Exhibit 10.3
EXECUTION VERSION
PLEDGE AND SECURITY AGREEMENT
DATED AS OF MAY 1, 2006
AMONG
WCI STEEL ACQUISITION, INC.
AS A GRANTOR
AND
EACH OTHER GRANTOR
FROM TIME TO TIME PARTY HERETO
AND
CITICORP USA, INC.
AS ADMINISTRATIVE AGENT
WEIL, GOTSHAL & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
THIS PLEDGE AND SECURITY AGREEMENT IS SUBJECT TO THE TERMS AND
PROVISIONS OF THE INTERCREDITOR AGREEMENT, DATED AS OF MAY 1, 2006 (AS SUCH
AGREEMENT MAY BE AMENDED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE
MODIFIED FROM TIME, THE "INTERCREDITOR AGREEMENT"), AMONG WCI STEEL ACQUISITION,
INC., AS BORROWER, CITICORP, USA, INC., AS ADMINISTRATIVE AGENT, AND THE BANK OF
NEW YORK TRUST COMPANY, N.A.,] AS COLLATERAL TRUSTEE.
PLEDGE AND SECURITY AGREEMENT, dated as of May 1, 2006, by WCI STEEL
ACQUISITION, INC. (the "Borrower") and each of the other entities listed on the
signature pages hereof or that becomes a party hereto pursuant to Section 7.10
(Additional Grantors) (each a "Grantor" and, collectively, the "Grantors"), in
favor of Citicorp USA, Inc. ("CUSA"), as agent (in such capacity, the
"Administrative Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, dated as of May 1, 2006 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the Lenders and Issuers
party thereto and CUSA, as agent for the Lenders and Issuers, the Lenders and
the Issuers have severally agreed to make extensions of credit to the Borrower
upon the terms and subject to the conditions set forth therein;
WHEREAS, the Grantors other than the Borrower are party to the
Guaranty pursuant to which they have guaranteed the Obligations (as defined in
the Credit Agreement); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
and the Issuers to make their respective extensions of credit to the Borrower
under the Credit Agreement that the Grantors shall have executed and delivered
this Agreement to the Administrative Agent;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders, the Issuers and the Administrative Agent to enter into the Credit
Agreement and to induce the Lenders and the Issuers to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby agrees with
the Administrative Agent as follows:
ARTICLE 1 DEFINED TERMS
SECTION 1.1 DEFINITIONS
(a) Unless otherwise defined herein, capitalized terms defined in the
Credit Agreement and used herein have the meanings given to them in the Credit
Agreement.
(b) Terms used herein without definition that are defined in the UCC
have the meanings given to them in the UCC, including the following terms (which
are capitalized herein):
"Account Debtor"
"Account"
"Certificated Security"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Control Account"
"Deposit Account"
"Documents"
"Entitlement Holder"
1
"Entitlement Order"
"Equipment"
"Financial Asset"
"Fixtures"
"General Intangible"
"Goods"
"Instruments"
"Inventory"
"Investment Property"
"Letter-of-Credit Right"
"Proceeds"
"Securities Account"
"Securities Intermediary"
"Security"
"Security Entitlement"
"Software"
"Supporting obligation"
(c) The following terms shall have the following meanings:
"Additional Pledged Collateral" means any Pledged Collateral acquired
by any Grantor after the date hereof and in which a security interest is granted
pursuant to Section 2.2 (Grant of Security Interest in Collateral), including,
to the extent a security interest is granted therein pursuant to Section 2.2
(Grant of Security Interest in Collateral), (i) all Stock and Stock Equivalents
of any Person that are acquired by any Grantor after the date hereof, together
with all certificates, instruments or other documents representing any of the
foregoing and all Security Entitlements of any Grantor in respect of any of the
foregoing, (ii) all additional Indebtedness from time to time owed to any
Grantor by any obligor on the Pledged Debt Instruments and the Instruments
evidencing such Indebtedness and (iii) all interest, cash, Instruments and other
property or Proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any of the foregoing. "Additional
Pledged Collateral" may be General Intangibles, Instruments or Investment
Property.
"Agreement" means this Pledge and Security Agreement.
"Collateral" means the Credit Agreement Collateral and the Indenture
Collateral.
"Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee granting any right under any Copyright, including the grant
of any right to copy, publicly perform, create derivative works, manufacture,
distribute, exploit or sell materials derived from any Copyright.
"Copyrights" means (a) 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, all
registrations and recordings thereof and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof, and (b)
the right to obtain all renewals thereof.
"Credit Agreement Collateral" has the meaning ascribed in Section
2.1(a).
2
"Deposit Account Control Agreement" means a letter agreement,
substantially in the form of Annex 1 (Form of Deposit Account Control Agreement)
or otherwise containing similar terms and (with such changes as may reasonably
be agreed to by the Administrative Agent), executed by the Grantor, the
Administrative Agent and the relevant financial institution, as may be amended,
restated, modified or supplemented from time to time.
"Domestic Person" means any "United States person" under and as
defined in Section 7701(a)(30) of the Code.
"Excluded Equity" means any Voting Stock in excess of 66% of the total
outstanding Voting Stock of any direct Subsidiary of any Grantor that is a
Non-Domestic Person. For the purposes of this definition, "Voting Stock" means,
as to any issuer, the issued and outstanding shares of each class of capital
stock or other ownership interests of such issuer entitled to vote (within the
meaning of Treasury Regulations Section 1.956-2(c)(2)).
"Excluded Property" means, collectively, (i) Excluded Equity, (ii) any
permit, lease, license, contract, instrument or other agreement held by any
Grantor that prohibits or requires the consent of any Person other than the
Borrower and its Affiliates as a condition to the creation by such Grantor of a
Lien thereon, or any permit, lease, license contract or other agreement held by
any Grantor to the extent that any Requirement of Law applicable thereto
prohibits the creation of a Lien thereon, but only, in each case, to the extent,
and for so long as, such prohibition is not terminated or rendered unenforceable
or otherwise deemed ineffective by the UCC or any other Requirement of Law (iii)
any "intent to use" Trademark applications for which a statement of use has not
been filed (but only until such statement is filed) and (iv) Equipment owned by
any Grantor that is subject to a purchase money Lien or a Capital Lease if the
contract or other agreement in which such Lien is granted (or in the
documentation providing for such Capital Lease) prohibits or requires the
consent of any Person other than the Borrower and its Affiliates as a condition
to the creation of any other Lien on such Equipment; provided, however,
"Excluded Property" shall not include any Proceeds, substitutions or
replacements of Excluded Property (unless such Proceeds, substitutions or
replacements would constitute Excluded Property).
"First Priority Collateral Liens" has the meaning ascribed in Section
2.2(a)
"Indenture Collateral" has the meaning ascribed in Section 2.1(b).
"Intellectual Property" means, collectively, all rights, priorities
and privileges of any Grantor relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses, trade secrets and Internet domain names, and all rights to ▇▇▇ at law
or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made by
any Grantor or any of its Subsidiaries to any of its Subsidiaries or another
Grantor.
"Intercreditor Agreement" has the meaning ascribed in the legend to
this Agreement.
3
"LLC" means each limited liability company in which a Grantor has an
interest, including those set forth on Schedule 2 (Pledged Collateral).
"LLC Agreement" means each operating agreement with respect to an LLC,
as each agreement has heretofore been, and may hereafter be, amended, restated,
supplemented or otherwise modified from time to time.
"Material Intellectual Property" means Intellectual Property owned by
or licensed to a Grantor and material to the conduct of any Grantor's business.
"Partnership" means each partnership in which a Grantor has an
interest, including those set forth on Schedule 2 (Pledged Collateral).
"Partnership Agreement" means each partnership agreement governing a
Partnership, as each such agreement has heretofore been, and may hereafter be,
amended, restated, supplemented or otherwise modified.
"Patents" means (a) all letters patent of the United States, any other
country or any political subdivision thereof and all reissues and extensions
thereof, (b) all applications for letters patent of the United States or any
other country and all divisionals, continuations and continuations-in-part
thereof and (c) all rights to obtain any reissues, continuations or
continuations-in-part of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, have
manufactured, use, import, sell or offer for sale any invention covered in whole
or in part by a Patent.
"Pledged Certificated Stock" means all Certificated Securities and any
other Stock and Stock Equivalent of a Person evidenced by a certificate,
Instrument or other equivalent document, in each case owned by any Grantor,
including all Stock listed on Schedule 2 (Pledged Collateral).
"Pledged Collateral" means, collectively, the Pledged Stock, Pledged
Debt Instruments, any other Investment Property of any Grantor, all chattel
paper, certificates or other Instruments representing any of the foregoing and
all Security Entitlements of any Grantor in respect of any of the foregoing.
Pledged Collateral may be General Intangibles, Instruments or Investment
Property.
"Pledged Debt Instruments" means all right, title and interest of any
Grantor in Instruments evidencing any Indebtedness owed to such Grantor,
including all Indebtedness described on Schedule 2 (Pledged Collateral), issued
by the obligors named therein.
"Pledged Stock" means all Pledged Certificated Stock and all Pledged
Uncertificated Equity Interest. For purposes of this Agreement, the term
"Pledged Stock" shall not include any Excluded Equity.
"Pledged Uncertificated Equity Interest" means any Stock or Stock
Equivalent of any Person that is not a Pledged Certificated Stock, including all
right, title and interest of any Grantor as a limited or general partner in any
Partnership or as a member of any LLC and all
4
right, title and interest of any Grantor in, to and under any Partnership
Agreement or LLC Agreement to which it is a party.
"Receivable" shall mean any right to a monetary payment for goods
which have been sold, leased, licensed, assigned or otherwise disposed of, or
for services which have been 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).
"Securities Account Control Agreement" means a letter agreement,
substantially in the form of Annex 2 (Form of Securities Account Control
Agreement) (or otherwise containing similar terms and with such changes as may
reasonably be agreed to by the Administrative Agent), executed by the relevant
Grantor, the Administrative Agent and the relevant Approved Securities
Intermediary.
"Second Priority Collateral Liens" has the meaning ascribed in Section
2.2(a)
"Securities Act" means the Securities Act of 1933, as amended.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark.
"Trademarks" means (a) 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, in each case, all
goodwill associated therewith, whether now existing or hereafter adopted or
acquired, all registrations and recordings thereof and all applications in
connection therewith, in each case 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, and (b) the right to
obtain all renewals thereof.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the State of New York; provided, however, that, in the event that, by reason
of mandatory provisions of law, any of the attachment, perfection or priority of
the Administrative Agent's and the Secured Parties' security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"Vehicles" means all vehicles covered by a certificate of title law of
any state.
SECTION 1.2 CERTAIN OTHER TERMS
(a) In this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding" and the
word "through" means "to and including."
(b) The terms "herein," "hereof," "hereto" and "hereunder" and similar
terms refer to this Agreement as a whole and not to any particular Article,
Section, subsection or clause in this Agreement.
5
(c) References herein to an Annex, Schedule, Article, Section,
subsection or clause refer to the appropriate Annex or Schedule to, or Article,
Section, subsection or clause in this Agreement.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Where the context requires, provisions relating to any Collateral,
when used in relation to a Grantor, shall refer to such Grantor's Collateral or
any relevant part thereof.
(f) Any reference in this Agreement to a Loan Document shall include
all appendices, exhibits and schedules thereto, and, unless specifically stated
otherwise all amendments, restatements, supplements or other modifications
thereto, and as the same may be in effect at any time such reference becomes
operative.
(g) The term "including" means "including without limitation" except
when used in the computation of time periods.
(h) The terms "Lender," "Issuer," "Administrative Agent" and "Secured
Party" include their respective successors.
(i) References in this Agreement to any statute shall be to such
statute as amended or modified and in effect from time to time.
ARTICLE 2 GRANT OF SECURITY INTEREST
SECTION 2.1
(a) For the purposes of this Agreement, all of the following property
now owned or at any time hereafter acquired by a Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest is collectively referred to as the "Credit Agreement Collateral":
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents, except to the extent specified in Section 2.1(b)
as "Indenture Collateral";
(v) all General Intangibles, except to the extent specified in Section
2.1(b) as "Indenture Collateral";
(vi) all Instruments;
(vii) all Inventory;
(viii) all Investment Property;
6
(ix) all Letter-of-Credit Rights;
(x) all Vehicles;
(xi) the Commercial Tort Claims described on Schedule 7 (Commercial
Tort Claims) and on any supplement thereto received by the Administrative
Agent pursuant to Section 4.11 (Notice of Commercial Tort Claims);
(xii) all books and records pertaining to the other property described
in this Section 2.1(a), except to the extent specified in Section 2.1(b) as
"Indenture Collateral";
(xiii) all property of any Grantor held by the Administrative Agent or
any other Secured Party, including all property of every description, in
the possession or custody of or in transit to the Administrative Agent or
such Secured Party for any purpose, including safekeeping, collection or
pledge, for the account of such Grantor or as to which such Grantor may
have any right or power;
(xiv) all other Goods and personal property of such Grantor, whether
tangible or intangible and wherever located, except to the extent specified
in Section 2.1(b) as "Indenture Collateral"; and
(xv) to the extent not otherwise included, all Proceeds of any
Collateral described in (i) through (xiv) above;
provided, however, that "Credit Agreement Collateral" shall not include any
Excluded Property; and provided, further, that if and when any property that
would have otherwise constituted Credit Agreement Collateral shall cease to be
Excluded Property, such property shall be deemed at all times from and after the
date hereof to constitute Credit Agreement Collateral.
(b) For the purposes of this Agreement, all of the following property
now owned or at any time hereafter acquired by a Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest is collectively referred to as the "Indenture Collateral":
(i) all Equipment;
(ii) all General Intangibles solely to the extent (A) primarily
related, and integral, to the development, construction, maintenance,
ownership and/or use of, or embedded in, any Real Property, Fixtures or
Equipment, including all licenses, permits, certificates, Software and
computer programs necessary for the use of such property, and (B) directly
derived or arising from, or giving rise to, any Real Property, Fixtures or
Equipment, including all Leases, Payment Intangibles, Supporting
Obligations, all know-how, warranties, guarantees, endorsements,
indemnifications and insurance policies and proceeds thereof to the extent
covering such property and all other rights and claims pertaining to such
property (but, in the case of this clause (B), only including Intellectual
Property that could otherwise be included in the scope of clause (A));
(iii) all Documents primarily pertaining to the development,
construction, maintenance, ownership and/or use of, any Real Property,
Fixtures or Equipment; and
7
(iv) all books and records primarily related, and integral, to the
development, construction, maintenance, ownership and/or use of, any Real
Property, Fixtures or Equipment.
provided, however, that "Indenture Collateral" shall not include any Excluded
Property; and provided, further, that if and when any property that would have
otherwise constituted Indenture Collateral shall cease to be Excluded Property,
such property shall be deemed at all times from and after the date hereof to
constitute Indenture Collateral.
SECTION 2.2 GRANT OF SECURITY INTEREST IN COLLATERAL
(a) Each Grantor, as collateral security for the full, prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations of such Grantor, hereby
mortgages, pledges and hypothecates to the Administrative Agent for the benefit
of the Secured Parties, and grants to the Administrative Agent for the benefit
of the Secured Parties a (i) Lien on and security interest in, all of its right,
title and interest in, to and under the Credit Agreement Collateral of such
Grantor (the "First Priority Collateral Liens") and (ii) a Lien on and security
interest in, all of its right, title and interest in, to and under the Indenture
Collateral of such Grantor; provided, however, that, if and when any property
that at any time constituted Excluded Property becomes Indenture Collateral, the
Administrative Agent shall have, and at all times from and after the date hereof
be deemed to have had, a second priority security interest in such property (the
"Second Priority Collateral Liens"). The Second Priority Collateral Liens on any
or all of the Indenture Collateral shall be and are hereby rendered subordinate
and inferior in priority to the Liens of the New Senior Notes and the Collateral
Trust on such Indenture Collateral permitted by Section 8.2 (Liens, etc.) of the
Credit Agreement.
(b) The Second Priority Collateral Liens on any or all of the
Indenture Collateral shall be and are hereby rendered subordinate and inferior
in priority to the Liens of the New Senior Notes and the Collateral Trust on
such Indenture Collateral permitted by Section 8.2 (Liens, etc.) of the Credit
Agreement. Subject to the Intercreditor Agreement between the Collateral Trust
and the Indenture Trustee, as may be amended from time to time, the Collateral
Trust is hereby made a third-party beneficiary to this Section 2.2(b).
SECTION 2.3 CASH COLLATERAL ACCOUNTS
The Administrative Agent has established a Deposit Account at
Citibank, N.A., designated as "Citicorp USA, Inc. - WCI Steel Acquisition, Inc.
Concentration Account". Such Deposit Account shall be a Cash Collateral Account.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Issuers and the Administrative Agent to
enter into the Credit Agreement, each Grantor hereby represents and warrants
each of the following to the Administrative Agent, the Lenders, the Issuers and
the other Secured Parties:
SECTION 3.1 TITLE; NO OTHER LIENS
8
Except for the Lien granted to the Administrative Agent pursuant to
this Agreement and the other Liens permitted to exist on the Collateral under
the Credit Agreement, such Grantor (a) is the record and beneficial owner of the
Pledged Collateral pledged by it hereunder constituting Instruments or
Certificated Securities, (b) is the Entitlement Holder of all such Pledged
Collateral constituting Investment Property held in a Securities Account and (c)
has rights in or the power to transfer each other item of Collateral in which a
Lien is granted by it hereunder, free and clear of any other Lien.
SECTION 3.2 PERFECTION AND PRIORITY
The security interest granted pursuant to this Agreement shall
constitute a valid and continuing perfected security interest in favor of the
Administrative Agent in the Collateral for which perfection is governed by the
UCC or filing with the United States Copyright Office upon (i) in the case of
all Collateral in which a security interest may be perfected by filing a
financing statement under the UCC, the completion of the filings and other
actions specified on Schedule 3 (Filings) (which, in the case of all filings and
other documents referred to on such schedule, have been delivered to the
Administrative Agent in completed and duly executed form), (ii) the delivery to
the Administrative Agent of all Collateral consisting of Instruments and
Certificated Securities, in each case properly endorsed for transfer to the
Administrative Agent or in blank, and the keeping of such Collateral in New York
State by the Administrative Agent (iii) the execution of Securities Account
Control Agreements with respect to Investment Property not in certificated form,
(iv) the execution of Deposit Account Control Agreements with respect to all
Deposit Accounts of a Grantor and (v) all appropriate filings having been made
with the United States Copyright Office. Except with respect to the
subordination of the Parties' interest in the Indenture Collateral, such
security interest shall be prior to all other Liens on the Collateral except for
Customary Permitted Liens having priority over the Administrative Agent's Lien
by operation of law or otherwise as permitted under the Credit Agreement or
Intercreditor Agreement.
SECTION 3.3 JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE
Such Grantor's jurisdiction of organization, legal name,
organizational identification number, if any, and the location of such Grantor's
chief executive office or sole place of business, in each case as of the date
hereof, is specified on Schedule 1 (Jurisdiction of Organization; Principal
Executive Office).
SECTION 3.4 INVENTORY AND EQUIPMENT
On the date hereof, such Grantor's Inventory and Equipment (other than
mobile goods and Inventory or Equipment in transit) are kept at the locations
listed on Schedule 4 (Location of Inventory and Equipment) and such Schedule 4
(Location of Inventory and Equipment).
SECTION 3.5 PLEDGED COLLATERAL
(a) The Pledged Stock pledged hereunder by such Grantor is listed on
Schedule 2 (Pledged Collateral) and constitutes that percentage of the issued
and outstanding equity of all classes of each issuer thereof as set forth on
Schedule 2 (Pledged Collateral).
9
(b) All of the Pledged Stock (other than Pledged Uncertificated Equity
Interests) has been duly authorized, validly issued and is fully paid and
nonassessable.
(c) Each of the Pledged Stock constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
(d) All Pledged Collateral and, when applicable, any Additional
Pledged Collateral, consisting of Certificated Securities or Instruments has
been delivered to the Administrative Agent in accordance with Section 4.4(a)
(Pledged Collateral) and Section 7.11 of the Credit Agreement.
(e) All Pledged Collateral held by a Securities Intermediary in a
Securities Account is subject to a Securities Account Control Account.
(f) Other than Pledged Stock constituting General Intangibles, there
is no Pledged Collateral other than that represented by Certificated Securities
or Instruments in the possession of the Administrative Agent or that consist of
Financial Assets held in a Securities Account that is subject to a Securities
Account Control Agreement.
SECTION 3.6 ACCOUNTS
No amount payable to such Grantor under or in connection with any
Account is evidenced by any Instrument or Chattel Paper that has not been
delivered to the Administrative Agent, properly endorsed for transfer, to the
extent delivery is required by Section 4.4 (Pledged Collateral).
SECTION 3.7 INTELLECTUAL PROPERTY
(a) Schedule 5 (Intellectual Property) lists all Material Intellectual
Property of such Grantor on the date hereof, separately identifying that owned
by such Grantor and that licensed to such Grantor. The Material Intellectual
Property set forth on Schedule 5 (Intellectual Property) for such Grantor
constitutes all of the intellectual property rights necessary to conduct its
business.
(b) All Material Intellectual Property owned by such Grantor is valid,
subsisting, unexpired and enforceable, has not been adjudged invalid and has not
been abandoned and the use thereof in the business of such Grantor does not
infringe, misappropriate, dilute or violate the intellectual property rights of
any other Person.
(c) Except as set forth in Schedule 5 (Intellectual Property), none of
the Material Intellectual Property owned by such Grantor is the subject of any
licensing or franchise agreement pursuant to which such Grantor is the licensor
or franchisor.
(d) To each Grantor's knowledge, no holding, decision or judgment has
been rendered by any Governmental Authority that would limit, cancel or question
the validity of, or such Grantor's rights in, any Material Intellectual
Property.
10
(e) Except as set forth on Schedule 5, no action or proceeding seeking
to limit, cancel or question the validity of any Material Intellectual Property
owned by such Grantor or such Grantor's ownership interest therein is pending
or, to the knowledge of such Grantor, threatened in writing. There are no
claims, judgments or settlements to be paid by such Grantor relating to the
Material Intellectual Property.
SECTION 3.8 DEPOSIT ACCOUNTS; SECURITIES ACCOUNTS
The only Deposit Accounts or Securities Accounts maintained by any
Grantor on the date hereof are those listed on Schedule 6 (Bank Accounts;
Control Accounts), which sets forth such information separately for each
Grantor.
SECTION 3.9 COMMERCIAL TORT CLAIMS
The only Commercial Tort Claims of any Grantor existing on the date
hereof (regardless of whether the amount, defendant or other material facts can
be determined and regardless of whether such Commercial Tort Claim has been
asserted, threatened or has otherwise been made known to the obligee thereof in
writing or whether litigation has been commenced for such claims) are those
listed on Schedule 7 (Commercial Tort Claims), which sets forth such information
separately for each Grantor.
ARTICLE 4 COVENANTS
Each Grantor agrees with the Administrative Agent to the following, as
long as any Obligation or Commitment remains outstanding and, in each case,
unless the Requisite Lenders otherwise consent in writing:
SECTION 4.1 GENERALLY
Such Grantor shall (a) except for the security interests created by
this Agreement, not create or suffer to exist any Lien upon or with respect to
any Collateral, except Liens permitted under Section 8.2 (Liens, etc.) of the
Credit Agreement, (b) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement, any other Loan Document, any
Related Document, any Requirement of Law or any policy of insurance covering the
Collateral, (c) not sell, transfer or assign (by operation of law or otherwise)
any Collateral except as permitted under the Credit Agreement, (d) except as
provided in the Credit Agreement, not enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Administrative Agent to
sell, assign or transfer any Collateral if such restriction would have a
Material Adverse Effect and (e) promptly notify the Administrative Agent of its
entry into any agreement or assumption of undertaking that restricts the ability
to sell, assign or transfer any Collateral regardless of whether or not it has a
Material Adverse Effect.
SECTION 4.2 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION
(a) Except as permitted by the Credit Agreement, such Grantor shall
maintain the security interest created by this Agreement as a perfected security
interest having at least the priority described in Section 2.2 (Grants of
Security Interest in Collateral) and Section 3.2 (Perfection and Priority) and
shall defend such security interest and the applicable priorities of such
security interests against the claims and demands of all Persons unless the
Administrative
11
Agent determines in its reasonable discretion that the benefits of doing so are
not justified by the costs.
(b) Such Grantor shall furnish to the Administrative Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail and in
form and substance reasonably satisfactory to the Administrative Agent.
(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor
shall promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further action as the Administrative
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 the filing of any financing or continuation statement under the UCC
(or other similar laws) in effect in any jurisdiction with respect to the
security interest created hereby and the execution and delivery of Deposit
Account Control Agreements and Securities Account Control Agreements.
SECTION 4.3 CHANGES IN LOCATIONS, NAME, ETC.
(a) Except upon 15 days' prior written notice to the Administrative
Agent and delivery to the Administrative Agent of (i) all additional financing
statements and other documents reasonably requested by the Administrative Agent
to maintain the validity, perfection and priority of the security interests
provided for herein and (ii) if applicable, a written supplement to Schedule 4
(Location of Inventory and Equipment) showing (A) any additional locations at
which Inventory or Equipment shall be kept or (B) any changes in any location
where Inventory or Equipment shall be kept if such change would cause any
Security Interest in any Collateral to lapse or cease, such Grantor shall not do
any of the following:
(i) permit any Inventory or Equipment to be kept at a location other
than those listed on Schedule 4 (Location of Inventory and Equipment),
except for Inventory or Equipment in transit;
(ii) change its jurisdiction of organization or its location, in each
case from that referred to in Section 3.3 (Jurisdiction of Organization;
Chief Executive Office); or
(iii) change its legal name (other than the deletion of the word
"Acquisition" from its legal name on or promptly after the date hereof) or
any trade name used to identify it in the conduct of its business or
ownership of its properties or organizational identification number, if
any, or corporation, limited liability company or other organizational
structure to such an extent that any financing statement filed in
connection with this Agreement would become misleading.
(b) Such Grantor shall keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including a record of all
payments received and all credits granted with respect to the Collateral and all
other dealings with the Collateral. During the continuance of an Event of
Default, if requested by the Administrative Agent, the security interest of the
Administrative Agent shall be noted on the certificate of title of each Vehicle.
12
SECTION 4.4 PLEDGED COLLATERAL
(a) Such Grantor shall (i) deliver to the Administrative Agent, all
certificates and Instruments representing or evidencing any Pledged Collateral
(including Additional Pledged Collateral), whether now existing or hereafter
acquired, in suitable form for transfer by delivery or, as applicable,
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Administrative Agent, together, in respect of any
Additional Pledged Collateral, with a Pledge Amendment, duly executed by the
Grantor, in substantially the form of Annex 3 (Form of Pledge Amendment), an
acknowledgment and agreement to a Joinder Agreement duly executed by the
Grantor, in substantially the form in the form of Annex 4 (Form of Joinder
Agreement), or such other documentation reasonably acceptable to the
Administrative Agent and (ii) maintain all other Pledged Collateral constituting
Investment Property in a Control Account. Such Grantor authorizes the
Administrative Agent to attach each Pledge Amendment to this Agreement. During
the continuance of an Event of Default, (i) the Administrative Agent shall have
the right, at any time in its discretion with notice to the Grantor, to transfer
to or to register in its name or in the name of its nominees any Pledged
Collateral, (ii) the Administrative Agent shall have the right at any time to
exchange any certificate or instrument representing or evidencing any Pledged
Collateral for certificates or instruments of smaller or larger denominations.
(b) Except as provided in Sections 5.1 and 5.3 (Remedial Provisions),
such Grantor shall be entitled to receive all cash dividends paid in respect of
the Pledged Collateral (other than liquidating or distributing dividends) with
respect to the Pledged Collateral. Any sums paid upon or in respect of any
Pledged Collateral upon the liquidation or dissolution of any issuer of any
Pledged Collateral, any distribution of capital made on or in respect of any
Pledged Collateral or any property distributed upon or with respect to any
Pledged Collateral pursuant to the recapitalization or reclassification of the
capital of any issuer of Pledged Collateral or pursuant to the reorganization
thereof shall, unless otherwise subject to a perfected security interest in
favor of the Administrative Agent, be delivered to the Administrative Agent to
be held by it hereunder as additional collateral security for the Secured
Obligations. If any sum of money or property so paid or distributed in respect
of any Pledged Collateral shall be received by such Grantor, such Grantor shall,
until such money or property is paid or delivered to the Administrative Agent,
hold such money or property in trust for the Administrative Agent, segregated
from other funds of such Grantor, as additional security for the Secured
Obligations.
(c) Except as provided in Article 5 (Remedial Provisions), such
Grantor shall be entitled to exercise all voting, consent and corporate,
partnership, limited liability company and similar rights with respect to the
Pledged Collateral; provided, however, that no vote shall be cast, consent given
or right exercised or other action taken by such Grantor that would impair the
Collateral, be inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Loan Document or, without
prior notice to the Administrative Agent, enable or permit any issuer of Pledged
Collateral to issue any Stock or other equity Securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any Stock or other equity Securities of any nature of any issuer of
Pledged Collateral.
(d) Such Grantor shall not grant "control" (within the meaning of such
term under Article 9-106 of the UCC) over any Investment Property to any Person
other than the Administrative Agent.
13
(e) In the case of each Grantor that is an issuer of Pledged
Collateral, such Grantor agrees to be bound by the terms of this Agreement
relating to the Pledged Collateral issued by it and shall comply with such terms
insofar as such terms are applicable to it. In the case of any Grantor that is a
holder of any Stock or Stock Equivalent in any Person that is an issuer of
Pledged Collateral, such Grantor consents to (i) the exercise of the rights
granted to the Administrative Agent hereunder (including those described in
Section 5.3 (Pledged Collateral)), and (ii) the pledge by each other Grantor,
pursuant to the terms hereof, of the Pledged Stock in such Person and to the
transfer of such Pledged Stock to the Administrative Agent or its nominee and to
the substitution of the Administrative Agent or its nominee as a holder of such
Pledged Stock with all the rights, powers and duties of other holders of Pledged
Stock of the same class and, if the Grantor having pledged such Pledged Stock
hereunder had any right, power or duty at the time of such pledge or at the time
of such substitution beyond that of such other holders, with all such additional
rights, powers and duties. Such Grantor agrees to execute and deliver to the
Administrative Agent such certificates, agreements and other documents as may be
necessary to evidence, formalize or otherwise give effect to the consents given
in this clause (e).
(f) Such Grantor shall not, without the consent of the Administrative
Agent, agree to any amendment of any Constituent Document that in any way
adversely affects the perfection of the security interest of the Administrative
Agent in the Pledged Collateral pledged by such Grantor hereunder, including any
amendment electing to treat any membership interest or partnership interest that
is part of the Pledged Collateral as a "security" under Section 8-103 of the
UCC, or any election to turn any previously uncertificated Stock that is part of
the Pledged Collateral into certificated Stock.
SECTION 4.5 ACCOUNTS
(a) Such Grantor shall not, other than in the ordinary course of
business consistent with its past practice, (i) grant any extension of the time
of payment of any Account, (ii) compromise or settle any Account for less than
the full amount thereof, (iii) release, wholly or partially, any Person liable
for the payment of any Account, (iv) allow any credit or discount on any Account
or (v) amend, supplement or modify any Account in any manner that could
adversely affect the value thereof.
SECTION 4.6 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER
If any amount in excess of $100,000 payable under or in connection
with any Collateral owned by such Grantor shall be or become evidenced by an
Instrument or Chattel Paper, such Grantor shall immediately deliver such
Instrument or Chattel Paper to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, or, if consented to by the
Administrative Agent, shall ▇▇▇▇ all such Instruments and Chattel Paper with the
following legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of Citicorp USA, Inc., as Administrative
Agent".
SECTION 4.7 INTELLECTUAL PROPERTY
(a) Such Grantor (either itself or through licensees) shall (i)
continue to use each Trademark that is Material Intellectual Property in order
to maintain such Trademark in full force and effect with respect to each class
of goods for which such Trademark is currently used, 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
14
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any ▇▇▇▇ that is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent shall obtain a perfected security interest in such ▇▇▇▇
pursuant to this Agreement and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark (or any goodwill associated therewith) may become destroyed,
invalidated, impaired or harmed in any way.
(b) Such Grantor (either itself or through licensees) shall not do any
act, or omit to do any act, whereby any Patent that is Material Intellectual
Property may become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) shall not
(and shall not permit any licensee or sublicensee thereof to) do any act or omit
to do any act whereby any portion of the Copyrights that is Material
Intellectual Property may become invalidated or otherwise impaired and (ii)
shall not (either itself or through licensees) do any act whereby any portion of
the Copyrights that is Material Intellectual Property may fall into the public
domain.
(d) Such Grantor (either itself or through licensees) shall not do any
act, or omit to do any act, whereby any trade secret that is Material
Intellectual Property may become publicly available or otherwise unprotectable.
(e) Such Grantor (either itself or through licensees) shall not do any
act that knowingly uses any Material Intellectual Property to infringe,
misappropriate, or violate the intellectual property rights of any other Person.
(f) Such Grantor shall notify the Administrative Agent immediately if
it knows, or has reason to know, that any application or registration relating
to any Material Intellectual Property may become forfeited, abandoned or
dedicated to the public, or of any adverse determination or development
(including 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, right to use, interest in, or the validity of, any
Material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(g) Whenever such Grantor, either by itself or through any agent,
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 within or outside
the United States or register any Internet domain name, such Grantor shall
report such filing to the Administrative Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs. Upon request of
the Administrative Agent, such Grantor shall execute and deliver, and have
recorded, all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent's security
interest in any Copyright, Patent, Trademark or Internet domain name and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.
(h) Such Grantor shall take all reasonable actions necessary or
requested by the Administrative Agent, including in any proceeding before the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency and any Internet domain name registrar, to maintain
and pursue each application (and to obtain the
15
relevant registration) and to maintain each registration of any Copyright,
Trademark, Patent or Internet domain name that is Material Intellectual
Property, including filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition and interference and cancellation
proceedings.
(i) In the event that any Material Intellectual Property is or has
been infringed upon or misappropriated or diluted by a third party, such Grantor
shall notify the Administrative Agent promptly after such Grantor learns
thereof. Such Grantor shall take appropriate action in response to such
infringement, misappropriation of dilution, including promptly bringing suit for
infringement, misappropriation or dilution and to recover all damages for such
infringement, misappropriation of dilution, and shall take such other actions
may be appropriate in its reasonable judgment under the circumstances to protect
such Material Intellectual Property.
(j) Unless otherwise agreed to by the Administrative Agent, such
Grantor shall execute and deliver to the Administrative Agent for filing in (i)
the United States Copyright Office a short-form copyright security agreement in
the form attached hereto as Annex 5 (Form of Short Form Intellectual Property
Security Agreement), (ii) in the United States Patent and Trademark Office and
with the Secretary of State of all appropriate States of the United States a
short-form patent security agreement in the form attached hereto as Annex 5
(Form of Short Form Intellectual Property Security Agreement), (iii) the United
States Patent and Trademark Office a short-form trademark security agreement in
form attached hereto as Annex 5 (Form of Short Form Intellectual Property
Security Agreement) and (iv) with the appropriate Internet domain name
registrar, a duly executed form of assignment of such Internet domain name to
the Administrative Agent (together with appropriate supporting documentation as
may be requested by the Administrative Agent) in form and substance reasonably
acceptable to the Administrative Agent. In the case of clause (iv) above, such
Grantor hereby authorizes the Administrative Agent to file such assignment in
such Grantor's name and to otherwise perform in the name of such Grantor all
other necessary actions to complete such assignment, and each Grantor agrees to
perform all appropriate actions deemed necessary by the Administrative Agent for
the Administrative Agent to ensure such Internet domain name is registered in
the name of the Administrative Agent.
SECTION 4.8 VEHICLES
During the continuance of an Event of Default, upon the request of the
Administrative Agent, within 30 days after the date of such request and, with
respect to any Vehicle acquired by such Grantor subsequent to the date of any
such request, within 30 days after the date of acquisition thereof, such Grantor
shall file all applications for certificates of title or ownership indicating
the Administrative Agent's first priority security interest (subject to
Permitted Encumbrances) in the Vehicle covered by such certificate and any other
necessary documentation, in each office in each jurisdiction that the
Administrative Agent shall deem advisable to perfect its security interests in
the Vehicles.
SECTION 4.9 PAYMENT OF OBLIGATIONS
Such Grantor shall pay and discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of income or profits therefrom, as well as all claims of any kind
(including claims for labor, materials and supplies) against or with respect to
the Collateral, except that no such charge need be paid if the amount or
validity thereof
16
is currently being contested in good faith by appropriate proceedings, reserves
in conformity with GAAP with respect thereto have been provided on the books of
such Grantor.
SECTION 4.10 INSURANCE
Such Grantor shall (i) maintain, and cause to be maintained for each
of its Subsidiaries, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which such Grantor or such Subsidiary operates, and
such other insurance as may be reasonably requested by the Requisite Lenders,
and, in any event, all insurance required by any Collateral Documents and (ii)
cause all such insurance to name the Administrative Agent on behalf of the
Secured Parties as additional insured or loss payee, as appropriate, and (unless
otherwise agreed by the Administrative Agent) to provide that no cancellation,
material addition in amount or material change in coverage shall be effective
until after 30 days' written notice thereof to the Administrative Agent.
SECTION 4.11 NOTICE OF COMMERCIAL TORT CLAIMS
Such Grantor agrees that, if it shall acquire any interest in any
Commercial Tort Claim (whether from another Person or because such Commercial
Tort Claim shall have come into existence), (i) such Grantor shall, immediately
upon such acquisition, deliver to the Administrative Agent, in each case in form
and substance satisfactory to the Administrative Agent, a notice of the
existence and nature of such Commercial Tort Claim and deliver a supplement to
Schedule 7 (Commercial Tort Claims) containing a specific description of such
Commercial Tort Claim, (ii) the provision of Section 2.1 (Grant of Security
Interest in Collateral) shall apply to such Commercial Tort Claim and (iii) such
Grantor shall execute and deliver to the Administrative Agent, in each case in
form and substance reasonably satisfactory to the Administrative Agent, any
certificate, agreement and other document, and take all other action, deemed by
the Administrative Agent to be reasonably necessary or appropriate for the
Administrative Agent to obtain, on behalf of the Lenders, a first-priority
(subject to Permitted Encumbrances), perfected security interest in all such
Commercial Tort Claims. Any supplement to Schedule 7 (Commercial Tort Claims)
delivered pursuant to this Section 4.11 (Notice of Commercial Tort Claims)
shall, after the receipt thereof by the Administrative Agent, become part of
Schedule 7 (Commercial Tort Claims) for all purposes hereunder other than in
respect of representations and warranties made prior to the date of such
receipt.
ARTICLE 5 REMEDIAL PROVISIONS
SECTION 5.1 CODE AND OTHER REMEDIES
During the continuance of an Event of Default, the Administrative
Agent may exercise, in addition to all other rights and remedies granted to it
in this Agreement and in any other instrument or agreement securing, evidencing
or relating to the Secured Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law. Without limiting the generality
of the foregoing, the Administrative 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 any Collateral, and may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
17
deliver any Collateral (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 Administrative Agent or any Lender 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 Administrative Agent shall have the right upon any such public sale or
sales, and, to the extent permitted by the UCC and other applicable 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 of any Grantor,
which right or equity is hereby waived and released. Each Grantor further
agrees, at the Administrative Agent's request, to assemble the Collateral and
make it available to the Administrative Agent at places that the Administrative
Agent shall reasonably select, whether at such Grantor's premises or elsewhere.
The Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 5.1, after deducting all reasonable costs and expenses
incurred in connection therewith or incidental to the care or safekeeping of any
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and any other Secured Party hereunder, including reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Secured Obligations, in such order as the Credit Agreement shall prescribe, and
only after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, need the Administrative 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 Administrative Agent or any other Secured Party arising out
of the exercise by them of any rights hereunder. 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 10 days before such sale
or other disposition.
SECTION 5.2 ACCOUNTS AND PAYMENTS IN RESPECT OF GENERAL INTANGIBLES
(a) In addition to, and not in substitution for, any similar
requirement in the Credit Agreement, if required by the Administrative Agent at
any time during the continuance of an Event of Default, any payment of Accounts
or payment in respect of General Intangibles, when collected by any Grantor,
shall be forthwith (and, in any event, within four Business Days) deposited by
such Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent, in an Approved Deposit Account or a Cash Collateral
Account, subject to withdrawal by the Administrative Agent as provided in
Section 5.4 (Proceeds to be Turned Over To Administrative Agent). Until so
turned over or turned over, such payment shall be held by such Grantor in trust
for the Administrative Agent, segregated from other funds of such Grantor. Each
such deposit of Proceeds of Accounts and payments in respect of General
Intangibles shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
(b) At the Administrative Agent's request, during the continuance of
an Event of Default, each Grantor shall deliver to the Administrative Agent all
original and other documents evidencing, and relating to, the agreements and
transactions that gave rise to the Accounts or payments in respect of General
Intangibles, including all original orders, invoices and shipping receipts.
(c) The Administrative Agent may, without notice, at any time during
the continuance of an Event of Default, limit or terminate the authority of a
Grantor to collect its Accounts or amounts due under General Intangibles or any
thereof, provided that the Administrative Agent shall arrange for such
alternative collection procedures as it shall reasonably deem appropriate.
18
(d) The Administrative Agent in its own name or in the name of others
may at any time during the continuance of an Event of Default communicate with
Account Debtors to verify with them to the Administrative Agent's satisfaction
the existence, amount and terms of any Account or amounts due under any General
Intangible.
(e) Upon the request of the Administrative Agent at any time during
the continuance of an Event of Default, each Grantor shall notify Account
Debtors that the Accounts or General Intangibles have been collaterally assigned
to the Administrative Agent and that payments in respect thereof shall be made
directly to the Administrative Agent. In addition, the Administrative Agent may
at any time during the continuance of an Event of Default enforce such Grantor's
rights against such Account Debtors and obligors of General Intangibles.
(f) To the extent allowed by applicable law and nything herein to the
contrary notwithstanding, each Grantor shall remain liable under each of the
Accounts and payments in respect of General Intangibles 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 Administrative Agent nor any other Secured Party shall have
any obligation or liability under any agreement giving rise to an Account or a
payment in respect of a General Intangible by reason of or arising out of this
Agreement or the receipt by the Administrative Agent nor any other Secured Party
of any payment relating thereto, nor shall the Administrative Agent nor any
other Secured Party be obligated in any manner to perform any obligation of any
Grantor under or pursuant to any agreement giving rise to an Account or a
payment in respect of a General Intangible, 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 that may have been assigned to it or to which it may be
entitled at any time or times.
SECTION 5.3 PLEDGED COLLATERAL
(a) During the continuance of an Event of Default, upon notice by the
Administrative Agent to the relevant Grantor or Grantors, (i) the Administrative
Agent shall have the right to receive any Proceeds of the Pledged Collateral and
make application thereof to the Obligations in the order set forth in the Credit
Agreement and (ii) the Administrative Agent or its nominee may exercise (A) any
voting, consent, corporate and other right pertaining to the Pledged Collateral
at any meeting of shareholders, partners or members, as the case may be, of the
relevant issuer or issuers of Pledged Collateral or otherwise and (B) any right
of conversion, exchange and subscription and any other right, privilege or
option pertaining to the Pledged Collateral as if it were the absolute owner
thereof (including the right to exchange at its discretion any of the Pledged
Collateral upon the merger, amalgamation, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or equivalent
structure of any issuer of Pledged Stock, the right to deposit and deliver any
Pledged Collateral with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it; provided, however, that the Administrative Agent shall
have no duty to any Grantor to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so doing.
(b) In order to permit the Administrative Agent to exercise the voting
and other consensual rights that it may be entitled to exercise pursuant hereto
and to receive all
19
dividends and other distributions that it may be entitled to receive hereunder,
(i) each Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to the Administrative Agent all such proxies, dividend payment orders
and other instruments as the Administrative Agent may from time to time
reasonably request and (ii) without limiting the effect of clause (i) above,
such Grantor hereby grants to the Administrative Agent an irrevocable proxy to
vote all or any part of the Pledged Collateral and to exercise all other rights,
powers, privileges and remedies to which a holder of the Pledged Collateral
would be entitled (including giving or withholding written consents of
shareholders, partners or members, as the case may be, calling special meetings
of shareholders, partners or members, as the case may be, and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Collateral on the
record books of the issuer thereof) by any other person (including the issuer of
such Pledged Collateral or any officer or agent thereof) during the continuance
of an Event of Default and which proxy shall only terminate upon the payment in
full of the Secured Obligations.
(c) Each Grantor hereby expressly authorizes and instructs each issuer
of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with
any instruction received by it from the Administrative Agent in writing that (A)
states that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that such issuer
shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividend or other payment with respect to the Pledged
Collateral directly to the Administrative Agent.
SECTION 5.4 PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE AGENT
Unless otherwise expressly provided in the Credit Agreement or
Intercreditor Agreement, all Proceeds received by the Administrative Agent
hereunder in cash or Cash Equivalents shall be held by the Administrative Agent
in a Cash Collateral Account. All Proceeds while held by the Administrative
Agent in a Cash Collateral Account (or by such Grantor in trust for the
Administrative Agent) shall continue to be held as collateral security for the
Secured Obligations and shall not constitute payment thereof until applied as
provided in the Credit Agreement.
SECTION 5.5 DEFICIENCY
Each Grantor understands that it shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations and the reasonable fees and
disbursements of any attorney employed by the Administrative Agent or any other
Secured Party to collect such deficiency.
ARTICLE 6 THE ADMINISTRATIVE AGENT
SECTION 6.1 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT
(a) Anything in this clause (a) to the contrary notwithstanding, the
Administrative Agent for the benefit of the Lenders agrees that it shall not
exercise any right under the power of attorney provided for in this clause (a)
unless an Event of Default shall be continuing. Each Grantor hereby irrevocably
constitutes and appoints the Administrative Agent and any duly appointed officer
or agent thereof, with full power of substitution, as its true and
20
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
appropriate action and to execute any document or instrument that 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
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any check, draft, note, acceptance or
other instrument for the payment of moneys due under any Account or General
Intangible 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 Administrative Agent for the purpose of
collecting any such moneys due under any Account or General Intangible or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any agreement, instrument, document or paper as the
Administrative Agent may request to evidence the Administrative Agent's
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 repair or pay any insurance
called for by the terms of this Agreement (including all or any part of the
premiums therefor and the costs thereof);
(iv) execute, in connection with any sale provided for in Section 5.1
(Code and Other Remedies), any endorsement, assignment or other instrument
of conveyance or transfer with respect to the Collateral; or
(v) (A) direct any party liable for any payment under any Collateral
to make payment of any moneys due or to become due thereunder directly to
the Administrative Agent or as the Administrative Agent shall direct, (B)
ask or demand for, collect, and receive payment of and receipt for, any
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral, (C) sign and indorse any
invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse
receipt, draft against debtors, assignment, verification, notice and other
document in connection with any Collateral, (D) commence and prosecute any
suit, action or proceeding at law or in equity in any court of competent
jurisdiction to collect any Collateral and to enforce any other right in
respect of any Collateral, (E) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral, (F) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Administrative Agent may
deem appropriate, (G) assign any Copyright, Patent or Trademark (along with
the goodwill of the business to which any such Trademark pertains)
throughout the world for such term or terms, on such conditions, and in
such manner as the Administrative Agent shall in its sole discretion
determine, including the execution and filing of any document necessary to
effectuate or record such assignment and (H) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any
Collateral as fully and completely as though the Administrative Agent were
the absolute owner thereof for all purposes, and do, at the
21
Administrative Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things that the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative 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.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative 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 expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 6.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Revolving Loans that are Base Rate
Loans under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Grantor, shall be payable by such
Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby authorizes 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.
SECTION 6.2 DUTY OF ADMINISTRATIVE AGENT
The Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative 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
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 any
Collateral. The powers conferred on the Administrative Agent hereunder are
solely to protect the Administrative Agent's interest in the Collateral and
shall not impose any duty upon the Administrative Agent or any other Secured
Party to exercise any such powers. The Administrative 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
respective officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for the Administrative
Agent's or such Secured Parties' own gross negligence or willful misconduct.
SECTION 6.3 AUTHORIZATION OF FINANCING STATEMENTS
Each Grantor authorizes the Administrative Agent and its Affiliates,
counsel and other representatives, at any time and from time to time, to file or
record financing statements, amendments to financing statements, and other
filing or recording documents or instruments with respect to the Collateral in
such form and in such offices as the Administrative Agent reasonably determines
appropriate to perfect the security interests of the Administrative Agent under
this Agreement, and such financing statements and amendments may described the
Collateral covered thereby as "all assets of the debtor", "all personal property
of the debtor" or words of similar effect. Each Grantor hereby also authorizes
the Administrative Agent and its Affiliates, counsel
22
and other representatives, at any time and from time to time, to file
continuation statements with respect to previously filed financing statements. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
SECTION 6.4 AUTHORITY OF ADMINISTRATIVE AGENT
Each Grantor acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the Administrative
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 Administrative Agent and the other Secured Parties, be governed by
the Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Administrative Agent and
the Grantors, the Administrative Agent shall be conclusively presumed to be
acting as agent for the other 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.
ARTICLE 7 MISCELLANEOUS
SECTION 7.1 AMENDMENTS IN WRITING
None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with Section
11.1 (Amendments, Waivers, Etc.) of the Credit Agreement; provided, however,
that annexes to this Agreement may be supplemented (but no existing provisions
may be modified and no Collateral may be released except as provided in the
Credit Agreement or the Intercreditor Agreement) through Pledge Amendments and
Joinder Agreements, in substantially the form of Annex 3 (Form of Pledge
Amendment) and Annex 4 (Form of Joinder Agreement) respectively, in each case
duly executed by the Administrative Agent and each Grantor directly affected
thereby.
SECTION 7.2 NOTICES
All notices, requests and demands to or upon the Administrative Agent
or any Grantor hereunder shall be effected in the manner provided for in Section
11.8 (Notices, Etc.) of the Credit Agreement; provided, however, that any such
notice, request or demand to or upon any Grantor shall be addressed to the
Borrower's notice address set forth in such Section 11.8.
SECTION 7.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES
Neither the Administrative Agent nor any other Secured Party shall by
any act (except by a written instrument pursuant to Section 7.1 (Amendments in
Writing)), 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 exercise, nor any delay in exercising, on the part of the
Administrative 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 Administrative 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 that the Administrative Agent or such other Secured Party would
23
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.
SECTION 7.4 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the successors and assigns of
each Grantor and shall inure to the benefit of the Administrative Agent and each
other Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent.
SECTION 7.5 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), each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Signature pages may
be detached from multiple counterparts and attached to a single counterpart so
that all signature pages are attached to the same document. Delivery of an
executed counterpart by telecopy shall be effective as delivery of a manually
executed counterpart.
SECTION 7.6 SEVERABILITY
Any provision of this Agreement that 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.
SECTION 7.7 SECTION HEADINGS
The Article and Section titles contained in this Agreement are, and
shall be, without substantive meaning or content of any kind whatsoever and are
not part of the agreement of the parties hereto.
SECTION 7.8 ENTIRE AGREEMENT
This Agreement together with the other Loan Documents represents the
entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof.
SECTION 7.9 GOVERNING LAW
This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the law
of the State of New York.
SECTION 7.10 ADDITIONAL GRANTORS
24
If, pursuant to Section 7.11 (Additional Collateral and Guaranties) of
the Credit Agreement, the Borrower shall be required to cause any Subsidiary
that is not a Grantor to become a Grantor hereunder, such Subsidiary shall
execute and deliver to the Administrative Agent a Joinder Agreement
substantially in the form of Annex 4 (Form of Joinder Agreement) and shall
thereafter for all purposes be a party hereto and have the same rights, benefits
and obligations as if a Grantor party hereto on the Closing Date.
SECTION 7.11 RELEASE OF COLLATERAL
(a) At the time provided in Section 10.8(b)(i) (Concerning the
Collateral and the Collateral Documents) of the Credit Agreement, the Collateral
shall be released from the Lien created hereby and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Administrative 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 Administrative Agent
shall deliver to such Grantor any Collateral of such Grantor held by the
Administrative Agent hereunder and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If the Administrative Agent shall be directed or permitted
pursuant to Section 10.8(b)(ii) or (iii) (Concerning the Collateral and the
Collateral Documents) of the Credit Agreement to release any Lien created hereby
upon any Collateral (including any Collateral sold or disposed of by any Grantor
in a transaction permitted by the Credit Agreement), such Collateral shall be
released from the Lien created hereby to the extent provided under, and subject
to the terms and conditions set forth in, Section 10.8(b)(ii) or (iii)
(Concerning the Collateral and the Collateral Documents) of the Credit
Agreement. In connection therewith, the Administrative Agent, at the request and
sole expense of the Borrower, shall execute and deliver to the Borrower all
releases or other documents, including, without limitation, UCC termination
statements, reasonably necessary or desirable for the release of the Lien
created hereby on such Collateral. At the request and sole expense of the
Borrower, a Grantor shall be released from its obligations hereunder in the
event that all the capital stock of such Grantor shall be so sold or disposed;
provided, however, that the Borrower shall have delivered to the Administrative
Agent, at least ten Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Grantor and the terms of
the sale or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a certification by the
Borrower in form and substance satisfactory to the Administrative Agent stating
that such transaction is in compliance with the Credit Agreement and the other
Loan Documents.
SECTION 7.12 REINSTATEMENT
Each Grantor further agrees that, if any payment made by any Loan
Party or other Person and applied to the Obligations is at any time annulled,
avoided, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
Collateral are required to be returned by any Secured Party to such Loan Party,
its estate, trustee, receiver or any other party, including any Grantor, under
any bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, any Lien or other Collateral
securing such liability shall be and remain in full force and effect, as fully
as if such payment had never been made or, if prior thereto the Lien granted
hereby or other Collateral securing such liability hereunder shall have been
released or
25
terminated by virtue of such cancellation or surrender), such Lien or other
Collateral shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect any Lien or other Collateral securing the obligations of any
Grantor in respect of the amount of such payment except to the extent such
payment was not so required to be refunded, repaid or returned.
SECTION 7.13 INTERCREDITOR ISSUES.
Notwithstanding anything herein to the contrary, for so long as the
Indenture and Collateral Trust (to the extent applicable) is in effect, if any
Grantor is in compliance with any requirements relating to Indenture Collateral
imposed by the Indenture which are equivalent to or conflict with requirements
set forth in this Agreement, such Grantor need not comply with (and shall be
deemed to have satisfied) such requirements of this Agreement.
[SIGNATURE PAGES FOLLOW]
26
IN WITNESS WHEREOF, each of the undersigned has caused this Pledge and
Security Agreement to be duly executed and delivered as of the date first above
written.
WCI STEEL ACQUISITION, INC.,
as Grantor
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
WCI STEEL METALLURGICAL SERVICES
ACQUISITION, INC.,
as Grantor
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
WCI STEEL PRODUCTION CONTROL SERVICES
ACQUISITION, INC.,
as Grantor
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
YOUNGSTOWN SINTER ACQUISITION COMPANY,
as Grantor
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]
WCI STEEL SALES ACQUISITION, L.P.,
as Grantor
By: WCI STEEL PRODUCTION CONTROL
SERVICES ACQUISITION, INC.,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]
ACCEPTED AND AGREED
as of the date first above written:
CITICORP USA, INC.,
as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Director/Vice President
[SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT]
ANNEX 1
TO
PLEDGE AND SECURITY AGREEMENT
FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT
_____________ __, ____
[Financial Institution]
[Address]
Ladies and Gentlemen:
Reference is made to account no. [__________] maintained with you (the
"Bank") by [__________] (the "Company"), [as borrower] [as guarantor] into which
funds are deposited from time to time (the "Account"). The Company has entered
into a Pledge and Security Agreement, dated as of May 1, 2006 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
"Pledge and Security Agreement"), among the Company, [certain of its
subsidiaries and/or affiliates party thereto] and Citicorp USA, Inc., as agent
for the Secured Parties referred to therein (in such capacity the
"Administrative Agent").
Pursuant to the Pledge and Security Agreement and related documents,
the Company has granted to the Administrative Agent, for the benefit of the
Secured Parties, a security interest in certain property of the Company,
including, among other things, accounts, inventory, equipment, instruments,
general intangibles and all proceeds thereof (the "Collateral"). Payments with
respect to the Collateral are or hereafter may be made to the Account. You, the
Company and the Administrative Agent are entering into this letter agreement to
perfect the security interest of the Administrative Agent in the Account.
The Company hereby transfers to the Administrative Agent exclusive
control of the Account and all funds and other property on deposit therein. By
your execution of this letter agreement, you (i) agree that you shall comply
with instructions originated by the Administrative Agent directing disposition
of the funds in the Account without further consent of the Company and (ii)
acknowledge and agree that the Administrative Agent now has exclusive control of
the Account, that all funds and other property on deposit in the Account shall
be transferred to the Administrative Agent as provided herein, that the Account
is being maintained by you for the benefit of the Administrative Agent and that
all amounts and other property therein are held by you as custodian for the
Administrative Agent.
Except as provided in clauses Section 2(c) and Section 4below, the
Account shall not be subject to deduction, set-off, banker's lien, counterclaim,
defense, recoupment or any other right in favor of any person or entity other
than the Administrative Agent. By your execution of this letter agreement you
also acknowledge that, as of the date hereof, you have received no notice of any
other pledge or assignment of the Account and have not executed any agreements
with third parties covering the disposition of funds in the Account. You agree
with the Administrative Agent as follows:
SECTION 1. Notwithstanding anything to the contrary or any other
agreement relating to the Account, the Account is and shall be maintained
for the benefit of the Administrative Agent, shall be entitled "Citicorp
USA, Inc. [name of Company]
A1-1
Account" and shall be subject to written instructions only from an
authorized officer of the Administrative Agent.
SECTION 2. [A POST OFFICE BOX (THE "LOCKBOX") HAS BEEN RENTED IN THE
NAME OF THE COMPANY AT THE [___________] POST OFFICE AND THE ADDRESS TO BE
USED FOR SUCH LOCKBOX IS:
[Insert address]
Your authorized representatives shall have access to the Lockbox under the
authority given by the Company to the post office and shall make regular
pick-ups from the Lockbox timed to gain maximum benefit of early
presentation and availability of funds. You shall endorse process all
checks received in the Lockbox and deposit such checks (to the extent
eligible) in the Account in accordance with the procedures set forth below.
(a) YOU SHALL FOLLOW YOUR USUAL OPERATING PROCEDURES FOR THE
HANDLING OF ANY [CHECKS RECEIVED FROM THE LOCKBOX OR OTHER] REMITTANCE
RECEIVED IN THE ACCOUNT THAT CONTAINS RESTRICTIVE ENDORSEMENTS,
IRREGULARITIES (SUCH AS A VARIANCE BETWEEN THE WRITTEN AND NUMERICAL
AMOUNTS), UNDATED OR POSTDATED ITEMS, MISSING SIGNATURES, INCORRECT
PAYEES AND THE LIKE.
(b) YOU SHALL ENDORSE AND PROCESS ALL ELIGIBLE CHECKS AND OTHER
REMITTANCE ITEMS NOT COVERED BY CLAUSE (C) BELOW AND DEPOSIT SUCH
CHECKS AND REMITTANCE ITEMS IN THE ACCOUNT.
(c) YOU SHALL MAIL ALL CHECKS RETURNED UNPAID BECAUSE OF
UNCOLLECTED OR INSUFFICIENT FUNDS UNDER APPROPRIATE ADVICE TO THE
COMPANY (WITH A COPY OF THE NOTIFICATION OF RETURN TO THE
ADMINISTRATIVE AGENT). You may charge the Account for the amounts of
any returned check that has been previously credited to the Account.
To the extent insufficient funds remain in the Account to cover any
such returned check, the Company shall indemnify you for the
uncollected amount of such returned check upon your demand.
(d) YOU SHALL MAINTAIN A RECORD OF ALL CHECKS AND OTHER
REMITTANCE ITEMS RECEIVED IN THE ACCOUNT AND, IN ADDITION TO PROVIDING
THE COMPANY WITH PHOTOSTATIC COPIES THEREOF, VOUCHERS, ENCLOSURES AND
THE LIKE OF SUCH CHECKS AND REMITTANCE ITEMS ON A DAILY BASIS, FURNISH
TO THE ADMINISTRATIVE AGENT A MONTHLY STATEMENT OF THE ACCOUNT TO
CITICORP USA, INC., AS ADMINISTRATIVE AGENT AT THE FOLLOWING ADDRESS:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ATTENTION:
[____________], WITH A COPY TO THE COMPANY.] (1)
SECTION 3. You shall transfer (by wire transfer or other method of
transfer mutually acceptable to you and the Administrative Agent) to the
Administrative Agent, in same day funds, on each business day, the entire
balance in the Account to the following account:
----------
(1) If the Account is tied to a particular lockbox.
A1-2
ABA Number: _____________________________________________________
Citibank, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Account Name: ___________________________________________________
Concentration Account
Account Number: _________________________________________________
Reference: ______________________________________________________
Attn: ___________________________________________________________
or to such other account as the Administrative Agent may from time to time
designate in writing (the "Administrative Agent Concentration Account").
SECTION 4. All customary service charges and fees with respect to the
Account shall be debited to the Account. In the event insufficient funds
remain in the Account to cover such customary service charges and fees, the
Company shall pay and indemnify you for the amounts of such customary
service charges and fees.
This letter agreement shall be binding upon and shall inure to the
benefit of you, the Company, the Administrative Agent, the Secured Parties
referred to in the Pledge and Security Agreement and the respective successors,
transferees and assigns of any of the foregoing. This letter agreement may not
be modified except upon the mutual consent of the Administrative Agent, the
Company and you. You may terminate the letter agreement only upon 30 days' prior
written notice to the Company and the Administrative Agent. The Administrative
Agent may terminate this letter agreement upon 10 days' prior written notice to
you and the Company. Upon such termination you shall close the Account and
transfer all funds in the Account to the Administrative Agent Concentration
Account or as otherwise directed by the Administrative Agent. After any such
termination, you shall nonetheless remain obligated promptly to transfer to the
Administrative Agent Concentration Account or as the Administrative Agent may
otherwise direct all funds and other property received in respect of the
Account.
This letter agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this letter agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this letter agreement.
This letter agreement supersedes all prior agreements, oral or
written, with respect to the subject matter hereof and may not be amended,
modified or supplemented except by a writing signed by the Administrative Agent,
the Company and you. You have not, and, without the prior consent of the
Administrative Agent and the Company, you shall not, agree with any third part
to comply with instructions or other directions concerning the Account or the
disposition of funds in the Account originated by such third party.
The Company hereby agrees to indemnify and hold you, your directors,
officers, agents and employees harmless against all claims, causes of action,
liabilities, lawsuits, demands and damages, including, without limitation, all
court costs and reasonable attorney fees, in each case in any way related to or
arising out of or in connection with this letter agreement or any
A1-3
action taken or not taken pursuant hereto, except to the extent caused by your
gross negligence or willful misconduct.
This letter agreement shall be governed by, and construed in
accordance with, the law of the State of New York.
A1-4
Upon acceptance of this letter agreement it shall be the valid and
binding obligation of the Company, the Administrative Agent, and you, in
accordance with its terms.
Very truly yours,
[NAME OF COMPANY]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CITICORP USA, INC.,
as Administrative Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED AND AGREED
as of the date first above written:
[FINANCIAL INSTITUTION]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO DEPOSIT ACCOUNT CONTROL ACCOUNT AGREEMENT]
A1-5
EXHIBIT A
TO
DEPOSIT ACCOUNT CONTROL AGREEMENT
FORM OF ADMINISTRATIVE AGENT BLOCKAGE NOTICE
[Financial Institution]
[Address]
Re: Account No. ____________________ (the "Account")
Ladies and Gentlemen:
Reference is made to the Account and that certain Deposit Account
Control Agreement dated __________ __, 20__ among you, Citicorp USA, Inc., as
Administrative Agent (the "Administrative Agent"), and [_____________] (the
"Deposit Account Control Agreement"). Capitalized terms used herein shall have
the meanings given to them in the Deposit Account Control Agreement.
The Administrative Agent hereby notifies you that, from and after the
date of this notice, you are hereby directed to transfer (by wire transfer or
other method of transfer mutually acceptable to you and the Administrative
Agent) to the Administrative Agent, in same day funds, on each business day, the
entire balance in the Account to the Administrative Agent Concentration Account
specified in clause Section 3 of the Deposit Account Control Agreement or to
such other account as the Administrative Agent may from time to time designate
in writing.
Very truly yours,
CITICORP USA, INC,
as Administrative Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A1-6
ANNEX 2
TO
PLEDGE AND SECURITY AGREEMENT
FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT
[Name and Address
of Approved Securities
Intermediary]
_____________ __, 20__
Ladies and Gentlemen:
The undersigned ___________________ (the "Pledgor") together with
certain of its affiliates are party to a Pledge and Security Agreement dated May
1, 2006 in favor of Citicorp USA, Inc., as agent for the Secured Parties
referred to therein (the "Pledgee" and such agreement the "Pledge and Security
Agreement") pursuant to which a security interest is granted by the Pledgor in
all present and future Assets (hereinafter defined) in Account No. _______ of
the Pledgor (the "Pledge").
In connection therewith, the Pledgor hereby instructs you (the
"Approved Securities Intermediary") to do all of the following:
1. maintain the Account, as " - Citicorp USA, Inc. Control Account";
2. hold in the Account the assets, including, without limitation, all
financial assets, securities, security entitlements and all other
property and rights now or hereafter received in such Account
(collectively the "Assets"), including, without limitation, those
assets listed on Schedule A (List of Assets) attached hereto and made
a part hereof;
3. provide to the Pledgee, with a duplicate copy to the Pledgor, a
monthly statement of Assets and a confirmation statement of each
transaction effected in the Account after such transaction is
effected; and
4. honor only the instructions or entitlement orders (within the meaning
of Section 8-102 of the UCC (as defined below) (the "Entitlement
Orders") in regard to or in connection with the Account given by an
Authorized Officer of the Pledgee, except as provided in the following
sentence. Until such time as the Pledgee gives a written notice in the
form of Exhibit A hereto to the Approved Securities Intermediary that
the Pledgor's rights under this sentence have been terminated (on
which notice the Approved Securities Intermediary may rely
exclusively), the Pledgor acting through an Authorized Officer may (a)
exercise any voting right that it may have with respect to any Asset,
(b) give Entitlement Orders and otherwise give instructions to enter
into purchase or sale transactions in the Account and (c) withdraw and
receive for its own use all regularly scheduled interest [and
dividends] paid with respect to the Assets [and all cash proceeds of
any sale of Assets] ("Permitted Withdrawals"); provided, however,
that, unless the Pledgee has consented to the specific transaction,
the ▇▇▇▇▇▇▇
▇▇-▇
shall not instruct the Approved Securities Intermediary to deliver
and, except as may be required by law or by court order, the Approved
Securities Intermediary shall not deliver, cash, securities, or
proceeds from the sale of, or distributions on, such securities out of
the Account to the Pledgor or to any other person or entity other than
Permitted Withdrawals.
By its signature below, the Approved Securities Intermediary agrees to
comply with the Entitlement Orders and instructions of an Authorized Officer of
the Pledgee (including, without limitation, any instruction with respect to
sales, trades, transfers and withdrawals of cash or other of the Assets) without
the further consent of the Pledgor or any other person (it being understood and
agreed by the Pledgor that the Approved Securities Intermediary shall have no
duty or obligation whatsoever to have knowledge of the terms of the Pledge and
Security Agreement or to determine whether or not an event of default exists
thereunder). The Pledgor hereby agrees to indemnify and hold harmless the
Approved Securities Intermediary, its affiliates, officers and employees from
and against all claims, causes of action, liabilities, lawsuits, demands and
damages, including, without limitation, all court costs and reasonable
attorney's fees, that may result by reason of the Approved Securities
Intermediary complying with such instructions of the Pledgee.
The Authorized Officer of the Pledgee who shall give oral instructions
hereunder shall confirm the same in writing to the Approved Securities
Intermediary within five days after such oral instructions are given.
For the purpose of this Agreement, the term "Authorized Officer of the
Pledgor" shall refer in the singular to _________________ or__________________
(each of whom is, on the date hereof, an officer or director of the Pledgor) and
"Authorized Officer of the Pledgee" shall refer in the singular to any person
who is a vice president or managing director of the Pledgee. In the event that
the Pledgor shall find it advisable to designate a replacement for any of its
Authorized Officers, written notice of any such replacement shall be given to
the Approved Securities Intermediary and the Pledgee.
Except with respect to the obligations and duties as set forth herein,
this Agreement shall not impose or create any obligation or duty upon the
Approved Securities Intermediary greater than or in addition to the customary
and usual obligations and duties of the Approved Securities Intermediary to the
Pledgor.
As long as the Assets are pledged to the Pledgee, (i) the Approved
Securities Intermediary shall not invade the Assets to cover margin debits or
calls in any other account of the Pledgor and (ii) the Approved Securities
Intermediary agrees that, except for liens resulting from customary commissions,
fees, or charges based upon transactions in the Account, it subordinates in
favor of the Pledgee any security interest, lien or right of setoff the Approved
Securities Intermediary may have. The Approved Securities Intermediary
acknowledges that it has not received notice of any other security interest in
the Account or the Assets. In the event any such notice is received, the
Approved Securities Intermediary shall promptly notify the Pledgee. The Pledgor
herein represents that the Assets are free and clear of any lien or encumbrance
and agrees that, with the exception of the security interest granted to the
Pledgee, no lien or encumbrance shall be placed by it on the Assets without the
express written consent of both the Pledgee and the Approved Securities
Intermediary.
A2-2
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns and it and the rights
and obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, and the law of the Approved Securities
Intermediary's jurisdiction for the purposes of Section 8-110 of the Uniform
Commercial Code in effect in the State of New York (the "UCC") shall be, the law
of the State of New York.
The Approved Securities Intermediary shall treat all property at any
time held by the Approved Securities Intermediary in the Account as Financial
Assets within the meaning of the UCC. The Approved Securities Intermediary
acknowledges that this Agreement constitutes written notification to the
Approved Securities Intermediary, pursuant to the UCC and any applicable federal
regulations for the Federal Reserve Book Entry System, of the Pledgee's security
interest in the Assets. The Pledgor, Pledgee and Approved Securities
Intermediary are entering into this Agreement to provide for the Pledgee's
control of the Assets and to confirm the first priority of the Pledgee's
security interest in the Assets.
If any term or provision of this Agreement is determined to be invalid
or unenforceable, the remainder of this Agreement shall be construed in all
respects as if the invalid or unenforceable term or provision were omitted. This
Agreement may not be altered or amended in any manner without the express
written consent of the Pledgor, the Pledgee and the Approved Securities
Intermediary. This Agreement may be executed in any number of counterparts, all
of which shall constitute one original agreement.
The Pledgor hereby agrees to indemnify and hold you, your directors,
officers, agents and employees harmless against all claims, causes of action,
liabilities, lawsuits, demands and damages, including, without limitation, all
court costs and reasonable attorney fees, in each case in any way related to or
arising out of or in connection with this letter agreement or any action taken
or not taken pursuant hereto, except to the extent caused by your gross
negligence or willful misconduct.
This Agreement may be terminated by the Approved Securities
Intermediary upon 30 day's prior written notice to the Pledgor and the Pledgee.
Upon expiration of such 30-day period, the Approved Securities Intermediary
shall be under no further obligation except to hold the Assets in accordance
with the terms of this Agreement, pending receipt of written instructions from
the Pledgor and the Pledgee, jointly, regarding the further disposition of the
pledged Assets.
The Pledgor acknowledges that this Agreement supplements any existing
agreement of the Pledgor with the Approved Securities Intermediary and, except
as expressly provided herein, is in no way intended to abridge any right that
the Approved Securities Intermediary might otherwise have.
A2-3
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly authorized officers all as of the date
first above written.
[NAME OF PLEDGOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CITICORP USA, INC.,
as Administrative Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACCEPTED AND AGREED
as of the date first above written:
[APPROVED FINANCIAL INTERMEDIARY]
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO SECURITIES ACCOUNT CONTROL AGREEMENT]
A2-4
SCHEDULE A
TO
SECURITIES ACCOUNT CONTROL AGREEMENT
PLEDGED COLLATERAL ACCOUNT NUMBER: ______________
A2-5
EXHIBIT A
TO
SECURITIES ACCOUNT CONTROL AGREEMENT
FORM OF ADMINISTRATIVE AGENT NOTICE OF CONTROL
[Securities Intermediary]
[Address]
Re: Account No. ____________________ (the "Account")
Ladies and Gentlemen:
Reference is made to the Account and that certain Securities Account
Control Agreement dated __________ __, 20__ among you, Citicorp USA, Inc., as
Administrative Agent (the "Administrative Agent"), and [_____________ (the
"Pledgor")] (such agreement, the "Securities Account Control Agreement").
Capitalized terms used herein shall have the meanings given to them in the
Securities Account Control Agreement.
The Administrative Agent hereby notifies you that, from and after the
date of this notice, the Pledgor's rights to give Entitlement Orders with
respect to the Account and the other rights afforded to the Pledgor under
paragraph 4 of the Securities Account Control Agreement are terminated. From and
after the delivery of this notice to you, you shall honor only the Entitlement
Orders in regard to or in connection with the Account and/or the financial
assets contained therein given by an Authorized Officer of the Administrative
Agent.
Very truly yours,
CITICORP USA, INC,
as Administrative Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A2-6
ANNEX 3
TO
PLEDGE AND SECURITY AGREEMENT
FORM OF PLEDGE AMENDMENT
This PLEDGE AMENDMENT, dated as of __________ __, 20__, is delivered
pursuant to Section 4.4(a) (Pledged Collateral) of the Pledge and Security
Agreement, dated as of May 1, 2006, by WCI Steel Acquisition, Inc. (the "The
Company"), the [undersigned Grantor and the other ]Subsidiaries of the Company
from time to time party thereto as Grantors in favor of Citicorp USA, Inc., as
agent for the Secured Parties referred to therein (the "Pledge and Security
Agreement") and the undersigned hereby agrees that this Pledge Amendment may be
attached to the Pledge and Security Agreement and that the Pledged Collateral
listed on this Pledge Amendment shall be and become part of the Collateral
referred to in the Pledge and Security Agreement and shall secure all Secured
Obligations of the undersigned. Capitalized terms used herein but not defined
herein are used herein with the meaning given them in the Pledge and Security
Agreement.
[GRANTOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Pledged Stock
NUMBER OF SHARES,
ISSUER CLASS CERTIFICATE NO(S). PAR VALUE UNITS OR INTERESTS
------ ----- ------------------ --------- ------------------
Pledged Debt Instruments
PRINCIPAL
ISSUER DESCRIPTION OF DEBT CERTIFICATE NO(S). FINAL MATURITY AMOUNT
------ ------------------- ------------------ -------------- ---------
A3-1
ACKNOWLEDGED AND AGREED
as of the date first above written:
CITICORP USA, INC.,
as Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
A3-2
ANNEX 4
TO
PLEDGE AND SECURITY AGREEMENT
This JOINDER AGREEMENT, dated as of _________ __, 20__, is delivered
pursuant to Section 7.10 (Additional Grantors) of the Pledge and Security
Agreement, dated as of May 1, 20, by WCI Steel Acquisition, Inc. (the "The
Company") and the Subsidiaries of the Company listed on the signature pages
thereof in favor of the Citicorp USA, Inc., as agent for the Secured Parties
referred to therein (the "Pledge and Security Agreement"). Capitalized terms
used herein but not defined herein are used with the meanings given them in the
Pledge and Security Agreement.
By executing and delivering this Joinder Agreement, the undersigned,
as provided in Section 7.10 (Additional Grantors) of the Pledge and Security
Agreement, hereby becomes a party to the Pledge and Security Agreement as a
Grantor thereunder with the same force and effect as if originally named as a
Grantor therein and, without limiting the generality of the foregoing, hereby
grants to the Administrative Agent, as collateral security for the full, prompt
and complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations of the undersigned, hereby
collaterally assigns, mortgages, pledges and hypothecates to the Administrative
Agent and grants to the Administrative Agent a Lien on and security interest in,
all of its right, title and interest in, to and under the Collateral of the
undersigned and expressly assumes all obligations and liabilities of a Grantor
thereunder.
The information set forth in Annex 1-A is hereby added to the
information set forth in Schedules 1 through 6 to the Pledge and Security
Agreement. [By acknowledging and agreeing to this Joinder Agreement, the
undersigned hereby agree that this Joinder Agreement may be attached to the
Pledge and Security Agreement and that the Pledged Collateral listed on Annex
1-A to this Pledge Amendment shall be and become part of the Collateral referred
to in the Pledge and Security Agreement and shall secure all Secured Obligations
of the undersigned.](2)
The undersigned hereby represents and warrants that each of the
representations and warranties contained in Article 3 (Representations and
Warranties) of the Pledge and Security Agreement applicable to it is true and
correct on and as the date hereof as if made on and as of such date.
IN WITNESS WHEREOF, the undersigned has caused this Joinder Agreement
to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------
(2) Insert to pledge Stock of the new Subsidiary without doing a Pledge
Amendment.
A5-1
ACKNOWLEDGED AND AGREED
as of the date first above written:
[EACH GRANTOR PLEDGING
ADDITIONAL COLLATERAL]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CITICORP USA, INC.,
as Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
A5-2
ANNEX 5
TO
PLEDGE AND SECURITY AGREEMENT
FORM OF SHORT FORM INTELLECTUAL PROPERTY SECURITY AGREEMENT(3)
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of
_________ __, 20__, by each of the entities listed on the signature pages hereof
[or that becomes a party hereto pursuant to Section 7.10 (Additional Grantors)
of the Security Agreement referred to below] (each a "Grantor" and,
collectively, the "Grantors"), in favor of Citicorp USA, Inc. ("CUSA"), as agent
for the Secured Parties (as defined in the Credit Agreement referred to below)
(in such capacity, the "Administrative Agent").
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, dated as of May 1, 2006 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among WCI Steel Acquisition, Inc. (the "The
Company"), the Lenders and Issuers party thereto and CUSA, as agent for the
Lenders and Issuers, the Lenders and the Issuers have severally agreed to make
extensions of credit to the Company upon the terms and subject to the conditions
set forth therein;
WHEREAS, the Grantors other than the Company are party to the Guaranty
pursuant to which they have guaranteed the Obligations; and
WHEREAS, all the Grantors are party to a Pledge and Security Agreement
of even date herewith in favor of the Administrative Agent (the "Security
Agreement") pursuant to which the Grantors are required to execute and deliver
this [Copyright] [Patent] [Trademark] Security Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders, the Issuers and the Administrative Agent to enter into the Credit
Agreement and to induce the Lenders and the Issuers to make their respective
extensions of credit to the Company thereunder, each Grantor hereby agrees with
the Administrative Agent as follows:
ARTICLE I. DEFINED TERMS
Unless otherwise defined herein, terms defined in the Credit Agreement
or in the Security Agreement and used herein have the meaning given to them in
the Credit Agreement or the Security Agreement.
ARTICLE II. GRANT OF SECURITY INTEREST IN [COPYRIGHT] [TRADEMARK] [PATENT]
COLLATERAL
Each Grantor, as collateral security for the full, prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations of such Grantor, hereby mortgages, pledges
and hypothecates to the Administrative Agent for the benefit of the Secured
Parties, and grants to the Administrative Agent for the benefit of the Secured
Parties a lien on and security interest in, all of its right, title and interest
in, to and under the following Collateral of such Grantor (the "[Copyright]
[Patent] [Trademark] Collateral"):
----------
(3) Separate short form agreements should be filed relating to each Grantor's
respective copyrights, patents and trademarks.
A5-1
SCHEDULE 2.1. [all of its Copyrights and Copyright Licenses to which it is a
party, including, without limitation, those referred to on Schedule I hereto;
SCHEDULE 2.2. all extensions of the foregoing; and
SCHEDULE 2.3. all Proceeds of the foregoing, including, without limitation, any
claim by Grantor against third parties for past, present or future infringement
of any Copyright or Copyright licensed under any Copyright License.]
SCHEDULE 2.4. or
SCHEDULE 2.5. all of its Patents and Patent Licenses to which it is a party,
including, without limitation, those referred to on Schedule I hereto;
SCHEDULE 2.6. all reissues, continuations or continuations-in-part of the
foregoing; and
SCHEDULE 2.7. all Proceeds of the foregoing, including, without limitation, any
claim by Grantor against third parties for past, present or future infringement
of any Patent or any Patent licensed under any Patent License.]
SCHEDULE 2.8. or
SCHEDULE 2.9. all of its Trademarks and Trademark Licenses to which it is a
party, including, without limitation, those referred to on Schedule I hereto;
SCHEDULE 2.10. all goodwill of the business connected with the use of, and
symbolized by, each Trademark; and
SCHEDULE 2.11. all Proceeds of the foregoing, including, without limitation, any
claim by Grantor against third parties for past, present, future (i)
infringement or dilution of any Trademark or Trademark licensed under any
Trademark License or (ii) injury to the goodwill associated with any Trademark
or any Trademark licensed under any Trademark License.]
ARTICLE III. SECURITY AGREEMENT
The security interest granted pursuant to this [Copyright] [Patent]
[Trademark] Security Agreement is granted in conjunction with the security
interest granted to the Administrative Agent pursuant to the Security Agreement
and each Grantor hereby acknowledges and affirms that the rights and remedies of
the Administrative Agent with respect to the security interest in the
[Copyright] [Patent] [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.
[SIGNATURE PAGES FOLLOW]
A5-2
IN WITNESS WHEREOF, each Grantor has caused this [Copyright] [Patent]
[Trademark] Security Agreement to be executed and delivered by its duly
authorized offer as of the date first set forth above.
Very truly yours,
[GRANTOR],
as Grantor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACCEPTED AND AGREED
as of the date first above written:
CITICORP USA, INC.,
as Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
[SIGNATURE PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]
A5-3
SCHEDULE I
TO
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT
[COPYRIGHT] [PATENT] [TRADEMARK] REGISTRATIONS
INCLUDE ONLY U.S. REGISTERED INTELLECTUAL PROPERTY
A. [REGISTERED COPYRIGHTS
[Include Copyright Registration Number and Date]
B. COPYRIGHT APPLICATIONS
C. COPYRIGHT LICENSES]
D. [REGISTERED PATENTS
E. PATENT APPLICATIONS
F. PATENT LICENSES]
G. [REGISTERED TRADEMARKS
H. TRADEMARK APPLICATIONS
I. TRADEMARK LICENSES]
[Include complete legal description of agreement (name of agreement,
parties and date)]
A5-4
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINED TERMS.................................................. 1
Section 1.1 Definitions.............................................. 1
Section 1.2 Certain Other Terms...................................... 5
ARTICLE 2 GRANT OF SECURITY INTEREST..................................... 6
Section 2.1 ......................................................... 6
Section 2.2 Grant of Security Interest in Collateral................. 8
Section 2.3 Cash Collateral Accounts................................. 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................................. 8
Section 3.1 Title; No Other Liens.................................... 8
Section 3.2 Perfection and Priority.................................. 8
Section 3.3 Jurisdiction of Organization; Chief Executive Office..... 9
Section 3.4 Inventory and Equipment.................................. 9
Section 3.5 Pledged Collateral....................................... 9
Section 3.6 Accounts................................................. 10
Section 3.7 Intellectual Property.................................... 10
Section 3.8 Deposit Accounts; Securities Accounts.................... 10
Section 3.9 Commercial Tort Claims................................... 11
ARTICLE 4 COVENANTS...................................................... 11
Section 4.1 Generally................................................ 11
Section 4.2 Maintenance of Perfected Security Interest; Further
Documentation............................................ 11
Section 4.3 Changes in Locations, Name, Etc.......................... 12
Section 4.4 Pledged Collateral....................................... 12
Section 4.5 Accounts................................................. 14
Section 4.6 Delivery of Instruments and Chattel Paper................ 14
Section 4.7 Intellectual Property.................................... 14
Section 4.8 Vehicles................................................. 16
Section 4.9 Payment of Obligations................................... 16
Section 4.10 Insurance................................................ 16
Section 4.11 Notice of Commercial Tort Claims ........................ 17
ARTICLE 5 REMEDIAL PROVISIONS............................................ 17
Section 5.1 Code and Other Remedies.................................. 17
Section 5.2 Accounts and Payments in Respect of General Intangibles.. 18
Section 5.3 Pledged Collateral....................................... 19
Section 5.4 Proceeds to be Turned Over To Administrative Agent....... 20
Section 5.5 Registration Rights...................................... 20
Section 5.6 Deficiency............................................... 21
ARTICLE 6 THE ADMINISTRATIVE AGENT....................................... 21
Section 6.1 Administrative Agent's Appointment as Attorney-in-Fact... 21
Section 6.2 Duty of Administrative Agent............................. 22
Section 6.3 Authorization of Financing Statements.................... 23
Section 6.4 Authority of Administrative Agent........................ 23
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE 7 MISCELLANEOUS.................................................. 23
Section 7.1 Amendments in Writing.................................... 23
Section 7.2 Notices.................................................. 23
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies...... 24
Section 7.4 Successors and Assigns................................... 24
Section 7.5 Counterparts............................................. 24
Section 7.6 Severability............................................. 24
Section 7.7 Section Headings......................................... 24
Section 7.8 Entire Agreement......................................... 25
Section 7.9 Governing Law............................................ 25
Section 7.10 Additional Grantors...................................... 25
Section 7.11 Release of Collateral.................................... 25
Section 7.12 Reinstatement............................................ 26
Section 7.13 Intercreditor Issues..................................... 26
ii
TABLE OF CONTENTS
(CONTINUED)
ANNEXES AND SCHEDULES
Annex 1 Form of Deposit Account Control Agreement
Annex 2 Form of Securities Account Control Agreement
Annex 3 Form of Pledge Amendment
Annex 4 Form of Joinder Agreement
Annex 5 Form of Short Form Intellectual Property Security Agreement
Schedule 1 Jurisdiction of Organization; Principal Executive Office
Schedule 2 Pledged Collateral
Schedule 3 Filings
Schedule 4 Location of Inventory and Equipment
Schedule 5 Intellectual Property
Schedule 6 Bank Accounts; Control Accounts
Schedule 7 Commercial Tort Claims
iii