Exhibit 10.4
GUARANTEE AND COLLATERAL AGREEMENT
made by
THE PACIFIC LUMBER COMPANY,
▇▇▇▇▇ LUMBER CO., INC.,
MAXXAM GROUP INC.,
SALMON CREEK LLC,
SCOTIA INN INC.
in favor of
CREDIT SUISSE FIRST BOSTON,
acting through its New York Branch as Administrative Agent
Dated as of April 19, 2005
TABLE OF CONTENTS
Section 1 DEFINED TERMS
1.1 Definitions
1.2 Other Definitional Provisions
Section 2 GUARANTEE
2.1 Guarantee
2.2 Rights of Reimbursement, Contribution and Subrogation
2.3 Amendments, etc. with respect to the Borrower Obligations
2.4 Guarantee Absolute and Unconditional
2.5 Reinstatement
2.6 Payments
Section 3 GRANT OF SECURITY INTEREST;CONTINUING LIABILITY UNDER COLLATERAL
Section 4 REPRESENTATIONS AND WARRANTIES
4.1 Representations in Credit Agreement
4.2 Title; No Other Liens
4.3 Liens
4.4 Name; Jurisdiction of Organization, etc
4.5 Inventory and Equipment
4.6 Farm Products
4.7 Certain Investment Property
4.8 Receivables
4.9 Intellectual Property
4.10 Letters of Credit and Letter of Credit Rights
4.11 Commercial Tort Claims
4.12 Contracts
Section 5 COVENANTS
5.1 Covenants in Credit Agreement
5.2 Delivery and Control of Instruments, Chattel Paper, Negotiable
Documents, Investment Property
5.3 Maintenance of Insurance
5.4 [Intentionally Omitted]
5.5 Maintenance of Perfected Security Interest; Further Documentation
5.6 Changes in Locations, Name, Jurisdiction of Incorporation, etc
5.7 Notices
5.8 Investment Property
5.9 Receivables
5.10 Intellectual Property
5.11 Contracts
5.12 Commercial Tort Claims
Section 6 REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables
6.2 Communications with Obligors; Grantors Remain Liable
6.3 Pledged Securities
6.4 Proceeds to be Turned Over To Administrative Agent
6.5 Application of Proceeds
6.6 Code and Other Remedies
6.7 Registration Rights
6.8 Deficiency
Section 7 THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc
7.2 Duty of Administrative Agent
7.3 Execution of Financing Statements
7.4 Authority of Administrative Agent
7.5 Appointment of Co-Administrative Agents
Section 8 MISCELLANEOUS
8.1 Amendments in Writing
8.2 Notices
8.3 No Waiver by Course of Conduct; Cumulative Remedies
8.4 Enforcement Expenses; Indemnification
8.5 Successors and Assigns
8.6 Set-Off
8.7 Counterparts
8.8 Severability
8.9 Section Headings
8.10 Integration
8.11 APPLICABLE LAW
8.12 Submission to Jurisdiction; Waivers
8.13 Acknowledgments
8.14 Additional Grantors
8.15 Releases
8.16 WAIVER OF JURY TRIAL
GUARANTEE AND COLLATERAL AGREEMENT, dated as of April 19, 2005, made by each of
the parties listed on the signature pages hereto as Grantors (together with any
other person that may become a party hereto as a Grantor as provided herein, the
"Grantors") and MAXXAM Group Inc., a Delaware corporation ("Holdings") in favor
of Credit Suisse First Boston, acting through its New York Branch, as
administrative agent (in such capacity and together with its successors, the
"Administrative Agent") for (i) the banks and other financial institutions or
entities (the "Lenders") from time to time parties to the Term Credit Agreement,
dated as of April 19, 2005 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among The Pacific Lumber Company, a
Delaware corporation ("Palco") and ▇▇▇▇▇ Lumber Company, a California
corporation ("▇▇▇▇▇", together with Palco, the "Borrowers"), the Lenders party
thereto, the Administrative Agent, and (ii) the other Secured Parties (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to
make extensions of credit to the Borrowers upon the terms and subject to the
conditions set forth therein;
WHEREAS, Holdings is the parent company of the Borrowers and each other Grantor
is a Borrower or a subsidiary of Palco;
WHEREAS, the proceeds of the extensions of credit under the Credit Agreement
will be used in part to enable the Borrowers to make valuable transfers to one
or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrowers, the other Grantors and Holdings are engaged in related
businesses, and each Grantor and Holdings will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrowers under the Credit
Agreement that the Grantors and Holdings shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Secured
Parties;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the
Borrowers thereunder, each Grantor and Holdings hereby agree with the
Administrative Agent for the ratable benefit of the Secured Parties, as follows:
SECTION 1.........DEFINED TERMS
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement, and
the following terms are used herein as defined in the New York UCC (and if
defined in more than one Article of the New York UCC, such terms shall have the
meanings given in Article 9 thereof): Accounts, Account Debtor, Certificated
Security, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity
Contract, Commodity Intermediary, Documents, Deposit Account, Electronic Chattel
Paper, Equipment, Farm Products, Financial Asset, Fixtures, Goods, Instruments,
Inventory, Letter of Credit, Letter of Credit Rights, Money, Payment
Intangibles, Securities Account, Securities Intermediary, Security, Security
Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated
Security.
(b) The following terms shall have the following meanings:
"Administrative Agent" shall have the meaning assigned to such term in the
preamble.
"Agreement" shall mean this Guarantee and Collateral Agreement, as the same may
be amended, supplemented, replaced or otherwise modified from time to time.
"Borrowers" shall have the meaning assigned to such term in the preamble.
"Borrower Obligations" shall mean the collective reference to the unpaid
principal of and interest on (including interest accruing after the maturity of
the Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to any Grantor, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrowers to the Arranger, to any Agent or to any Lender (or,
in case of Specified Hedge Agreements, any Affiliate of any Lender or any
Agent), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with the Credit Agreement, any other Loan Document, any Specified
Hedge Agreement or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Arranger, to any Agent or to any Lender that are
required to be paid by any Grantor pursuant to the Credit Agreement or any other
Loan Document) or otherwise; provided, that (i) obligations of any Grantor under
any Specified Hedge Agreement shall be secured and guaranteed pursuant to the
Security Documents only to the extent that, and for so long as the other
Borrower Obligations are so secured and guaranteed, (ii) any release of
collateral or guarantors effected in the manner permitted by the Credit
Agreement or any other Loan Document shall not require the consent of holders of
obligations under Specified Hedge Agreements and (iii) the amount of secured
obligations under any Specified Hedge Agreements shall not exceed the net
amount, including any net termination payments, that would be required to be
paid to the counterparty to such Specified Hedge Agreement on the date of
termination of such Specified Hedge Agreement.
"Collateral" shall have the meaning assigned to such term in Section 3.
"Collateral Account" shall mean (i) any collateral account established as
provided in Section 6.1 or 6.4 or (ii) any cash collateral account established
as provided in Section 2.23(j) of the Credit Agreement.
"Collateral Account Funds" shall mean, collectively, the following: all funds
(including all trust monies), investments (including all cash equivalents)
credited to, or purchased with funds from, any Collateral Account and all
certificates and instruments from time to time representing or evidencing such
investments; all notes, certificates of deposit, checks and other instruments
from time to time hereafter delivered to or otherwise possessed by the
Administrative Agent for or on behalf of any Grantor in substitution for, or in
addition to, any or all of the Collateral; and all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the items
constituting Collateral.
"Contracts" shall mean all contracts and agreements between any Grantor and any
other person (in each case, whether written or oral, or third party or
intercompany) as the same may be amended, assigned, extended, restated,
supplemented, replaced or otherwise modified from time to time including (i) all
rights of any Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (ii) all rights of any Grantor to receive proceeds
of any insurance, indemnity, warranty or guaranty with respect thereto, (iii)
all rights of any Grantor to damages arising thereunder and (iv) all rights of
any Grantor to terminate and to perform and compel performance of, such
Contracts and to exercise all remedies thereunder.
"Copyright Licenses" shall mean any agreement, whether written or oral, naming
any Grantor as licensor or licensee (including those listed in Schedule 4.9 (as
such schedule may be amended or supplemented from time to time in accordance
with Section 5.5(b))), granting any right in, to or under any Copyright,
including the grant of rights to manufacture, print, publish, copy, import,
export, distribute, exploit and sell materials derived from any Copyright.
"Copyrights" shall mean (i) all copyrights arising under the laws of the United
States, any other country, or union of countries, or any political subdivision
of any of the foregoing, whether registered or unregistered and whether
published or unpublished (including those listed in Schedule 4.9 (as such
schedule may be amended or supplemented from time to time in accordance with
Section 5.5(b))), all registrations and recordings thereof, and all applications
in connection therewith and rights corresponding thereto throughout the world,
including all registrations, recordings and applications in the United States
Copyright Office, (ii) the right to, and to obtain, all extensions and renewals
thereof, and the right to ▇▇▇ for past, present and future infringements of any
of the foregoing, (iii) all proceeds of the foregoing, including license,
royalties, income, payments, claims, damages, and proceeds of suit and (iv) all
other rights of any kind whatsoever accruing thereunder or pertaining thereto.
"Credit Agreement" shall have the meaning assigned to such term in the preamble.
"dollars" or "$" shall mean lawful money of the United States of America.
"Excluded Assets" shall mean (a) any lease, license, Contract, property right or
agreement to which any Grantor is a party or any of its rights or interests
thereunder if and only for so long as the grant of a security interest hereunder
shall constitute or result in a breach, termination or default under any such
lease, license, Contract, property right or agreement (other than to the extent
that any such term would be rendered ineffective pursuant to Section 9-406,
9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other
applicable law or principles of equity); provided, however, that such security
interest shall attach immediately to any portion of such lease, license,
Contract, property rights or agreement that does not result in any of the
consequences specified above and (b) any Excluded Foreign Subsidiary Voting
Stock excluded from the definition of "Pledged Stock".
"Excluded Foreign Subsidiary Voting Stock" shall mean the voting equity
interests in any Excluded Foreign Subsidiary.
"General Intangibles" shall mean all "general intangibles" as such term is
defined in Section 9-102(a)(42) of the New York UCC and, in any event, including
with respect to any Grantor, all rights of such Grantor to receive any tax
refunds, all Hedging Agreements and all Contracts and all licenses, permits,
concessions, franchises and authorizations issued by Governmental Authorities in
any form, and portions thereof, to which such Grantor is a party or under which
such Grantor has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same may from time to time be
amended, supplemented, replaced or otherwise modified from time to time.
"Grantors" shall have the meaning assigned to such term in the preamble.
"Guarantor Obligations" shall mean with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including Section 2) or any other Loan Document
to which such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including all fees and disbursements of counsel to any Secured Party
that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).
"Guarantors" shall mean the collective reference to each Grantor other than the
Borrowers.
"Holdings" shall have the meaning assigned to such term in the preamble.
"Holdings Obligations" shall mean all obligations and liabilities of Holdings
which may arise under or in connection with this Agreement or any other Loan
Document to which Holdings is a party, whether on account of reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including all fees
and disbursements of counsel to any Secured Party that are required to be paid
by Holdings pursuant to the terms of this Agreement or any other Loan Document).
"Insurance" shall mean (i) all insurance policies covering any or all of the
Collateral (regardless of whether the Administrative Agent is the loss payee
thereof) and (ii) any key man life insurance policies.
"Intellectual Property" shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks, the Trademark Licenses, the Trade Secrets and the Trade Secret
Licenses, and all rights to ▇▇▇ at law or in equity for any past, present and
future infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Intercompany Note" shall mean any promissory note evidencing loans made by any
Grantor to any other Grantor, including any subordinated intercompany note
entered into in connection with the Affiliate Subordination Agreement.
"Investment Property" shall mean the collective reference to (i) all "investment
property" as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Excluded Foreign Subsidiary Voting Stock excluded from the
definition of "Pledged Equity Interests") including all Certificated Securities
and Uncertificated Securities, all Security Entitlements, all Securities
Accounts, all Commodity Contracts and all Commodity Accounts, (ii) security
entitlements, in the case of any United States Treasury book-entry securities,
as defined in 31 C.F.R. section 357.2, or, in the case of any United States
federal agency book-entry securities, as defined in the corresponding United
States federal regulations governing such book-entry securities, and (iii)
whether or not otherwise constituting "investment property", all Pledged Notes
and all Pledged Equity Interests.
"Issuers" shall mean the collective reference to each issuer of a Pledged
Security.
"Lenders" shall have the meaning assigned to such term in the preamble.
"Licensed Intellectual Property" shall have the meaning assigned to such term in
Section 4.9.
"Material Contract" shall mean any agreement, Contract or license or other
arrangement (other than an agreement, Contract or arrangement representing
Indebtedness for borrowed money) to which any Grantor is a party that is
material to the Borrowers and their Subsidiaries, taken as a whole, and for
which breach, nonperformance, cancellation or failure to renew would reasonably
be expected to have a Material Adverse Effect.
"New York UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Non-Assignable Contract" shall mean any Contract that by its terms purports to
restrict or prevent the collateral assignment thereof or granting of a security
interest therein (either by its terms or by any federal or state statutory
prohibition or otherwise, irrespective of whether such prohibition or
restriction is enforceable under Sections 9-407 through 409 of the New York
UCC).
"Obligations" shall mean (i) in the case of the Borrowers, the Borrower
Obligations, (ii) in the case of each Guarantor, its Guarantor Obligations and
(iii) in the case of Holdings, the Holdings Obligations.
"Owned Intellectual Property" shall mean (i) all Registered Intellectual
Property (as defined in Section 4.9) and (ii) all material unregistered
Intellectual Property which is owned by such Grantor in its own name on the date
hereof.
"Patent License" shall mean all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use, import,
export, distribute or sell any invention covered in whole or in part by a
Patent, including any of the foregoing listed in Schedule 4.9 (as such schedule
may be amended or supplemented from time to time in accordance with Section
5.5(b)).
"Patents" shall mean (i) all letters of patent of the United States, any other
country, union of countries or any political subdivision of any of the
foregoing, and all reissues and extensions thereof, including any of the
foregoing listed in Schedule 4.9 (as such schedule may be amended or
supplemented from time to time in accordance with Section 5.5(b)), (ii) all
applications for letters of patent of the United States or any other country or
union of countries or any political subdivision of any of the foregoing and all
divisions, continuations and continuations-in-part thereof, all improvements
thereof, including any of the foregoing listed in Schedule 4.9 (as such schedule
may be amended or supplemented from time to time in accordance with Section
5.5(b)), (iii) all rights to, and to obtain, any reissues or extensions of the
foregoing and (iv) all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages and proceeds of suit.
"Pledged Alternative Equity Interests" shall mean all interests of any Grantor
in participation or other interests in any equity or profits of any business
entity and the certificates, if any, representing such interests and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
interests and any other warrant, right or option to acquire any of the
foregoing; provided, however, that Pledged Alternative Equity Interests shall
not include any Pledged Stock, Pledged Partnership Interests, Pledged LLC
Interests or Pledged Trust Interests.
"Pledged Debt Securities" shall mean all debt securities now owned or hereafter
acquired by any Grantor, including the debt securities listed on Schedule
4.7(b), (as such schedule may be amended or supplemented from time to time in
accordance with Section 5.5(b)), together with any other certificates, options,
rights or security entitlements of any nature whatsoever in respect of the debt
securities of any person that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect.
"Pledged Equity Interests" shall mean all Pledged Stock, Pledged LLC Interests,
Pledged Partnership Interests, Pledged Trust Interests and Pledged Alternative
Equity Interests.
"Pledged LLC Interests" shall mean all interests of any Grantor now owned or
hereafter acquired in any limited liability company, including all limited
liability company interests listed on Schedule 4.7(a) hereto under the heading
"Pledged LLC Interests" (as such schedule may be amended or supplemented from
time to time in accordance with Section 5.5(b)) and the certificates, if any,
representing such limited liability company interests and any interest of such
Grantor on the books and records of such limited liability company and all
dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
limited liability company interests and any other warrant, right or option to
acquire any of the foregoing.
"Pledged Notes" shall mean all promissory notes now owned or hereafter acquired
by any Grantor, including those listed on Schedule 4.7(b) (as such schedule may
be amended or supplemented from time to time in accordance with Section 5.5(b))
and all Intercompany Notes at any time issued to or held by any Grantor as a
result of loans or advances made by, or commitments to make loans or advances
of, the Grantors existing on the date hereof.
"Pledged Partnership Interests" shall mean all interests of any Grantor now
owned or hereafter acquired in any general partnership, limited partnership,
limited liability partnership or other partnership, including all partnership
interests listed on Schedule 4.7(a) hereto under the heading "Pledged
Partnership Interests" (as such schedule may be amended or supplemented from
time to time in accordance with Section 5.5(b)) and the certificates, if any,
representing such partnership interests and any interest of such Grantor on the
books and records of such partnership and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such partnership interests and any
other warrant, right or option to acquire any of the foregoing.
"Pledged Securities" shall mean the collective reference to the Pledged Debt
Securities, the Pledged Notes and the Pledged Equity Interests.
"Pledged Stock" shall mean all of the equity interests now owned or hereafter
acquired by any Grantor and all of the equity interests in The Pacific Lumber
Company owned by Holdings, including all of the equity interests listed on
Schedule 4.7(a) hereto under the heading "Pledged Stock" (as such schedule may
be amended or supplemented from time to time in accordance with Section 5.5(b)),
and the certificates, if any, representing such shares and any interest of such
Grantor and Holdings in the entries on the books of the issuer of such shares
and all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
shares and any other warrant, right or option to acquire any of the foregoing;
provided, however, that in no event shall more than 65% of the total outstanding
Excluded Foreign Subsidiary Voting Stock be required to be pledged hereunder.
"Pledged Trust Interests" shall mean all interests of any Grantor now owned or
hereafter acquired in a Delaware business trust or other trust, including all
trust interests listed on Schedule 4.7(a) hereto under the heading "Pledged
Trust Interests" (as such schedule may be amended or supplemented from time to
time in accordance with Section 5.5(b)) and the certificates, if any,
representing such trust interests and any interest of such Grantor on the books
and records of such trust or on the books and records of any securities
intermediary pertaining to such interest and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such trust interests and any other
warrant, right or option to acquire any of the foregoing.
"Proceeds" shall mean all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include all dividends
or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.
"Qualified Counterparty" shall mean, with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge
Agreement was entered into, was a Lender, an Agent or an Affiliate of a Lender
or an Agent.
"Receivable" shall mean all Accounts and any other right to payment for goods or
other property sold, leased, licensed or otherwise disposed of or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper or classified as a Payment Intangible and whether or not it has been
earned by performance. References herein to Receivables shall include any
Supporting Obligation or collateral securing such Receivable.
"Secured Parties" shall mean, collectively, the Administrative Agent, the
Lenders and, with respect to any Specified Hedge Agreement, any Qualified
Counterparty that has agreed to be bound by the provisions of Article VIII of
the Credit Agreement as if it were a Lender party thereto; provided that no
Qualified Counterparty shall have any rights in connection with the management
or release of any Collateral or the obligations of any Guarantor under this
Agreement or any other Loan Document.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Specified Hedge Agreement" shall mean any Hedging Agreement (a) entered into by
(i) any Grantor and (ii) any Lender or any Affiliate thereof or any Agent or any
Affiliate thereof, or any person that was a Lender or an Affiliate thereof or an
Agent or Affiliate thereof when such Hedging Agreement was entered into as
counterparty and (b) which has been designated by Grantor, by notice to the
Administrative Agent not later than 90 days after the execution and delivery
thereof by such Grantor, as a Specified Hedge Agreement and which the
Administrative Agent has agreed, in its sole discretion, in writing, constitutes
a specified Hedge Agreement; provided that the designation of any Hedging
Agreement as a Specified Hedge Agreement shall not create in favor of any Lender
or Affiliate thereof or any Agent or any Affiliate thereof that is a party
thereto any rights in connection with the management or release of any
Collateral or of the obligations of any Guarantor under this Agreement or any
other Loan Document.
"Subsidiary" shall mean any subsidiary of any Borrower other than Scotia Pacific
Company LLC.
"Trademark License" shall mean any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right in, to or under any Trademark,
including any of the foregoing referred to in Schedule 4.9 (as such schedule may
be amended or supplemented from time to time in accordance with Section 5.5(b)).
"Trademarks" shall mean (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country, union of countries, or any political subdivision of any of the
foregoing, or otherwise, and all common-law rights related thereto, including
any of the foregoing listed in Schedule 4.9 (as such schedule may be amended or
supplemented from time to time in accordance with Section 5.5(b)), (ii) the
right to, and to obtain, all renewals thereof, (iii) the goodwill of the
business symbolized by the foregoing, (iv) other source or business identifiers,
designs and general intangibles of a like nature and (v) the right to ▇▇▇ for
past, present and future infringements or dilution of any of the foregoing or
for any injury to goodwill, and all proceeds of the foregoing, including
royalties, income, payments, claims, damages and proceeds of suit.
"Trade Secret License" shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any
Trade Secret, including any of the foregoing listed in Schedule 4.9 (as such
schedule may be amended or supplemented from time to time in accordance with
Section 5.5(b)).
"Trade Secrets" shall mean all trade secrets and all other confidential or
proprietary information and know-how (all of the foregoing being collectively
called a "Trade Secret"), whether or not reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or describing
such Trade Secret, the right to ▇▇▇ for past, present and future infringements
of any Trade Secret and all proceeds of the foregoing, including royalties,
income, payments, claims, damages and proceeds of suit.
1.2 Other Definitional Provisions. (a) The words "hereof", "herein", "hereto"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to the specific provisions of
this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any part
thereof, when used in relation to a Grantor, shall refer to the property or
assets such Grantor has granted as Collateral or the relevant part thereof.
(d) The expressions "payment in full," "paid in full" and any other similar
terms or phrases when used herein with respect to the Borrower Obligations or
the Guarantor Obligations shall mean the unconditional, final and irrevocable
payment in full, in immediately available funds, of all of the Borrower
Obligations or the Guarantor Obligations, as the case may be, in each case,
unless otherwise specified, other than indemnification and other contingent
obligations not then due and payable.
(e) The words "include", "includes" and "including", and words of similar
import, shall not be limiting and shall be deemed to be followed by the phrase
"without limitation".
(f) All references to the Lenders herein shall, where appropriate, include any
Lender, the Administrative Agent, or, in the case of any Lender or Agent, any
Affiliate thereof that is a party to a Specified Hedge Agreement.
SECTION 2.........GUARANTEE
2.1 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Administrative Agent, for the ratable benefit of
the Secured Parties and their respective successors, indorsees, transferees and
assigns, the prompt and complete payment and performance by the Borrowers when
due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.
(b) If and to the extent required in order for the Guarantor Obligations of any
Guarantor to be enforceable under applicable federal, state and other laws
relating to the insolvency of debtors, the maximum liability of such Guarantor
hereunder shall be limited to the greatest amount which can be guaranteed by
such Guarantor under such laws, after giving effect to any rights of
contribution, reimbursement and subrogation arising under Section 2.2, without
causing such guarantee to be unenforceable or to be void or voidable under
applicable fraudulent conveyance or other laws of similar application. Each
Guarantor acknowledges and agrees that, to the extent not prohibited by
applicable law, (i) such Guarantor (as opposed to its creditors, representatives
of creditors or bankruptcy trustee, including such Guarantor in its capacity as
debtor in possession exercising any powers of a bankruptcy trustee) has no
personal right under such laws to reduce, or request any judicial relief that
has the effect of reducing, the amount of its liability under this Agreement,
(ii) such Guarantor (as opposed to its creditors, representatives of creditors
or bankruptcy trustee, including such Guarantor in its capacity as debtor in
possession exercising any powers of a bankruptcy trustee) has no personal right
to enforce the limitation set forth in this Section 2.1(b) or to reduce, or
request judicial relief reducing, the amount of its liability under this
Agreement, and (iii) the limitation set forth in this Section 2.1(b) may be
enforced only to the extent required under such laws in order for the
obligations of such Guarantor under this Agreement to be enforceable under such
laws and only by or for the benefit of a creditor, representative of creditors
or bankruptcy trustee of such Guarantor or other person entitled, under such
laws, to enforce the provisions thereof.
(c) Each Guarantor agrees that the Borrower Obligations may at any time and from
time to time be incurred or permitted in an amount exceeding the maximum
liability of such Guarantor under Section 2.1(b) without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of any Secured
Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force and
effect until payment in full of the Obligations, notwithstanding that from time
to time during the term of the Credit Agreement any of the Borrowers may be free
from any Borrower Obligations.
(e) No payment made by any of the Borrowers, any of the Guarantors, any other
guarantor or any other person or received or collected by any Secured Party from
any Borrower, any of the Guarantors, any other guarantor or any other person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or any payment received or collected from such Guarantor in
respect of the Borrower Obligations), remain liable for the Borrower Obligations
up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations (other than Obligations in respect of any Specified Hedge Agreement)
are paid in full.
2.2 Rights of Reimbursement, Contribution and Subrogation. In case any payment
is made on account of the Obligations by any Grantor or is received or collected
on account of the Obligations from any Grantor or its property:
(a) If such payment is made by any Borrower or from its property, then, if and
to the extent such payment is made on account of Obligations arising from or
relating to a Loan or other extension of credit made to the Borrowers, then,
unless and until the Obligations have been indefeasibly paid in full in cash (or
other assets which the Lenders, other than in connection with a bankruptcy or
similar proceeding, voluntarily accept as full satisfaction of the Obligations),
the Borrowers shall not be entitled (i) to demand or enforce reimbursement or
contribution in respect of such payment from any other Grantor or (ii) to be
subrogated to any claim, interest, right or remedy of any Secured Party against
any other person, including any other Grantor or its property.
(b) If such payment is made by a Guarantor or from its property, such Guarantor
shall be entitled, subject to and upon payment in full of the Obligations, (i)
to demand and enforce reimbursement for the full amount of such payment from the
Borrowers and (ii) to demand and enforce contribution in respect of such payment
from each other Guarantor that has not paid its fair share of such payment, as
necessary to ensure that (after giving effect to any enforcement of
reimbursement rights provided hereby) each Guarantor pays its fair share of the
unreimbursed portion of such payment. For this purpose, the fair share of each
Guarantor as to any unreimbursed payment shall be determined based on an
equitable apportionment of such unreimbursed payment among all Guarantors based
on the relative value of their assets and any other equitable considerations
deemed appropriate by a court of competent jurisdiction.
(c) If and whenever (after payment in full of the Obligations) any right of
reimbursement or contribution becomes enforceable by any Grantor against any
other Grantor under Sections 2.2(a) and 2.2(b), such Grantor shall be entitled,
subject to and upon payment in full of the Obligations, to be subrogated
(equally and ratably with all other Grantors entitled to reimbursement or
contribution from any other Grantor as set forth in this Section 2.2) to any
security interest that may then be held by the Administrative Agent upon any
Collateral granted to it in this Agreement. Such right of subrogation shall be
enforceable solely against the Grantors, and not against the Secured Parties,
and neither the Administrative Agent nor any other Secured Party shall have any
duty whatsoever to warrant, ensure or protect any such right of subrogation or
to obtain, perfect, maintain, hold, enforce or retain any Collateral for any
purpose related to any such right of subrogation. If subrogation is demanded by
any Grantor, then (after payment in full of the Obligations) the Administrative
Agent shall promptly following demand deliver to the Grantors making such
demand, or to a representative of such Grantors or of the Grantors generally, an
instrument reasonably satisfactory to the Grantor and the Administrative Agent
transferring, on a quitclaim basis without any recourse, representation,
warranty or obligation whatsoever, whatever security interest the Administrative
Agent then may hold in whatever Collateral may then exist that was not
previously released or disposed of by the Administrative Agent.
(d) All rights and claims arising under this Section 2.2 or based upon or
relating to any other right of reimbursement, indemnification, contribution or
subrogation that may at any time arise or exist in favor of any Grantor as to
any payment on account of the Obligations made by it or received or collected
from its property shall be fully subordinated in all respects to the prior
payment in full of all of the Obligations. Until payment in full of the
Obligations, no Grantor shall demand or receive any collateral security, payment
or distribution whatsoever (whether in cash, property or securities or
otherwise) on account of any such right or claim. If any such payment or
distribution is made or becomes available to any Grantor in any bankruptcy case
or receivership, insolvency or liquidation proceeding, such payment or
distribution shall be delivered by the person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Obligations. If any such payment or distribution is received by
any Grantor, it shall be held by such Grantor in trust, for the benefit of the
Secured Parties, and shall forthwith be transferred and delivered by such
Grantor to the Administrative Agent, in the exact form received and, if
necessary, duly endorsed.
(e) The obligations of the Grantors under the Loan Documents, including their
liability for the Obligations and the enforceability of the security interests
granted thereby, are not contingent upon the validity, legality, enforceability,
collectibility or sufficiency of any right of reimbursement, contribution or
subrogation arising under this Section 2.2. The invalidity, insufficiency,
unenforceability or uncollectibility of any such right shall not in any respect
diminish, affect or impair any such obligation or any other claim, interest,
right or remedy at any time held by any Secured Party against any Guarantor or
its property. The Secured Parties make no representations or warranties in
respect of any such right and shall have no duty to assure, protect, enforce or
ensure any such right or otherwise relating to any such right.
(f) Each Grantor reserves any and all other rights of reimbursement,
contribution or subrogation at any time available to it as against any other
Grantor, but (i) the exercise and enforcement of such rights shall be subject to
Section 2.2(d) and (ii) neither the Administrative Agent nor any other Secured
Party shall ever have any duty or liability whatsoever in respect of any such
right, except as provided in Section 2.2(c).
2.3 Amendments, etc. with respect to the Borrower Obligations. Each Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by any
Secured Party may be rescinded by such Secured Party and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, increased, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any Secured Party,
and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the parties thereto may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by any Secured Party for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Except to
the extent required by any non-waivable provisions of the New York UCC, no
Secured Party shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Borrower Obligations or for
the guarantee contained in this Section 2 or any property subject thereto.
2.4 Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by any Secured Party upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Borrower Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between any of the Borrowers and any of the Guarantors, on the
one hand, and the Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon any of the Borrowers or any of the Guarantors with respect to the
Borrower Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by any Secured Party, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance hereunder) which may at any time be
available to or be asserted by any of the Borrowers or any other person against
any Secured Party, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of any of the Borrowers or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of any Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, any Secured Party may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights
and remedies as it may have against any Borrower, any other Guarantor or any
other person or against any collateral security or guarantee for the Borrower
Obligations or any right of offset with respect thereto, and any failure by any
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from any Borrower, any other Guarantor or any other
person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of any Borrower, any other
Guarantor or any other person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of any Secured Party against
any Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
2.5 Reinstatement. The guarantee contained in this Section 2 shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any of the Borrower Obligations is rescinded or must
otherwise be restored or returned by any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, any Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.6 Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Administrative Agent without set-off or counterclaim in Dollars in
immediately available funds at the office of the Administrative Agent specified
in the Credit Agreement.
SECTION 3.........GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER
COLLATERAL
(a) Holdings hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in all equity interests in Palco and
all Proceeds thereof (the "Holdings Collateral"), as collateral security
for the prompt and complete payment and performance when due (whether at
the stated maturity, by acceleration or otherwise) of all Obligations. Any
reference to Collateral herein with respect to Holdings shall be understood
to be a reference to the Holdings Collateral.
(b) Each Grantor hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in all of the personal property of
such Grantor, including the following property, in each case, wherever
located and now owned or at any time hereafter acquired by such Grantor or
in which such Grantor now has or at any time in the future may acquire any
right, title or interest (collectively, and together with the Holdings
Collateral, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of such Grantor's Obligations:
(i) all Accounts;
(ii) all Chattel Paper;
(iii)all Collateral Accounts and all Collateral Account Funds;
(iv) all Commercial Tort Claims from time to time specifically described on
Schedule 4.11;
(v) all Contracts;
(vi) all Deposit Accounts;
(vii)all Documents;
(viii) all Equipment;
(ix) all Fixtures;
(x) all General Intangibles;
(xi) all Goods;
(xii) all Instruments;
(xiii) all Insurance;
(xiv) all Intellectual Property;
(xv) all Inventory;
(xvi) all Investment Property;
(xvii) all Letters of Credit and Letter of Credit Rights;
(xviii) all Money;
(xix)all Securities Accounts; (xx) all books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications,
manuals, computer software, computer printouts, tapes, disks and other
electronic storage media and related data processing software and similar
items that at any time pertain to or evidence or contain information
relating to any of the Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(xxi)to the extent not otherwise included, all other property, whether tangible
or intangible, of the Grantor and all Proceeds, products, accessions, rents
and profits of any and all of the foregoing and all collateral security,
Supporting Obligations and guarantees given by any person with respect to
any of the foregoing;
provided that, notwithstanding any other provision set forth in this Section 3,
this Agreement shall not, at any time, constitute a grant of a security interest
in any property that is, at such time, an Excluded Asset.
(c) Notwithstanding anything herein to the contrary, (i) each Grantor and
Holdings, as applicable, shall remain liable for all obligations under and in
respect of the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Administrative Agent or any other Secured Party,
(ii) each Grantor and Holdings, as applicable, shall remain liable under and
each of the agreements included in the Collateral, including any Receivables,
any Contracts and any agreements relating to Pledged Partnership Interests or
Pledged LLC Interests, to perform all of the obligations undertaken by it
thereunder all in accordance with and pursuant to the terms and provisions
thereof and neither the Administrative Agent nor any other Secured Party shall
have any obligation or liability under any of such agreements by reason of or
arising out of this Agreement or any other document related hereto nor shall the
Administrative Agent nor any other Secured Party have any obligation to make any
inquiry as to the nature or sufficiency of any payment received by it or have
any obligation to take any action to collect or enforce any rights under any
agreement included in the Collateral, including any agreements relating to any
Receivables, any Contracts or any agreements relating to Pledged Partnership
Interests or Pledged LLC Interests and (iii) the exercise by the Administrative
Agent of any of its rights hereunder shall not release any Grantor from any of
its duties or obligations under the Contracts and agreements included in the
Collateral, including any agreements relating to any Receivables, any Contracts
and any agreements relating to Pledged Partnership Interests or Pledged LLC
Interests.
SECTION 4 REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrowers thereunder, each Grantor and Holdings (in the case of
Holdings, only with respect to Sections 4.3, 4.4, 4.7 and 4.12) hereby represent
and warrant to the Secured Parties that:
4.1 Representations in Credit Agreement. In the case of each Guarantor, the
representations and warranties set forth in Article III of the Credit Agreement
as they relate to such Guarantor or to the Loan Documents to which such
Guarantor is a party, each of which is hereby incorporated herein by reference,
are true and correct, in all material respects, except for representations and
warranties expressly stated to relate to a specific earlier date, in which case
such representations and warranties were true and correct in all material
respects as of such earlier date, and the Secured Parties shall be entitled to
rely on each of them as if they were fully set forth herein, provided that each
reference in each such representation and warranty to the Borrower's knowledge
shall, for the purposes of this Section 4.l, be deemed to be a reference to such
Guarantor's knowledge.
4.2 Title; No Other Liens. Such Grantor has good and marketable title to, or
valid leasehold interests in, all its material properties and assets (including
material Real Property), except for (a) defects in title that, in the aggregate,
are not substantial in amount and do not materially detract from the value of
the property subject thereto or materially interfere with its ability to conduct
its business as currently conducted or to utilize such properties and assets for
their intended purposes, (b) Liens expressly permitted by Section 6.02 of the
Credit Agreement and (c) leasehold interests that terminate in the ordinary
course of business in accordance with their terms and not on account of a tenant
default. No financing statement, mortgage or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except (i) such as have been filed in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, pursuant to this Agreement, (ii) filings
in respect of which termination statements have been delivered to the
Administrative Agent for termination on the Closing Date or (iii) filings in
respect of Liens expressly permitted by Section 6.02 of the Credit Agreement.
4.3 Liens. The security interests granted pursuant to this Agreement (i) upon
completion of the filings and other actions specified on Schedule 4.3 (all of
which, in the case of all filings and other documents referred to on said
Schedule, have been delivered to the Administrative Agent in duly completed and
duly executed form, as applicable, and may be filed by the Administrative Agent
at any time) and payment of all filing fees, will constitute valid fully
perfected security interests in all of the Collateral (other than Deposit
Accounts and motor vehicles) in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, as collateral security for such
Grantor's Obligations or Holding's Obligations, as applicable, enforceable in
accordance with the terms hereof to the extent a security interest can be
perfected by filing and (ii) are prior to all other Liens on the Collateral,
except for Liens expressly permitted by Section 6.02 of the Credit Agreement.
4.4 Name; Jurisdiction of Organization, etc. On the date hereof, such Grantor's
and Holding's exact legal name (as indicated on the public record of such
Grantor's jurisdiction of formation or organization), jurisdiction of
organization, organizational identification number, if any, and the location of
such Grantor's and Holding's chief executive office or, if different, its
principal place of business are specified on Schedule 4.4. Each Grantor and
Holdings is organized solely under the law of the jurisdiction so specified and
has not filed any certificates of domestication, transfer or continuance in any
other jurisdiction. The jurisdiction of each such Grantor's or Holding's
organization of formation is required to maintain a public record showing the
Grantor, to have been organized or formed. Except as specified on Schedule 4.4,
no such Grantor or Holdings has changed its name, jurisdiction of organization,
chief executive office or, if different, its principal place of business or its
corporate structure in any way (e.g. by merger, consolidation, change in
corporate form or otherwise) within the past one year and has not within the
last one year become bound (whether as a result of merger or otherwise) as a
grantor under a security agreement entered into by another person, which has not
heretofore been (or on the date hereof will be) terminated.
4.5 Inventory and Equipment. (a) On the date hereof, the Inventory and the
Equipment (other than mobile goods) that is included in the Collateral are kept
at the locations listed on Schedule 4.5(a). Within the four months preceding
execution of this agreement, such Grantor has not changed the location of a
material portion of its Equipment and Inventory that is included in the
Collateral except as otherwise disclosed on Schedule 4.5(a).
(b) Any Inventory now or hereafter produced by any Grantor included in the
Collateral have been and will be produced in compliance with the requirements of
all applicable laws and regulations, including the Fair Labor Standards Act, as
amended.
(c) None of the Inventory or Equipment, in each case, with an aggregate fair
market value in excess of $100,000 that is included in the Collateral is in the
possession of an issuer of a negotiable document (as defined in Section 7-104 of
the New York UCC) therefor or is otherwise in the possession of any bailee or
warehouseman, except as set forth in Section II.B of the Perfection Certificate.
4.6 Farm Products. None of the Collateral constitutes, or is the Proceeds of,
Farm Products.
4.7 Certain Investment Property.
(a) Schedule 4.7(a) hereto (as such schedule may be amended or supplemented from
time to time in accordance with Section 5.5(b)) sets forth under the headings
"Pledged Stock," "Pledged LLC Interests," "Pledged Partnership Interests" and
"Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests owned by
any Grantor and all of the Pledged Stock owned by Holdings, and such Pledged
Equity Interests constitute the percentage of issued and outstanding shares of
stock, percentage of membership interests, percentage of partnership interests
or percentage of beneficial interest of the respective issuers thereof indicated
on such Schedule. Schedule 4.7(b) (as such schedule may be amended or
supplemented from time to time in accordance with Section 5.5(b)) sets forth
under the heading "Pledged Debt Securities" or "Pledged Notes" all of the
Pledged Debt Securities and Pledged Notes (other than promissory notes in an
aggregate principal amount not to exceed $100,000) owned by any Grantor and all
of such Pledged Debt Securities and Pledged Notes have been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and subject to general
principals of equity, regardless of whether considered in a proceeding in equity
or at law, and constitutes all of the issued and outstanding inter-company
indebtedness evidenced by an instrument or certificated security of the
respective issuers thereof owing to such Grantor. No Grantor nor Holdings has
consented to or is otherwise aware of any person having "control" (within the
meanings of Sections 8-106, 9-106 and 9-104 of the New York UCC) over, or any
other interest in, any Securities Account, Commodity Account, Deposit Account,
in each case in which such Grantor has an interest, or any securities,
commodities or other property credited thereto, except for any control arising
by operation of law, including pursuant to common law provisions relating to
banker's liens.
(b) The shares of Pledged Equity Interests pledged by such Grantor or Holdings
hereunder constitute all of the issued and outstanding shares of all classes of
equity interests in each Issuer owned by such Grantor or Holdings, as
applicable, or, in the case of Excluded Foreign Subsidiary Voting Stock, if
less, 65% of the outstanding Excluded Foreign Subsidiary Voting Stock of each
relevant Issuer.
(c) The Pledged Equity Interests have been duly and validly issued and are fully
paid and nonassessable.
(d) The terms of any uncertificated Pledged LLC Interests and Pledged
Partnership Interests expressly provide that they are securities governed by
Article 8 of the Uniform Commercial Code in effect from time to time in the
"issuer's jurisdiction" of each Issuer thereof (as such term is defined in the
Uniform Commercial Code in effect in such jurisdiction).
(e) Such Grantor or Holdings, as applicable, is the record and beneficial owner
of, and has good and marketable title to, the Investment Property pledged by it
hereunder, free of any and all Liens, except Liens expressly permitted by
Section 6.02 of the Credit Agreement, and there are no outstanding warrants,
options or other rights to purchase, or shareholder, voting trust or similar
agreements outstanding with respect to, or property that is convertible into, or
that requires the issuance or sale of, any Pledged Equity Interests.
4.8 Receivables. (a) No amount payable to such Grantor under or in connection
with any Receivable with a value in excess of $10,000 that is included in the
Collateral is evidenced by any Instrument or Tangible Chattel Paper which has
not been delivered to the Administrative Agent or constitutes Electronic Chattel
Paper that has not been subjected to the control (within the meaning of Section
9-105 of the New York UCC) of the Administrative Agent.
(b) None of the obligors on any Receivables with a value in excess of $10,000
that are included in the Collateral is a Governmental Authority.
4.9 Intellectual Property. (a) Schedule 4.9 lists all Intellectual Property
which is registered with a Governmental Authority or is the subject of an
application for registration, in each case which is owned by such Grantor in its
own name on the date hereof (collectively, the "Registered Intellectual
Property"). Except as set forth in Schedule 4.9, such Grantor is the exclusive
owner of the entire and unencumbered right, title and interest in and to all
such Registered Intellectual Property and is otherwise entitled to use, and
grant to others the right to use, all such Registered Intellectual Property
subject only to the license terms of the licensing or franchise agreements
referred to in paragraph (c) below. Such Grantor has the right to use all
Intellectual Property which it uses in its business, but does not own
(collectively, the "Licensed Intellectual Property").
(b) On the date hereof, except as set forth on Schedule 4.9, all Registered
Intellectual Property is subsisting and unexpired and has not been abandoned. To
such Grantor's knowledge, neither the operation of such Grantor's business as
currently conducted or as contemplated to be conducted nor the use of any of the
Owned Intellectual Property or the Licensed Intellectual Property which is
material to such Grantor's business (collectively, the "Material Intellectual
Property") in connection therewith conflicts with, infringes, misappropriates,
dilutes, misuses or otherwise violates the Intellectual Property rights of any
other person.
(c) Except as set forth in Schedule 4.9, on the date hereof (i) none of the
Owned Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor and (ii)
there are no other agreements, obligations, orders or judgments which affect the
use of any Owned Intellectual Property.
(d) To such Grantor's knowledge, no claim has been asserted that the use of such
Material Intellectual Property does or may infringe upon the rights of any third
party.
(e) To such Grantor's knowledge, no holding, decision or judgment has been
rendered by any Governmental Authority or arbitrator in the United States or
outside the United States which would limit, cancel or question the validity or
enforceability of, or such Grantor's rights in, any Owned Intellectual Property.
Such Grantor is not aware of any uses of any item of Owned Intellectual Property
that could reasonably be expected to lead to such item becoming invalid or
unenforceable including unauthorized uses by third parties and uses which were
not supported by the goodwill of the business connected with Trademarks and
Trademark Licenses.
(f) No action or proceeding is pending, or, to such Grantor's knowledge,
threatened, on the date hereof (i) seeking to limit, cancel or question the
validity of any Owned Intellectual Property, (ii) alleging that any services
provided by, processes used by, or products manufactured or sold by such Grantor
infringe any patent, trademark, copyright, or any other right of any other
person, (iii) alleging that any Material Intellectual Property is being
licensed, sublicensed or used in violation of any intellectual property or any
other right of any other person, or (iv) which, if adversely determined, would
have a Material Adverse Effect on the value of any Owned Intellectual Property.
To such Grantor's knowledge, no person is engaging in any activity that
infringes upon, or is otherwise an unauthorized use of, any Owned Intellectual
Property or upon the rights of such Grantor therein. Except as set forth in
Schedule 4.9, such Grantor has not granted any license, release, covenant not to
▇▇▇, non-assertion assurance, or other right to any person with respect to any
part of the Owned Intellectual Property. The consummation of the transactions
contemplated by this Agreement (including the enforcement of remedies) will not
result in the termination or impairment of any of the Material Intellectual
Property.
(g) With respect to each Copyright License, Trademark License, Trade Secret
License and Patent License which relates to Material Intellectual Property or
the loss of which could otherwise have a Material Adverse Effect: (i) such
license is in full force and effect and represents the entire agreement between
the respective licensor and licensee with respect to the subject matter of such
license; (ii) such license will not cease to be in full force and effect on
terms identical to those currently in effect as a result of the rights and
interests granted herein, nor will the grant of such rights and interests
constitute a breach or default under such license or otherwise give the licensor
or licensee a right to terminate such license; (iii) such Grantor has not
received any notice of termination or cancellation under such license; (iv) such
Grantor has not received any notice of a breach or default under such license,
which breach or default has not been cured; (v) such Grantor has not granted to
any other person any rights, adverse or otherwise, under such license; and (vi)
such Grantor is not in breach or default in any material respect, and no event
has occurred that, with notice and/or lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration under such
license.
(h) Except as set forth in Schedule 4.9, such Grantor has performed all acts and
has paid all required fees and taxes to maintain each and every item of Owned
Intellectual Property in full force and effect and to protect and maintain its
interest therein. Such Grantor has used commercially reasonable efforts to
provide proper statutory notice consistent with industry standards in connection
with its use of each Patent and Trademark that is material to its business and
included in the Owned Intellectual Property.
(i) To such Grantor's knowledge, (i) none of the Trade Secrets owned by such
Grantor that are material to its business have been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any other
person; (ii) no employee, independent contractor or agent of such Grantor has
misappropriated any trade secrets of any other person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of such Grantor; and (iii) no employee, independent contractor or agent of such
Grantor is in default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of inventions agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Intellectual Property material to such Grantor's
business
(j) Such Grantor has made all filings and recordations reasonably necessary to
protect its interest in its Registered Intellectual Property, including
recordation of its interests in the Patents and Trademarks with the United
States Patent and Trademark Office and in corresponding national and
international patent offices.
(k) Such Grantor has taken all commercially reasonable steps to use consistent
standards of quality in the manufacture, distribution and sale of all products
sold and provision of all services provided under or in connection with any
Trademark owned by such Grantor and has taken all commercially reasonable steps
to ensure that all licensed users of any such Trademark use such consistent
standards of quality.
(l) No Grantor is subject to any settlement or consents, judgment, injunction,
order, decree, covenants not to ▇▇▇, non-assertion assurances or releases that
would impair such Grantor's rights in any Owned Intellectual Property.
4.10 Letters of Credit and Letter of Credit Rights. No Grantor is a beneficiary
or assignee under any Letter of Credit with a value in excess of $100,000 other
than the Letters of Credit described on Schedule 4.10 (as such schedule may be
amended or supplemented from time to time in accordance with Section 5.5(b)).
With respect to any Letters of Credit with a value in excess of $100,000 that
are by their terms transferable, each Grantor has caused (or, in the case of the
Letters of Credit that are specified on Schedule 4.10 on the date hereof, will
use commercially reasonable efforts to cause) all issuers and nominated persons
under Letters of Credit in which the Grantor is the beneficiary or assignee to
consent to the assignment of such Letter of Credit to the Administrative Agent
and has agreed that upon the occurrence of a an Event of Default it shall cause
all payments thereunder to be made to the Collateral Account. With respect to
any Letters of Credit with a value in excess of $100,000 that are not
transferable, each Grantor shall obtain (or, in the case of the Letters of
Credit that are specified on Schedule 4.10 on the date hereof, use commercially
reasonable efforts to obtain) the consent of the issuer thereof and any
nominated person thereon to the assignment of the proceeds of the released
Letter of Credit to the Administrative Agent in accordance with Section 5-114(c)
of the New York UCC.
4.11 Commercial Tort Claims. No Grantor has any Commercial Tort Claims as of the
date hereof individually or in the aggregate in excess of $100,000 and, except
as specifically described on Schedule 4.11 (as such schedule may be promptly
amended or supplemented from time to time), no Grantor has any Commercial Tort
Claims after the date hereof individually or in the aggregate in excess of
$100,000.
4.12 Contracts.
(a) Schedule 4.12(a) (as such schedule may be amended or supplemented form time
to time in accordance with Section 5.5(b)) sets forth all of the Material
Contracts in which such Grantor has any right or interest.
(b) Except as set forth on Schedule 4.12(b), no Material Contract prohibits
assignment or encumbrance by such Grantor or requires or purports to require
consent of, or notice to, any party (other than such Grantor) to any Material
Contract in connection with the execution, delivery and performance of this
Agreement, including the exercise of remedies by the Administrative Agent with
respect to such Material Contract, except for such consents that have been
obtained and such notices that have been given, and except to the extent that
any such term would be rendered ineffective pursuant to Section 9-406, 9-407,
9-408 or 9-409 of the UCC of any relevant jurisdiction or any other applicable
law or principles of equity.
(c) Each Material Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of the Grantor party thereto and (to the best
of such Grantor's knowledge) each other party thereto, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(d) To the knowledge of such Grantor, the right, title and interest of such
Grantor, in, to and under the Material Contracts are not subject to any valid
defenses, rights of recoupment or claims.
(e) Neither such Grantor nor (to the best of such Grantor's knowledge) any of
the other parties to the Material Contracts is in material default in the
performance or observance of any of the material terms thereof.
(f) Such Grantor has delivered to the Administrative Agent a complete and
correct copy of each Material Contract, including all material amendments,
supplements and other modifications thereto, subject to any customary
confidentiality provisions contained therein.
(g) No amount payable to such Grantor under or in connection with any Contract
which has a value in excess of $100,000 is evidenced by any Instrument or
Tangible Chattel Paper which has not been delivered to the Administrative Agent
or constitutes Electronic Chattel Paper that is not under the control (within
the meaning of Section 9-105 of the New York UCC) of the Administrative Agent.
(h) None of the parties to any Material Contract is a Governmental Authority.
SECTION 5 COVENANTS
Each Grantor and Holdings (in the case of Holdings, only with respect to
Sections 5.2(a), 5.2(c), 5.2(d), 5.5, 5.6, 5.7 and 5.8) covenant and agree with
the Secured Parties that, from and after the date of this Agreement until the
Obligations (other than Obligations in respect of any Specified Hedge Agreement)
shall have been paid in full:
5.1 Covenants in Credit Agreement. Each Grantor shall take, or shall refrain
from taking, as the case may be, each action that is necessary to be taken or
not taken, as the case may be, so that no Default or Event of Default is caused
by the failure to take such action or to refrain from taking such action by such
Grantor or any of its Subsidiaries.
5.2 Delivery and Control of Instruments, Chattel Paper, Negotiable Documents,
Investment Property. (a) If any of the Collateral is or shall become evidenced
or represented by any Certificated Security or any Instrument, Negotiable
Document or Tangible Chattel Paper (with a value in excess of $100,000, such
Instrument (other than checks received in the ordinary course of business),
Certificated Security, Negotiable Documents or Tangible Chattel Paper shall be
promptly delivered to the Administrative Agent, duly endorsed in a manner
reasonably satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement, and all of such property owned by any Grantor or
Holdings as of the Closing Date shall be delivered on the Closing Date.
(b) If any of the Collateral is or shall become "Electronic Chattel Paper" with
a value in excess of $100,000 such Grantor shall ensure that (i) a single
authoritative copy exists which is unique, identifiable, unalterable (except as
provided in clauses (iii), (iv) and (v) of this paragraph), (ii) such
authoritative copy identifies the Administrative Agent as the assignee and is
communicated to and maintained by the Administrative Agent or its designee,
(iii) copies or revisions that add or change the assignee of the authoritative
copy can only be made with the participation of the Administrative Agent, (iv)
each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy and not the authoritative copy and (v) any revision of
the authoritative copy is readily identifiable as an authorized or unauthorized
revision.
(c) If any Collateral is or shall become evidenced or represented by an
Uncertificated Security of an Issuer that is a Subsidiary, such Grantor or
Holdings, as applicable, shall cause the Issuer thereof or, if any Collateral is
or shall become evidenced or represented by an Uncertificated Security of a
person other than an Issuer, such Grantor or Holdings, as applicable, shall use
commercially reasonable efforts to cause such person either (i) to register the
Administrative Agent as the registered owner of such Uncertificated Security,
upon original issue or registration of transfer or (ii) to agree in writing with
such Grantor or Holdings, as applicable, and the Administrative Agent that such
Issuer will comply with instructions with respect to such Uncertificated
Security originated by the Administrative Agent without further consent of such
Grantor or Holdings, as applicable, such agreement to be in a form reasonably
acceptable to the Administrative Agent, and such actions shall be taken on or
prior to the Closing Date with respect to any Uncertificated Securities owned as
of the Closing Date by any Grantor or Holdings.
(d) In addition to and not in lieu of the foregoing, if any Issuer of any
Investment Property constituting Collateral is organized under the law of, or
has its chief executive office in, a jurisdiction outside of the United States,
each Grantor or Holdings, as applicable, shall take such additional actions,
including causing the issuer to register the pledge on its books and records, as
may be necessary or advisable or as may be reasonably requested by the
Administrative Agent, under the laws of such jurisdiction to insure the
validity, perfection and priority of the security interest of the Administrative
Agent.
5.3 Maintenance of Insurance. (a) Such Grantor shall keep its insurable
properties adequately insured at all times by financially sound and reputable
insurers; maintain such other insurance, to such extent and against such risks
(and with such deductibles, retentions and exclusions) as is customary with
companies in the same or similar businesses operating in the same or similar
locations; provided that in any event such Grantor will maintain, to the extent
obtainable on commercially reasonable terms, (i) property and casualty insurance
on all material real and personal property on an all risks basis (including the
perils of flood and quake and loss by fire, explosion and theft), covering the
repair or replacement cost or cash value of all such property and consequential
loss coverage for business interruption and extra expense (which shall include
construction expenses and such other business interruption expenses as are
otherwise generally available to similar businesses), and (ii) public liability
insurance. All such insurance with respect to such Grantor shall be provided by
insurers or reinsurers which (x) in the case of United States insurers and
reinsurers, have an A.M. Best policyholders rating of not less than A- with
respect to primary insurance and B+ with respect to excess insurance and (y) in
the case of non-United States insurers or reinsurers, the providers of at least
80% of such insurance have either an ISI policyholders rating of not less than
A, an A.M. Best policyholders rating of not less than A- or a surplus of not
less than $500,000,000 with respect to primary insurance, and an ISI
policyholders rating of not less than BBB with respect to excess insurance, or,
if the relevant insurance is not available from such insurers, such other
insurers as the Administrative Agent may approve in writing. All insurance shall
(i) provide that no cancellation, material reduction in amount or material
change in coverage thereof other than for losses claimed shall be effective
until at least 30 days after receipt by the Administrative Agent of written
notice thereof, (ii) if reasonably requested by the Administrative Agent,
include a breach of warranty clause and (iii) be reasonably satisfactory in all
other respects to the Administrative Agent.
(b) Such Grantor will deliver to the Administrative Agent on behalf of the
Secured Parties, (i) on the Closing Date, a certificate dated such date showing
the amount and types of insurance coverage as of such date, (ii) promptly
following the request of the Administrative Agent from time to time (but no more
than two times each year, unless an Event of Default is continuing), full
information as to the insurance carried, (iii) promptly following receipt of
notice from any insurer, a copy of any notice of cancellation or material change
in coverage from that existing on the Closing Date and (iv) promptly after such
information is available to such Grantor, full information as to any claim
submitted to the insurer for an amount in excess of $150,000 with respect to any
property and casualty insurance policy maintained by such Grantor. Each Secured
Party shall be named as additional insured on all such liability insurance
policies of such Grantor and the Administrative Agent shall be named as loss
payee on all property and casualty insurance policies of such Grantor.
(c) Upon the request of the Administrative Agent (but no more than one time each
year, unless an Event of Default is continuing), the each of the Borrowers shall
deliver to the Secured Parties a report of a reputable insurance broker
summarizing such Borrower's insurance coverage with respect to such insurance.
5.4 [Intentionally Omitted].
5.5 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain each of the security interests created by this
Agreement and Holdings shall maintain the security interests in the Pledged
Stock of Palco as a perfected security interest (other than in the case of
Deposit Accounts or motor vehicles) having at least the priority described in
Section 4.3 and shall defend such security interest against the claims and
demands of all persons whomsoever, subject to the provisions of Section 8.15.
(b) Such Grantor and Holdings, as applicable, shall furnish to the Secured
Parties from time to time (but no more than one time each year, unless an Event
of Default is continuing) statements and schedules further identifying and
describing the Collateral and such other reports in connection with the assets
and property of such Grantor or Holdings as the Administrative Agent may
reasonably request, all in reasonable detail. In addition, (i) no later than 45
days following the end of each fiscal quarter of each Grantor or Holdings or
(ii) at any time and from time to time at the request of the Administrative
Agent upon the occurrence and during the continuance of an Event of Default, the
Grantors and Holdings, as applicable, shall furnish to the Administrative Agent
such supplements to the schedules hereof (other than Schedule 4.11, which shall
be furnished promptly following any change in the information contained therein)
as are necessary to accurately reflect at such time the information required
thereby.
(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 or Holdings, as
applicable, such Grantor or Holdings shall promptly and duly authorize, execute
and deliver, and have recorded, such further instruments and documents and take
such further actions 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 statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby.
5.6 Changes in Locations, Name, Jurisdiction of Incorporation, etc. Such Grantor
or Holdings shall furnish to each of the Administrative Agent prompt written
notice of any change (i) in such Grantor's corporate name, (ii) in the location
of such Grantor's or Holdings' (as applicable) chief executive office or, if
different, its principal place of business, any office in which it maintains
books or records relating to material Collateral owned by it or any office or
facility at which material Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in such Grantor's
corporate structure, (iv) in such Grantor's Federal Taxpayer Identification
Number or (v) in the location of any Inventory or Equipment of such Grantor
(other than mobile goods) with a value in excess of $10,000 to a location other
than those listed on Schedule 4.5(a). Such Grantor agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made (or will have been made within 30 days of such change) under the New
York UCC or otherwise and all other actions have been taken (or will have been
taken within 30 days of such change) that are required in order for the
Administrative Agent to continue at all times following such change to have a
valid, legal and, other than in the case of Deposit Accounts and motor vehicles,
perfected security interest in all the Collateral.
5.7 Notices. Such Grantor and Holdings shall advise the Administrative Agent
promptly following its knowledge thereof, in reasonable detail, of:
(a) any Lien (other than any Lien expressly permitted by Section 6.02 of the
Credit Agreement) on any of the Collateral which would materially adversely
affect the ability of the Administrative Agent to exercise any of its remedies
hereunder; and
(b) of the occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the Collateral of all
Grantors and Holdings, taken as a whole, or on the security interests created
hereby, except for Dispositions expressly permitted by the Credit Agreement.
5.8 Investment Property.
(a) If any Grantor or Holdings shall become entitled to receive or shall receive
any stock or other ownership certificate (including any certificate representing
a stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection with
any reorganization), option or rights in respect of the equity interests in any
Issuer, whether in addition to, in substitution of, as a conversion of, or in
exchange for, any shares of or other ownership interests in the Pledged
Securities, or otherwise in respect thereof, such Grantor or Holdings, as
applicable, shall accept the same as the agent of the Secured Parties, hold the
same in trust for the Secured Parties and promptly thereafter deliver the same
to the Administrative Agent in the exact form received, duly endorsed by such
Grantor or Holdings, as applicable, to the Administrative Agent, if required,
together with an undated stock power or similar instrument of transfer covering
such certificate duly executed in blank by such Grantor or Holdings, as
applicable, and with, if the Administrative Agent so reasonably requests,
signature guaranteed, to be held by the Administrative Agent, subject to the
terms hereof, as additional collateral security for the Obligations. Upon the
occurrence and during the continuance of an Event of Default, following notice
by the Administrative Agent to the Borrowers, any sums paid upon or in respect
of the Pledged Securities upon the liquidation or dissolution of any Issuer
shall be paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any distribution
of capital shall be made on or in respect of the Pledged Securities or any
property shall be distributed upon or with respect to the Pledged Securities
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged Securities
shall be received by any Grantor or Holdings, such Grantor or Holdings, as
applicable, shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Secured
Parties, segregated from other funds of such Grantor or Holdings, as applicable,
as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent, such Grantor
and Holdings shall not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock, partnership interests, limited liability company
interests 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, partnership interests, limited liability company interests or other
equity securities of any nature of any Issuer (except, in each case, pursuant to
a transaction expressly permitted by the Credit Agreement), (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, any of the Investment Property or Proceeds thereof or any interest therein
(except, in each case, pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) enter into any agreement or undertaking restricting the
right or ability of such Grantor, Holdings or the Administrative Agent to sell,
assign or transfer any of the Investment Property constituting Collateral or
Proceeds thereof or any interest therein or (iv) cause or permit any Issuer of
any Pledged Partnership Interests or Pledged LLC Interests which are not
securities (for purposes of the New York UCC) on the date hereof to elect or
otherwise take any action to cause such Pledged Partnership Interests or Pledged
LLC Interests to be treated as securities for purposes of the New York UCC;
provided, however, notwithstanding the foregoing, if any issuer of any Pledged
Partnership Interests or Pledged LLC Interests takes any such action in
violation of the provisions in this clause (iv), such Grantor shall promptly
following its knowledge thereof notify the Administrative Agent in writing of
any such election or action and, in such event, shall take all steps necessary
or reasonably requested to establish the Administrative Agent's "control"
thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i)
it shall be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and shall comply with such terms insofar as such terms
are applicable to it, (ii) it shall notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Pledged Securities issued by it. In addition, each Grantor and/or Holdings which
is either an Issuer or an owner of any Pledged Security hereby consents to the
grant by each other Grantor and/or Holdings of the security interest hereunder
in favor of the Administrative Agent and to the transfer of any Pledged Security
to the Administrative Agent or its nominee following the occurrence and during
the continuance of an Event of Default and to the substitution of the
Administrative Agent or its nominee as a partner, member or shareholder of the
Issuer of the related Pledged Security.
5.9 Receivables.
(a) Other than in the ordinary course of business consistent with its past
practice or standard industry practice, such Grantor shall not (i) grant any
extension of the time of payment of any Receivable with a value in excess of
$10,000, (ii) compromise or settle any Receivable with a value in excess of
$10,000 for less than the full amount thereof, (iii) release, wholly or
partially, any person liable for the payment of any Receivable with a value in
excess of $10,000, (iv) allow any credit or discount whatsoever on any
Receivable with a value in excess of $10,000 or (v) amend, supplement or modify
any Receivable with a value in excess of $10,000 in any manner that could
adversely affect the value thereof.
(b) Such Grantor shall deliver to the Administrative Agent a copy of each
material demand, notice or document received by it that questions or, in the
reasonable judgment of such Grantor, calls into doubt the validity or
enforceability of more than 10% of the aggregate amount of the then outstanding
Receivables that are included in the Collateral.
5.10 Intellectual Property.
(a) Such Grantor (either itself or through licensees) shall (i) continue to use
each Trademark material to its business on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, except to the extent that such
Grantor demonstrates to the Administrative Agent's reasonable satisfaction that
the economic benefit of not complying with this subsection 5.10(a)(i) exceeds
the economic benefit of complying with this subsection 5.10(a)(i), (ii) use such
Trademark with all notices and legends required by applicable Requirements of
Law, (iii) not adopt or use any ▇▇▇▇ which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for the ratable
benefit of the Secured Parties, shall obtain a perfected security interest in
such ▇▇▇▇ pursuant to this Agreement and the Intellectual Property Security
Agreement, and (iv) not knowingly (and not knowingly permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) shall not knowingly do any
act, or knowingly omit to do any act, whereby any Patent owned by such Grantor
material to its business may become forfeited, abandoned or dedicated to the
public.
(c) Such Grantor (either itself or through licensees) shall not knowingly permit
any licensee or sublicensee thereof to do any act or knowingly omit to do any
act whereby any portion of such Copyrights material to the Grantor's business
may become invalidated or otherwise impaired.
(d) Such Grantor (either itself or through licensees) shall not knowingly do any
act that uses any Material Intellectual Property to infringe, misappropriate or
violate the Intellectual Property rights of any other person.
(e) Such Grantor (either itself or through licensees) shall use commercially
reasonable efforts to provide proper statutory notice consistent with industry
standards in connection with the use of the Material Intellectual Property.
(f) Such Grantor shall promptly notify the Administrative Agent if it knows, or
has reason to know, that any application or registration relating to any
Registered Intellectual Property material to the Grantor's business may become
forfeited, abandoned or dedicated to the public, or of any materially 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, or the validity of, any
Registered 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, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property that is material to the business of such Grantor with the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the 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, any and all agreements, instruments,
documents, and papers as the Administrative Agent may reasonably request to
evidence the Secured Parties' security interest in any Copyright, Patent,
Trademark or other Intellectual Property of such Grantor and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby with
the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or political
subdivision thereof.
(h) Such Grantor shall take all reasonable and necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of
Registered Intellectual Property material to its business, including the payment
of required fees and taxes, the filing of responses to office actions issued by
the United States Patent and Trademark Office and the United States Copyright
Office, the filing of applications for renewal or extension, the filing of
affidavits of use and affidavits of incontestability, the filing of divisional,
continuation, continuation-in-part, reissue, and renewal applications or
extensions, the payment of maintenance fees, and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings.
(i) Such Grantor (either itself or through licensees) shall not discontinue use
of or otherwise abandon any of its Registered Intellectual Property material to
its business, or abandon any application or any right to file an application for
letters patent, trademark, or copyright, unless such Grantor shall have
previously determined that such use or the pursuit or maintenance of such
Intellectual Property is no longer desirable in the conduct of such Grantor's
business and that the loss thereof could not reasonably be expected to have a
Material Adverse Effect and, in which case, such Grantor shall give prompt
notice of any such abandonment to the Administrative Agent in accordance
herewith.
(j) In the event that any Intellectual Property material to its business is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and ▇▇▇ for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution,
except to the extent that such Grantor demonstrates to the Administrative
Agent's reasonable satisfaction that the economic benefit of not suing for
infringement, misappropriation or dilution exceeds the economic benefit of
taking any such action.
(k) Such Grantor agrees that, should it obtain an ownership interest in any item
of Intellectual Property which is not, as of the Closing Date, a part of the
Intellectual Property Collateral (the "After-Acquired Intellectual Property"),
(i) the provisions of Section 3 shall automatically apply thereto, (ii) any such
After-Acquired Intellectual Property, and in the case of trademarks, the
goodwill of the business connected therewith or symbolized thereby, shall
automatically become part of the Intellectual Property Collateral, (iii) it
shall give prompt (and, in any event within five Business Days after the last
day of the fiscal quarter in which such Grantor acquires such ownership
interest) written notice thereof to the Administrative Agent in accordance
herewith, and (iv) it shall provide the Administrative Agent promptly (and, in
any event within five Business Days after the last day of the fiscal quarter in
which such Grantor acquires such ownership interest) with an amended Schedule
4.9 and take the actions specified in 5.9(m).
(l) Such Grantor agrees to execute an Intellectual Property Security Agreement
with respect to its Intellectual Property in form and substance acceptable to
the Administrative Agent in order to record the security interest granted herein
to the Administrative Agent for the ratable benefit of the Secured Parties with
the United States Patent and Trademark Office, the United States Copyright
Office, and any other applicable Governmental Authority.
(m) Such Grantor agrees to execute an Intellectual Property Security Agreement
with respect to its Intellectual Property in form and substance acceptable to
the Administrative Agent order to record the security interest granted herein to
the Administrative Agent for the ratable benefit of the Secured Parties with the
United States Patent and Trademark Office, the United States Copyright Office
and any other applicable Governmental Authority. (n) Such Grantor shall take all
steps reasonably necessary to protect the secrecy of all Trade Secrets material
to its business, including entering into confidentiality agreements with
employees and restricting access to secret information and documents.
5.11 Contracts.
(a) Such Grantor shall enforce its rights in all material respects under the
Material Contracts.
(b) Such Grantor shall not amend, modify, terminate, waive or fail to enforce
any provision of any Contract in any manner which could reasonably be expected
to have a Material Adverse Effect.
(c) Such Grantor shall exercise promptly and diligently each material right
which it may have under each Material Contract (other than any right of
termination).
(d) Such Grantor shall deliver to the Administrative Agent a copy of each
material (i) demand, (ii) notice or (iii) document received by it relating in
any way to any Material Contract and shall also deliver to the Administrative
Agent a copy of all new Material Contracts entered into after the date hereof,
in each case, promptly (and in any event within 45 days of such receipt or
execution, as applicable).
(e) With respect to any Non-Assignable Contract that is a Material Contract as
of the date hereof, each Grantor shall, within ten days of the date hereof,
request in writing the consent of the counterparty or counterparties to such
Non-Assignable Contract pursuant to the terms of such Non-Assignable Contract or
applicable law to the collateral assignment or granting of a security interest
in such Non-Assignable Contract to the Administrative Agent for the ratable
benefit of the Secured Parties and use its commercially reasonable efforts to
obtain such consent as soon as practicable thereafter. Unless otherwise agreed
by the Administrative Agent, no Grantor shall after the Closing Date enter into
any Non-Assignable Contract that is a Material Contract unless, within 30 days
following its execution, counterparties to such Non-Assignable Contract consent
in writing pursuant to the terms of such Non-Assignable Contract to the
collateral assignment and granting of a security interest in such Non-Assignable
Contract to the Administrative Agent for the ratable benefit of the Secured
Parties.
(f) Such Grantor shall not permit to become effective in any document creating
any Material Contract, a provision that would prohibit the creation or
perfection of, or exercise of remedies in connection with, a Lien on such
Material Contract in favor of the of the Administrative Agent for the ratable
benefit of the Secured Parties unless such Grantor believes, in its reasonable
judgment, that such prohibition is usual and customary in transactions of such
type.
5.12 Commercial Tort Claims. Such Grantor shall advise the Administrative Agent
promptly of any Commercial Tort Claim held by such Grantor individually or in
the aggregate in excess of $100,000 and shall promptly execute a supplement to
this Agreement in form and substance reasonably satisfactory to the
Administrative Agent to grant a security interest in such Commercial Tort Claim
to the Administrative Agent for the ratable benefit of the Secured Parties.
SECTION 6 REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) The Administrative Agent hereby authorizes each Grantor to collect such
Grantor's Receivables, subject, following the occurrence and during the
continuance of an Event of Default, to the Administrative Agent's direction and
control, and each Grantor hereby agrees to continue to collect all amounts due
or to become due to such Grantor under the Receivables and any Supporting
Obligation in the ordinary course of business consistent with past practice;
provided, however, that the Administrative Agent may curtail or terminate said
authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly endorsed by such Grantor to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Secured Parties only as provided in Section 6.5, and (ii) until
so turned over, shall be held by such Grantor in trust for the Secured Parties,
segregated from other funds of such Grantor.
(b) Following the occurrence and during the continuance of an Event of Default,
at the Administrative Agent's request, each Grantor shall deliver to the
Administrative Agent all original and other documents evidencing, and relating
to, the agreements and transactions which gave rise to the Receivables that are
included in the Collateral, including all original orders, invoices and shipping
receipts.
6.2 Communications with Obligors; Grantors Remain Liable.
(a) The Administrative Agent in its own name or in the name of others may at any
time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables and parties to the Contracts to
verify with them to the Administrative Agent's satisfaction the existence,
amount and terms of any Receivables or Contracts.
(b) The Administrative Agent may at any time after the occurrence and during the
continuance of an Event of Default or at any other time with the consent of the
Borrowers (such consent not to be unreasonably withheld or delayed) notify, or
require any Grantor to so notify, the Account Debtor or counterparty on any
Receivable or Contract of the security interest of the Administrative Agent
therein. In addition, after the occurrence and during the continuance of an
Event of Default, the Administrative Agent may upon written notice to the
applicable Grantor, notify, or require any Grantor to notify, the Account Debtor
or counterparty to make all payments under the Receivables and/or Contracts
directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall remain
liable under each of the Receivables and Contracts to observe and perform all
the conditions and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise thereto. No
Secured Party shall have any obligation or liability under any Receivable (or
any agreement giving rise thereto) or Contract by reason of or arising out of
this Agreement or the receipt by any Secured Party of any payment relating
thereto, nor shall any Secured Party be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Securities.
(a) Unless an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have given notice to the relevant Grantor or Holdings
of the Administrative Agent's intent to exercise its corresponding rights
pursuant to Section 6.3(b), each Grantor and Holdings shall be permitted to
receive all dividends or distributions (except for dividends or distributions of
additional equity interests) paid in respect of the Pledged Equity Interests and
all payments made in respect of the Pledged Notes, to the extent permitted in
the Credit Agreement, and to exercise all voting and rights with respect to the
Pledged Securities; provided, however, that no vote shall be cast or corporate
or other ownership right exercised or other action taken which would be
materially inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing: (i) all rights of each
Grantor and Holdings, as applicable, to exercise or refrain from exercising the
voting and other consensual rights which they would otherwise be entitled to
exercise pursuant hereto shall cease and all such rights shall thereupon become
vested in the Administrative Agent who shall thereupon have the sole right, but
shall be under no obligation, to exercise or refrain from exercising such voting
and other consensual rights and (ii) the Administrative Agent shall have the
right, without notice to any Grantor or Holdings, to transfer all or any portion
of the Investment Property to its name or the name of its nominee or agent. In
order to permit the Administrative Agent to exercise the voting and other
consensual rights which it may be entitled to exercise pursuant hereto and to
receive all dividends and other distributions which it may be entitled to
receive hereunder each Grantor and Holdings, as applicable, shall promptly
execute and deliver (or cause to be executed and delivered) to the
Administrative Agent all proxies, dividend payment orders and other instruments
as the Administrative Agent may from time to time reasonably request and each
Grantor and Holdings acknowledge that the Administrative Agent may utilize the
power of attorney set forth herein.
(c) Each Grantor and Holdings hereby authorize and instruct each Issuer of any
Pledged Securities pledged by such Grantor or Holdings hereunder to (i) comply
with any instruction received by it from the Administrative Agent in writing
that (x) states that an Event of Default has occurred and is continuing and (y)
is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor or Holdings, and each Grantor and
Holdings agree that each Issuer shall be fully protected in so complying, and
(ii) upon any such instruction following the occurrence and during the
continuance of an Event of Default, pay any dividends or other payments with
respect to the Investment Property, including Pledged Securities, directly to
the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In addition to the
rights of the Secured Parties specified in Section 6.1 with respect to payments
of Receivables, if an Event of Default shall occur and be continuing, all
Proceeds received by any Grantor or Holdings (solely in connection with the
Pledged Shares held by Holdings in Palco) consisting of cash, Cash Equivalents,
checks and other near-cash items shall be held by such Grantor or Holdings, as
applicable, in trust for the Secured Parties, segregated from other funds of
such Grantor and shall, following notice to the Borrowers from the
Administrative Agent, forthwith upon receipt by such Grantor or Holdings, as
applicable, be turned over to the Administrative Agent in the exact form
received by such Grantor or Holdings (duly endorsed by such Grantor or Holdings,
as applicable, to the Administrative Agent, if required). All Proceeds received
by the Administrative Agent hereunder shall be held by the Administrative Agent
in a Collateral Account maintained under its sole dominion and control. All
Proceeds while held by the Administrative Agent in a Collateral Account (or by
such Grantor or Holdings in trust for the Secured Parties) shall continue to be
held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. If an Event of Default shall have occurred and be
continuing, at any time at the Administrative Agent's election, the
Administrative Agent may apply all or any part of the net Proceeds (after
deducting fees and expenses as provided in Section 6.6) constituting Collateral
realized through the exercise by the Administrative Agent of its remedies
hereunder, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:
First, to the Administrative Agent, to pay incurred and unpaid fees and
expenses of the Secured Parties under the Loan Documents;
Second, to the Administrative Agent, for application by it towards payment
of amounts then due and owing and remaining unpaid in respect of the
Obligations, pro rata among the Secured Parties according to the amounts of the
Obligations then due and owing and remaining unpaid to the Secured Parties;
Third, any balance of such Proceeds and proceeds from the guarantee
remaining after the Obligations shall have been paid in full shall be paid over
to the Grantors or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies.
(a) If an Event of Default shall occur and be continuing, the Administrative
Agent, on behalf of the Secured Parties, may exercise, in addition to all other
rights and remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the New York UCC (whether or not
the New York UCC applies to the affected Collateral) or its rights under any
other applicable law or in equity. Without limiting the generality of the
foregoing, if an Event of Default shall have occurred and be continuing, 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, Holdings or any other
person (all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by applicable law), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, license,
assign, give option or options to purchase, or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, at any exchange,
broker's board or office of any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Each Secured Party shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor or Holdings, as applicable, which right or equity is
hereby waived and released to the extent permitted by applicable law. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Grantor or Holdings and each Grantor and
Holdings hereby waive (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which they now have or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Grantor and Holdings agree that, to the extent notice of sale shall be
required by law, at least ten days notice to such Grantor or Holdings, as
applicable, of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Administrative Agent may
sell the Collateral without giving any warranties as to the Collateral. The
Administrative Agent may specifically disclaim or modify any warranties of title
or the like. This procedure will not be considered to adversely effect the
commercial reasonableness of any sale of the Collateral. Each Grantor and
Holdings agree that it would not be commercially unreasonable for the
Administrative Agent to dispose of the Collateral or any portion thereof by
using Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets. Each Grantor and Holdings hereby
waive any claims against the Administrative Agent arising by reason of the fact
that the price at which any Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
the Administrative Agent accepts the first offer received and does not offer
such Collateral to more than one offeree. Each Grantor and Holdings further
agree, at the Administrative Agent's request, to assemble the Collateral and
make it available to the Administrative Agent at places which the Administrative
Agent shall reasonably select, whether at such Grantor's or Holdings' premises,
as applicable, or elsewhere. The Administrative Agent shall have the right to
the extent permitted by applicable law to enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process.
(b) The Administrative Agent shall apply the net proceeds of any action taken by
it pursuant to this Section 6.6, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Secured Parties hereunder, including reasonable
attorneys' fees and disbursements in accordance with the terms of the Credit
Agreement, to the payment in whole or in part of the Obligations and only after
such application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including Section 9-615(a) of the New
York UCC, need the Administrative Agent account for the surplus, if any, to any
Grantor or Holdings. If the Administrative Agent sells any of the Collateral
upon credit, the Grantor or Holdings, as applicable, will be credited only with
payments actually made by the purchaser and received by the Administrative Agent
and applied to Indebtedness of the purchaser. In the event the purchaser fails
to pay for the Collateral, the Administrative Agent may resell the Collateral
and the Grantor or Holdings, as applicable, shall be credited with Proceeds of
the sale. To the extent permitted by applicable law, each Grantor and Holdings
waive all claims, damages and demands they may acquire against any Secured Party
arising out of the exercise by them of any rights hereunder, except to the
extent that such claims, damages and demands are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
primarily the gross negligence, willful misconduct or bad faith of such Secured
Party.
(c) In the event of any disposition of any of the Intellectual Property, the
goodwill of the business connected with and symbolized by any Trademarks subject
to such Disposition shall be included, and the applicable Grantor shall supply
the Administrative Agent or its designee with such Grantor's know-how and
expertise, and with documents and things embodying the same, relating to the
manufacture, distribution, advertising and sale of products or the provision of
services relating to any Intellectual Property subject to such disposition, and
such Grantor's customer lists and other records and documents relating to such
Intellectual Property and to the manufacture, distribution, advertising and sale
of such products and services.
6.7 Registration Rights.
(a) Each Grantor and Holdings recognize that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Equity Interests or the
Pledged Debt Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor and Holdings acknowledge and agree
that any such private sale may result in prices and other terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agree that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Equity Interests or the Pledged
Debt Securities for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
(b) Each Grantor and Holdings agree to use their best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Equity Interests or the Pledged Debt
Securities pursuant to this Section 6.7 are valid and binding and in compliance
with any and all other applicable Requirements of Law. Each Grantor and Holdings
further agree that a breach of any of the covenants contained in this Section
6.7 will cause irreparable injury to the Secured Parties, that the Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall be
specifically enforceable against such Grantor or Holdings, as applicable, and
such Grantor and/or Holdings, as applicable, hereby waive and agree not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred and is continuing
under the Credit Agreement or a defense of payment.
6.8 Deficiency. Each Grantor or Holdings, as applicable, shall remain liable for
any deficiency if the Proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Obligations and the reasonable fees and
disbursements of any attorneys employed by any Secured Party to collect such
deficiency in accordance with the terms of the Credit Agreement.
SECTION 7 THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor and Holdings hereby irrevocably constitute and appoint each of
Administrative Agent and any officer or agent thereof, with full power of
substitution, as their true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor or Holdings, as
applicable, and in the name of such Grantor or Holdings, as applicable, or in
its own name, for the purpose of carrying out the terms of this Agreement, upon
the occurrence and during the continuance of an Event of Default, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Grantor
and Holdings hereby give the Administrative Agent, upon the occurrence and
during the continuance of an Event of Default, the power and right, on behalf of
such Grantor and Holdings, without notice to or assent by such Grantor, to do
any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take possession
of and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Receivable or Contract
or with respect to any other Collateral and file any claim or take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or Contract or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver, and have
recorded, any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Secured Parties' security
interest in such Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby;
(iii)pay or discharge taxes and Liens levied or placed on or threatened against
the Collateral, effect any repairs or any insurance called for by the terms
of this Agreement and pay all or any part of the premiums therefor and the
costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.7 or 6.8,
any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due or to become due thereunder directly
to the Administrative Agent or as the Administrative Agent shall direct;
(2) ask or demand for, collect, and receive payment of and receipt for, any
and all moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Collateral; (3) sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (4) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (5)
defend any suit, action or proceeding brought against such Grantor or
Holdings with respect to any Collateral; (6) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem appropriate;
(7) assign any Copyright, Patent or Trademark (along with the goodwill of
the business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's option and
such Grantor's or Holdings' expense, as applicable, at any time, or from
time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Secured Parties' security interests therein and to effect the intent of
this Agreement, all as fully and effectively as such Grantor or Holdings
might do.
Anything in this Agreement to the contrary notwithstanding, the Administrative
Agent agrees that, except as provided in Section 7.1(b), it will not exercise
any rights under the power of attorney provided for in this Section 7.1(a)
unless an Event of Default shall have occurred and be continuing.
(b) If any Grantor or Holdings fail to perform or comply with any of their
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; provided, however, that unless
an Event of Default has occurred and is continuing or time is of the essence,
the Administrative Agent shall not exercise this power without first making
demand on the Grantor or Holdings, as applicable, and the Grantor or Holdings
failing to promptly comply therewith.
(c) The expenses of the Administrative Agent incurred in connection with actions
undertaken as provided in this Section 7.1, together with interest thereon at a
rate per annum equal to the rate per annum at which interest would then be
payable on ABR Loans under the Credit Agreement, plus 2.00% from the date of
payment to the date reimbursed by the relevant Grantor or Holdings, and shall be
payable by such Grantor or Holdings on demand.
(d) Each Grantor and Holdings hereby ratify 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.
7.2 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, under Section 9-207 of the New York UCC or otherwise, 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 nor any
other Secured Party nor any of their respective officers, directors, partners,
employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor, Holdings
or any other person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Secured Parties
hereunder are solely to protect the Secured Parties' interests in the Collateral
and shall not impose any duty upon any Secured Party to exercise any such
powers. The Secured Parties shall be accountable only for amounts that they
actually receive as a result of the exercise of such powers, and neither they
nor any of their officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or affiliates shall be responsible to any
Grantor for any act or failure to act hereunder, except to the extent that any
such act or failure to act is found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted primarily from their own gross
negligence, willful misconduct or bad faith.
7.3 Execution of Financing Statements. Each Grantor acknowledges that pursuant
to Section 9-509(b) of the New York UCC and any other applicable law, each
Grantor authorizes the Administrative Agent to file or record financing or
continuation statements, and amendments thereto, and other filing or recording
documents or instruments with respect to the Collateral, without the signature
of such Grantor, in such form and in such offices as the Administrative Agent of
the Credit Agreement reasonably determines appropriate to perfect or maintain
the perfection of the security interests of the Administrative Agent under this
Agreement. Each Grantor agrees that such financing statements may describe the
collateral in the same manner as described in the Security Documents or as "all
assets" or "all personal property," whether now owned or hereafter existing or
acquired or such other description as the Administrative Agent of the Credit
Agreement, in its sole judgment, determines is necessary or advisable. If
permitted by applicable law, 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
where so permitted.
7.4 Authority of Administrative Agent. Each Grantor and Holdings acknowledge
that the rights and responsibilities of the Administrative Agent under the
Credit Agreement and 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 under the Credit Agreement or under this Agreement
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 and/or Holdings, the Administrative Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor or Holdings shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
7.5 Appointment of Co-Administrative Agents. At any time or from time to time,
in order to comply with any Requirement of Law, the Administrative Agent may
appoint another bank or trust company or one of more other persons, either to
act as co-agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and which may be specified in the instrument of appointment (which may,
in the discretion of the Administrative Agent, include provisions for
indemnification and similar protections of such co-agent or separate agent).
SECTION 8 MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by each affected Grantor or Holdings, if applicable, and the
Administrative Agent, subject to any consents required under Section 9.08 of the
Credit Agreement; provided that any provision of this Agreement imposing
obligations on any Grantor or Holdings may be waived by the Administrative Agent
in a written instrument executed by the Administrative Agent.
8.2 Notices. All notices, requests and demands to or upon the Administrative
Agent, any Grantor hereunder or Holdings shall be effected in the manner
provided for in Section 9.01 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor or Holdings shall be
addressed to such Guarantor or Holdings, as applicable, at its notice address
set forth on Schedule 8.2.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Secured Party shall
by any act (except by a written instrument pursuant to Section 8.1), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure
to exercise, nor any delay in exercising, on the part of any 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 any Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
such Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Grantor and Holdings agree
to pay or reimburse each Secured Party for all its reasonable costs and expenses
incurred in collecting against such Grantor or Holdings under the guarantee
contained in Section 2 or otherwise enforcing or preserving any rights under
this Agreement and the other Loan Documents to which any Grantor is a party,
including the reasonable fees and disbursements of counsel to each Secured Party
and of counsel to the Administrative Agent, in each case, in accordance with the
terms of the Credit Agreement.
(b) Each Grantor and Holdings agree to pay, and to hold the Secured Parties
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Agreement.
(c) Each Grantor and Holdings agree to pay, and to hold the Secured Parties
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrowers
would be required to do so pursuant to Section 9.05 of the Credit Agreement.
(d) The agreements in this Section shall survive repayment of the Obligations
and all other amounts payable under the Credit Agreement and the other Loan
Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the successors
and assigns of each Grantor and Holdings and shall inure to the benefit of the
Secured Parties and their successors and assigns; provided that, except as
expressly permitted by the terms of the Credit Agreement, no Grantor or Holdings
may assign, transfer or delegate any of their rights or obligations under this
Agreement without the prior written consent of the Administrative Agent, and any
attempted assignment without such consent shall be null and void.
8.6 Set-Off. If an Event of Default shall have occurred and be continuing, each
Secured Party is hereby authorized at any time and from time to time, except to
the extent prohibited by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Secured Party to or for the credit or the
account of any Grantor or Holdings against any of and all the obligations of any
Grantor or Holdings now or hereafter existing under this Agreement and other
Loan Documents held by such Secured Party, irrespective of whether or not such
Secured Party shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Secured Party under this Section 8.6 are in addition to other rights and
remedies (including other rights of setoff) which such Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts (including by
facsimile), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Grantors, Holdings, the Administrative Agent and the other
Secured Parties with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by any Secured
Party relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF ANY SECURITY INTEREST HEREUNDER, OR ANY REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE PURSUANT TO MANDATORY CHOICE OF LAW
RULES GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN NEW YORK.
8.12 Submission to Jurisdiction; Waivers. Each Grantor and Holdings hereby
irrevocably and unconditionally:
(a) submit for themselves and their property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which they are a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the Courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
(b) consent that any such action or proceeding may be brought in such courts and
waive any objection that they may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agree not to plead or claim the same;
(c) agree that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor or
Holdings at their address referred to in Section 8.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agree that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
(e) waive, to the maximum extent not prohibited by law, any right they may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgments. Each Grantor and Holdings hereby acknowledge that:
(a) they have been advised by counsel in the negotiation, execution and delivery
of this Agreement and the other Loan Documents to which they are a party;
(b) no Secured Party has any fiduciary relationship with or duty to any Grantor
or Holdings arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Grantors and Holdings, on
the one hand, and the Secured Parties, on the other hand, in connection herewith
or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Secured Parties.
8.14 Additional Grantors. Each Subsidiary of any of the Borrowers that is
required to become a party to this Agreement pursuant to Section 5.09 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in form and
substance satisfactory to the Administrative Agent.
8.15 Releases.
(a) At such time as the Loans and the other Obligations (other than Obligations
in respect of any Specified Hedge Agreement) shall have been paid in full, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent, each Grantor hereunder and Holdings
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
and Holdings, as applicable. At the request and sole expense of any Grantor or
Holdings following any such termination, the Administrative Agent shall deliver
to such Grantor or Holdings, as applicable, any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor or
Holdings such documents as such Grantor or Holdings shall reasonably request to
evidence such termination.
(b) If any of the Collateral shall be sold or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of a Grantor shall execute
and deliver to such Grantor all releases or other documents reasonably necessary
for the release of the Liens created hereby on such Collateral. At the request
and sole expense of the Borrowers, a Guarantor shall be released from its
obligations hereunder in the event that all the equity interests in such
Guarantor shall be sold or otherwise disposed of in a transaction permitted by
the Credit Agreement; provided that the Borrowers shall have delivered to the
Administrative Agent, at least five Business Days prior to the date of the
proposed release, a written request for such release identifying the relevant
Guarantor and such other information reasonably requested by the Administrative
Agent, together with a certification by the Borrowers stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
(c) Each Grantor and Holdings acknowledge that they are not authorized to file
any financing statement or amendment or termination statement with respect to
any financing statement originally filed in connection herewith without the
prior written consent of the Administrative Agent, subject to such Grantor's
rights under Section 9-509(d)(2) of the New York UCC.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR, HOLDINGS AND THE ADMINISTRATIVE AGENT
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
[Signature Pages Follow]
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.
GRANTORS:
THE PACIFIC LUMBER COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP Finance & Administration and CFO
▇▇▇▇▇ LUMBER CO., INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP Finance & Administration and CFO
SALMON CREEK LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP Finance & Administration and CFO
SCOTIA INN INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP Finance & Administration and CFO
HOLDINGS:
MAXXAM GROUP INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and CFO
ADMINISTRATIVE AGENT
CREDIT SUISSE FIRST BOSTON, acting through its New York
Branch, as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇
_____________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇ ▇▇▇▇▇▇
_____________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Schedule 4.3(a)
(to Guarantee and Collateral Agreement)
1. The security interests in that portion of the Collateral consisting of (i)
Accounts, (ii) General Intangibles (including patents and trademarks), (iii)
Goods (other than standing timber to be cut, as to which no opinion is
expressed), (iv) Chattel Paper, (v) Negotiable Documents, (vi) Instruments or
(vii) Investment Property will be perfected upon the later of the attachment of
such security interest and the filing with respect thereto of the Financing
Statements with the Office of the Secretary of State of the State of the State
in which such Grantor or Holdings is incorporated (the "Filing Office") with
payment of the required fees, provided that, if such entity changes its location
(within the meaning of Section 9-307 of the UCC) to another location, the
effectiveness of the Financing Statement naming such entity as debtor will cease
on the expiration of four months after such change or, if earlier, when
perfection would have otherwise ceased, unless such security interest becomes
perfected under the law of such other location prior to such expiration;
2. The security interests in that portion of the Collateral consisting of (i) an
Instrument, (ii) a Certificated Security represented by a Security Certificate
in bearer form or in registered form, (iii) a Negotiable Document, (iv) Money,
(v) Tangible Chattel Paper or (vi) Goods will, upon the creation of such
security interest, be perfected by the Administrative Agent taking possession in
the State of New York of such Instrument, Security Certificate, Negotiable
Document, Money, Tangible Chattel Paper or Goods;
3. The security interests in that portion of the Collateral consisting of a
Certificated Security represented by a Security Certificate in bearer form or in
registered form will, upon the creation of such security interest, be perfected
by another person, other than a Securities Intermediary, taking possession in
the State of New York of such Security Certificate on behalf of the
Administrative Agent or, having previously taken possession in the State of New
York of such Security Certificate, acknowledging that it holds such Security
Certificate for the Administrative Agent;
4. The security interests in that portion of the Collateral consisting of a
Certificated Security represented by a Security Certificate in registered form
specially indorsed to the Administrative Agent by an effective endorsement will,
upon the creation of such security interest, be perfected by a Securities
Intermediary taking possession in the State of New York of such Security
Certificate on behalf of the Administrative Agent;
5. The security interests in that portion of the Collateral consisting of an
Uncertificated Security will, upon the creation of such security interest, be
perfected by the issuer of such Uncertificated Security registering the
Administrative Agent as the registered owner of such Uncertificated Security;
6. The security interests in that portion of the Collateral consisting of an
Uncertificated Security will, upon the creation of such security interest, be
perfected by another person, other than a Securities Intermediary, becoming the
registered owner of such Uncertificated Security on behalf of the Administrative
Agent or, having previously become the registered owner of such Uncertificated
Security, acknowledging that it holds such Uncertificated Security for the
Administrative Agent;
7. The security interests in that portion of the Collateral consisting of an
Uncertificated Security will, upon the creation of such security interest, be
perfected when (with the consent of the registered owner of such Uncertificated
Security) the issuer of such Uncertificated Security agrees that it will comply
with Instructions originated by the Administrative Agent without further consent
by the registered owner of such Uncertificated Security;
8. The security interests in that portion of the Collateral consisting of a
Security Entitlement will, upon the creation of such security interest, be
perfected when the Administrative Agent becomes the Entitlement Holder of such
Security Entitlement;
9. The security interests in that portion of the Collateral consisting of a
Securities Account will, upon the creation of such security interest, be
perfected when a security interest in all Security Entitlements carried in such
Securities Account is perfected by the Administrative Agent by the means
indicated in subparagraph (h) above;
10. To the extent not expressly covered by the foregoing paragraphs, such
security interest in that portion of the Collateral consisting of Proceeds may
be perfected as and to the extent provided in Section 9-315 of the UCC; and
11. Compliance with a statute, regulation or treaty described in Section
9-311(a) of the NY UCC is required in order to perfect such security interest in
any portion of the Collateral that is subject to any such statute, regulation or
treaty.
Schedule 4.4
(to Guarantee and Collateral Agreement)
CHIEF EXECUTIVE OFFICES/PRINCIPAL PLACES OF BUSINESS
Name Chief Executive Office Principal Place
of Business
The Pacific Lumber Company ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Lumber Co., Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Same
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Salmon Creek LLC ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Scotia Inn Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Scotia Pacific Company LLC ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MAXXAM Group Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule 4.5
(to Guarantee and Collateral Agreement)
INVENTORY AND EQUIPMENT
---------------------------------------------------------------------------------------------------
Loan Party Address City State Zip County Description of Assets
---------------------------------------------------------------------------------------------------
PALCO ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Humboldt Equipment
Logs & Lumber
PALCO ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Humboldt Equipment
Logs & Lumber
PALCO ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Humboldt Equipment
PALCO ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Humboldt Equipment
PALCO ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Humboldt Logs
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Humboldt Equipment
Logs & Lumber
Schedule 4.7
(to Guarantee and Collateral Agreement)
CERTAIN INVESTMENT PROPERTY
Pledged Stock
100 shares of common stock, $0.01 par value, of The Pacific Lumber Company
750 shares of common stock, $10.00 par value, of ▇▇▇▇▇ Lumber Co., Inc.
1,000 shares of common stock, $1.00 par value, of Scotia Inn, Inc.
Pledged LLC Interests
100% of the membership interests in Salmon Creek LLC.
Schedule 4.7(b)
(to Guarantee and Collateral Agreement)
PLEDGED DEBT SECURITIES
Pledged Debt Securities
None.
Schedule 4.9(a)
(to Guarantee and Collateral Agreement)
INTELLECTUAL PROPERTY
See attached list of trademarks and copyrights.
Trademarks Inventory Report
Registered Owner: Pacific Lumber Company, The ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------- -------------------------- --------------- ----------------- ------------- --------------- -----------------------------------
Country ▇▇▇▇ Classes Reg.# Reg.Dt Status Goods
---------------- -------------------------- --------------- ----------------- ------------- --------------- -----------------------------------
United States PALCO PRIME 19 2,833,677 4/20/2004 Registered Lumber products, namely, interior
and exterior wood siding, fascia,
trim and molding
United States COMMITTED TO SUSTAINABLE 37 2,683,542 2/4/2003 Registered Timber logging services
FORESTRY
United States PALCO BLOCK & Design 19 2,590,377 7/9/2002 Registered STRUCTURAL AND DECORATIVE
CONCRETE PRODUCTS, NAMELY, PIER
BLOCKS, BUILDING BLOCKS, BRICKS,
PAVERS, STEPPING STONES, TRAILER
PADS, WALL ENDS AND WALL CAPS
United States PALCO BLOCK 19 2,370,981 7/25/2000 Registered STRUCTURAL AND DECORATIVE
CONCRETE PRODUCTS, NAMELY, PIER
BLOCKS, BUILDING BLOCKS, BRICKS,
PAVERS, STEPPING STONES, PADS FOR
SUPPORTING TRAILERS, WALL ENDS
AND WALL CAPS
United States STEELHEAD 19 2,053,140 4/15/1997 Registered Lumber products, namely rails,
framing lumber, trim, decking,
posts, studs, fencing, lath,
lattice panels and planter boxes
United States THE PACIFIC LUMBER COMPANY 19 2,028,422 1/7/1997 Registered Lumber products, namely, rough
and surfaced flooring and ceiling
fascia; stepping; moulding;
shiplap; louvers; tongue and
groove; saw textured; beveled and
drop siding; bevel ▇▇▇▇▇;
panelling; pattern; rails and
studs
United States PALCO PRIME & Design 19 1,910,091 8/8/1995 Registered Lumber products, namely, interior
and exterior wood siding, fascia,
trim and moulding
United States SCOTIA INN 42 1,362,640 9/24/1985 Registered HOTEL AND RESTAURANT SERVICES
United States PALCO 19 1,208,406 9/14/1982 Registered LUMBER PRODUCTS-NAMELY, PATTERNS,
SIDINGS, MOULDINGS, ((BOX SHOOK,
POSTS,)) BOARDS, DIMENSION
LUMBER, FINGERJOINTS, PANELING,
((PICKETS,)) TRIM, FASCIA, (ROUGH
LUMBER, CUT STOCK,)) AND FLOORING
United States PALCO 19 734,786 7/24/1962 Registered ▇▇▇▇▇▇▇ Fir Lumber Products,
Consisting of Lumber in Boards,
Dimension Lumber, Planks and
Joists, and Beams and Timber
United States PALCO-LOC 19 734,785 7/24/1962 Registered Finger Jointed End Glued and/or
Edge Glued Redwood and ▇▇▇▇▇▇▇
Fir Glued Lumber Products-Namely,
Boards and Dimension Lumber
LIST OF COPYRIGHTS
Description No. Date
----------------------------------------------------------------- ---------------------------------- -----------------
"California Redwoods" book
"Palco Insulation Wool, the Insulation of the Ages for Constant Class AA 241,276 07/26/37
Cold" book Class AA 263,081 03/28/38
"For Comfort & Economy, Palco Insulation, the Insulation of the Class AA 257,981 03/05/38
Ages" book Class AA 241,278 07/26/37
"Palco Insulation Wool, Comfort that Pays its Own Way" book Class AA 245,775 10/12/37
Palco Insulation Wool Class K 37108 04/04/38
"Cold Storage Locker Plants" book Class AA 322,807 02/08/40
"Comfort that Pays its Own Way" book Class AA 333,530 04/30/40
"For Comfort Savings, Palco Insulation Wool" book Class AA 353,650 12/26/40
"Frozen Food Locker, Plants Insulated with Palco Wool" book Class AA 378,152 12/15141
"Comfort that Pays its Own Way" print Class KK 9006 09/15/41
"Keeping Heat in its Place" print Class KK 9007 09/15/41
"How to Choose Your Insulation" print Class KK 9008 09/15/41
"Cold Storage Manual" book Class AA 387,451 10/18/41
"For Comfort Savings" book Class AA 393,628 12/30/41
"Palco Pete's Mulch" booklet Class KK 75463 05/15/44
"Palco Pete's Mulch" label 469016 03/01/44
The Redwood Parallel in History Class 138295 05/15/45
"Every Home Owner Can Enjoy Lasting Comfort & Savings The Year Class K 25015 07/15/48
`Round for Years to Come'"
Frozen Food Locker Plant Plan and Construction Manual Class K 24893 07/12/48
Palco Wool, a Superior Material for Cushioning Running Tracks Class K 26299 08/05/48
Cold Storage Manual Class K 27558 11/05/48
Palco Wool Insulation - The All Purpose Insulation Class K 29335 12/8/48
Palco Seal (Technical Bulletin) Class K 30978 01/25/49
Palco Wool - a Superior Material for Sound Deadening Class K 32908 02/25/49
Palco Wool Blowing Machine Class K 46671 03/01/50
"Palco Chemicals" Technical Bulletin No. T-4 Class A 156920 04/24/50
"Historical Occurrences During the Growth of a Redwood Tree" Class K 54386 10/10/50
Palco Wool Insulation Proof of Permanence of the Saferized Class K 54960 10/20/50
Treatment
Palco Seal - Preventing and Restoring Lose Circulation Class K 53668 09/05/50
Palco Wood Insulation - The Multipurpose Insulation Class AA 195757A 10/22/51
Palco Seal Technical Bulletin Class AA 197125 11/8/51
Palco Wool Insulation - For Comfort Savings Class AA 204751 01/02/52
Class AA 204752
Class AA 204753
Field Test Redwood Bark Fibre Wall Insulation Various 01/02/52
Trademark certificates for chemicals Various
Canadian Patent Well Drilling Composition 481545 03/04/52
In Place tests of Palco Wool Insulation JA227540 11/21/52
Palco Insulation Board 591537 06/16/53
In place field tests, redwood bark insulation IP 2582 09/13/54
Palco Insulation Wool & Palco Insulation Board A157628 10/20/54
Palco Wool - Proved by Track Records 200609 08/16/55
Palco Wool used in construction of running tracks 200610 08/16/55
Palco Industrial Fibers 197502 08/03/55
Palco Wool Aislante 58061 07/04/55
Palco Wool Refrigeration Insulation Manual A213021 12/09/55
Palco Wool Insulation in Steel Frame & Truss Cons. "Cork IP 3649 01/20/56
Recovery"
Palco Industrial Chemicals 456639 09/10/57
Historical Occurrences during the Growth of a Redwood Tree K52959 06/27/58
Palco Seal Bulletin "Palco Seal is Your Best Buy" KK 141271 03/05/59
Schedule 4.9(c)
(to Guarantee and Collateral Agreement)
INTELLECTUAL PROPERTY
None.
Schedule 4.9(f)
(to Guarantee and Collateral Agreement)
INTELLECTUAL PROPERTY
None.
Schedule 4.9(h)
(to Guarantee and Collateral Agreement)
INTELLECTUAL PROPERTY
None.
Schedule 4.10
(to Guarantee and Collateral Agreement)
BENEFICIARY LETTERS OF CREDIT
None.
Schedule 4.11
(to Guarantee and Collateral Agreement)
COMMERCIAL TORT CLAIMS
None.
Schedule 4.12(a)
(to Guarantee and Collateral Agreement)
MATERIAL CONTRACTS
1. As-Delivered Capacity and Energy Power Purchase Agreement dated January 17,
1986 by and between The Pacific Lumber Company and Pacific Gas and Electric
Company, the amendments thereto and the following ancillary agreements:
(a) Generating Facility Interconnection Agreement, dated April 20, 2004, by and
between The Pacific Lumber Company and Pacific Gas and Electric Company;
(b) Pacific Gas and Electric Company's Special Agreement for Electrical Standby
Service, dated August 4, 1994
(c) Letter agreement dated January 10, 2003 between The Pacific Lumber Company
and Pacific Gas and Electric Company;
(d) Agreement, dated as of July 13, 2001, by and between The Pacific Lumber
Company and Pacific Gas and Electric Company; and
(e) Supplemental Agreement, dated as of January 17, 2002, by and between The
Pacific Lumber Company and Pacific Gas and Electric Company;
2. New Master Purchase Agreement between Scotia Pacific Company LLC and The
Pacific Lumber Company, dated as of July 20, 1998;
3. New Services Agreement between The Pacific Lumber Company and Scotia
Pacific Company LLC, dated July 20, 1998;
4. New Additional Services Agreement between Scotia Pacific Company LLC and
The Pacific Lumber Company, dated July 20, 1998;
5. New Escrow Agreement among The Pacific Lumber Company, Scotia Pacific
Company LLC, Salmon Creek Corporation and U.S. Bank of California, as
Escrow Holder, dated as of July 20, 1998;
6. New Reciprocal Rights Agreement among The Pacific Lumber Company, Scotia
Pacific Company LLC and Salmon Creek Corporation, dated July 20, 1998;
7. New Environmental Indemnification Agreement between The Pacific Lumber
Company and Scotia Pacific Company LLC, dated as of July 20, 1998; and
8. Master Lease Agreement between Scotia Pacific Company LLC, as lessor, and
The Pacific Lumber Company, as lessee, dated as of July 20, 1998.
Schedule 4.12(b)
(to Guarantee and Collateral Agreement)
MATERIAL CONTRACTS NOT ASSIGNABLE
Agreement Expressly Limits
Assignment
1. As-Delivered Capacity and Energy Power Purchase Agreement dated January 17, Yes
1986 by and between The Pacific Lumber Company and Pacific Gas and Electric
Company, the amendments thereto and the following ancillary agreements:
(a) Generating Facility Interconnection Agreement, dated April 20, 2004, by Yes
and between The Pacific Lumber Company and Pacific Gas and Electric Company;
(b) Pacific Gas and Electric Company's Special Agreement for Electrical Yes
Standby Service, dated August 4, 1994
(c) Letter agreement dated January 10, 2003 between The Pacific Lumber No
Company and Pacific Gas and Electric Company;
(d) Agreement, dated as of July 13, 2001, by and between The Pacific Lumber No
Company and Pacific Gas and Electric Company; and
(e) Supplemental Agreement, dated as of January 17, 2002, by and between No
The Pacific Lumber Company and Pacific Gas and Electric Company;
2. New Master Purchase Agreement between Scotia Pacific Company LLC and The Yes
Pacific Lumber Company, dated as of July 20, 1998;
3. New Services Agreement between The Pacific Lumber Company and Scotia Pacific Yes
Company LLC, dated July 20, 1998;
4. New Additional Services Agreement between Scotia Pacific Company LLC and The No
Pacific Lumber Company, dated July 20, 1998;
5. New Escrow Agreement among The Pacific Lumber Company, Scotia Pacific Company No
LLC, Salmon Creek Corporation and U.S. Bank of California, as Escrow Holder,
dated as of July 20, 1998;
6. New Reciprocal Rights Agreement among The Pacific Lumber Company, Scotia No
Pacific Company LLC and Salmon Creek Corporation, dated July 20, 1998;
7. New Environmental Indemnification Agreement between The Pacific Lumber Yes
Company and Scotia Pacific Company LLC, dated as of July 20, 1998;
8. Master Lease Agreement between Scotia Pacific Company LLC, as lessor, and The Yes
Pacific Lumber Company, as lessee, dated as of July 20, 1998.
Schedule 8.2
(to Guarantee and Collateral Agreement)
ADDRESS OF GUARANTORS
Salmon Creek LLC
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Scotia Inn
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MAXXAM Group Inc.
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CH\757852.3