EXECUTION COPY
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SECOND-LIEN COLLATERAL AGREEMENT
made by
PAPERWEIGHT DEVELOPMENT CORP.,
APPLETON PAPERS INC.,
and certain of its Subsidiaries
in favor of
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
Dated as of September 30, 2009
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TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS....................................................1
1.1. Definitions......................................................1
1.2. Other Definitional Provisions....................................4
SECTION 2. RESERVED.........................................................5
SECTION 3. GRANT OF SECURITY INTEREST.......................................5
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................7
4.1. Title; No Other Liens............................................7
4.2. Perfected Second Priority Liens..................................7
4.3. Jurisdiction of Organization; Chief Executive Office.............8
4.4. Inventory and Equipment..........................................8
4.5. Farm Products....................................................8
4.6. Investment Property..............................................8
4.7. Receivables......................................................8
4.8. Intellectual Property............................................8
SECTION 5. COVENANTS........................................................9
5.1. Delivery of Instruments, Certificated Securities and
Chattel Paper...................................................9
5.2. Maintenance of Perfected Security Interest; Further
Documentation...................................................9
5.3. Changes in Locations, Name, etc..................................9
5.4. Notices.........................................................10
5.5. Investment Property.............................................10
5.6. Receivables.....................................................10
5.7. Intellectual Property...........................................11
5.8. Commercial Tort Claims..........................................12
5.9. Deposit and Securities Accounts.................................13
5.10. Overriding Provisions with respect to Collateral................13
SECTION 6. REMEDIAL PROVISIONS.............................................13
6.1. Certain Matters Relating to Receivables.........................13
6.2. Communications with Obligors; Grantors Remain Liable............14
6.3. Pledged Notes...................................................14
6.4. Proceeds to be Turned Over to Collateral Agent..................15
6.5. Application of Proceeds.........................................15
6.6. Code and Other Remedies.........................................16
6.7. Reserved........................................................17
6.8. Deficiency......................................................17
SECTION 7. THE COLLATERAL AGENT............................................17
7.1. Collateral Agent's Appointment as Attorney-in-Fact, etc.........17
7.2. Duty of Collateral Agent........................................19
7.3. Filing of Financing Statements..................................19
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7.4. Authority of Collateral Agent...................................19
7.5. Collateral Agent................................................19
SECTION 8. MISCELLANEOUS...................................................23
8.1. Amendments in Writing...........................................23
8.2. Notices.........................................................23
8.3. No Waiver by Course of Conduct; Cumulative Remedies.............23
8.4. Enforcement Expenses; Indemnification...........................24
8.5. Successors and Assigns..........................................24
8.6. Set-Off.........................................................24
8.7. Counterparts....................................................25
8.8. Severability....................................................25
8.9. Section Headings................................................25
8.10. Integration.....................................................25
8.11. GOVERNING LAW...................................................25
8.12. Submission To Jurisdiction; Waivers.............................25
8.13. Acknowledgements................................................26
8.14. Additional Grantors.............................................26
8.15. Releases........................................................26
8.16. WAIVER OF JURY TRIAL............................................27
Annex I to Second-Lien Collateral Agreement...................................ii
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SECOND-LIEN COLLATERAL AGREEMENT, dated as of September 30, 2009, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the "Grantors"), in favor of U.S. Bank National
Association, as collateral agent (in such capacity and together with its
successors and assigns in such capacity, the "Collateral Agent") for the Secured
Parties (as defined below).
W I T N E S S E T H:
WHEREAS, Appleton Papers Inc., a Delaware corporation (the "Notes Issuer"),
Paperweight Development Corp., a Wisconsin corporation ("Holdings"), the
guarantors party thereto (together with Holdings, each a "Guarantor" and
collectively, the "Guarantors") and U.S. Bank National Association, as trustee
(in such capacity and together with its successors and assigns in such capacity,
the "Trustee"), have entered into an Indenture, dated as of September 30, 2009
(as amended, restated, supplemented and/or otherwise modified from time to time,
the "Indenture"), and pursuant thereto, the Notes Issuer is issuing, and the
Guarantors are guaranteeing, $161,766,000 in aggregate principal amount of
11.25% Second-Lien Notes due 2015 (together with all notes issued in exchange or
replacement therefor as provided in the Indenture, the "Notes");
WHEREAS, the Notes Issuer is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the Notes Issuer and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the issuance of the Notes;
WHEREAS, the Collateral Agent has agreed to act as agent for the benefit of
the Secured Parties in connection with the transactions contemplated by the
Indenture and this Agreement; and
WHEREAS, in order to induce the holders of the Notes to enter into the
Exchange Offer, the Grantors have agreed to grant a continuing security interest
in and to the Collateral (as defined below) in order to secure the prompt and
complete payment, observance and performance of, among other things, their
respective Obligations (as defined below);
NOW, THEREFORE, in consideration of the recitals made above and other good
and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS
1.1. Definitions. (a) Unless otherwise defined herein, terms defined in
the Indenture and used herein shall have the meanings given to them in the
Indenture, and the following terms are used herein as defined in the New York
UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Farm Products, General Intangibles, Instruments,
Inventory, Letter of Credit Rights and Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agreement": this Second-Lien Collateral Agreement, as the same may be
amended, restated, supplemented and/or otherwise modified from time to
time.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the Collateral
Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as licensor
or licensee (including, without limitation, those listed in Schedule 6),
granting any right under any Copyright, including, without limitation, the grant
of rights to manufacture, distribute, exploit and sell materials derived from
any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution. The Deposit Accounts of the Grantors as of the Closing Date are
listed on Schedule 8.
"Discharge of First-Lien Obligations": as defined in the Intercreditor
Agreement.
"First-Lien Collateral Agent": as defined in the Intercreditor Agreement.
"First-Lien Creditors": as defined in the Intercreditor Agreement.
"First-Lien Documents": as defined in the Intercreditor Agreement.
"First-Lien Obligations": as defined in the Intercreditor Agreement.
"First-Lien Obligations Termination Date": that date upon which the
Discharge of First-Lien Obligations shall have occurred.
"First-Lien Security Agreement": as defined in the Intercreditor Agreement.
"Fox River Security Agreement": means the Security Agreement, dated as of
November 9, 2001, among the Notes Issuer, Holdings and Arjo Xxxxxxx Appleton
p.l.c.
"Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to xxx at
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law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.
"Intercreditor Agreement": as defined in Section 3.
"Investment Property": the collective reference to (i) all "investment
property" as such term is defined in Section 9-102(a)(49) of the New York UCC
and (ii) whether or not constituting "investment property" as so defined in the
preceding clause (i), all Pledged Notes.
"Issuers": the collective reference to each issuer of any Investment
Property.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": the collective reference to the unpaid principal of and
interest and premium on the Notes and all other monetary obligations and
liabilities of the Grantors (including, without limitation, interest accruing at
the then applicable rate provided in the Second-Lien Note Documents after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any of the Grantors, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) to the Secured Parties, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, or in connection with, the Second-Lien Note Documents or any
other document made, delivered or given in connection with any of the foregoing,
in each case whether on account of principal, interest, reimbursement
obligations, premium, fees, indemnities, costs, expenses or otherwise and all
guaranties of the foregoing amounts.
"Patents": (i) all letters patent of the United States, any other country
or any political subdivision thereof, all reissues and extensions thereof and
all goodwill associated therewith, including, without limitation, any of the
foregoing referred to in Schedule 6, (ii) all applications for letters patent of
the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule 6, and (iii) all rights to obtain any reissues
or extensions of the foregoing.
"Patent License": all agreements, whether written or oral, providing for
the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
"Permitted Unperfected Account": with respect to any Grantor, any Deposit
Account or Securities Account of such Grantor that (a) contains a balance of
less than $250,000, (b) with respect to Deposit Accounts only, is used solely as
a payroll or employee benefit account, an operating expenses disbursement
account, a sub-concentration account that is zero-balanced on a daily basis to
another account or a fiduciary or trust account or (c) as to which the
Collateral Agent otherwise agrees that no control agreement need be obtained.
The Permitted Unperfected Accounts of the Grantors as of the Closing Date are so
indicated on Schedule 8.
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"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
"Proceeds": all "proceeds" as such term is defined in Section 9-102(a)(64)
of the New York UCC and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any Account).
"Second-Lien Note Documents": means, collectively, the Indenture, the
Notes, the Mortgages, this Agreement and each other agreement, document or
instrument to which the Trustee is or may become a party in its capacity as
Trustee, Collateral Agent, Paying Agent or Registrar, as each may be amended,
supplement or otherwise modified from time to time.
"Secured Parties": the collective reference to the Trustee, the Collateral
Agent and the Holders.
"Securities Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction. The Securities Accounts of the Grantors as of the
Closing Date are listed on Schedule 8.
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether 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 any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to in Schedule 6,
and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral, providing for
the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule 6.
1.2. Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. RESERVED
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Collateral Agent, and
hereby grants to the Collateral Agent, for the ratable benefit of the Secured
Parties, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all Letter-of-Credit Rights;
(m) all books and records pertaining to the Collateral;
(n) those certain Commercial Tort Claims of the Obligors set forth on
Schedule 7 attached hereto; and
(o) to the extent not otherwise included, all Proceeds, Supporting
Obligations and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing;
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provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in (I) any shares of Capital Stock of any Subsidiary of the Notes
Issuer or any other Grantor or other shares, stock certificates, options,
interests or rights of any nature whatsoever in respect of the Capital Stock of
any Subsidiary of the Notes Issuer or any other Grantor that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect or
(II) any property to the extent that (x) such grant of a security interest is
prohibited by any Requirements of Law, requires a consent not obtained of any
Governmental Authority pursuant to any such Requirement of Law or is prohibited
by, or constitutes a breach or default under, or results in the termination of
or requires any consent not obtained under, any contract, license, agreement,
instrument or other document evidencing or giving rise to such property or, in
the case of any Investment Property or Pledged Note, any applicable shareholder
or similar agreement, except to the extent that such Requirement of Law or the
applicable terms in such contract, license, agreement, instrument or other
document or shareholder or similar agreement providing for such prohibition,
breach, default or termination or requiring such consent is ineffective under
applicable law or (y) such property constitutes "Collateral" under and as
defined in the Fox River Security Agreement; provided, further, notwithstanding
anything to the contrary contained in this Section 3 or elsewhere in this
Agreement, no Grantor shall be required to perfect the security interests
granted by this Agreement in any Deposit Account or Securities Account except in
accordance with Section 5.9. The Collateral Agent agrees that it will not give
any instructions under any control agreement or withhold any withdrawal rights
with respect to funds or securities in any Deposit Account or Securities Account
subject thereto unless and until an Event of Default has occurred and is
continuing.
Notwithstanding anything to the contrary contained in this Section 3 or
elsewhere in this Agreement, each Grantor and the Collateral Agent (on behalf of
the Secured Parties) acknowledges and agrees that (x) the security interest
granted pursuant to this Agreement (including pursuant to this Section 3) to the
Collateral Agent for the benefit of the Secured Parties in the Collateral shall
be a junior priority Lien, fully junior, subordinated and subject to the
security interest granted to the First-Lien Collateral Agent for the benefit of
the First-Lien Creditors on the terms and conditions set forth in the First-Lien
Documents and the Intercreditor Agreement and all other rights and benefits
afforded hereunder to the Secured Parties are expressly subject to the terms and
conditions of the Intercreditor Agreement; and (y) the First-Lien Secured
Creditors' security interests in the Collateral constitute security interests
separate and apart (and of a different class and claim) from the Secured
Parties' security interests in the Collateral.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY
INTEREST GRANTED TO THE SECOND-LIEN COLLATERAL AGENT PURSUANT TO THIS AGREEMENT
AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE SECOND-LIEN COLLATERAL AGENT
HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED AS
OF SEPTEMBER 30, 2009 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED
FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE "INTERCREDITOR
AGREEMENT"), AMONG APPLETON PAPERS INC., PAPERWEIGHT DEVELOPMENT CORP., EACH
OTHER GRANTOR PARTY THERETO FROM TIME TO TIME, BANK OF AMERICA, N.A., AS
FIRST-LIEN COLLATERAL AGENT FOR THE
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BENEFIT OF THE LENDERS PARTY THERETO AND U.S. BANK NATIONAL ASSOCIATION, AS
SECOND-LIEN COLLATERAL AGENT AND CERTAIN OTHER PERSONS PARTY OR THAT MAY BECOME
PARTY THERETO FROM TIME TO TIME. 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 CONTROL.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Each Grantor hereby represents and warrants to the Collateral Agent and
each other Secured Party that:
4.1. Title; No Other Liens. Except for the security interest granted to the
Collateral Agent for the ratable benefit of the Secured Parties pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by the
Second-Lien Note Documents, such Grantor owns its Collateral in all material
respects free and clear of any and all Liens or claims of others. For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part of
its business, grant licenses to third parties to use Intellectual Property owned
or developed by a Grantor. For purposes of this Agreement and the other
Second-Lien Note Documents, such licensing activity shall not constitute a
"Lien" or a "claim" on such Intellectual Property. Each of the Collateral Agent
and each other Secured Party understands that any such licenses may be exclusive
to the applicable licensees, and such exclusivity provisions may limit the
ability of the Collateral Agent to utilize, sell, Lease or transfer the related
Intellectual Property or otherwise realize value from such Intellectual Property
pursuant hereto.
4.2. Perfected Second Priority Liens. Subject to the terms of the
Intercreditor Agreement, the security interests granted pursuant to this
Agreement (a) upon completion of the filings and other actions specified on
Schedule 3 (including obtaining "control" (within the meaning of the applicable
Uniform Commercial Code) of Deposit Accounts and Securities Accounts (other than
Permitted Unperfected Accounts), Investment Property and, to the extent
requested in writing by the Collateral Agent, Letter-of-Credit Rights (which, in
the case of all filings and other documents referred to on said Schedule, unless
otherwise noted, have been delivered to the Collateral Agent in completed and,
where applicable, duly executed form)) will constitute valid perfected security
interests (to the extent perfection of security interests therein may be
perfected by filing of UCC-1 financing statements and/or filings with the United
States Patent and Trademark Office and United States Copyright Office,
possession by the Collateral Agent of the respective Investment Property or
"control" of Deposit Accounts and Securities Accounts) in all of the Collateral
(excluding Letter-of-Credit Rights where written request has not been made by
the Collateral Agent) in favor of the Collateral Agent, for the ratable benefit
of the Secured Parties, as collateral security for such Grantor's Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor,
other than purchasers in the ordinary course of business, and (b) are prior to
all other Liens on the Collateral in existence on the date hereof except for
Liens permitted by the Second-Lien Note Documents and other Liens that have
priority over the Liens granted hereunder on the Collateral by operation of law.
Notwithstanding anything to the contrary contained above or elsewhere in this
Agreement, but subject to the terms of the Intercreditor Agreement, with respect
to Letter-of-Credit Rights where the relevant
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Grantor has been requested by the Collateral Agent to obtain "control" of same,
the respective Grantor shall have a reasonable period of time to comply with
such request and such "control" shall not be required if the respective Grantor
is unable to obtain any required consents for such "control" after using
commercially reasonable efforts to obtain same, and unless and until "control"
of the respective Letter-of-Credit Rights is obtained in accordance with the
above provisions of this Section 4.2 (including this sentence), there shall be
no violation of any representation or warranty or covenant contained in this
Agreement as a result thereof.
4.3. Jurisdiction of Organization; Chief Executive Office. On the date
hereof, such Grantor's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of such Grantor's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 4.
4.4. Inventory and Equipment. On the date hereof, the Inventory and the
Equipment (other than mobile goods), in each case except where the value thereof
at any one location does not exceed $250,000, are kept at the locations listed
on Schedule 5.
4.5. Farm Products. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
4.6. Investment Property. (a) Each of the Pledged Notes issued by a
Grantor constitutes the legal, valid and binding obligation of the obligor with
respect thereto, enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(b) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens in favor of, or claims of, any other Person, except the
security interest created by this Agreement, the other Second-Lien Note
Documents and the First-Lien Documents and as otherwise would not violate the
applicable requirements of the Indenture.
4.7. Receivables. (a) No amount, in excess of $250,000, payable to such
Grantor under or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Collateral
Agent.
(b) As of the date hereof, not more than ten percent (10%) of the
Receivables have a Governmental Authority as an obligor.
4.8. Intellectual Property. (a) Schedule 6 lists all Intellectual
Property registered in the United States and owned by such Grantor in its own
name on the date hereof.
(b) Except as set forth in Schedule 6, on the date hereof none of the
material Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
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SECTION 5. COVENANTS.
Each Grantor covenants and agrees with the Collateral Agent and the other
Secured Parties that, from and after the date of this Agreement until the
Obligations (other than contingent indemnification and contingent expense
reimbursement obligations) shall have been paid in full:
5.1. Delivery of Instruments, Certificated Securities and Chattel Paper.
If any amount, in excess of $250,000, payable under or in connection with any of
the Collateral shall be or become evidenced by any Instrument, Certificated
Securities or Chattel Paper, such Instrument, Certificated Securities or Chattel
Paper shall, subject to the terms of the Intercreditor Agreement, be promptly
delivered to the Collateral Agent, duly endorsed in a manner reasonably
satisfactory to the Collateral Agent, to be held as Collateral pursuant to this
Agreement.
5.2. Maintenance of Perfected Security Interest; Further Documentation.
Subject to the terms of the Intercreditor Agreement, (a) such Grantor shall
maintain the security interest created by this Agreement as a perfected security
interest (but only to the extent that such security interest can be perfected by
filing a filing a financing statements under the Uniform Commercial Code (or
other similar laws) or obtaining "control" (within the meaning of the applicable
Uniform Commercial Code) of Deposit Accounts (other than Permitted Unperfected
Accounts) or Investment Property) having at least the priority described in
Section 4.2 and shall defend such security interest against the claims and
demands of all Persons whomsoever (other than Persons with prior Liens permitted
under clause (b) of Section 4.2), subject to the rights of such Grantor under
the Second-Lien Note Documents to dispose of the Collateral.
(b) Such Grantor will furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the reasonable written
request of the Collateral Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) filing any financing or
continuation statements under the applicable Uniform Commercial Code (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby and (ii) in the case of Investment Property, Deposit
Accounts and Securities Accounts (other than Permitted Unperfected Accounts),
Letter-of-Credit Rights (but, in the case of such Letter-of-Credit Rights, only
after written request from the Collateral Agent and subject to the last sentence
of Section 4.2) and any other relevant Collateral, taking any actions necessary
to enable the Collateral Agent to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.
5.3. Changes in Locations, Name, etc. Such Grantor will not, except upon
15 days' prior written notice to the Collateral Agent and delivery to the
Collateral Agent of all additional
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financing statements and other documents reasonably requested by the Collateral
Agent to maintain the validity, perfection and priority of the security
interests provided for herein:
(i) change its jurisdiction of organization from that referred to in
Section 4.3 and Schedule 4; or
(ii) change its name.
5.4. Notices. Such Grantor will advise the Collateral Agent promptly, in
reasonable detail, of the occurrence of any event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.5. Investment Property.
(a) Subject to the terms of the Intercreditor Agreement, (i) if an Event
of Default has occurred and is continuing, any sums paid upon or in respect of
the Investment Property upon the liquidation or dissolution of, or as a
distribution of capital by, any Issuer shall be paid over to the Collateral
Agent to be held by it hereunder as additional collateral security for the
Obligations, and in case any property (if an Event of Default has occurred and
is continuing) or any Investment Property shall be distributed upon or with
respect to the Investment Property pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall, unless otherwise subject to a
perfected security interest in favor of the Collateral Agent, be delivered to
the Collateral Agent to be held by it hereunder as additional collateral
security for the Obligations; and (ii) if any sums of money or property so paid
or distributed in respect of the Investment Property shall be received by such
Grantor (when otherwise required to be paid or delivered over to the Collateral
Agent as set forth above), such Grantor shall, until such money or property is
paid or delivered to the Collateral Agent, hold such money or property in trust
for the Collateral Agent and the other Secured Parties, segregated from other
funds of such Grantor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Collateral Agent, such
Grantor will not (i) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property or Proceeds thereof
(except pursuant to a transaction permitted by the Indenture), (ii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Investment Property or Proceeds thereof, or
any interest therein, except for the security interests created by this
Agreement or otherwise permitted in the Indenture or (iii) enter into any
agreement or undertaking, other than as permitted under the Indenture,
restricting the right or ability of such Grantor or the Collateral Agent to
sell, assign or transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees
that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it and (ii) the terms of Section 6.3(c) shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 6.3(c) with respect to the Investment Property issued by it.
5.6. Receivables.
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(a) Other than in the ordinary course of business, such Grantor will not,
with respect to any material portion of the Receivables, (i) grant any extension
of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could materially adversely affect the
value thereof.
(b) Such Grantor will deliver to the Collateral Agent a copy of each
material demand, notice or document received by it that challenges the validity
or enforceability of more than five percent (5%) of the aggregate amount of the
then outstanding Receivables.
(c) Subject to the terms of the Intercreditor Agreement, if, as of any
fiscal quarter end occurring after the Closing Date, the Grantors determine that
more than ten percent (10%) of Receivables (in the aggregate for all Grantors)
have a Governmental Authority as an obligor, then the Grantors shall so notify
the Collateral Agent (such notice to be given substantially concurrently with
the delivery of the quarterly financial statements required pursuant to the
Indenture) and, upon the reasonable request of the Collateral Agent, promptly
take such steps as may be necessary to comply with any applicable federal
assignment of claims laws and other comparable laws.
5.7. Intellectual Property.
(a) Except as would not have a material adverse effect on the aggregate
value of the Collateral, such Grantor will (i) continue to use each Trademark on
each and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services
offered under such Trademark, (iii) use such Trademark with the appropriate
notice of registration and all other notices and legends required by applicable
Requirements of Law, (iv) not adopt or use any xxxx which is confusingly similar
or a colorable imitation of such Trademark unless the Collateral Agent, for the
ratable benefit of the Secured Parties, shall obtain a perfected security
interest in such xxxx pursuant to this Agreement, and (v) not do any act or
knowingly omit to do any act whereby such Trademark may become invalidated or
impaired in any way.
(b) Except as would not have a material adverse effect on the aggregate
value of the Collateral, such Grantor will not do any act, or omit to do any
act, whereby any Patent may become forfeited, abandoned or dedicated to the
public.
(c) Except as would not have a material adverse effect on the aggregate
value of the Collateral, such Grantor (i) will employ each Copyright and
(ii) will not do any act or knowingly omit to do any act whereby any Copyright
may become invalidated or otherwise impaired. Such Grantor will not do any act
whereby any Copyright may fall into the public domain, to the extent such
Copyright is material to the aggregate value of the Collateral.
(d) Except as would not have a material adverse effect on the aggregate
value of the Collateral, such Grantor will not do any act that knowingly uses
any Intellectual Property to infringe the intellectual property rights of any
other Person.
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(e) Such Grantor will promptly notify the Collateral Agent if it knows,
or has reason to know, that any application or registration relating to any
Intellectual Property may become forfeited, abandoned or dedicated to the
public, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any Intellectual Property or such
Grantor's right to register the same or to own and maintain the same, in each
case to the extent such Intellectual Property is material to the aggregate value
of the Collateral.
(f) Whenever such Grantor, either by itself or through the Collateral
Agent, employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with 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, such Grantor
shall report such filing to the Collateral Agent in accordance with the
Indenture. Upon reasonable request of the Collateral Agent, such Grantor shall
execute and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Collateral Agent may request to evidence the
Collateral Agent' and the other Secured Parties' security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps, including,
without limitation, in any proceeding before 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, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability, in each case to the extent such Intellectual Property is
material to the aggregate value of the Collateral.
(h) In the event that any Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) promptly notify the
Collateral Agent after it learns thereof, in each case to the extent such
Intellectual Property is material to the aggregate value of the Collateral.
5.8. Commercial Tort Claims. Subject to the terms of the Intercreditor
Agreement, each Grantor shall (i) forward to the Collateral Agent written
notification (such notice to be given substantially concurrently with the
delivery of the quarterly financial statements required pursuant to the
Indenture) of any and all Commercial Tort Claims where the expected recovery
could reasonably be expected to be in an amount in excess of $2,500,000,
including, but not limited to, any and all actions, suits and proceedings before
any court or Governmental Authority by or affecting such Grantor or any of its
Subsidiaries and (ii) if and to the extent requested by the Collateral Agent in
writing, execute and deliver such statements, documents and notices and do and
cause to be done all such things as may be required by the Collateral Agent, or
required by law, including all things which may from time to time be necessary
under the Uniform
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Commercial Code to fully create, preserve, perfect and protect
the priority of the Collateral Agent's security interest in any such Commercial
Tort Claims.
5.9. Deposit and Securities Accounts. Each Grantor shall execute and
deliver to the Collateral Agent the account control agreements for each Deposit
Account and Securities Account (other than Permitted Unperfected Accounts) that
are subject to a account control agreement in favor of the First-Lien Collateral
Agent within 120 days after the Closing Date, or such longer period as is
reasonably acceptable to the Collateral Agent. In addition, the Grantors shall
ensure that any Deposit Account or Securities Account that, after the Closing
Date, first becomes subject to an account control agreement in favor of the
Collateral Agent is subject to the terms of the same account control agreement
or a separate account control agreement in substantially the same form as the
agreement entered into with the First-Lien Collateral Agent.
5.10. Overriding Provisions with respect to Collateral. Notwithstanding
anything to the contrary contained above in this Section 5 or elsewhere in this
Agreement or any other Second-Lien Note Document, to the extent the provisions
of this Agreement (or any other Second-Lien Note Documents) require the delivery
of, or control over, Collateral to be granted to the Collateral Agent at any
time prior to the First-Lien Obligations Termination Date, then delivery of such
Collateral (or control with respect thereto) shall instead be granted to the
First-Lien Collateral Agent, as provided by the terms of the Intercreditor
Agreement, to be held in accordance with the Intercreditor Agreement.
Furthermore, at all times prior to the First-Lien Obligations Termination Date,
the Collateral Agent is authorized by the parties hereto to effect transfers of
Collateral at any time in its possession (and any "control" or similar
agreements with respect to Collateral) to the First-Lien Collateral Agent.
SECTION 6. REMEDIAL PROVISIONS
6.1. Certain Matters Relating to Receivables.
(a) If an Event of Default shall have occurred and be continuing, (x) the
Collateral Agent shall have the right to make test verifications of the
Receivables in any reasonable manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance and
information as the Collateral Agent may require in connection with such test
verifications and (y) upon the Collateral Agent's reasonable request and at the
expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others satisfactory to the Collateral Agent to furnish to the
Collateral Agent reports showing reconciliations, aging and test verifications
of, and trial balances for, the Receivables.
(b) Subject to the terms of the Intercreditor Agreement, the Collateral
Agent hereby authorizes each Grantor to collect such Grantor's Receivables and
the Collateral Agent may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. Subject to the
terms of the Intercreditor Agreement, if required by the Collateral Agent at any
time after the occurrence and during the continuance of an Event of Default, any
payments of Receivables, when collected by any Grantor, (i) shall be forthwith
(and, in any event, within two Business Days) deposited by such Grantor in the
exact form received, duly endorsed by such Grantor to the Collateral Agent if
required, in a Collateral Account maintained under the sole dominion and control
of the Collateral Agent, subject to
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withdrawal by the Collateral Agent for the account of the other Secured Parties
only as provided in Section 6.5, and (ii) until so turned over, shall be held by
such Grantor in trust for the Collateral Agent and the other Secured Parties,
segregated from other funds of such Grantor.
(c) Subject to the terms of the Intercreditor Agreement, if an Event of
Default shall have occurred and be continuing, at the Collateral Agent's
reasonable request, (i) each Grantor shall deliver to the Collateral Agent all
original (to the extent such Grantor has original copies or otherwise, copies)
and other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including, without limitation, all original
(to the extent such Grantor has original copies or otherwise, copies) orders,
invoices and shipping receipts and (ii) the applicable Grantor shall take such
steps as may be necessary to comply with any applicable federal assignment of
claims laws and other comparable laws.
6.2. Communications with Obligors; Grantors Remain Liable.
(a) The Collateral Agent in its own name or in the name of others may at
any time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables and parties to the contracts to
verify with them to the Collateral Agent's satisfaction the existence, amount
and terms of any Receivables or contracts.
(b) Subject to the terms of the Intercreditor Agreement, upon the request
of the Collateral Agent at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify obligors on the
Receivables and parties to the contracts that the Receivables and the contracts
have been assigned to the Collateral Agent for the ratable benefit of the
Secured Parties and that payments in respect thereof shall be made directly to
the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of the Receivables and contracts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Collateral Agent nor any other Secured Party shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) or contract by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any other Secured Party of any payment
relating thereto, nor shall the Collateral Agent or any Secured Party be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto) or
contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
6.3. Pledged Notes.
(a) Unless an Event of Default shall have occurred and be continuing and
the Collateral Agent shall have given notice to the relevant Grantor of the
Collateral Agent's intent to exercise its corresponding rights pursuant to
Section 6.3(b), each Grantor shall be permitted to receive all payments made in
respect of the Pledged Notes and to exercise all voting and
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corporate or other organizational rights with respect to the Investment
Property; provided, however, that no vote shall be cast or corporate or other
organizational right exercised or other action taken which would materially
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Intercreditor Agreement, the Indenture, this
Agreement or any other Second-Lien Note Document.
(b) Subject to the terms of the Intercreditor Agreement, if an Event of
Default shall occur and be continuing and the Collateral Agent shall give notice
of its intent to exercise such rights to the relevant Grantor or Grantors, the
Collateral Agent shall have the right to receive any and all payments or other
Proceeds paid in respect of the Investment Property and make application thereof
to the Obligations in the order set forth in Section 6.5.
(c) Subject to the terms of the Intercreditor Agreement, each Grantor
hereby authorizes and instructs each Issuer of any Investment Property pledged
by such Grantor hereunder to (i) comply with any instruction received by it from
the Collateral Agent in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) unless otherwise expressly permitted hereby, pay any payments with
respect to the Investment Property directly to the Collateral Agent.
6.4. Proceeds to be Turned Over to Collateral Agent. In addition to the
rights of the Collateral Agent and the other Secured Parties specified in
Section 6.1 with respect to payments of Receivables, subject to the terms of the
Intercreditor Agreement, if an Event of Default shall occur and be continuing,
all Proceeds received by any Grantor consisting of cash, checks and other
similar near-cash items shall be held by such Grantor in trust for the
Collateral Agent and the other Secured Parties, segregated from other funds of
such Grantor, and shall, upon the request of the Collateral Agent, be turned
over to the Collateral Agent forthwith upon receipt by such Grantor in the exact
form received by such Grantor (duly endorsed by such Grantor to the Collateral
Agent, if required). All Proceeds received by the Collateral Agent hereunder
shall be held by the Collateral Agent in a Collateral Account maintained under
its sole dominion and control. All Proceeds while held by the Collateral Agent
in a Collateral Account (or by such Grantor in trust for the Collateral Agent
and the other Secured Parties) shall continue to be held as collateral security
for all the Obligations and shall not constitute payment thereof until applied
as provided in Section 6.5.
6.5. Application of Proceeds. Subject to the terms of the Intercreditor
Agreement, if an Event of Default shall have occurred and be continuing, at any
time at the Collateral Agent's election, the Collateral Agent shall apply all or
any part of Proceeds constituting Collateral, whether or not held in any
Collateral Account, in payment of the Obligations in the following order:
(a) First, to pay incurred and unpaid fees and expenses of the
Collateral Agent and the Trustee under the Second-Lien Note Documents
including in connection with or incidental to the care or safekeeping of
any of the Collateral or in any way relating to the Collateral or the
rights of the Collateral Agent, the Holders or the Trustee hereunder,
15
including, without limitation, reasonable attorneys' fees and disbursements
and indemnification amounts;
(b) Second, to the Collateral Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Secured Parties according to the
amounts of the Obligations then due and owing and remaining unpaid to the
Secured Parties;
(c) Third, any balance of such Proceeds remaining after the
Obligations shall have been paid in full shall be paid over to the Notes
Issuer or to whomsoever may be lawfully entitled to receive the same.
To the extent permitted by applicable law, each Grantor waives all claims,
damages and demands it may acquire against the Collateral Agent, the Holders or
the Trustee arising out of the exercise by them of any rights hereunder.
6.6. Code and Other Remedies. Subject to the terms of the Intercreditor
Agreement, if an Event of Default shall occur and be continuing, the Collateral
Agent, on behalf of the Secured Parties, may exercise, in addition to all other
rights and remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the New York UCC or any other
applicable law. Without limiting the generality of the foregoing, subject to the
terms of the Intercreditor Agreement, the Collateral Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Collateral Agent or any other Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released to the extent permitted by law. Each Grantor further
agrees, at the Collateral Agent's request, to assemble the Collateral and make
it available to the Collateral Agent at places which the Collateral Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Collateral Agent shall apply the net proceeds of any action taken by it pursuant
to this Section 6.6, after deducting all reasonable costs and expenses of every
kind incurred in connection therewith or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Collateral Agent and the other Secured Parties hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in the order set forth in Section 6.5
hereof, and only after such application and after the payment by the Collateral
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-615(a)(3) of the New York UCC,
16
need the Collateral Agent account for the surplus, if any, to any Grantor. To
the extent permitted by applicable law, each Grantor waives all claims, damages
and demands it may acquire against the Collateral Agent or any other Secured
Party arising out of the exercise by them of any rights hereunder, except for
gross negligence or willful misconduct on the part of the Collateral Agent or
such other Secured Party. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least 20 days before such sale or other disposition.
6.7. Reserved.
6.8. Deficiency. Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Obligations and the reasonable fees and disbursements of any
attorneys employed by the Collateral Agent or any other Secured Party to collect
such deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1. Collateral Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Collateral Agent the power and right,
on behalf of such Grantor, without notice to or assent by such Grantor, to do
any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Receivable or contract or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Collateral Agent may reasonably request to evidence the
Collateral Agent's and the other Secured Parties' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
17
(iv) execute, in connection with any sale provided for in Section
6.6, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) 1. direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; 2. ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; 3. sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral;
4. commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any
Collateral; 5. defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; 6. settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Collateral Agent may deem appropriate;
7. assign any Copyright, Patent or Trademark (along with the goodwill of
the business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Collateral Agent shall in its sole discretion
determine; and 8. generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Collateral Agent were the absolute owner thereof
for all purposes, and do, at the Collateral Agent's option and such
Grantor's expense, at any time, or from time to time, all acts and things
which the Collateral Agent deems necessary to protect, preserve or realize
upon the Collateral and the Collateral Agent's and the other Secured
Parties' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1 to the contrary notwithstanding, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 7.1 unless an Event of Default shall have
occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The reasonable out-of-pocket expenses of the Collateral Agent
incurred in connection with actions undertaken as provided in this Section 7.1,
together with interest thereon payable on past due Notes under the Indenture,
from the date of payment by the Collateral Agent to the date reimbursed by the
relevant Grantor, shall be payable by such Grantor to the Collateral Agent on
demand.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
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7.2. Duty of Collateral Agent. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the New York UCC or otherwise, shall
be to deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral Agent, any other Secured
Party nor any of their respective officers, directors, employees or agents shall
be liable for failure to demand, collect or realize upon any 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 any other
Person or to take any other action whatsoever with regard to the Collateral or
any part thereof. The powers conferred on the Collateral Agent and the other
Secured Parties hereunder are solely to protect the Collateral Agent's and the
other Secured Parties' interests in the Collateral and shall not impose any duty
upon the Collateral Agent or any other Secured Party to exercise any such
powers. The Collateral Agent and the other 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 shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct. The
Grantors and each Secured Party, by acceptance of the benefits hereof, agrees
that references to the Trustee in Article XIII of the Indenture shall be
understood to include the Collateral Agent when acting under this Agreement and
the other Collateral Agreements, and that said Sections are hereby incorporated
herein in their entirety, mutatis mutandis.
7.3. Filing of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Collateral Agent to file or record financing statements
and other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Collateral Agent determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. Each Grantor authorizes
the Collateral Agent to use the collateral description "all personal property"
in any such financing statements. Each Grantor hereby ratifies and authorizes
the filing by the Collateral Agent of any financing statement with respect to
the Collateral made prior to the date hereof.
7.4. Authority of Collateral Agent. Each Grantor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the other
Secured Parties, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
7.5. Collateral Agent.
Notwithstanding anything to the contrary herein, the following provisions
shall govern the Collateral Agent's rights, powers, obligations and duties under
this Security Agreement:
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(a) Each of the Holders and the Trustee hereby designates and appoints
U.S. Bank National Association to act as Collateral Agent under this Security
Agreement and the other Note Documents to which it is a party, and hereby
authorizes the Collateral Agent to take such actions on its behalf under the
provisions of this Security Agreement and such other Note Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of this Security Agreement and such other Note
Documents. Notwithstanding any provision to the contrary elsewhere in this
Security Agreement or any other Note Documents the Collateral Agent shall not
have any duties or responsibilities, except those expressly set forth in this
Security Agreement or such other Note Documents or any fiduciary relationship
with any parties to the First-Lien Documents or Second-Lien Note Documents, and
no implied covenants, functions or responsibilities shall be read into this
Security Agreement or otherwise exist against Collateral Agent.
(b) In no event shall the Collateral Agent have any obligation to inquire
or investigate as to the correctness, veracity, or content of any instruction
received from any other Note Documents. In no event shall the Collateral Agent
have any liability in respect of any such instruction received by it and relied
on with respect to any action or omission taken pursuant thereto.
(c) With respect to the Collateral Agent's duties under this Security
Agreement or any of the Note Documents, the Collateral Agent may act through its
attorneys, accountants, experts and such other professionals as the Collateral
Agent deems necessary, advisable or appropriate and shall not be responsible for
the misconduct or negligence of any attorney, accountant, expert or other such
professional appointed with due care.
(d) Neither the Collateral Agent nor any of its experts, officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it under or
in connection with this Security Agreement or any of the Note Documents (except
for its gross negligence or willful misconduct), or (ii) responsible in any
manner for any recitals, statements, representations or warranties (other than
its own recitals, statements, representations or warranties) made in this
Security Agreement or any of the other Note Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Collateral Agent under or in connection with, this Security Agreement or
any of the Note Documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Security Agreement or any of
the Note Documents or for any failure of the Grantors or any other Person to
perform their obligations hereunder and thereunder. The Collateral Agent shall
not be under any obligation to any Person to ascertain or to inquire as to
(i) the observance or performance of any of the agreements contained in, or
conditions of, this Security Agreement or any of the Note Documents or to
inspect the properties, books or records of the Grantors, (ii) whether or not
any representation or warranty made by any Person in connection with this
Security Agreement or any Note Documents is true, (iii) the performance by any
Person of its obligations under this Security Agreement or any of the Note
Documents or (iv) the breach of or default by any Person of its obligations
under this Security Agreement or any of the Note Documents.
(e) The Collateral Agent shall not be bound to (i) account to any Person
for any sum or the profit element of any sum received for its own account;
(ii) disclose to any other Person
20
any information relating to the Person if such disclosure would, or might,
constitute a breach of any law or regulation or be otherwise actionable at the
suit of any Person; (iii) be under any fiduciary duties or obligations other
than those for which express provision is made in this Security Agreement or in
any of the other Second Priority Debt Documents to which it is a party; or
(iv) be required to take any action that it reasonably believes, based on
advice of counsel, is in conflict with any applicable law, this Security
Agreement or any of the other Second Priority Debt Documents, or any order of
any court or administrative agency;
(f) The Collateral Agent shall be authorized to but shall not be
responsible for filing any financing or continuation statements or recording any
documents or instruments in any public office at any time or times or otherwise
perfecting or monitoring or maintaining the perfection of any security interest
in the Collateral. It is expressly agreed, to the maximum extent permitted by
applicable law, that the Collateral Agent shall have no responsibility for
(i) taking any necessary steps to preserve rights against any Person with
respect to any Collateral or (ii) taking any action to protect against any
diminution in value of the Collateral, but, in each case (A) subject to the
requirement that the Collateral Agent may not act or omit to take any action if
such act or omission would constitute gross negligence or willful misconduct and
(B) the Collateral Agent may do so and all expenses reasonably incurred in
connection therewith shall be part of the Secured Obligations.
(g) The Collateral Agent shall not be liable or responsible for any
loss or diminution in the value of any of the Collateral, by reason of the act
or omission of any carrier, forwarding agency or other agent or bailee selected
by the Collateral Agent in good faith, except to the extent of the Collateral
Agent's gross negligence or willful misconduct.
(h) The Collateral Agent shall not be responsible for, nor incur any
liability with respect to, (i) the existence, genuineness or value of any of the
Collateral or for the validity, perfection, priority or enforceability of the
security interest in any of the Collateral, whether impaired by operation of law
or by reason of any action or omission to act on its part under this Security
Agreement or any of the other Note Documents, except to the extent such action
or omission constitutes gross negligence or willful misconduct on the part of
the Collateral Agent, (ii) the validity or sufficiency of the Collateral or any
agreement or assignment contained therein, (iii) the validity of the title of
the Grantors to the Collateral, (iv) insuring the Collateral or (v) the payment
of taxes, charges or assessments upon the Collateral or otherwise as to the
maintenance of the Collateral.
(i) Notwithstanding anything in this Security Agreement or any of the
Note Documents to the contrary, (i) in no event shall the Collateral Agent or
any officer, director, employee, representative or agent of the Collateral Agent
be liable under or in connection with this Security Agreement or any of the Note
Documents for indirect, special, incidental, punitive or consequential losses or
damages of any kind whatsoever, including but not limited to lost profits or
loss of opportunity, whether or not foreseeable, even if the Collateral Agent
has been advised of the possibility thereof and regardless of the form of action
in which such damages are sought; and (ii) the Collateral Agent shall be
afforded all of the rights, powers, immunities and indemnities set forth in this
Security Agreement in all of the other Note Documents to which it is a signatory
as if such rights, powers, immunities and indemnities were specifically set out
in
21
each such Note Documents. In no event shall the Collateral Agent be obligated
to invest any amounts received by it hereunder.
(j) The Collateral Agent shall be entitled conclusively to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
request, direction, certificate, notice, consent, affidavit, letter, cablegram,
telegram, telecopy, email, telex or teletype message, statement, order or other
document or conversation believed by it in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and/or
upon advice and/or statements of legal counsel, independent accountants and
other experts selected by the Collateral Agent and need not investigate any fact
or matter stated in any such document. Any such statement of legal counsel shall
be full and complete authorization and protection in respect of any action taken
or suffered by it hereunder in accordance therewith. The Collateral Agent shall
be fully justified in failing or refusing to take any action under this Security
Agreement or any of the other Note Documents (i) if such action would, in the
reasonable opinion of the Collateral Agent (which may be based on the opinion of
legal counsel), be contrary to applicable law or any of the Note Documents,
(ii) if such action is not provided for in this Security Agreement or any
of the other Note Documents, (iii) if, in connection with the taking of any such
action hereunder or under any of the Note Documents that would constitute an
exercise of remedies hereunder or under any of the Note Documents it shall not
first be indemnified to its satisfaction by the Holders against any and all risk
of nonpayment, liability and expense that may be incurred by it, its agents or
its counsel by reason of taking or continuing to take any such action, or (iv)
if, notwithstanding anything to the contrary contained in this Security
Agreement, in connection with the taking of any such action that would
constitute a payment due under any agreement or document, it shall not first
have received from the Holders or the Grantors funds equal to the amount
payable. The Collateral Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Security Agreement or any of the other
Note Documents in accordance with a request of the requisite percentage of
Holders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the other Holders and the Trustee.
(k) The Collateral Agent shall not be deemed to have actual,
constructive, direct or indirect knowledge or notice of the occurrence of any
Default unless and until the Collateral Agent has received a written notice or a
certificate from the Grantors stating that a Default has occurred. The
Collateral Agent shall have no obligation whatsoever either prior to or after
receiving such notice or certificate to inquire whether a Default has in fact
occurred and shall be entitled to rely conclusively, and shall be fully
protected in so relying, on any notice or certificate so furnished to it. No
provision of this Security Agreement, the Intercreditor Agreement or any of the
Note Documents shall require the Collateral Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties under this Security Agreement, any of the other Note Documents or the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability including an advance of moneys necessary to perform work or to take
the action requested is not reasonably assured to it, the Collateral Agent may
decline to act unless it receives indemnity satisfactory to it in its sole
discretion, including an advance of moneys necessary to take the action
requested. The Collateral Agent shall be under no obligation or duty to take any
action under this Security Agreement or any of the other Note Documents or
otherwise if taking such action (i) would subject the Collateral Agent to a tax
in any jurisdiction
22
where it is not then subject to a tax or (ii) would require the
Collateral Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
(l) Any corporation into which the Collateral Agent may be merged,
or with which it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Collateral Agent shall be a party, shall
become a Collateral Agent under this Security Agreement without the execution or
filing of any paper or any further act on the part of the parties hereto except
for written notice to the other parties hereto.
(m) The Collateral Agent may resign as Collateral Agent at any time upon
written notice to the Holders, Trustee and the Grantors and may be removed at
any time with or without cause by the Requisite Secured Parties, with any such
resignation or removal to become effective only upon the appointment of a
successor Collateral Agent under this Section. If the Collateral Agent shall
provide notice of its resignation or be removed as Collateral Agent, then the
Requisite Secured Parties shall (and if no such successor shall have been
appointed within 45 days of the Second Priority Collateral Agent's resignation
or removal, the Collateral Agent may) appoint a successor Collateral Agent which
successor agent shall, in the case of any appointment by the Collateral Agent,
be reasonably acceptable to the Requisite Secured Parties, and the former
Collateral Agent's rights, powers and duties as Collateral Agent shall be
terminated, without any other or further act or deed on the part of such former
Collateral Agent (except that the resigning Collateral Agent shall deliver all
Collateral then in its possession to the successor Collateral Agent and shall
execute and deliver to the successor Collateral Agent such instruments of
assignment and transfer and other similar documents as such successor Collateral
Agent shall deem necessary or advisable (at the joint and several expense of the
Grantors)). After any retiring Collateral Agent's resignation or removal
hereunder as Collateral Agent, the provisions of this Security Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Second Collateral Agent. In the event that a successor Collateral Agent
is not appointed within the time period specified in this Section following the
provision of a notice of resignation or removal of the Collateral Agent, the
Collateral Agent or any other Second Priority Secured Party may petition a court
of competent jurisdiction for the appointment of a successor Collateral Agent
(at the joint and several expense of the Grantors).
SECTION 8. MISCELLANEOUS
8.1. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Article IX of the Indenture.
8.2. Notices. All notices, requests and demands to or upon the Collateral
Agent or any Grantor hereunder shall be effected in the manner provided for in
Section 12.02 of the Indenture; provided that any such notice, request or demand
to or upon any Grantor shall be addressed to such Grantor at its notice address
set forth on Schedule 1.
8.3. No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Collateral Agent nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to
23
exercise, nor any delay in exercising, on the part of the Collateral Agent or
any other Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Collateral
Agent or any other Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Collateral Agent or such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
8.4. Enforcement Expenses; Indemnification.
(a) Each Grantor agrees to pay or reimburse each Collateral Agent for all
its costs and expenses incurred in enforcing or preserving any rights under this
Security Agreement and the other Note Documents to which such Grantor is a
party, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to the
Collateral Agent in each case, in accordance with the terms of the Indenture.
(b) Each Grantor agrees to pay, and to save the Collateral Agent and the
other Secured Parties harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Grantor agrees to pay, and to save the Collateral Agent and the
other Secured Parties harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Notes Issuer would be required to do so pursuant to the Indenture.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Indenture and the other
Second-Lien Note Documents.
8.5. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and the other Secured Parties and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent.
8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Secured
Party at any time after the Obligations shall have become due and payable
pursuant to Section 6.02 of the Indenture, without notice to such Grantor or any
other Grantor, any such notice being expressly waived by each Grantor, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Secured Party to or for the credit or the account of such Grantor,
or any part thereof in such amounts as such Secured Party
24
may elect, against and on account of the obligations and liabilities of such
Grantor to such Secured Party hereunder and claims of every nature and
description of such Secured Party against such Grantor, in any currency, whether
arising hereunder, under the Indenture, any other Second-Lien Note Document or
otherwise, as such Secured Party may elect, whether or not the Secured Party has
made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. Each Secured Party shall notify such
Grantor promptly of any such set-off and the application made by such Secured
Party of the proceeds thereof, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Secured Party under this Section 8.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Secured Party may have.
8.7. Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy or other electronic transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
8.8. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
8.10. Integration. This Agreement and the other Second-Lien Note Documents
represent the agreement of the Grantors, the Collateral Agent and the other
Secured Parties with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the Collateral
Agent or any other Secured Party relative to subject matter hereof and thereof
not expressly set forth or referred to herein or in the other Second-Lien Note
Documents.
8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12. Submission To Jurisdiction; Waivers. Each Grantor hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Second-Lien Note Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
25
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to xxx
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
8.13. Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Second-Lien Note Documents to which it
is a party;
(b) neither the Collateral Agent nor any other Secured Party has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Second-Lien Note Documents,
and the relationship between the Grantors, on the one hand, and the Collateral
Agent and the other Secured Parties, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Second-Lien Note
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Grantors and the Secured Parties.
8.14. Additional Grantors. Each Subsidiary of Holdings that is required to
become a party to this Agreement pursuant to Section 4.19 of the Indenture shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.
8.15. Releases.
(a) At such time as the Notes and the other Obligations (other than
contingent indemnification and contingent expense reimbursement obligations)
shall have been paid in full, the Collateral shall be released from the Liens
created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent and each
Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Collateral Agent shall deliver to such Grantor any
Collateral held by the Collateral Agent hereunder, and execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to
26
evidence such termination and to authorize the filing by Grantors of any
necessary UCC terminations or other terminations or releases.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Indenture, then the
Collateral Agent, at the request and sole expense of such Grantor, shall execute
and deliver to such Grantor all releases or other documents reasonably necessary
or desirable for the release of the Liens created hereby on such Collateral. At
the request and sole expense of the Notes Issuer, a Grantor shall be released
from its obligations hereunder in the event that all the Capital Stock of such
Grantor shall be sold, transferred or otherwise disposed of in a transaction
permitted by the Indenture; provided that the Notes Issuer shall have delivered
to the Collateral Agent a certification by the Notes Issuer stating that such
transaction is in compliance with the Indenture and the other Second-Lien Note
Documents.
8.16. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER SECOND-LIEN NOTE DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
27
IN WITNESS WHEREOF, each of the undersigned has caused this Second-Lien
Collateral Agreement to be duly executed and delivered as of the date first
above written.
PAPERWEIGHT DEVELOPMENT CORP.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
APPLETON PAPERS INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
AMERICAN PLASTICS COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
C & H PACKAGING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NEW ENGLAND EXTRUSION INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
Annex I
to
Second-Lien Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ____________________, 200__, made by
___________________, a _____________________ [corporation] (the "Additional
Grantor"), in favor of U.S. Bank National Association, as Collateral Agent (in
such capacity and together with its successors and assigns in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in the Second-Lien
Collateral Agreement). All capitalized terms not defined herein shall have the
meaning ascribed to them in the Indenture (as referred to below).
W I T N E S S E T H :
WHEREAS, Appleton Papers Inc., a Delaware corporation (the "Notes Issuer"),
Paperweight Development Corp., a Wisconsin corporation ("Holdings"), the
Guarantors party thereto and U.S. Bank National Association, as Trustee, have
entered into an Indenture, dated as of September 30, 2009 (as amended,
supplemented or otherwise modified from time to time, the "Indenture");
WHEREAS, in connection with the Indenture the Notes Issuer and certain of
its Affiliates (other than the Additional Grantor) have entered into the
Second-Lien Collateral Agreement, dated as of September 30, 2009 (as amended,
restated, supplemented and/or otherwise modified from time to time, the
"Second-Lien Collateral Agreement") in favor of the Collateral Agent for the
benefit of the Secured Parties (as defined in the Second-Lien Collateral
Agreement);
WHEREAS, the Indenture requires the Additional Grantor to become a party
to, and Grantor under, the Second-Lien Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to, and Grantor under, the
Second-Lien Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Second-Lien Collateral Agreement. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.14 of the
Second-Lien Collateral Agreement, hereby becomes a party to the Second-Lien
Collateral Agreement as a Grantor thereunder and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules __________(*)
to the Second-Lien Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Second-Lien Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
----------
(*) Refer to each Schedule with needs to be supplemented.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
----------------------------
Name:
Title:
