EXHIBIT 10(ab)
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT (the "Agreement"), dated as of June 25,
2001, by and among USG CORPORATION, a Delaware corporation, and each of its
direct or indirect subsidiaries party to the Credit Agreement (as hereinafter
defined) (the "Grantors"), each of which Grantors, other than USG Foreign
Investments, Ltd., is a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code, and THE CHASE MANHATTAN BANK, a New York
banking corporation as administrative agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") party to the Credit
Agreement.
WITNESSETH:
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Administrative Agent, the Lenders and the Grantors are entering
into a Revolving Credit and Guaranty Agreement dated as of the date hereof (as
amended, modified or supplemented from time to time, the "Credit Agreement");
and
WHEREAS, unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined; and
WHEREAS, it is a condition precedent to the making of Loans and the
issuance of Letters of Credit that the Grantors, other than USG Foreign
Investments, Ltd., shall have granted a security interest, pledge and lien on
(x) all cash maintained in the Letter of Credit Account pursuant to Section
364(c)(2) of the Bankruptcy Code and (y) certain of the Grantors' assets and
properties and the proceeds thereof pursuant to Sections 364(c)(2), 364(c)(3)
and 364(d)(1) of the Bankruptcy Code; and
WHEREAS, the grant of such security interest, pledge and lien has been
authorized pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the
Bankruptcy Code by the Interim Order, and, after the entry thereof, will have
been so authorized by the Final Order (collectively, the "Orders"); and
WHEREAS, it is a condition precedent to the making of the Loans and the
issuance of Letters of Credit that USG Foreign Investments, Ltd. shall have
granted a security interest, pledge and lien on its assets and properties and
the proceeds thereof; and
WHEREAS, to supplement the Orders without in any way diminishing or
limiting the effect of the Orders or the security interest, pledge and lien
granted thereunder, the parties hereto desire to more fully set forth their
respective rights in connection with such security interest, pledge and lien;
and
WHEREAS, this Agreement has been approved by the Orders;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Loans and issue Letters of Credit, the Grantors hereby agree
with the Administrative Agent as follows:
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SECTION 1. GRANT OF SECURITY AND PLEDGE. Each of the Grantors hereby
transfers, grants, bargains, sells, conveys, hypothecates, assigns, pledges and
sets over to the Administrative Agent for its benefit and the ratable benefit of
the Lenders, and hereby grants to the Administrative Agent for its benefit and
the ratable benefit of the Lenders a perfected pledge and security interest in,
all of the Grantors' right, title and interest in and to the following (the
"Collateral"), which pledge and security interest shall be (x) junior to the
Permitted Liens hereinafter referred to and (y) subject to the Carve-Out:
(a) all "accounts" as defined in 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 (the "UCC"), including, without limitation, all present
and future accounts, accounts receivable and other rights of each of the
Grantors to payment for goods sold or leased or for services rendered (except
those evidenced by instruments or chattel paper), whether now existing or
hereafter arising and wherever arising, and whether or not they have been earned
by performance (collectively, the "Accounts");
(b) (i) all "inventory" as defined in the UCC, and (ii) all
goods and merchandise now owned or hereafter acquired by each of the Grantors
wherever located, whether in the possession of a Grantor or of a bailee or other
person for sale, storage, transit, processing, use or otherwise consisting of
whole goods, components, supplies, materials, or consigned, returned or
repossessed goods) which are held for sale or lease or to be furnished (or have
been furnished) under any contract of service or which are raw materials,
work-in-process, finished goods or materials used or consumed in such Grantor's
business or processed by or on behalf of any Grantor (regardless of whether
characterized as inventory under the UCC) (collectively, the "Inventory");
(c) (i) all "equipment" as defined in the UCC, and (ii) all
machinery, all manufacturing, distribution, selling, data processing and office
equipment, all furniture, furnishings, appliances, fixtures and trade fixtures,
tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of
every type and description (other than Inventory), in each instance whether now
owned or hereafter acquired by each of the Grantors and wherever located
(collectively, the "Equipment");
(d) all works of art now owned or hereafter acquired by each
of the Grantors, including, without limitation, paintings, sketches, drawings,
prints, sculptures, crafts, tapestries, porcelain, carvings, artifacts,
renderings and designs;
(e) all "general intangibles" as defined in the UCC,
including, without limitation, all rights, interests, chooses in action, causes
of action, claims and all other intangible property of each of the Grantors of
every kind and nature (other than Accounts, Trademarks, Patents and Copyrights),
in each instance whether now owned or hereafter acquired by such Grantor,
including, without limitation, all general intangibles; all corporate and other
business records; all loans, royalties, and other obligations receivable; all
inventions, designs, trade secrets, computer programs, software, printouts and
other computer materials, goodwill, registrations, copyrights, licenses,
franchises, customer lists, credit files, correspondence, and advertising
materials; all customer and supplier contracts, firm sale orders, rights under
license and franchise agreements (including all license agreements with any
other Person in connection with any of the Patents and Trademarks or such other
Person's names or marks, whether such Grantor is a licensor or licensee under
any such license agreement), and other contracts and contract rights; all
interests in partnerships and joint ventures; all tax refunds and tax refund
claims; all right, title and interest under leases, subleases, licenses and
concessions and other agreements to the extent assignable relating to real or
personal property; all payments due or made to each of the Grantors in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of
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any property by any person or governmental authority; all deposit accounts
(general or special) with any bank or other financial institution; all credits
with and other claims against carriers and shippers; all rights to
indemnification; all reversionary interests in pension and profit sharing plans
and reversionary, beneficial and residual interest in trusts; all proceeds of
insurance of which each of the Grantors is beneficiary; and all letters of
credit, guaranties, liens, security interest and other security held by or
granted to each of the Grantors; and all other intangible property, whether or
not similar to the foregoing (collectively, the "General Intangibles");
(f) all chattel paper (as that term is defined in Article 9 of
the UCC, including, without limitation, electronic chattel paper, as that term
is defined in Revised Article 9), all instruments (as that term is defined in
Article 9 of the UCC), all notes and debt instruments and all payments
thereunder and instruments and other property from time to time delivered in
respect thereof or in exchange therefor, and all bills of lading, warehouse
receipts and other documents of title and documents, in each instance whether
now owned or hereafter acquired by each of the Grantors;
(g) all property or interests in property now or hereafter
acquired by each of the Grantors which may be owned or hereafter may come into
the possession, custody or control of the Administrative Agent or any agent or
affiliate of the Administrative Agent in any way or for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise),
and all rights and interests of each of the Grantors, now existing or hereafter
arising and however and wherever arising, in respect of any and all (i) notes,
drafts, letters of credits, stocks, bonds, and debt and equity securities,
whether or not certificated, and warrants, options, puts and calls and other
rights to acquire or otherwise relating to the same; (ii) money (including all
cash and cash equivalents held in the Letter of Credit Account (as defined and
referred to in the Credit Agreement)); (iii) proceeds of loans, including,
without limitation, Loans made under the Credit Agreement; and (iv) insurance
proceeds and books and records relating to any of the property covered by this
Agreement; together, in each instance, with all accessions and additions
thereto, substitutions therefor, and replacements, proceeds and products
thereof;
(h) all of each Grantor's now owned or existing and filed and
hereafter acquired or arising and filed trademarks, service marks, trademark or
service xxxx registrations, trade names, trademark or service xxxx applications,
trade styles, prints and labels on which said trademarks, trade names, trade
styles and service marks have appeared or appear, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, and
all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, or any other country or political subdivision thereof (except for
"intent to use" applications for trademark or service xxxx registrations filed
pursuant to Section 1(b) of the Xxxxxx Act, unless and until an Amendment to
Allege Use or a Statement of Use under Sections 1(c) and 1(d) of said Act has
been filed), and including, without limitation, each xxxx, registration, and
application listed on Schedule 3 attached hereto and made a part hereof (as the
same may be amended pursuant hereto from time to time), and (i) renewals
thereof, (ii) all income, royalties, damages and payments now and hereafter due
and/or payable with respect thereto, including, without limitation, damages and
payment for past or future infringements thereof, (iii) the right to xxx for
past, present and future infringements thereof, (iv) all rights corresponding
thereto throughout the world, and (v) together in each case with the good will
of each Grantor's business connected with the use of each such trademark,
service xxxx, trade name and trade dress (all of the foregoing being herein
referred to as the "Trademarks");
(i) all of each Grantor's now owned or existing and filed and
hereafter acquired or arising and filed patents and patent applications of the
United States and any other country, and all registrations and recordings
thereof, including, without limitation, applications, registrations and
recordings in the United States
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Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by each Grantor, and
including without limitation the inventions and improvements described and
claimed therein, and those patents and patent applications listed on Schedule 4
attached hereto and made a part hereof, and (a) all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (b) all
income, royalties, damages and payments now and hereafter due and/or payable
under and with respect thereto, including, without limitation, damages and
payments for past or future infringements thereof, (c) the right to xxx for
past, present and future infringements thereof, (d) all rights, title and
interests corresponding thereto throughout the world (all of the foregoing
patents and applications, and (e) the goodwill of Assignor's business connected
with and symbolized by the foregoing, together with the items described in
clauses (a)-(d), are sometimes hereinafter individually and/or collectively
referred to as the "Patents");
(j) all of each Grantor's now owned, registered and
unregistered, and hereafter acquired or arising, registered and unregistered,
copyrights and copyright applications of the United States, or any other
country, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Copyright Office, the Library of Congress or in any similar office or agency of
the United States, any State thereof, or any other country or political
subdivision thereof, including those listed on Schedule 5 attached hereto and
made a part hereof (as the same may be amended pursuant hereto from time to
time), and (i) the renewals thereof, (ii) all income, royalties, damages and
payments now and hereafter due and/or payable with respect thereto, including
damages and payments for past or future infringements thereof, (iii) the right
to xxx for past, present and future infringements thereof, and (iv) all rights,
title, and interests corresponding thereto throughout the world (all of the
foregoing being herein referred to as the "Copyrights");
(k) all books, records, ledger cards and other property at any
time evidencing or relating to the Accounts, Equipment, General Intangibles,
Trademarks, Patents or Copyrights;
(l) all shares of capital stock owned by any Grantor,
including, without limitation, all shares of capital stock listed on Schedule 6
hereto (as such schedule may be amended or supplemented from time to time) of
the issuers listed thereon (individually, an "Issuer", and collectively, the
"Issuers") and all shares of capital stock of any Issuer obtained in the future
by such Grantor and the certificates, if any, representing or evidencing such
shares and any interest of such Grantor on the books and records of such Issuer
or on the books and records of any securities intermediary pertaining to such
shares, and, subject to Section 9 below, 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, and all rights and
privileges of any Grantor with respect to such shares (the "Pledged Shares");
(m) all interests in any general partnership, limited
partnership, limited liability partnership or other partnership held by any
Grantor, including, without limitation, all partnership interests listed in
Schedule 7 hereto (as such schedule may be amended or supplemented from time to
time) of the partnerships listed thereon (individually, a "Partnership", and
collectively, the "Partnerships") and all partnership interests in any
Partnership obtained in the future by such Grantor and the certificates, if any,
representing or evidencing such 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, subject to Section 9
below, 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
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such interests, and all rights and privileges of any Grantor with respect to
such interests (the "Pledged Partnership Interests");
(n) all interests in any limited liability company or
unlimited liability company held by any Grantor, including, without limitation,
all limited liability company and unlimited liability company interests listed
in Schedule 8 hereto (as such schedule may be amended or supplemented from time
to time) of the limited liability companies and the unlimited liability company
listed thereon (individually, a "Company", and collectively, the "Companies")
and all interests in any Company obtained in the future by such Grantor and the
certificates, if any, representing or evidencing such interests and any interest
of such Grantor on the books and records of such Company or on the books and
records of any securities intermediary pertaining to such interest, and, subject
to Section 9 below, 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 interests, and all rights and privileges of any Grantor
with respect to such interests (the "Pledged Company Interests") (the Pledged
Shares, the Pledged Partnership Interests and the Pledged Company Interests
being collectively called the "Pledged Collateral");
(o) all health-care-insurance receivables (the
"Health-Care-Insurance Receivables)", as such term is defined in the 1999
Official Text of Article 9 of the Uniform Commercial Code with conforming
amendments to Articles 1, 2, 2a, 4, 5, 6, 7 and 8 ("Revised Article 9");
(p) all letter of credit rights, as such term is defined in
Revised Article 9 (the "Letter of Credit Rights")
(q) all other personal property of each of the Grantors,
whether tangible or intangible, and whether now owned or hereafter acquired; and
(r) all proceeds and products of any of the foregoing, in any
form, including, without limitation, any claims against third parties for loss
or damage to or destruction of any or all of the foregoing and, to the extent
not otherwise included, all (i) payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral and (ii) cash.
Notwithstanding anything contained herein to the contrary, the
total amount of shares of capital stock or other ownership interests of any
Person pledged pursuant to this Agreement that is not incorporated or organized
in the United States shall in no event exceed sixty-six percent (66%) of the
total outstanding shares of capital stock or such other ownership interests
thereof.
For avoidance of doubt, it is expressly understood and agreed
that, to the extent the UCC is revised subsequent to the date hereof such that
the definition of any of the foregoing terms included in the description of
Collateral is changed, the parties hereto desire that any property which is
included in such changed definitions which would not otherwise be included in
the foregoing grant on the date hereof be included in such grant immediately
upon the effective date of such revision. Notwithstanding the immediately
preceding sentence, the foregoing grant is intended to apply immediately on the
date hereof to all Collateral to the fullest extent permitted by applicable law
regardless of whether any particular item of Collateral is currently subject to
the UCC.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement and the Collateral
secure the payment of all obligations of each of the Grantors, now or hereafter
existing, under the Credit Agreement and the other Loan
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Documents (and any other documents in respect of such Obligations), and in
respect of Indebtedness permitted by Section 6.3 of the Credit Agreement,
whether for principal, interest, fees, expenses or otherwise, and all
obligations of each of the Grantors now or hereafter existing under or in
respect of this Agreement (all such obligations of the Grantors being herein
called the "Obligations").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL; OTHER ACTIONS. Upon written
request by the Administrative Agent (and without further order of the Bankruptcy
Court), all certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by the Administrative Agent pursuant
hereto and shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Agent. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent shall have the right (for the ratable
benefit of the Lenders) at any time in its discretion and without notice to the
Grantors, to transfer to or to register in the name of the Administrative Agent
or any of its nominees any or all of the Pledged Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Grantor, jointly and
severally, represents and warrants as follows:
(a) As of the Filing Date, all of the Inventory and/or
Equipment (other than motor vehicles and other immaterial amounts of Inventory
and Equipment is located at the places specified in Schedule 1 hereto. As of the
Filing Date, the jurisdictions of formation, organization or incorporation, as
the case may be, the chief places of business and chief executive offices of
each of the Grantors and the offices where each Grantor keeps its records
concerning any Accounts and any Receivables and all originals of all chattel
paper which evidence any Account are located at the places specified in Schedule
2 hereto. As of the Filing Date, all trade names under which the Guarantor has
sold and will sell Inventory are listed on Schedule 3 hereto.
(b) Each of the Grantors owns the Collateral free and clear of
any lien, security interest, charge or encumbrance except for the security
interest created by this Agreement and except as otherwise permitted under
Section 6.1 of the Credit Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office, except such as may have been filed (x) in favor of
the Administrative Agent relating to this Agreement and (y) in favor of any
holder of a Lien permitted under Section 6.1 of the Credit Agreement.
(c) As of the Filing Date, no Grantor owns any material
Trademarks, Patents or Copyrights or has any material Trademarks, Patents or
Copyrights registered in, or the subject of pending applications in, the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, other than those described in Schedules 3, 4 and 5 hereto. As of the
Filing Date, the registrations for the Trademarks, Patents and Copyrights
disclosed on such Schedules 3, 4 and 5 hereto are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part, and each Patent,
Trademark and Copyright is valid and enforceable. None of the material
Trademarks, Patents or Copyrights has been abandoned or dedicated.
(d) Each Grantor, as the case may be, is the sole and
exclusive owner of the entire right, title and interest in and to each of its
Trademarks, Patents and Copyrights, free and clear of any liens, charges and
encumbrances except for Liens permitted pursuant to Section 6.1 of the Credit
Agreement.
(e) As of the Filing Date, no Grantor owns or holds any
Pledged Collateral other than that described in Schedules 6, 7 and 8.
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(f) The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable.
(g) As of the Filing Date, each Grantor, as the case may be,
is the record and beneficial owner of the Pledged Collateral described in
Schedules 6, 7 and 8 free and clear of any Lien, security interest, option or
other charge or encumbrance, except as permitted under Section 6.1 of the Credit
Agreement.
(h) As of the Filing Date, except as disclosed on Schedule 6,
the Pledged Shares constitute all of the issued and outstanding shares of stock
of each of the Issuers which is a Borrower or a Subsidiary of a Borrower and no
such Issuer is under any contractual obligation to issue any additional shares
of stock or any other securities, rights or indebtedness.
(i) As of the Filing Date, except as disclosed on Schedule 7,
the Pledged Partnership Interests, if any, constitute all of the issued and
outstanding interests in each of the Partnerships, if any, and no Partnership is
under any contractual obligation to issue any additional interests or any other
rights or indebtedness.
(j) As of the Filing Date, except as disclosed on Schedule 8,
the Pledged Company Interests constitute all of the issued and outstanding
interests in each of the Companies and no Company is under any contractual
obligation to issue any additional interests or any other rights or
indebtedness.
(k) Upon the entry by the Bankruptcy Court of the Final Order,
(i) each Grantor will be duly authorized to execute and deliver this Agreement
to the Administrative Agent, and (ii) this Agreement will constitute the legal,
valid and binding obligation of the Grantors, enforceable against the Grantors
in accordance with its terms.
(l) As of the Filing Date, all material letters of credit to
which any Grantor has rights are listed on Schedule 9 (as amended or
supplemented from time to time) hereto, and the Grantors, upon the request of
the Administrative Agent made in the exercise of its business judgment, have
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 Administrative Agent.
SECTION 5. FURTHER ASSURANCES.
(a) Each of the Grantors agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that the
Administrative Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce any of its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, and without further order of the Bankruptcy Court, each of the
Grantors will execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary,
or as the Administrative Agent may reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of such
Grantor where permitted by law. A carbon, photographic or other reproduction of
this
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Agreement or any financing statement covering the Collateral or any part thereof
is sufficient as a financing statement where permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
(d) Each Grantor hereby covenants and agrees that with respect
to any material letter of credit hereafter arising it shall obtain the consent
of the issuer thereof to the assignment of the proceeds of the letter of credit
to the Administrative Agent.
(e) Each Grantor will furnish to the Administrative Agent,
upon Administrative Agent's written request, agreements establishing the
Administrative Agent's dominion and control over any deposit accounts (as
defined in the UCC) of such Grantor. Such agreements shall be substantially in
the form of Exhibit A to this Agreement.
SECTION 6. AS TO EQUIPMENT AND INVENTORY. Each Grantor shall:
(a) Keep the Equipment and Inventory (other than Inventory
sold in the ordinary course of business) at the places specified therefor in
Schedule 1 hereto or, upon 30 days' prior written notice to the Administrative
Agent, at other places in jurisdictions where all action required by Section 5
hereof shall have been taken to assure the continuation of the perfection of the
security interest of the Administrative Agent (for its benefit and the ratable
benefit of the Lenders) with respect to the Equipment and Inventory.
(b) Subject to provisions of the Credit Agreement, maintain or
cause to be maintained in good repair, working order and condition, excepting
ordinary wear and tear and damage due to casualty, all of the Equipment, and
make or cause to be made all appropriate repairs, renewals and replacements
thereof, to the extent not obsolete and consistent with past practice of such
Grantor, as quickly as practicable after the occurrence of any loss or damage
thereto which are necessary or reasonably desirable to such end, except where
the failure to do any of the foregoing would not result in a material adverse
effect on the assets, properties or condition (financial or otherwise) of the
Grantors, taken as a whole.
(c) Until satisfaction in full of the Obligations, at any time
when an Event of Default has occurred and is continuing: (i) each Grantor will
perform any and all reasonable actions requested by the Administrative Agent to
enforce the Administrative Agent's security interest in the Inventory and all of
the Administrative Agent's rights hereunder, such as leasing warehouses to the
Administrative Agent or its designee, placing and maintaining signs, appointing
custodians, transferring Inventory to warehouses, and delivering to the
Administrative Agent warehouse receipts and documents of title in the
Administrative Agent's name; (ii) if any Inventory is in the possession or
control of any of the Grantors' agents, contractors or processors or any other
third party, each such Grantor will notify the Administrative Agent thereof and
will notify such agents, contractors or processors or third party of the
Administrative Agent's security interest therein and, upon request, instruct
them to hold all such Inventory for the Administrative Agent and such Grantor's
account, as their interests may appear, and subject to the Administrative
Agent's instructions; (iii) the Administrative Agent shall have the right to
hold all Inventory subject to the security interest granted hereunder; and (iv)
the Administrative Agent shall have the right to give the Default Notice and, at
any time after the expiration of the Default Notice Period, to take possession
of the Inventory or any part thereof and to maintain such possession on such
Grantor's premises or to remove any or all of the Inventory to such other place
or places as the Administrative Agent desires in its sole discretion. If the
Administrative Agent exercises
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its right to take possession of the Inventory, such Grantor, upon the
Administrative Agent's demand, will assemble the Inventory and make it available
to the Administrative Agent at such Grantor's premises at which it is located.
SECTION 7. AS TO ACCOUNTS
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts, and the offices where it keeps all originals of all chattel paper
which evidence Accounts, at the location therefor specified in Section 4(a)
hereof or, upon 30 days' prior written notice to the Administrative Agent, at
such other locations in a jurisdiction where all actions required by Section 5
hereof shall have been taken with respect to the Accounts. Each Grantor will
hold and preserve such records and chattel paper and will permit representatives
of the Administrative Agent, at any time during normal business hours, to
inspect and make abstracts from such records and chattel paper in accordance
with Section 5.6 of the Credit Agreement.
(b) Except as otherwise provided in this subsection (b), each
Grantor shall continue to collect in accordance with its customary practice, at
its own expense, all amounts due or to become due to such Grantor under the
Accounts and, prior to the occurrence and continuance of an Event of Default,
such Grantor shall have the right to adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon, all in accordance with
its customary practices. In connection with such collections, the Grantors may,
upon the occurrence and during the continuation of an Event of Default, take
(and at the direction of the Administrative Agent shall take) such action as the
Grantors or the Administrative Agent may reasonably deem necessary or advisable
to enforce collection of the Accounts; provided, that upon written notice by the
Administrative Agent to any Grantor, following the occurrence and during the
continuation of an Event of Default and after the expiration of the Default
Notice Period, of its intention so to do, the Administrative Agent shall have
the right to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to the Administrative Agent and to direct such
account debtors or obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Administrative Agent and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Accounts, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice referred to in the proviso to
the preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Accounts shall be received in trust
for the benefit of the Administrative Agent (for the ratable benefit of the
Lenders) hereunder, shall be segregated from other funds of the Grantors and
shall be forthwith paid over to the Administrative Agent in the same form as so
received (with any necessary endorsement) to be held as cash collateral and
either (A) released to the Grantors if such Event of Default shall have been
cured or waived or (B) if such Event of Default shall be continuing, applied as
provided by Section 15 hereof, and (ii) the Grantors shall not adjust, settle or
compromise the amount or payment of any Account, or release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
SECTION 8. AS TO TRADEMARKS, PATENTS AND COPYRIGHTS. Except to the
extent failure to do any of the foregoing could reasonably be expected to have a
Material Adverse Effect:
(a) (i) Each Grantor shall, either itself or through
licensees, continue to use the Trademarks as each is currently used in the
Grantor's business in order to maintain the Trademarks in full force free from
any claim of abandonment for nonuse, and (ii) each such Grantor will not (and
will not permit any licensee thereof to) do any act or knowingly omit to do any
act whereby any Trademark may become invalidated,
237
unless, in the cases of clauses (i) and (ii), such failure to maintain or use a
Trademark is not reasonably likely to have a material adverse effect on the
condition (financial or otherwise), operation or properties of the Grantors
taken as a whole.
(b) Unless and until an Event of Default shall have occurred,
the Administrative Agent hereby grants to the Grantors the exclusive and
nontransferable right and license to make, have made, use and sell the
inventions disclosed and claimed in the Patents for the Grantors' own benefit
and account and for none other. Each Grantor agrees that it will not sell or
assign its interest in, or grant any sublicense under, the license granted to
the Grantors under this subsection (b) without the prior written consent of the
Administrative Agent. From and after the occurrence of any Event of Default, the
Grantors' license with respect to the Patents as set forth in this subsection
(b) shall terminate, and the Administrative Agent shall have, in addition to all
other rights and remedies given it by this Agreement, those allowed by law.
(c) Each Grantor hereby agrees that the license granted to the
Administrative Agent with respect to each of the Patents shall be without any
liability for royalties or other related charges from the Administrative Agent
to the Grantors. The assignment granted to the Administrative Agent herein with
respect to each of the Patents shall terminate on the earlier of (i) the
expiration of such Patent, and (ii) the payment in full of all of the
Obligations and the termination of the Commitments.
(d) No Grantor will do any act, or omit to do any act, whereby
the Patents or Copyrights may become abandoned or dedicated and each such
Grantor shall notify the Administrative Agent immediately if it knows of any
reason or has reason to know that the application or registration of any of the
Patents or Copyrights may become abandoned or dedicated, unless such abandonment
or dedication is not reasonably likely to have a material adverse effect on the
condition (financial or otherwise), operations or properties of the Grantors
taken as a whole.
(e) No Grantor will, either itself or through any agent,
employee, licensee or designee, (i) file an application for the registration of
any Patent or Trademark with the United States Patent and Trademark Office or
any similar office or agency in any other country or any political subdivision
thereof or (ii) file any assignment of any Patent or Trademark, which such
Grantor may acquire from a third party, with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, unless such Grantor shall, within 30 days after
the date of such filing, notify the Administrative Agent thereof, and, upon
request of the Administrative Agent in the exercise of its business judgment,
execute and deliver any and all assignments, agreements, instruments, documents
and papers as the Administrative Agent may request to evidence the
Administrative Agent's interest in such Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby, and
such Grantor hereby constitutes the Administrative Agent its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all lawful acts
of such attorney being hereby ratified and confirmed; such power being coupled
with an interest is irrevocable until the Obligations are paid in full.
(f) Each Grantor will take all necessary steps in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office, the Library of Congress or any similar office or agency
in any other country or any political subdivision thereof, in order to maintain
in all material respects each registered Trademark, Patent and Copyright, and to
pursue each application for registration of any Trademark, Patent and Copyright
not listed on Schedules 3, 4 or 5 hereto, including, without limitation, filing
of renewals, payment of maintenance fees, filing of affidavits of use, filing of
affidavits of incontestability and opposition, and participation in opposition,
interference and cancellation proceedings, unless failure to take
238
such steps is not reasonably likely to have a material adverse effect on the
condition (financial or otherwise), operation or properties of the Grantors,
taken as a whole.
(g) Each Grantor will, without further order of the Bankruptcy
Court, perform all acts and execute and deliver all further instruments and
documents, including, without limitation, assignments for security in form
suitable for filing with the United States Patent and Trademark Office, and the
United States Copyright Office, respectively, reasonably requested by the
Administrative Agent at any time to evidence, perfect, maintain, record and
enforce the Administrative Agent's interest in all Trademarks, Patents and
Copyrights or otherwise in furtherance of the provisions of this Agreement, and
each Grantor hereby authorizes the Administrative Agent to execute and file one
or more accurate financing statements (and similar documents) or copies thereof
or of this Agreement with respect to Patents, Trademarks and Copyrights signed
only by the Administrative Agent.
(h) Each Grantor will, upon acquiring knowledge of any use by
any person of any term or design likely to cause confusion with any Trademark,
promptly notify the Administrative Agent of such use, and if requested by the
Administrative Agent, shall join with the Administrative Agent, at such
Grantor's expense, in such action as the Administrative Agent, in its reasonable
discretion, may deem advisable for the protection of the Administrative Agent's
interest in and to the Trademarks.
(i) Each Grantor agrees that, should it obtain rights to any
Patent, Trademark or Copyright which is not now identified on Schedules 3, 4 or
5, or become entitled to the benefit of any reissue, division, continuation,
renewal, extension, or continuation-in-part of any Trademark, Patent or
Copyright, (i) such Grantor shall give prompt written notice thereof to the
Administrative Agent, (ii) the provisions of Section 1 of this Agreement shall
automatically apply to any such Trademark, Patent or Copyright, and (iii) any
such Trademark, Patent or Copyright shall automatically become part of the
Collateral.
(j) If any Grantor becomes aware that any Trademark, Patent or
Copyright is infringed or misappropriated by a third party, such Grantor shall
promptly notify the Administrative Agent and shall, if reasonably requested by
the Administrative Agent, promptly xxx for infringement or misappropriation and
for recovery of all damages caused by such infringement or misappropriation, or,
with the prior written consent of the Administrative Agent, shall take such
other actions as the Administrative Agent shall reasonably deem appropriate
under the circumstances to protect such Trademark, Patent or Copyright.
(k) Each Grantor shall continue to use reasonable and proper
statutory notice in connection with its use of each registered Patent, Trademark
and Copyright.
(l) This Agreement is executed for collateral purposes only
and upon payment in full of the Obligations and termination of the Commitments,
the Administrative Agent shall, at the Grantors' expense, execute and deliver to
the Grantors all deeds, assignments and other instruments as may be necessary or
proper to re-vest in the Grantors full title to the Trademarks, Patents and
Copyrights, subject to any disposition thereof which may have been made by the
Administrative Agent pursuant hereto or pursuant to the Credit Agreement.
SECTION 9. AS TO THE PLEDGED COLLATERAL; VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
239
(i) the Grantors (as applicable) shall be entitled to
exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement
or the Credit Agreement;
(ii) notwithstanding the provisions of Section 1
hereof, such Grantors shall be entitled to receive and retain
any and all dividends, interest or distributions paid in
respect of the Pledged Collateral; provided, that any and all
(A) dividends, interest or distributions paid or
payable other than in cash in respect of,
and instruments and other property received,
receivable or otherwise distributed in
respect of, or in exchange for, any Pledged
Collateral, and
(B) dividends, interest or distributions paid or
payable in cash in respect of any Pledged
Collateral (other than the Pledged
Collateral consisting of Pledged Shares,
Pledged Partnership Interests or Pledged
Company Interests of Subsidiaries of the
Borrowers) in connection with a partial or
total liquidation or dissolution or in
connection with a reduction of capital,
capital surplus or paid-in-surplus; and
(C) cash paid, payable or otherwise distributed
in respect of, or in redemption of, or in
exchange for, any Pledged Collateral (other
than the Pledged Collateral consisting of
Pledged Shares, Pledged Partnership
Interests or Pledged Company Interests of
Subsidiaries of the Borrowers);
shall be, and shall be forthwith delivered to the Administrative Agent,
to hold as Pledged Collateral and shall, if received by any of the
Grantors, be received in trust for the benefit of the Administrative
Agent, be segregated from the other property or funds of such Grantor,
and be forthwith delivered to the Administrative Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement); and
(iii) the Administrative Agent shall execute and
deliver (or cause to be executed and delivered) to the
Grantors (as applicable) all such proxies and other
instruments as the Grantors (as applicable) may reasonably
request for the purpose of enabling such Grantor to exercise
the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends
which it is authorized to receive and retain pursuant to
paragraph (ii) above;
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) upon written notice from the Administrative Agent
to the Grantors (as applicable) to such effect, all rights of
such Grantors (as applicable) to exercise the voting and other
consensual rights which it would otherwise be entitled to
exercise pursuant to Section 9(a)(i) and to receive the
dividends which it would otherwise be authorized to receive
and retain pursuant to Section 9(a)(ii) shall cease, and all
such rights shall thereupon become vested in the
Administrative Agent, who shall thereupon have the sole right
to exercise such voting and other consensual rights and to
receive and hold as Pledged Collateral any such dividends; and
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(ii) all dividends which are received by such
Grantors contrary to the provisions of paragraph (i) of this
Section 9(b) shall be received in trust for the benefit of the
Administrative Agent, shall be segregated from other funds of
the Grantors and shall be forthwith paid over to the
Administrative Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
SECTION 10. INSURANCE. Upon the occurrence and during the continuance
of any Event of Default, all insurance payments in respect of Inventory and
Equipment shall be held, applied and paid to the Administrative Agent as
specified in Section 15 hereof.
SECTION 11. TRANSFERS TO OTHERS; LIENS; ADDITIONAL SHARES AND
INTERESTS.
(a) Each Grantor shall not sell, assign (by operation of law
or otherwise) or otherwise dispose of any of the Collateral, except for
dispositions otherwise permitted by the Credit Agreement or other Loan
Documents.
(b) Each Grantor shall not create or suffer to exist any lien,
security interest or other charge or encumbrance upon or with respect to any of
the Collateral to secure any obligation of any person or entity, except for the
security interest created by this Agreement and the Final Order, or except as
otherwise permitted under Section 6.1 of the Credit Agreement.
(c) Each of the Grantors (as applicable) agrees that it will
(i) cause each of the Issuers that are wholly-owned Subsidiaries not to issue
any stock or other securities in addition to or substitution for the Pledged
Shares issued by such Issuer, except to the respective Grantor, and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all such additional shares of stock or other securities of each Issuer.
(d) Each of the Grantors (as applicable) agrees that it will
(i) cause each of the Partnerships, if any, that are wholly-owned Subsidiaries
not to issue any interests in addition to or substitution for the Pledged
Partnership Interests issued by such Issuer, except to the respective Grantor,
and (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all such additional interests of each Partnership.
(e) Each of the Grantors (as applicable) agrees that it will
(i) cause each of the Companies that are wholly-owned Subsidiaries not to issue
any interests in addition to or substitution for the Pledged Company Interests
issued by such Company, except to the respective Grantor and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all such additional interests of each Company.
SECTION 12. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. Each
Grantor hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact (which appointment shall be irrevocable and deemed coupled with
an interest), with full authority in the place and stead of such Grantor and in
the name of such Grantor or otherwise, from time to time in the Administrative
Agent's discretion, upon and during the occurrence and continuation of an Event
of Default at any time after the Administrative Agent has given the Default
Notice and the Default Notice Period has expired, to take any action and to
execute any instrument which the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
241
(i) to obtain and adjust insurance required to be
paid to the Administrative Agent pursuant to Section 10
hereof,
(ii) to ask, 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,
(iii) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper, in connection
with clause (i) or (ii) above,
(iv) to receive, endorse and collect all instruments
made payable to the Grantors representing any dividend or
other distribution in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same, and
(v) to file any claims or take any action or
institute any proceedings which the Administrative Agent may
deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the
Administrative Agent with respect to any of the Collateral.
SECTION 13. ADMINISTRATIVE AGENT MAY PERFORM. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may itself
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by the
Grantors under Section 16(b) hereof.
SECTION 14. THE ADMINISTRATIVE AGENT'S DUTIES. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest and the
interests of the Lenders in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Administrative 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, including, without limitation,
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Administrative Agent has or is deemed to have knowledge of such
matters.
SECTION 15. REMEDIES. If any Event of Default shall have occurred and
be continuing at any time after the Administrative Agent has given the Default
Notice and the Default Notice Period has expired, and subject to the provisions
of Section 7 of the Credit Agreement:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, and without application to or order of the Bankruptcy
Court, all the rights and remedies of a secured party on default under the UCC
and also may (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent forthwith,
assemble all or part of the Collateral as directed by the Administrative Agent
and make it available to the Administrative Agent at a place to be designated by
the Administrative Agent which is reasonably convenient to both parties and (ii)
without notice except as specified in the following sentence, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Administrative Agent's offices or elsewhere, for cash, on credit
or for future delivery, and at such price or prices and upon such other terms as
the Administrative Agent may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of such sale shall be required by law, at least ten
days' notice to the Grantors of the time and place of any public sale or the
time after which any private sale is to be made shall
242
constitute reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) The Administrative Agent may instruct the Grantors not to
make any further use of the Patents, Copyrights or Trademarks or any xxxx
similar thereto for any purpose to the extent that such use would be
inconsistent with the exercise by the Administrative Agent of any other remedies
under this Section.
(c) The Administrative Agent may license, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis, any of
the Trademarks, Patents or Copyrights throughout the world for such term or
terms, on such conditions, and in such manner, as the Administrative Agent shall
in its sole discretion determine.
(d) The Administrative Agent may (without assuming any
obligations or liability thereunder), at any time, enforce (and shall have the
exclusive right to enforce) against any licensee or sublicensee all rights and
remedies of the Grantors in, to and under any one or more license agreements
with respect to the Collateral, and take or refrain from taking any action under
any thereof, and each of the Grantors hereby releases the Administrative Agent
from, and agrees to hold the Administrative Agent free and harmless from and
against any claims arising out of, any action taken or omitted to be taken with
respect to any such license agreement.
(e) In the event of any such license, assignment, sale or
other disposition of the Collateral, or any of it, each Grantor shall supply its
know-how and expertise relating to the manufacture and sale of the products
bearing or in connection with the Trademarks, Patents or Copyrights, and its
customer lists and other records relating to the Trademarks, Patents or
Copyrights and to the distribution of said products, to the Administrative Agent
or its designee.
(f) In order to implement the assignment, sale or other
disposal of any of the Trademarks, Patents or Copyrights, the Administrative
Agent may, at any time, pursuant to the authority granted in Section 12 hereof,
execute and deliver on behalf of the Grantors, one or more instruments of
assignment of the Trademarks, Patents or Copyrights (or any application of
registration thereof), in form suitable for filing, recording or registration in
any country.
(g) All cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Administrative Agent, be
held by the Administrative Agent as collateral for, and then or at any time
thereafter applied (after payment of any amounts payable to the Administrative
Agent pursuant to Section 16 hereof) in whole or in part against, all or any
part of the Obligations in such order as the Administrative Agent shall elect.
Any surplus of such cash or cash proceeds held by the Administrative Agent and
remaining after payment in full of all the Obligations shall be paid over to the
Grantors or to whomsoever may be lawfully entitled to receive such surplus.
(h) If at any time when the Administrative Agent shall
determine to exercise its right to sell all or any part of the Pledged
Collateral pursuant to this Section 15, such Pledged Collateral or the part
thereof to be sold shall not be effectively registered under the Securities Act
of 1933, as amended, and as from time to time in effect, and the rules and
regulations thereunder (the "Securities Act"), the Administrative Agent is
hereby expressly authorized to sell such Pledged Collateral or such part thereof
by private sale in such manner
243
and under such circumstances as the Administrative Agent may deem necessary or
advisable in order that such sale may legally be effected without such
registration. Without limiting the generality of the foregoing, in any such
event the Administrative Agent, in compliance with applicable securities laws,
(a) may proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Collateral or such part
thereof shall have been filed under such Securities Act, (b) may approach and
negotiate with a restricted number of potential purchasers to effect such sale
and (c) may restrict such sale to purchasers as to their number, nature of
business and investment intention including without limitation to purchasers
each of whom will represent and agree to the satisfaction of the Administrative
Agent that such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Pledged Collateral, or part
thereof, it being understood that the Administrative Agent may cause or require
each Grantor, and each Grantor hereby agrees upon the written request of the
Administrative Agent, to cause (i) a legend or legends to be placed on the
certificates to be delivered to such purchasers to the effect that the Pledged
Collateral represented thereby have not been registered under the Securities Act
and setting forth or referring to restrictions on the transferability of such
securities; and (ii) the issuance of stop transfer instructions to such Issuer's
transfer agent, if any, with respect to the Pledged Collateral, or, if such
Issuer transfers its own securities, a notation in the appropriate records of
such Issuer. In the event of any such sale, each Grantor does hereby consent and
agree that the Administrative Agent shall incur no responsibility or liability
for selling all or any part of the Pledged Collateral at a price which the
Administrative Agent may deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were public and deferred until after registration as
aforesaid.
SECTION 16. INDEMNITY AND EXPENSES.
(a) Each Grantor, jointly and severally, agrees to indemnify
the Administrative Agent from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
directly arising from the Administrative Agent's own gross negligence, willful
misconduct or bad faith.
(b) The Grantors will upon demand pay to the Administrative
Agent the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents, which the
Administrative Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Administrative Agent
hereunder or (iv) the failure by any of the Grantors to perform or observe any
of the provisions hereof.
(c) The Grantors assume all responsibility and liability
arising from the use of the Trademarks, Patents and Copyrights, and the Grantors
hereby, jointly and severally, indemnify and hold the Administrative Agent
harmless from and against any claim, suit, loss, damage or expense (including
reasonable attorneys' fees) arising out of any alleged defect in any product
manufactured, promoted or sold by any of the Grantors in connection with any
Trademark or out of the manufacture, promotion, labeling, sale or advertisement
of any such product by any of the Grantors except as the same may have resulted
from the gross negligence, willful misconduct or bad faith of the Administrative
Agent.
(d) Each of the Grantors agree that the Administrative Agent
does not assume, and shall have no responsibility for, the payment of any sums
due or to become due under any agreement or contract included in the Collateral
or the performance of any obligations to be performed under or with respect to
any such agreement or contract by any of the Grantors, and except as the same
may have resulted from the gross negligence or willful misconduct of the
Administrative Agent, each of the Grantors hereby jointly and
244
severally agree to indemnify and hold the Administrative Agent harmless with
respect to any and all claims by any person relating thereto.
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of the
Administrative Agent and security interests hereunder, and all obligations of
each of the Grantors hereunder, shall be absolute and unconditional,
irrespective of any circumstance which might constitute a defense available to,
or a discharge of, any guarantor or other obligor in respect of the Obligations.
SECTION 18. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement, nor any consent to any departure by any of the Grantors
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the party against whom enforcement is sought, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 19. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and shall be given in accordance with
the applicable provisions of the Credit Agreement.
SECTION 20. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall (i) remain in full
force and effect until payment in full of the Obligations, (ii) be binding upon
each of the Grantors, their successors and assigns and (iii) inure, together
with the rights and remedies of the Administrative Agent hereunder, to the
benefit of the Administrative Agent and each of the Lenders and their respective
successors, transferees and assigns. Upon the payment in full of the
Obligations, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Grantors subject to any existing liens,
security interests or encumbrances on such Collateral. Upon any such
termination, the Administrative Agent will, at the Grantor's expense, execute
and deliver to the Grantors such documents as the Grantors shall reasonably
request to evidence such termination.
SECTION 21. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York and by Federal law (including,
without limitation, the Bankruptcy Code) to the extent the same has pre-empted
the law of the State of New York or such other jurisdiction.
SECTION 22. INCONSISTENCY. In the event of any conflict or
inconsistency between the terms of this Agreement and the terms of the Credit
Agreement, the terms of the Credit Agreement shall control.
SECTION 23. HEADINGS. 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.
245
IN WITNESS WHEREOF, each of the Grantors and the Administrative Agent
have caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above written.
GRANTORS:
USG CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
UNITED STATES GYPSUM COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
USG INTERIORS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
L&W SUPPLY CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
USG INTERIORS INTERNATIONAL, INC
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
LA MIRADA PRODUCTS CO., INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
246
BEADEX MANUFACTURING, LLC
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
B-R PIPELINE COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
USG INDUSTRIES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
USG PIPELINE COMPANY
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
STOCKING SPECIALISTS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
USG FOREIGN INVESTMENTS, LTD.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
247
ADMINISTRATIVE AGENT:
THE CHASE MANHATTAN BANK
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
248
EXHIBIT A
FORM OF BLOCKED ACCOUNT AGREEMENT
AGREEMENT dated as of __________, 2001, by and among
_____________________________ ("Company"), The Chase Manhattan Bank ("Lender")
and _________________ ("Depositary").
The parties hereto refer to Account No. _______________ in the name of
Company maintained at Depositary (the "Account") and hereby agree as follows:
1. Company and Lender notify Depositary that by separate agreement
Company has granted Lender a security interest in the Account and all funds on
deposit from time to time therein. Depositary acknowledges being so notified.
2. Prior to the Effective Time (as defined below) Depositary shall
honor all withdrawal, payment, transfer or other fund disposition or other
instructions (collectively, "instructions") received from the Company (but not
those from Lender) concerning the Account. On and after the Effective Time (and
without Company's consent), Depositary shall honor all instructions received
from Lender (but not those from Company) concerning the Account and Company
shall have no right or ability to access or withdraw or transfer funds from the
Account.
For the purposes hereof, the "Effective Time" shall be the opening of business
on the business day next succeeding the business day on which a notice
purporting to be signed by Lender in substantially the same form as Exhibit A,
attached hereto, with a copy of this Agreement attached thereto (a "Shifting
Control Notice"), is delivered to the Depositary. A "business day" is any day
other than a Saturday, Sunday or other day on which Depositary is or is
authorized or required by law to be closed.
Notwithstanding the foregoing: (i) all transactions involving or resulting in a
transaction involving the Account duly commenced by Depositary or any affiliate
prior to the Effective Time and so consummated or processed thereafter shall be
deemed not to constitute a violation of this Agreement; and (ii) Depositary
and/or any affiliate may (at its discretion and without any obligation to do so)
commence honoring solely Lender's instructions concerning the Account at any
time or from time to time after it becomes aware that Lender has sent to it a
Shifting Control Notice but prior to the Effective Time therefor (including
without limitation halting, reversing or redirecting any transaction referred to
in clause (i) above) with no liability whatsoever to Company or any other party
for doing so.
3. This Agreement supplements, rather than replaces, Depositary's
deposit account agreement, terms and conditions and other standard documentation
in effect from time to time with respect to the Account or services provided in
connection with the Account (the "Account Documentation"), which Account
Documentation will continue to apply to the Account and such services, and the
respective rights, powers, duties,
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obligations, liabilities and responsibilities of the parties thereto and hereto,
to the extent not expressly conflicting with the provisions of this Agreement
(however, in the event of any such conflict, the provisions of this Agreement
shall control). Prior to issuing any instructions on or after the Effective
Time, Lender shall provide Depositary with such Account Documentation as
Depositary may reasonably request to establish the identity and authority of the
individuals issuing instructions on behalf of Lender.
4. Depositary agrees not to exercise or claim any right of offset,
banker's lien or other like right against the Account for so long as this
Agreement is in effect except with respect to (i) returned or charged-back
items, (ii) reversals or cancellations of payment orders and other electronic
fund transfers, (iii) Depositary's charges, fees and expenses with respect to
the Account or the services provided hereunder or (iv) overdrafts in the
Account.
5. Notwithstanding anything to the contrary in this Agreement: (i)
Depositary shall have only the duties and responsibilities with respect to the
matters set forth herein as is expressly set forth in writing herein and shall
not be deemed to be an agent, bailee or fiduciary for any party hereto; (ii)
Depositary shall be fully protected in acting or refraining from acting in good
faith without investigation on any notice (including without limitation a
Shifting Control Notice), instruction or request purportedly furnished to it by
Company or Lender in accordance with the terms hereof, in which case the parties
hereto agree that Depositary has no duty to make any further inquiry whatsoever;
(iii) it is hereby acknowledged and agreed that Depositary has no knowledge of
(and is not required to know) the terms and provisions of the separate agreement
referred to in paragraph 1 above or any other related documentation or whether
any actions by Lender (including without limitation the sending of a Shifting
Control Notice), Company or any other person or entity are permitted or a breach
thereunder or consistent or inconsistent therewith, (iv) Depositary shall not be
liable to any party hereto or any other person for any action or failure to act
under or in connection with this Agreement except to the extent such conduct
constitutes its own willful misconduct or gross negligence (and to the maximum
extent permitted by law, shall under no circumstances be liable for any
incidental, indirect, special, consequential or punitive damages); and (v)
Depositary shall not be liable for losses or delays caused by force majeure,
interruption or malfunction of computer, transmission or communications
facilities, labor difficulties, court order or decree, the commencement of
bankruptcy or other similar proceedings or other matters beyond Depositary's
reasonable control.
6. Company hereby agrees to indemnify, defend and save harmless
Depositary against any loss, liability or expense (including reasonable fees and
disbursements of counsel who may be an employee of Depositary) (collectively,
"Covered Items") incurred in connection with this Agreement or the Account
(except to the extent due to Depositary's willful misconduct or gross
negligence) or any interpleader proceeding relating thereto or incurred at
Company's direction or instruction.
7. Depositary may terminate this Agreement (a) in its discretion upon
the sending of at least thirty (30) days' advance written notice to the other
parties hereto or (b) because of a
250
material breach by Company or Lender of any of the terms of this Agreement or
the Account Documentation, upon the sending of at least five (5) days advance
written notice to the other parties hereto. Any other termination or any
amendment or waiver of this Agreement shall be effected solely by an instrument
in writing executed by all the parties hereto. The provisions of paragraphs 5
and 6 above shall survive any such termination.
8. Company shall compensate Depositary for the opening and
administration of the Account and services provided hereunder in accordance with
Depositary's fee schedules from time to time in effect. Payment will be effected
by a direct debit to the Account.
9. This Agreement: (i) may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument; (ii) shall become effective
when counterparts hereof have been signed and delivered by the parties hereto;
and (iii) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. ALL PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THE ACCOUNT OR THIS AGREEMENT. All notices
under this Agreement shall be in writing and sent (including via facsimile
transmission) to the parties hereto at their respective addresses or fax numbers
set forth below (or to such other address or fax number as any such party shall
designate in writing to the other parties from time to time).
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
[NAME OF COMPANY] [NAME OF DEPOSITARY]
By: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
Address for
------------------------------ ------------------------------
Notices:
------------------------------ ------------------------------
------------------------------ ------------------------------
------------------------------ ------------------------------
Fax No.: Fax No.:
---------------------- ----------------------
THE CHASE MANHATTAN BANK
By:
------------------------------
Name:
Title:
Address
For Notices The Chase Manhattan Bank
[Address]
Attention: [Customer Service Officer] and
----------------
Fax No.: - -
------------------------
252
EXHIBIT A TO BLOCKED ACCOUNT AGREEMENT
[The Chase Manhattan Bank letterhead]
BLOCKED ACCOUNT AGREEMENT
SHIFTING CONTROL NOTICE
---------------, ----
[Name of Depositary]
[Address]
Attention: [Customer Service Officer] or
--------------
Re: Blocked Account Control Agreement dated as of _____________, 200_
(the "Agreement") by and among ______________, ____________,
and The Chase Manhattan Bank
Ladies and Gentlemen:
This constitutes a Shifting Control Notice as referred to in paragraph 2 of the
Agreement, a copy of which is attached hereto.
THE CHASE MANHATTAN BANK
By:
-----------------------------
Signature
-----------------------------
Name
-----------------------------
Title:
253
