agent may deem
commercially reasonable.
(b) Subject to the terms of the Intercreditor Agreement, the
Term Collateral Agent or any Term Secured Party may be the purchaser of any or
all of the Collateral at any public or private (to the extent the portion of the
Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Term Collateral Agent, as
collateral agent for and representative of the Term Secured Parties, 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 sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Term 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 (10) 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. The Term Collateral Agent shall
not be
33
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Term 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. Each Grantor agrees that it would not be commercially unreasonable
for the Term Collateral Agent to dispose of the Collateral or any portion
thereof by using Internet sites that provide for the auction of assets of the
types included in the Collateral or that have the reasonable capability of doing
so, or that match buyers and sellers of assets. Each Grantor hereby waives any
claims against the Term 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 the Term
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 liable for the deficiency and the reasonable fees
of any attorneys employed by the Term 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 the Term Collateral
Agent, that the Term 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 such
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. Nothing in this Section shall in any way alter
the rights of the Term Collateral Agent hereunder.
(c) The Term Collateral Agent may sell the Collateral without
giving any warranties as to the Collateral. The Term Collateral Agent may
specifically disclaim or modify any warranties of title or the like. This
procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(d) The Term Collateral Agent shall have no obligation to
marshal any of the Collateral.
7.2 APPLICATION OF PROCEEDS. All proceeds received by the Term
Collateral Agent in respect of any sale, any collection from, or other
realization upon all or any part of the Collateral shall be applied in full or
in part by the Term Collateral Agent in accordance with the terms of the
Intercreditor Agreement.
7.3 SALES ON CREDIT .If the Term Collateral Agent sells any of the
Collateral upon credit, Grantor will be credited only with payments actually
made by purchaser and received by the Term Collateral Agent and applied to
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Term Collateral Agent may resell the Collateral and Grantor shall be
credited with proceeds of the sale.
7.4 DEPOSIT ACCOUNTS. If any Event of Default shall have occurred and
be continuing, the Term Collateral Agent may, subject to the terms of the
Intercreditor Agreement, apply the balance from any Deposit Account or instruct
the bank at which any Deposit Account is maintained to pay the balance of any
Deposit Account to or for the benefit of the Term Collateral Agent. Unless an
Event of Default shall have occurred and is continuing the Term Collateral Agent
agrees not to instruct any bank in which any Deposit Account is maintained as
provided in the immediately preceding sentence.
7.5 INVESTMENT RELATED PROPERTY. Each Grantor recognizes that, by
reason of certain prohibitions contained in the Securities Act and applicable
state securities laws, the Term Collateral Agent may be compelled, with respect
to any sale of all or any part of the Investment Related Property conducted
without prior registration or qualification of such Investment Related Property
under the
34
Securities Act and/or such state securities laws, to limit purchasers to those
who will agree, among other things, to acquire the Investment Related Property
for their own account, for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges that any such private sale 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, each Grantor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the Term Collateral
Agent shall have no obligation to engage in public sales and no obligation to
delay the sale of any Investment Related Property 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 the Term Collateral Agent determines, subject to the terms of the
Intercreditor Agreement, to exercise its right to sell any or all of the
Investment Related Property, upon written request, each Grantor shall and shall
cause each issuer of any Pledged Stock to be sold hereunder, each partnership
and each limited liability company from time to time to furnish to the Term
Collateral Agent all such information as the Term Collateral Agent may request
in order to determine the number and nature of interest, shares or other
instruments included in the Investment Related Property which may be sold by the
Term 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.
7.6 INTELLECTUAL PROPERTY.
(a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, but
subject to the terms of the Intercreditor Agreement:
(i) the Term Collateral Agent shall have the right
(but not the obligation) to bring suit or otherwise commence any action
or proceeding in the name of any Grantor, the Term Collateral Agent or
otherwise, in the Term Collateral Agent's sole discretion, to enforce
any Intellectual Property, in which event such Grantor shall, at the
request of the Term Collateral Agent, do any and all lawful acts and
execute any and all documents required by the Term Collateral Agent in
aid of such enforcement and such Grantor shall promptly, upon demand,
reimburse and indemnify the Term Collateral Agent as provided in the
Revolving Credit Agreement in connection with the exercise of its
rights under this Section, and, to the extent that the Term Collateral
Agent shall elect not to bring suit to enforce any Intellectual
Property as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise,
to prevent the infringement or other violation of any of such Grantor's
rights in the Intellectual Property that is material to the business by
others and for that purpose agrees to diligently maintain any action,
suit or proceeding against any Person so infringing as shall be
necessary to prevent such infringement or violation;
(ii) upon written demand from the Term Collateral
Agent, each Grantor shall grant, assign, convey or otherwise transfer
to the Term Collateral Agent an absolute assignment of all of such
Grantor's right, title and interest in and to the Intellectual Property
and shall execute and deliver to the Term Collateral Agent such
documents as are necessary or appropriate to carry out the intent and
purposes of this Agreement; and
(iii) the Term Collateral Agent shall have the right
to notify, or require each Grantor to notify, any obligors with respect
to amounts due or to become due to such Grantor in respect of the
Intellectual Property, of the existence of the security interest
created
35
herein, to direct such obligors to make payment of all such amounts
directly to the Term Collateral Agent, and, upon such notification and
at the expense of such Grantor,
(1) 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; and
(2) 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.
(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 or other transfer to the Term Collateral Agent
of any rights, title and interests in and to the Intellectual Property shall
have been previously made in accordance with the terms hereof and of the
Intercreditor Agreement and shall have become absolute and effective, and (iv)
the Secured Obligations shall not have become immediately due and payable, upon
the written request of any Grantor, the Term Collateral Agent shall promptly
execute and deliver to such Grantor, at such Grantor's sole cost and expense,
such assignments or other transfer as may be necessary to reassign to such
Grantor any such rights, title and interests as may have been assigned to the
Term Collateral Agent as aforesaid, subject to any disposition thereof that may
have been made by the Term Collateral Agent; provided, after giving effect to
such reassignment, the Term Collateral Agent's security interest granted
pursuant hereto, as well as all other rights and remedies of the Term 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 any other Liens granted by or on behalf of the Term Collateral
Agent and the Term Secured Parties.
(c) Solely for the purpose of enabling the Term Collateral
Agent to exercise rights and remedies under this Section 7 and at such time as
the Term Collateral Agent shall be lawfully entitled to exercise such rights and
remedies hereunder and under the Intercreditor Agreement, each Grantor hereby
grants to the Term Collateral Agent, to the extent it has the right to do so, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor), subject, in the case of Trademarks, to
sufficient rights to quality control and inspection in favor of such Grantor to
avoid the risk of invalidation of said Trademarks, to use, operate under,
license, or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located.
7.7 CASH PROCEEDS. In addition to the rights of the Term Collateral
Agent specified in Section 4.3 with respect to payments of Receivables, all
proceeds of any Collateral received by any Grantor consisting of Cash Proceeds
shall be held by such Grantor in trust for the Term Collateral Agent, segregated
from other funds of such Grantor, and shall, forthwith upon receipt by such
Grantor, unless otherwise provided pursuant to Section 4.4.1(a)(ii), be turned
over to the Term Collateral Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Term Collateral Agent, if required) and
held by the Term Collateral Agent, provided, however, that prior to the
Discharge of Revolving Obligations, such Grantor shall satisfy the delivery
requirements of this section with respect to Cash Proceeds of Liquid Collateral
by delivering such Proceeds to the Revolving Collateral Agent. Any Cash Proceeds
received by the Term Collateral Agent (whether from a Grantor or otherwise): (i)
if no Event of Default shall have occurred and be continuing, shall be held by
the Term Collateral Agent for the benefit of the Secured Parties, as forth in
the Intercreditor Agreement, as collateral security for the Secured Obligations
(whether matured or unmatured) and the Secured Obligations under and as defined
in the Revolving Security Agreement (whether matured or unmatured) and (ii) if
an Event of Default shall
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have occurred and be continuing, may, in the sole discretion of the Term
Collateral Agent, subject to the terms of the Intercreditor Agreement, (A) be
held by the Term Collateral Agent for the benefit of the Secured Parties, as set
forth in the Intercreditor Agreement, as collateral security for the Secured
Obligations (whether matured or unmatured) and the Secured Obligations under and
as defined in the Revolving Security Agreement (whether matured or unmatured)
and/or (B) then or at any time thereafter be applied by the Term Collateral
Agent against the Secured Obligations then due and owing.
SECTION 8. TERM COLLATERAL AGENT; AGREEMENT AMONG AGENTS.
8.1 THE TERM COLLATERAL AGENT
The Term Collateral Agent has been appointed to act as Term Collateral
Agent hereunder by the Term Lenders and, by their acceptance of the benefits
hereof, the other Term Secured Parties. The Term 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, the Term Credit
Agreement, the other Credit Documents and the Intercreditor Agreement; provided,
the Term Collateral Agent shall, after payment in full of all Obligations under
the Term Credit Agreement and the other Credit Documents, subject to the terms
of the Intercreditor Agreement, exercise, or refrain from exercising, any
remedies provided for herein in accordance with the instructions of the holders
of a majority of the aggregate notional amount (or, with respect to any Hedge
Agreement that has been terminated in accordance with its terms, the amount then
due and payable (exclusive of expenses and similar payments but including any
early termination payments then due) under such Hedge Agreement) under all Hedge
Agreements. In furtherance of the foregoing provisions of this Section, each
Term Secured Party, by its acceptance of the benefits hereof, agrees that it
shall have no right individually to realize upon any of the Collateral
hereunder, it being understood and agreed by such Term Secured Party that all
rights and remedies hereunder may be exercised solely by the Term Collateral
Agent for the benefit of Term Secured Parties in accordance with the terms of
this Section and the Intercreditor Agreement. The Term Collateral Agent may
resign at any time by giving thirty (30) days' prior written notice thereof to
Lenders and the Grantors, and the Term Collateral Agent may be removed at any
time with or without cause by an instrument or concurrent instruments in writing
delivered to the Borrower and the Term Collateral Agent signed by the Requisite
Lenders under the Term Credit Agreement. Upon any such notice of resignation or
any such removal, Term Lenders shall have the right, upon five (5) Business
Days' notice to the Term Collateral Agent, following receipt of the Grantors'
consent (which shall not be unreasonably withheld or delayed and which shall not
be required while an Event of Default exists), to appoint a successor Term
Collateral Agent. Upon the acceptance of any appointment as Term Collateral
Agent hereunder by a successor Term Collateral Agent, or upon the acceptance of
any appointment as Administrative Agent under the terms of the Term Credit
Agreement by a successor Administrative Agent, that successor Administrative
Agent shall thereby also be deemed the successor Revolving Collateral Agent
hereunder.
8.2 INTERCREDITOR ARRANGEMENTS INCORPORATED BY REFERENCE.
Notwithstanding anything to the contrary set forth herein, Sections 2.4(e)(vi)
and 3.4(e)(vi) of the Intercreditor Agreement are hereby incorporated herein by
reference.
SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the payment in full
of all Secured Obligations, the cancellation or termination of the Term
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, be binding upon each Grantor, its successors and assigns, and inure,
together with the rights and remedies of the
37
Term Collateral Agent hereunder, to the benefit of the Term Collateral Agent and
its successors, transferees and assigns. Without limiting the generality of the
foregoing, but subject to the terms of the Term Credit Agreement, any Term
Lender may assign or otherwise transfer any Loans or Term Commitments held by it
to any other Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to Lenders herein or otherwise. The
security interest granted hereby shall terminate hereunder and of record and,
subject to the terms of the Intercreditor Agreement, all rights to the
Collateral shall revert to Grantors in accordance with the terms of the
Intercreditor Agreement. Upon any such termination the Term Collateral Agent
shall, at Grantors' expense, execute and deliver to Grantors such documents as
Grantors shall reasonably request to evidence such termination.
SECTION 10. STANDARD OF CARE; COLLATERAL AGENT MAY PERFORM.
The powers conferred on the Term 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, the Term 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.
The Term 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 the Term Collateral
Agent accords its own property. Neither the Term Collateral Agent nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or otherwise. If any Grantor fails to
perform any agreement contained herein, the Term Collateral Agent may itself
perform, or cause performance of, such agreement, subject to the terms of the
Intercreditor Agreement, and the expenses of the Term Collateral Agent incurred
in connection therewith shall be payable by each Grantor under Section 10.2 of
the Term Credit Agreement.
SECTION 11. MISCELLANEOUS.
Any notice required or permitted to be given under this Agreement shall
be given in accordance with Section 10.1 of the Term Credit Agreement. No
failure or delay on the part of the Term Collateral Agent in the exercise of any
power, right or privilege hereunder or under any other Credit Document 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 other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under this
Agreement and the other Credit Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available. 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. All
covenants hereunder and under the Term Credit Agreement shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists. This Agreement shall be binding upon and inure to the
benefit of the Term Collateral Agent, the Term Secured Parties and Grantors and
their respective successors and assigns. No Grantor shall, without the prior
written consent of the Term Collateral Agent given in accordance with the Term
Credit Agreement, assign any right, duty or obligation hereunder. This Agreement
and the other Credit Documents embody the entire agreement and understanding
between Grantors and the Term Collateral Agent and supersede all prior
agreements and understandings
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between such parties relating to the subject matter hereof and thereof.
Accordingly, the Credit Documents may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties. 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.
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 LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE
NEW YORK GENERAL OBLIGATION LAWS).
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IN WITNESS WHEREOF, each Grantor and the Term 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.
STANADYNE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
STANADYNE AUTOMOTIVE
HOLDING CORP.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
PRECISION ENGINE PRODUCTS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
40
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as the Term Collateral Agent
By: /s/ Xxxxxx Xxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Authorized Signatory
