EXHIBIT 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is dated as of April 30,
1999 by and between CHEROKEE INTERNATIONAL FINANCE, INC., a California
corporation ("Debtor"), and ▇▇▇▇▇▇ FINANCIAL, INC., a Delaware corporation, as
agent ("Agent") for the benefit of all Lenders.
W I T N E S S E T H :
WHEREAS, Cherokee International, LLC, a California limited liability
company ("Borrower"), has entered into a Credit Agreement of even date herewith
(as the same may hereafter be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement") with the Lenders and Agent,
for the benefit of Agent and all Lenders thereunder, providing for extensions of
credit and other financial accommodations to be made to Debtor by Agent and
Lenders; and
WHEREAS, Borrower is the legal and beneficial owner of all of the
issued and outstanding capital stock of Debtor; and
WHEREAS, Debtor acknowledges that as a wholly owned subsidiary of
Borrower, it will receive substantial direct and indirect benefits by reason of
the making of Loans to Borrower as provided in the Credit Agreement; and
WHEREAS, Debtor has guaranteed the Obligations pursuant to that certain
Guaranty of even date herewith (the "Guaranty") made by Debtor to Agent, for the
benefit of Agent and Lenders; and
WHEREAS, it is a condition precedent to the obligations of Agent and
the Lenders under the Credit Agreement that Debtor shall have granted the Liens
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and in order to
induce Agent and the Lenders to extend credit and make other financial
accommodations under the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged,
Debtor hereby agrees with Agent, on behalf of and for the benefit of Agent and
Lenders, as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. Unless otherwise defined herein, all
capitalized terms used herein shall have the respective meanings given to such
terms in the Credit Agreement. The following terms, as used herein, have the
meanings set forth below:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter created or acquired by Debtor including, without limitation, all of
the following now owned or hereafter
created or acquired by Debtor: (a) accounts receivable, contract rights, book
debts, notes, drafts, chattel paper and other obligations or indebtedness owing
to Debtor arising from the sale, lease or exchange of goods or other property
and/or the performance of services; (b) Debtor's rights in, to and under all
purchase orders for goods, services or other property; (c) Debtor's rights to
any goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights of stoppage in transit); (d) monies
due to or to become due to Debtor under all contracts for the sale, lease or
exchange of goods or other property and/or the performance of services (whether
or not yet earned by performance on the part of Debtor); (e) uncertificated
securities; and (f) Proceeds of any of the foregoing and all collateral security
and guaranties of any kind given by any Person with respect to any of the
foregoing.
"Blocked Accounts" has the meaning assigned to that term in Section 7.
"Collateral" has the meaning assigned to that term in Section 2.
"Collecting Banks" has the meaning assigned to that term in Section 7.
"Copyright License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any Copyright including, without
limitation, the agreements described in Schedule 1 of the Copyright Security
Agreement.
"Copyrights" means collectively all of the following: (a) all
copyrights, rights and interests in copyrights, works that may be protected by
copyright, copyright registrations and copyright applications now owned or
hereafter created or acquired by Debtor, including, without limitation, those
listed on Schedule 1 of the Copyright Security Agreement; (b) all renewals of
any of the foregoing; (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (d) the right to ▇▇▇ for past, present and future infringements of
any of the foregoing; and (e) all rights corresponding to any of the foregoing
throughout the world.
"Copyright Security Agreement" means the copyright security agreement
to be executed and delivered by Debtor to Agent, substantially in the form of
EXHIBIT A, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"Depository Account" has the meaning assigned to that term in Section
7.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods now owned or hereafter
acquired by Debtor.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by Debtor including, without limitation, all machinery, motor
vehicles, trucks, trailers, vessels, aircraft and rolling stock and all parts
thereof and all additions and accessions thereto and replacements therefor.
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"Fixtures" means all of the following now owned or hereafter acquired
by Debtor: plant fixtures; business fixtures; other fixtures and storage
facilities, wherever located; and all additions and accessions thereto and
replacements therefor.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by Debtor including, without
limitation, all right, title and interest of Debtor in and to: (a) all
agreements, leases, licenses and contracts to which Debtor is or may become a
party; (b) all obligations or indebtedness owing to Debtor (other than Accounts)
from whatever source arising; (c) all tax refunds; (d) Intellectual Property;
and (e) all trade secrets and other confidential information relating to the
business of Debtor including by way of illustration and not limitation: systems
and techniques for the analysis, diagnosis and correction of malfunctions of
products used by Debtor's customers; the names and addresses of, and credit and
other business information concerning, Debtor's past, present or future
customers; the prices which Debtor obtains for its services or at which it sells
or leases merchandise; estimating and cost procedures; profit margins; policies
and procedures pertaining to the sale and design of equipment, components,
devices and services furnished by Debtor; information concerning suppliers of
Debtor; and information concerning the manner of operation, business plans,
pledges, projections, and all other information of any kind or character,
whether or not reduced to writing, with respect to the conduct by Debtor of its
business not generally known by the public.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) including, but not limited to, promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by Debtor.
"Intellectual Property" shall mean collectively all of the following:
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by Debtor, wherever located including, without limitation,
finished goods, raw materials, work in process and other materials and supplies
(including packaging and shipping materials) used or consumed in the manufacture
or production thereof and goods which are returned to or repossessed by Debtor.
"Investment Property" means all "investment property" (as defined in
the UCC); provided, however, that "Investment Property" shall not include more
than sixty-five percent (65%) of the capital stock or other equity interests of
any Subsidiary of Borrower organized in a jurisdiction located outside the
United States of America.
"Patent License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any invention on which a Patent is
in existence including, without limitation, the agreements described in Schedule
1 of the Patent Security Agreement.
"Patents" means collectively all of the following: (a) all patents and
patent applications now owned or hereafter created or acquired by Debtor
including, without limitation, those listed on Schedule 1 of the Patent Security
Agreement and the inventions and improvements described
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and claimed therein; (b) the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing; (c) all patentable
inventions now owned or hereafter created or acquired by Debtor; (d) all income,
royalties, damages or payments now and hereafter due and/or payable under any of
the foregoing with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (e) the right to ▇▇▇ for past, present and future infringements of
any of the foregoing; and (f) all rights corresponding to any of the foregoing
throughout the world.
"Patent Security Agreement" means the patent security agreement
executed and delivered by Debtor to Agent, substantially in the form of EXHIBIT
B, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims of Debtor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance with respect to any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"Secured Obligations" has the meaning assigned to that term in Section
3.
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any Trademark, including, without
limitation, the agreements described in Schedule 1 of the Trademark Security
Agreement.
"Trademarks" means collectively all of the following now owned or
hereafter created or acquired by Debtor: (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all registrations and
recordings thereof, and all applications in connection therewith including
registrations, recordings and applications 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,
including, without limitation, those described in Schedule 1 of the Trademark
Security Agreement; (b) all reissues, extensions or renewals thereof; (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing including
damages or payments for past or future infringements of any of the foregoing;
(d) the right to ▇▇▇ for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.
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"Trademark Security Agreement" means the trademark security agreement
executed and delivered by Debtor to Agent substantially in the form of EXHIBIT
C, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Illinois, PROVIDED that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral or the availability of any remedy hereunder
is governed by the Uniform Commercial Code as in effect on or after the date
hereof in any other jurisdiction, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or availability of
such remedy.
1.2 OTHER DEFINITION PROVISIONS. References to "Subsections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. All references to statutes and related regulations shall
include (unless otherwise specifically provided herein) any amendments of same
and any successor statutes and regulations.
SECTION 2. GRANT OF SECURITY INTERESTS
In order to secure the prompt and complete payment and performance of
the Secured Obligations in accordance with the terms thereof, Debtor hereby
grants to Agent, for the benefit of Agent and the Lenders, a continuing security
interest in and to all right, title and interest of Debtor in the following
property, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all being collectively referred to as the
"Collateral"):
(A) Accounts;
(B) Inventory;
(C) General Intangibles;
(D) Documents;
(E) Instruments;
(F) Equipment;
(G) Fixtures;
(H) Investment Property;
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(I) Any Depository Account and all other deposit accounts of
Debtor maintained with any bank or financial institution;
(J) All cash deposited therein from time to time and other
monies and property of Debtor in the possession or under the
control of Agent or any Lender;
(K) All books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing
software that at any time evidence or contain information
relating to any of the property described in subparts (A) -
(J) above or are otherwise necessary or helpful in the
collection thereof or realization thereon; and
(L) Proceeds of all or any of the property described in
subparts (A) - (K) above.
Notwithstanding the foregoing, Collateral shall not include, and Debtor shall
not be deemed to have granted a security interest in, any of Debtor's rights or
interests in: (i) any licenses, contracts or agreements to which Debtor is a
party, existing on the date hereof, to the extent that such a grant would, under
the express terms of such licenses, contracts or agreements, result in a breach
of the terms thereof, or constitute a default thereunder; (ii) any capital
leases and purchase money agreements to which Debtor is a party, or any of its
rights or interests thereunder, to the extent that such a grant would, under the
express terms of such capital leases and/or purchase money agreements, result in
a breach of the terms thereof, or constitute a default thereunder; or (iii) any
licenses, contracts or agreements to which Debtor is a party, or any of its
rights or interests thereunder, to the extent that such a grant would be
prohibited by applicable law.
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Debtor shall have the exclusive, non-transferable right and
license to use the Intellectual Property and the exclusive right to grant to
other Persons licenses and sublicenses with respect to the Intellectual
Property.
SECTION 3. SECURITY FOR SECURED OBLIGATIONS
This Agreement secures the prompt and complete payment and performance
of the obligations of Debtor under the Guaranty and all other Loan Documents to
which Debtor is a party, including all obligations of Debtor now or hereafter
existing under this Agreement and all renewals, extensions, restructurings and
refinancings of any of the above (all such debts, obligations and liabilities of
Debtor being collectively referred to herein as the "Secured Obligations").
SECTION 4. DEBTOR REMAINS LIABLE
Anything herein to the contrary notwithstanding: (a) Debtor shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been
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executed; (b) the exercise by Agent of any of the rights granted hereunder shall
not release Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral; and (c) Agent shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Agent be obligated to perform
any of the obligations or duties of Debtor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants as of the Closing Date as follows:
5.1 BINDING OBLIGATION. This Agreement is the legally valid and binding
obligation of Debtor, enforceable against Debtor in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws or equitable principles relating to or limiting
creditor's rights generally.
5.2 LOCATION OF EQUIPMENT AND INVENTORY. All of the Equipment and
Inventory is located at the places specified on SCHEDULE I.
5.3 OWNERSHIP OF COLLATERAL. Except for the Permitted Encumbrances
disclosed on SCHEDULE II and the Security Interests, Debtor owns the Collateral
free and clear of any Lien. No effective financing statement or other form of
lien notice covering all or any part of the Collateral is on file in any
recording office, except for those in favor of Agent and as disclosed on
SCHEDULE II. Except as disclosed on SCHEDULE II, none of the Collateral is in
the possession of any bailee, warehouseman, agent, processor or consignee.
5.4 OFFICE LOCATIONS; FICTITIOUS NAMES. The chief place of business,
the chief executive office and the office where Debtor keeps its books and
records are located at the places specified on SCHEDULE I. Debtor does not do
business and has not done business during the past five years under any
trade-name or fictitious business name except as disclosed on SCHEDULE III.
5.5 PERFECTION. Assuming the proper filing of one or more financing
statements identifying the Collateral with the proper local, state and/or
federal authorities, this Agreement creates a valid, perfected and, except for
the Permitted Encumbrances, first priority security interest in the Collateral,
securing the payment of the Secured Obligations, to the extent such security
interest may be perfected by the filing of financing statements.
5.6 GOVERNMENTAL AUTHORIZATIONS; CONSENTS. No authorization, approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or consent of any other Person (including without limitation
any licensor of Intellectual Property or any party to the Purchase Agreement) is
required either (a) the execution, delivery or performance of this Agreement by
Debtor, (b) for the grant by Debtor of the security interest granted hereby or
(c) for the perfection of such Security Interests or the exercise by Agent of
its rights and remedies hereunder.
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5.7 ACCOUNTS. Each Account constitutes the legally valid and binding
obligation of the customer obligated to pay the same. The amount represented by
Debtor to Agent as owing by each customer is the correct amount actually and
unconditionally owing, except for normal cash discounts and allowances where
applicable. No customer has any defense, set-off, claim or counterclaim against
Debtor that can be asserted against Agent, whether in any proceeding to enforce
Agent's rights in the Collateral or otherwise except defenses, set-offs, claims
or counterclaims that are not, in the aggregate, material to the value of the
Accounts. None of the Accounts is evidenced by a promissory note or other
instrument other than a check.
5.8 INTELLECTUAL PROPERTY. The Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses listed on the respective
schedules to each of the Copyright Security Agreement, the Patent Security
Agreement, the Trademark Security Agreement and the Credit Agreement constitute
all of the Intellectual Property owned by Debtor. The execution, delivery and
performance of this Agreement by Debtor will not violate or cause a default
under any of the Intellectual Property or any agreement in connection therewith.
5.9 ACCURATE INFORMATION. All information heretofore, herein or
hereafter supplied to Agent by or on behalf of Debtor with respect to the
Collateral is and will be accurate and complete in all material respects.
SECTION 6. FURTHER ASSURANCES; COVENANTS
6.1 OTHER DOCUMENTS AND ACTIONS. Debtor will, from time to time, at its
expense, promptly execute and deliver all further instruments and documents and
take all further action that may be necessary or desirable, or that Agent may
reasonably request, in order to perfect and protect the Security Interests
granted or purported to be granted hereby or to enable Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Debtor will: (a) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Agent may
reasonably request, in order to perfect and preserve the Security Interests
granted or purported to be granted hereby; (b) at any reasonable time during
normal business hours and upon reasonable notice, upon demand by Agent exhibit
the Collateral to allow inspection of the Collateral by Agent or persons
designated by Agent; and (c) upon Agent's request, appear in and defend any
action or proceeding that may affect Debtor's title to or the Security Interests
of the Agent in the Collateral.
6.2 AGENT AUTHORIZED. Debtor hereby authorizes Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of Debtor to the extent
permitted by law.
6.3 CORPORATE OR NAME CHANGE. Debtor will notify Agent promptly in
writing prior to any change in Debtor's name, identity or corporate structure.
6.4 BUSINESS LOCATIONS. Except for the sale of Inventory in the
ordinary course of business and dispositions expressly permitted in the Credit
Agreement, Debtor will keep the
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Collateral at the locations specified on SCHEDULE I. Debtor will give Agent
thirty (30) days prior written notice of any change in Debtor's chief place of
business, of any new location of business, and of any new location for any of
the Collateral. With respect to any new location (which in any event shall be
within the continental United States), Debtor will execute such documents and
take such actions as Agent deems necessary to perfect and protect the Security
Interests.
6.5 BAILEES. If any Collateral is at any time in the possession or
control of any warehouseman, bailee, consignee or any of Debtor's agents or
processors, Debtor shall, upon the request of Agent, notify such warehouseman,
bailee, consignee, agent or processor of the Security Interests created hereby
and shall instruct such Person to hold all such Collateral for Agent's account
subject to Agent's instructions.
6.6 INSTRUMENTS. Debtor will deliver and pledge to Agent all
Instruments duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Agent. Debtor
will ▇▇▇▇ conspicuously all chattel paper with a legend, in form and substance
satisfactory to Agent, indicating that such chattel paper is subject to the
Security Interests and will, upon Agent's request from time to time, deliver
possession thereof to Agent, for the benefit of Agent and the Lenders.
6.7 CERTIFICATES OF TITLE. Upon Agent's request, Debtor shall promptly
deliver to Agent any and all certificates of title, applications for title or
similar evidence of ownership of all Equipment and shall cause Agent to be named
as lienholder on any such certificate of title or other evidence of ownership.
Debtor shall promptly inform Agent of any acquisitions of dispositions of
Equipment and shall not permit any Equipment to become a fixture to real estate
other than real estate encumbered by the mortgages or deeds of trust made by
Borrower for the benefit of Agent pursuant to the terms of the Credit Agreement.
6.8 ACCOUNT COVENANTS. Except as otherwise provided in this subsection
6.8, Debtor shall continue to collect, at its own expense, all amounts due or to
become due Debtor under the Accounts. In connection with such collections,
Debtor may take (and, at Agent's direction, shall take) such action as Debtor or
Agent may deem necessary or advisable to enforce collection of the Accounts;
PROVIDED, that Agent shall have the right at any time after the occurrence and
during the continuation of an Event of Default to: (a) notify the customers or
obligors under any Account of the assignment of such Account to Agent, for the
benefit of Agent and the Lenders, and to direct such customers or obligors to
make payment of all amounts due or to become due directly to Agent; (b) enforce
collection of any such Accounts; and (c) adjust, settle or compromise the amount
or payment of such Accounts. After the occurrence and during the continuation of
an Event of Default (i) all amounts and proceeds (including Instruments)
received by Debtor with respect to the Accounts shall be received in trust for
the benefit of Agent (on behalf of Lenders), shall be segregated from other
funds of Debtor and shall be forthwith paid over to Agent in the same form as so
received (with any necessary endorsement) pursuant to Section 7 and (ii) Debtor
shall not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partially any customer or obligor thereof, or allow any credit
or discount thereon without the prior consent of Agent.
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6.9 INTELLECTUAL PROPERTY COVENANTS. Debtor shall concurrently herewith
deliver to Agent the Copyright Security Agreement, the Patent Security Agreement
and the Trademark Security Agreement and all other documents, instruments and
other items as may be necessary for Agent to file such agreements with the
United States Copyright Office, United States Patent and Trademark Office and
any similar domestic or foreign office, department or agency. If, before the
Secured Obligations are paid in full, Debtor obtains any new Intellectual
Property or rights thereto or becomes entitled to the benefit of any
Intellectual Property not listed on the respective schedules to such security
agreements, Debtor shall give to Agent prompt written notice thereof, and shall
amend the respective security agreement to include any such new Intellectual
Property. Debtor shall: (a) prosecute diligently any copyright, patent,
trademark or license application at any time pending; (b) make application on
all new copyrights, patents and trademarks as reasonably deemed appropriate by
Debtor; (c) preserve and maintain all rights in the Intellectual Property
including, without limitation, the prosecution of infringement actions with
respect to the Intellectual Property; and (d) use its best efforts to obtain any
consents, waivers or agreements necessary to enable Agent to exercise its
remedies with respect to the Intellectual Property. Debtor shall not abandon any
right to file a copyright, patent or trademark application nor shall Debtor
abandon any pending copyright, patent or trademark application, or Copyright,
Copyright License, Patent, Patent License, Trademark or Trademark License
without the prior written consent of Agent; provided, however, that Debtor shall
not be obligated to preserve any application or Intellectual Property to the
extent Debtor determines, in its reasonable business judgment, that the
preservation of such application or Intellectual Property is no longer material
to the conduct of its business..
6.10 EQUIPMENT COVENANTS. Debtor shall cause the Equipment to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall promptly make or cause to be made all repairs, replacements,
and other improvements in connection therewith that are necessary or desirable
to such end.
6.11 INSURANCE. Debtor shall maintain insurance with respect to the
Collateral in accordance with the terms of the Credit Agreement.
6.12 TAXES AND CLAIMS. Debtor will pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims against, the Collateral (including claims for labor, materials
and supplies), except to the extent the validity thereof is being contested in
good faith.
6.13 COLLATERAL DESCRIPTION. Debtor will furnish to Agent, from time to
time, statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Agent may reasonably
request, all in reasonable detail.
6.14 USE OF COLLATERAL. Debtor will not use or permit any Collateral to
be used unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
any of the Collateral.
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6.15 RECORDS OF COLLATERAL. Debtor shall keep full and accurate books
and records relating to the Collateral and shall stamp or otherwise ▇▇▇▇ such
books and records in such manner as Agent may reasonably request indicating that
the Collateral is subject to the Security Interests.
6.16 OTHER INFORMATION. Debtor will, promptly upon Agent's reasonable
request, provide to Agent all information and evidence it may reasonably request
concerning the Collateral, and in particular the Accounts, to enable Agent to
enforce the provisions of this Agreement.
SECTION 7. BANK ACCOUNTS; COLLECTION OF ACCOUNTS AND PAYMENTS
On or prior to the Closing Date, Agent and Debtor shall enter into an
Assignment of Deposit Accounts and Bank Agency Agreement with each financial
institution with which Debtor maintains from time to time any deposit accounts
(general or special). Pursuant to the Assignment of Deposit Accounts and Bank
Agency Agreement(s) and pursuant hereto, Debtor grants, sells, conveys, assigns,
transfers, pledges and sets over unto Agent, for the benefit of Agent and the
Lenders, all of Debtor's right, title and interest in and to such accounts and
all funds at any time paid, deposited, credited or held in such accounts
(whether for collection, provisionally or otherwise) or otherwise in the
possession of such financial institutions, and each such financial institution
shall act as agent and pledgee-in-possession for Agent in connection therewith.
Following the Closing Date, Debtor shall not establish any deposit account with
any financial institution except in accordance with the terms of the Credit
Agreement.
Upon the request of Agent from time to time after the occurrence of an
Event of Default, Debtor shall promptly establish lock box or blocked accounts
(collectively, "Blocked Accounts") in Debtor's name with such banks as are
acceptable to Agent ("Collecting Banks"), subject to irrevocable instructions in
the form of EXHIBIT D hereto, to which the obligors on all Accounts shall
directly remit all payments on Accounts and in which Debtor will immediately
deposit all cash payments made for Inventory or other cash payments constituting
proceeds of Collateral in the identical form in which such payment was made,
whether by cash or check. In addition, Agent, for the benefit of Agent and the
Lenders, may establish one or more depository accounts at each Collecting Bank
or at a centrally located bank (collectively, the "Depository Account"). Without
limitation of the terms and provisions of the Assignment of Deposit Accounts and
Bank Agency Agreement(s), from and after receipt by any Collecting Bank of
written notice from Agent to such Collecting Bank that an Event of Default has
occurred, all amounts held or deposited in the Blocked Accounts held by such
Collecting Bank shall be transferred to the Depository Account; provided that,
prior to such Collecting Bank's receipt of such notice, such amounts shall be
automatically transferred to Debtor's operating account for unrestricted use by
Debtor, provided that any such use is not prohibited by the Credit Agreement.
Subject to the foregoing, Debtor hereby agrees that all payments received by
Agent or any Lender, whether by cash, check, wire transfer or any other
instrument, whether made to such Blocked Accounts or otherwise received by Agent
or any Lender and whether representing payments on the Accounts or proceeds of
other Collateral, will be the sole and exclusive property of Lenders. Debtor,
and any of its Affiliates, employees, agents or other Persons acting for or in
concert with Debtor, shall, acting as trustee for Agent and Lenders, receive, as
the sole and exclusive property of Lenders, any
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monies, checks, notes, drafts or any other payments relating to and/or
representing proceeds of Accounts or other Collateral which come into the
possession or under the control of Debtor or any Affiliates, employees, agents
or other Persons acting for or in concert with Debtor, and immediately upon
receipt thereof, Debtor or such Persons shall deposit the same or cause the same
to be deposited, in kind, in a Blocked Account. Notwithstanding the foregoing,
any amounts contained in Agent's Depository Account or the Blocked Accounts or
otherwise received by Agent in excess of the Secured Obligations then due and
payable shall be the property of Debtor and shall promptly be paid over to
Debtor.
SECTION 8. AGENT APPOINTED ATTORNEY-IN-FACT
Debtor hereby irrevocably appoints Agent as Debtor's attorney-in-fact,
with full authority in the place and stead of Debtor and in the name of Debtor,
Agent or otherwise, from time to time in Agent's discretion to take any action
and to execute any instrument that Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to
Agent;
(b) to ask, demand, collect, ▇▇▇ for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses
(a) and (b) above;
(d) to file any claims or take any action or institute any
proceedings that Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of Agent with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens, levied or placed upon
or threatened against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by
Agent in its sole discretion;
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, assignments,
verifications and notices in connection with Accounts and other
documents (including without limitation financing statements,
continuation statements and other documents necessary or advisable to
perfect the Security Interests) relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though Agent were the absolute owner thereof for all
purposes, and to do, at Agent's option and Debtor's expense, at any
time or from time to time, all acts and things that Agent deems
necessary to protect, preserve or realize upon the Collateral.
12
Debtor hereby ratifies and approves all acts of Agent made or taken pursuant to
this Section 8. Neither Agent nor any person designated by Agent shall be liable
for any acts or omissions or for any error of judgment or mistake of fact or
law. This power, being coupled with an interest, is irrevocable so long as this
Agreement shall remain in force.
SECTION 9. TRANSFERS AND OTHER LIENS
Except as otherwise permitted by the Credit Agreement, Debtor shall
not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, except that Debtor may sell Inventory in the ordinary
course of business; or
(b) create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the
Collateral to secure indebtedness of any Person except for the Security
Interests created by this Agreement and Permitted Encumbrances
disclosed on SCHEDULE II.
SECTION 10. REMEDIES
If any Event of Default shall have occurred and be continuing, Agent
may exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may: (a) require Debtor to, and
Debtor hereby agrees that it will, at its expense and upon request of Agent
forthwith, assemble all or part of the Collateral as directed by Agent and make
it available to Agent at a place to be designated by Agent which is reasonably
convenient to both parties; (b) withdraw all cash in any of Debtor's accounts
and apply such monies in payment of the Secured Obligations in the manner
provided in Section 14; (c) without notice or demand or legal process, enter
upon any premises of Debtor and take possession of the Collateral; and (d)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Agent's
offices or elsewhere, at such time or times, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as Agent may
deem commercially reasonable. Debtor agrees that, to the extent notice of sale
shall be required by law, at least ten days notice to Debtor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute commercially reasonable notification. At any sale of the
Collateral, if permitted by law, Agent may bid (which bid may be, in whole or in
part, in the form of cancellation of indebtedness) for the purchase of the
Collateral or any portion thereof for the account of Agent (on behalf of Agent
and the Lenders). Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. To the extent permitted by law, Debtor
hereby specifically waives all rights of redemption, stay or appraisal which it
has or may have under any law now existing or hereafter enacted.
13
SECTION 11. LICENSE OF INTELLECTUAL PROPERTY
Debtor hereby assigns, transfers and conveys to Agent, effective upon
the occurrence of any Event of Default hereunder, the nonexclusive right and
license to use all Intellectual Property owned or used by Debtor together with
any goodwill associated therewith, all to the extent necessary to enable Agent
to realize on the Collateral and any successor or assign to enjoy the benefits
of the Collateral. This right and license shall inure to the benefit of Agent
and all of its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge,
without requirement that any monetary payment whatsoever be made to Debtor by
Agent.
SECTION 12. INTENTIONALLY OMITTED
SECTION 13. LIMITATION ON DUTY OF AGENT WITH RESPECT TO COLLATERAL
Beyond the safe custody thereof, Agent shall have no duty with respect
to any Collateral in its possession or control (or in the possession or control
of any agent or bailee of Agent) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto. Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property. Agent shall not be liable or responsible for any loss or damage to any
of the Collateral, or for any diminution in the value thereof, by reason of the
act or omission of any warehouseman, carrier, forwarding agency, consignee or
other agent or bailee selected by Agent in good faith.
SECTION 14. APPLICATION OF PROCEEDS
Upon the occurrence and during the continuance of an Event of Default,
the proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in any of Debtor's accounts shall be applied:
FIRST, to all fees, costs and expenses incurred by Agent or any Lender with
respect to the Credit Agreement, the other Loan Documents or the Collateral
including, without limitation, those described in subsections 1.3(E), 6.4 and
9.1 of the Credit Agreement and in Section 15 hereof; SECOND, to accrued and
unpaid interest on the Secured Obligations (including any interest which but for
the provisions of the Bankruptcy Code, would have accrued on such amounts);
THIRD, to the principal amounts of the Secured Obligations outstanding; and
FOURTH, to any other indebtedness or obligations of Debtor owing to Agent or any
Lender. Any proceeds remaining after payment of the foregoing shall be paid to
Debtor.
SECTION 15. EXPENSES
Debtor shall pay all insurance expenses and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining and shipping
the Collateral, all costs, fees and expenses of perfecting and maintaining the
Security Interests, and any and all excise, property, sales and use taxes
imposed by any state, federal or local authority on any of the
14
Collateral, or with respect to periodic appraisals and inspections of the
Collateral, or with respect to the sale or other disposition thereof. If Debtor
fails promptly to pay any portion of the above expenses when due or to perform
any other obligation of Debtor under this Agreement, Agent or any other Lender
may, at its option, but shall not be required to, pay or perform the same and
charge Debtor's account for all costs and expenses incurred therefor, and Debtor
agrees to reimburse Agent or such Lender therefor on demand. All sums so paid or
incurred by Agent or any other Lender for any of the foregoing, any and all
other sums for which Debtor may become liable hereunder and all costs and
expenses (including reasonable attorneys' fees, legal expenses and court costs)
incurred by Agent or any other Lender in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement shall be
payable on demand, shall constitute Secured Obligations, shall bear interest
until paid at the highest rate provided in the Credit Agreement and shall be
secured by the Collateral.
SECTION 16. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL
Upon payment in full of all Secured Obligations (other than contingent
indemnification obligations to the extent no unsatisfied claim giving rise
thereto has been asserted) and the termination of all Commitments, Risk
Participation Agreements and Lender Letters of Credit, the Security Interests
shall terminate and all rights to the Collateral shall revert to Debtor. Upon
such termination of the Security Interests or release of any Collateral, Agent
will, at the expense of Debtor, execute and deliver to Debtor such documents as
Debtor shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
SECTION 17. NOTICES
All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provisions of the Credit
Agreement.
SECTION 18. WAIVERS, NON-EXCLUSIVE REMEDIES
No failure on the part of Agent to exercise, and no delay in exercising
and no course of dealing with respect to, any right under the Credit Agreement
or this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by Agent of any right under the Credit Agreement or this
Agreement preclude any other or further exercise thereof or the exercise of any
other right. The rights in this Agreement and the Credit Agreement are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 19. SUCCESSORS AND ASSIGNS
This Agreement is for the benefit of Agent and Lenders and their
successors and assigns, and in the event of an assignment of all or any of the
Secured Obligations, the rights hereunder, to the extent applicable to the
Secured Obligations so assigned, may be transferred with such Secured
Obligations. This Agreement shall be binding on Debtor and its successors and
assigns.
15
SECTION 20. CHANGES IN WRITING
No amendment, modification, termination or waiver of any provision of
this Agreement or consent to any departure by Debtor therefrom, shall in any
event be effective without the written concurrence of Agent and Debtor.
SECTION 21. APPLICABLE LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 22. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE
No failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or any other right, power or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 23. HEADINGS
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 24. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
[remainder of this page intentionally left blank]
16
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the day first above written.
CHEROKEE INTERNATIONAL, ▇▇▇▇▇▇ FINANCIAL, INC., as Agent
FINANCE, INC., a California corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇ HENANAN
---------------- ----------------
Title: Secretary Title: Senior Vice President
--------- ---------------------
FEIN: ▇▇-▇▇▇▇▇▇▇
----------
17
SCHEDULE I
Locations of Equipment, Inventory, Books and
Records, Chief Executive Office, Other Locations
SCHEDULE II
Other Liens, Security Interests and
Financing Statements; Bailees
SCHEDULE III
Trade-names and Fictitious Names
(Present and Past Five Years)
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
WHEREAS, ____________________, a ____________ corporation ("Grantor")
owns the Copyright registrations and Copyright applications listed on Schedule 1
annexed hereto, and is a party to the Copyright Licenses listed on Schedule 1
annexed hereto; and
WHEREAS, Cherokee International, LLC, a California limited liability
company ("Borrower") has entered into a Credit Agreement dated as of
_______________, 1999 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") with ▇▇▇▇▇▇
Financial, Inc., as agent ("Agent") for the benefit of all financial
institutions that from time to time become lenders under the Credit Agreement
("Lenders"), and the Lenders parties thereto, providing for extensions of credit
and other financial accommodations to be made to Borrower by Agent and the
Lenders; and
WHEREAS, Grantor is a wholly owned subsidiary of Borrower and has
guaranteed the payment and performance of Borrower's Obligations pursuant to
that certain Guaranty dated _________, 1999 (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement dated as of
_______________, 1998 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), between Grantor
and Agent (in such capacity, "Grantee"), Grantor has granted to Grantee, for the
benefit of Agent and the Lenders a security interest in substantially all the
assets of Grantor including all right, title and interest of Grantor in, to and
under all now owned and hereafter acquired Copyrights (as defined in the
Security Agreement), Copyright registrations, Copyright applications and
Copyright Licenses (as defined in the Security Agreement), together with the
goodwill of the business symbolized by Grantor's Copyrights and all proceeds
thereof, to secure the payment of all amounts owing by Grantor under the
Guaranty and the other Loan Documents to which it is a party;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Copyright Collateral"), whether presently
existing or hereafter created or acquired:
(1) each Copyright, Copyright application and Copyright registration,
together with any reissues, extensions or renewals thereof, including,
without limitation, the Copyright, Copyright registrations and
Copyright applications referred to in Schedule 1 annexed hereto, and
all of the goodwill of the business connected with the use of, and
symbolized by, each Copyright, Copyright registration and Copyright
application;
(2) each Copyright License and all of the goodwill of the business
connected with the use of, and symbolized by, each Copyright License;
and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past,
present or future infringement or dilution of any Copyright or
Copyright registration including, without limitation, the Copyright and
Copyright registrations referred to in Schedule 1 annexed hereto, the
Copyright registrations issued with respect to the Copyright
applications referred in Schedule 1 and the Copyright licensed under
the Copyright License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security
Agreement to be duly executed by its duly authorized officer as of the ______
day of ___________, ____.
Acknowledged:
▇▇▇▇▇▇ FINANCIAL, INC., ____________________
as Agent
By:___________________________ By:_______________________
Title:_________ Vice President Title:____________________
2
ACKNOWLEDGEMENT
STATE OF )
) ss.
COUNTY OF )
On the ____ day of ____________, 199_ before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of ___________________________, who being
by me duly sworn, did depose and say that he is ______________ of
__________________, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
----------------------------------
Notary Public
{Seal}
My commission expires:
---------------------
3
Schedule 1
to Copyright
SECURITY AGREEMENT
COPYRIGHT REGISTRATIONS
REG. NO. DATE
-------- ----
COPYRIGHT APPLICATIONS
COPYRIGHT LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
EXHIBIT B
PATENT SECURITY AGREEMENT
WHEREAS,_____________________, a _____________ corporation ("Grantor")
owns the Patents and Patent Applications listed on Schedule 1 annexed hereto,
and is a party to the Patent Licenses listed on Schedule 1 annexed hereto; and
WHEREAS, _______________, a ____________ corporation ("Borrower") has
entered into a Credit Agreement dated as of _______________, 1999 (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement") with ▇▇▇▇▇▇ Financial, Inc., as agent ("Agent") for the
benefit of all financial institutions that from time to time become lenders
under the Credit Agreement ("Lenders"), as the Lenders parties thereto,
providing for extensions of credit and other financial accommodations to be made
to Borrower by Agent and the Lenders; and
WHEREAS, Grantor is a wholly owned subsidiary of Borrower and has
guaranteed the payment and performance of Borrower's Obligations pursuant to
that certain Guaranty dated ____________, 1999 (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement dated as of
__________________, 1998 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), between Grantor
and Agent (in such capacity, together with its successors in such capacity, the
"Grantee"), Grantor has granted to Grantee, for the benefit of Agent and the
Lenders a security interest in substantially all the assets of Grantor including
all right, title and interest of Grantor in, to and under all now owned and
hereafter acquired Patents (as defined in the Security Agreement), Patent
applications and Patent Licenses (as defined in the Security Agreement), and all
products and proceeds thereof, to secure the payment of all amounts owing by
Grantor under the Guaranty and other Loan Documents to which it is a party;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Patent Collateral"), whether presently existing
or hereafter created or acquired:
(1) each Patent and Patent application, including, without limitation,
each Patent and Patent application referred to in Schedule 1 annexed
hereto, together with any reissues, continuations or extensions
thereof;
(2) each Patent License, including, without limitation, each Patent
License listed on Schedule 1 annexed hereto; and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past,
present or future infringement of any Patent, including, without
limitation, any Patent referred to in Schedule 1 annexed hereto, any
Patent issued pursuant to a Patent Applications referred to in Schedule
1 and any Patent licensed under any Patent License listed on Schedule 1
annexed hereto.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provision of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement
to be duly executed by its duly authorized officer thereunto as of the ______
day of _____________, ____.
Acknowledged:
▇▇▇▇▇▇ FINANCIAL, INC., ____________________
as Agent
By:___________________________ By:_______________________
Title:________ Vice President Title:____________________
2
ACKNOWLEDGEMENT
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On the ____ day of ____________, 199_ before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of __________________________________, who
being by me duly sworn, did depose and say that he is ______________ of
___________________________, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
------------------------
Notary Public
{Seal}
My commission expires:
---------------------
3
Schedule 1
to Patent
Security Agreement
------------------
PATENTS
U.S. Patent No. Date Issued Related Foreign Patents
--------------- ----------- -----------------------
PATENT APPLICATIONS
PATENT LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
EXHIBIT C
TRADEMARK SECURITY AGREEMENT
WHEREAS, ____________________, a ____________ corporation ("Grantor"),
owns the Trademarks, Trademark registrations, and Trademark applications listed
on Schedule 1 annexed hereto, and is a party to the Trademark Licenses listed on
Schedule 1 annexed hereto; and
WHEREAS, _______________, a ____________ corporation ("Borrower") has
entered into a Credit Agreement dated as of _______________, 1999 (as the same
may be amended, restated, supplemented or otherwise modified from time to time,
the "Credit Agreement") with ▇▇▇▇▇▇ Financial, Inc., as agent ("Agent") for the
benefit of all financial institutions that from time to time become lenders
under the Credit Agreement ("Lenders"), and the Lenders parties thereto,
providing for extensions of credit and other financial accommodations to be made
to Borrower by Agent and the Lenders; and
WHEREAS, Grantor is a wholly owned subsidiary of Borrower and has
guaranteed the payment and performance of Borrower's Obligations pursuant to
that certain Guaranty dated ___________, 1999 (the "Guaranty"); and
WHEREAS, pursuant to the terms of a Security Agreement dated as of
__________, 1998 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), between Grantor
and Agent (in such capacity, "Grantee"), Grantor has granted to Grantee, for the
benefit of Agent and the Lenders a security interest in substantially all the
assets of Grantor including all right, title and interest of Grantor in, to and
under all now owned and hereafter acquired Trademarks (as defined in the
Security Agreement), Trademark registrations, Trademark applications and
Trademark Licenses (as defined in the Security Agreement), together with the
goodwill of the business symbolized by Grantor's Trademarks, and all proceeds
thereof, to secure the payment of all amounts owing by Grantor under the
Guaranty and other Loan Documents to which it is a party;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee, for the benefit of Grantee and the Lenders a continuing security
interest in all of Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "Trademark Collateral"), whether presently
existing or hereafter created or acquired:
(1) each Trademark, Trademark registration and Trademark application,
including, without limitation, the Trademarks, Trademark registrations
(together with any reissues, continuations or extensions thereof) and
Trademark applications referred to in Schedule 1 annexed hereto, and
all of the goodwill of the business connected with the use of, and
symbolized by, each Trademark, Trademark registration and Trademark
application;
(2) each Trademark License and all of the goodwill of the business
connected with the use of, and symbolized by, each Trademark License;
and
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by Grantor against third parties for past,
present or future (a) infringement or dilution of any Trademark or
Trademark registration including, without limitation, the Trademarks
and Trademark registrations referred to in Schedule 1 annexed hereto,
the Trademark registrations issued with respect to the Trademark
applications referred in Schedule 1 and the Trademarks licensed under
any Trademark License, or (b) injury to the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under any
Trademark License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security
Agreement to be duly executed by its duly authorized officer thereunto as of the
____ day of ___________,
----.
Acknowledged:
▇▇▇▇▇▇ FINANCIAL, INC., ____________________
as Agent
By:___________________________ By:_______________________
Title:________ Vice President Title:____________________
2
ACKNOWLEDGEMENT
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
On the ____ day of ____________, 199_ before me personally appeared
______________, to me personally known or proved to me on the basis of
satisfactory evidence to be the person described in and who executed the
foregoing instrument as _____________ of _______________________________, who
being by me duly sworn, did depose and say that he is ______________ of
___________________________, the corporation described in and which executed the
foregoing instrument; that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of said corporation.
------------------------
Notary Public
{Seal}
My commission expires:
---------------------
3
Schedule 1
to Trademark
Security Agreement
------------------
TRADEMARK REGISTRATIONS
▇▇▇▇ REG. NO. DATE
---- -------- ----
TRADEMARK APPLICATIONS
TRADEMARK LICENSES
Name of Agreement Parties Date of Agreement
----------------- ------- -----------------
EXHIBIT D
[FORM OF LOCKBOX LETTER]
,
---------------------- -----
[Name and Address of
Lockbox Bank]
RE: [NAME OF TRANSACTION]
Gentlemen:
We hereby notify you that effective ____________________, _____, we
have transferred to ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation, as Agent for
the benefit of our Lenders ("Agent"), exclusive ownership and control of our
lock-box account No. ____________________ (the "Lockbox Account") maintained
with you under the terms of the Lockbox Agreement attached hereto as Exhibit A.
We hereby irrevocably instruct you to make all payments to be made by
you out of or in connection with the Lockbox Account as you may be instructed by
Agent.
We also hereby notify you that Agent shall be irrevocably entitled to
exercise any and all rights and to receive from you all information requested by
Agent in respect of or in connection with the Lockbox Account, including,
without limitation, the right to specify when payments are to be made out of or
in connection with the Lockbox Account.
All funds deposited into the Lockbox Account will not be subject to any
deduction, set-off, banker's lien or any other right in favor of any person
other than Agent, except that you may set-off against the Lockbox Account the
face amount of any check deposited in and credited to such Lockbox Account which
is subsequently returned for any reason. Your compensation for providing the
services contemplated herein shall be as mutually agreed between you and us from
time to time and we will continue to pay such compensation.
Please confirm your acknowledgement of and agreement to the foregoing
instructions by signing in the space provided below.
Sincerely yours, Acknowledged and Agreed:
____________________ [BANK]
By:_________________________ By:_________________________
Title:______________________ Title:______________________