EXHIBIT 10.2
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GUARANTEE AND COLLATERAL AGREEMENT
dated as of
May 29, 2003
among
INTERLINE BRANDS, INC.,
THE SUBSIDIARIES OF INTERLINE BRANDS, INC.
IDENTIFIED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Collateral Agent
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TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement.................................................1
SECTION 1.02. Other Defined Terms..............................................1
ARTICLE II
Guarantee
SECTION 2.01. Guarantee .......................................................5
SECTION 2.02. Guarantee of Payment.............................................5
SECTION 2.03. No Limitations...................................................5
SECTION 2.04. Reinstatement....................................................6
SECTION 2.05. Agreement To Pay; Subrogation....................................6
SECTION 2.06. Information......................................................6
ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge ..........................................................7
SECTION 3.02. Delivery of the Pledged Collateral...............................7
SECTION 3.03. Representations, Warranties and Covenants........................8
SECTION 3.04. Certification of Limited Liability Company and
Limited Partnership Interests....................................9
SECTION 3.05. Registration in Nominee Name; Denominations......................9
SECTION 3.06. Voting Rights; Dividends and Interest............................9
ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest...............................................11
SECTION 4.02. Representations and Warranties..................................13
SECTION 4.03. Covenants ......................................................15
SECTION 4.04. Other Actions...................................................18
SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral..20
ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default...........................................22
SECTION 5.02. Proceeds to be Turned Over to Collateral Agent..................23
SECTION 5.03. Application of Proceeds.........................................24
SECTION 5.04. Grant of License to Use Intellectual Property...................24
SECTION 5.05. Securities Act..................................................25
SECTION 5.06. Registration....................................................25
ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation.......................................26
SECTION 6.02. Contribution and Subrogation....................................26
SECTION 6.03. Subordination...................................................27
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices ........................................................27
SECTION 7.02. Waivers; Amendment..............................................27
SECTION 7.03. Collateral Agent's Fees and Expenses; Indemnification...........28
SECTION 7.04. Successors and Assigns..........................................29
SECTION 7.05. Survival of Agreement...........................................29
SECTION 7.06. Counterparts; Effectiveness; Several Agreement..................29
SECTION 7.07. Severability....................................................30
SECTION 7.08. Right of Set-Off................................................30
SECTION 7.09. Governing Law; Jurisdiction; Consent to Service of Process......30
SECTION 7.10. WAIVER OF JURY TRIAL............................................31
SECTION 7.11. Headings........................................................31
SECTION 7.12. Security Interest Absolute......................................31
SECTION 7.13. Termination or Release..........................................32
SECTION 7.14. Additional Subsidiaries.........................................32
SECTION 7.15. Collateral Agent Appointed Attorney-in-Fact.....................32
SCHEDULES
Schedule I Subsidiary Parties
Schedule II Capital Stock; Debt Securities
Schedule III Intellectual Property
Schedule IV Insurance Requirements
Schedule V Commercial Tort Claims
EXHIBITS
Exhibit I Form of Supplement
Exhibit II Form of Perfection Certificate
GUARANTEE AND COLLATERAL AGREEMENT dated as
of May 29, 2003, among Interline Brands, Inc., the
Subsidiaries of Interline Brands, Inc. identified
herein and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland and acting
through its Cayman Islands branch ("CSFB"), as
Collateral Agent.
Reference is made to the Credit Agreement dated as of May 29, 2003 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Interline Brands, Inc. (the "BORROWER"), the Lenders party
thereto and CSFB, as Administrative Agent, and JPMorgan Chase Bank, as
Syndication Agent. The Lenders have agreed to extend credit to the Borrower
subject to the terms and conditions set forth in the Credit Agreement. The
obligations of the Lenders to extend such credit are conditioned upon, among
other things, the execution and delivery of this Agreement. The Subsidiary
Parties are affiliates of the Borrower, will derive substantial benefits from
the extension of credit to the Borrower pursuant to the Credit Agreement and are
willing to execute and deliver this Agreement in order to induce the Lenders to
extend such credit. Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CREDIT AGREEMENT. (a) Capitalized terms used in this
Agreement and not otherwise defined herein have the meanings specified in the
Credit Agreement. All terms defined in the New York UCC (as defined herein) and
not defined in this Agreement have the meanings specified therein; the term
"instrument" shall have the meaning specified in Article 9 of the New York UCC.
(b) The rules of construction specified in Section 1.03 of the
Credit Agreement also apply to this Agreement.
SECTION 1.02. OTHER DEFINED TERMS. As used in this Agreement, the
following terms have the meanings specified below:
"ACCOUNT DEBTOR" means any Person who is or who may become obligated to
any Grantor under, with respect to or on account of an Account.
"ARTICLE 9 COLLATERAL" has the meaning assigned to such term in Section
4.01.
"COLLATERAL" means Article 9 Collateral and Pledged Collateral.
"COPYRIGHT LICENSE" means any written agreement, now or hereafter in
effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the right to
license, or granting any
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right to any Grantor under any copyright now or hereafter owned by any third
party, and all rights of such Grantor under any such agreement.
"COPYRIGHTS" means all of the following now owned or hereafter acquired
by any Grantor: (a) all copyright rights in any work subject to the copyright
laws of the United States or any other country, whether as author, assignee,
transferee or otherwise, and (b) all registrations and applications for
registration of any such copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office, including
those listed on Schedule III.
"CREDIT AGREEMENT" has the meaning assigned to such term in the
preliminary statement of this Agreement.
"FEDERAL SECURITIES LAWS" has the meaning assigned to such term in
Section 5.05.
"GENERAL INTANGIBLES" means all choses in action and causes of action
and all other intangible personal property of every kind and nature (other than
Accounts) now owned or hereafter acquired by any Grantor, including corporate or
other business records, indemnification claims, contract rights (including
rights under leases, whether entered into as lessor or lessee, Swap Agreements
and other agreements), Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to secure
or support payment by an Account Debtor of any of the Accounts.
"GRANTORS" means the Borrower and the Subsidiary Parties.
"GUARANTORS" means the Subsidiary Parties.
"INTELLECTUAL PROPERTY" means all intellectual and similar property of
every kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information, know-how,
show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to any of the
foregoing.
"LICENSE" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party, including those listed on Schedule III.
"LOAN DOCUMENT OBLIGATIONS" means (a) the due and punctual payment by
the Borrower of (i) the principal of and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under the Credit
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Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) and obligations to provide cash collateral, and
(iii) all other monetary obligations of the Borrower to any of the Secured
Parties under the Credit Agreement and each of the other Loan Documents,
including obligations to pay fees, expense reimbursement obligations and
indemnification obligations, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), (b) the due and
punctual performance of all other obligations of the Borrower under or pursuant
to the Credit Agreement and each of the other Loan Documents, and (c) the due
and punctual payment and performance of all the obligations of each other Loan
Party under or pursuant to this Agreement and each of the other Loan Documents.
"NEW YORK UCC" means the Uniform Commercial Code as from time to time
in effect in the State of New York.
"OBLIGATIONS" means (a) Loan Document Obligations and (b) the due and
punctual payment and performance of all obligations of each Loan Party under
each Swap Agreement that (i) is in effect on the Effective Date with a
counterparty that is a Lender or an Affiliate of a Lender as of the Effective
Date or (ii) is entered into after the Effective Date with any counterparty that
is a Lender or an Affiliate of a Lender at the time such Swap Agreement is
entered into.
"PATENT LICENSE" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by any Grantor or that any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a patent, now or hereafter
owned by any third party, is in existence, and all rights of any Grantor under
any such agreement.
"PATENTS" means all of the following now owned or hereafter acquired by
any Grantor: (a) all letters patent of the United States or the equivalent
thereof in any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and pending
applications in the United States Patent and Trademark Office or any similar
offices in any other country, including those listed on Schedule III, and (b)
all reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" means a certificate substantially in the form
of Exhibit II, completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Financial Officer and the chief
legal officer of the Borrower.
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"PLEDGED COLLATERAL" has the meaning assigned to such term in Section
3.01.
"PLEDGED DEBT SECURITIES" has the meaning assigned to such term in
Section 3.01.
"PLEDGED SECURITIES" means any promissory notes, stock certificates or
other securities now or hereafter included in the Pledged Collateral, including
all certificates, instruments or other documents representing or evidencing any
Pledged Collateral.
"PLEDGED STOCK" has the meaning assigned to such term in Section 3.01.
"PROCEEDS" has the meaning specified in Section 9-102 of the New York
UCC.
"SECURED PARTIES" means (a) the Lenders, (b) the Collateral Agent, (c)
each Issuing Bank, (d) each counterparty to any Swap Agreement with a Loan Party
the obligations under which constitute Obligations, (e) the beneficiaries of
each indemnification obligation undertaken by any Loan Party under any Loan
Document and (f) the successors and assigns of each of the foregoing.
"SECURITY INTEREST" has the meaning assigned to such term in Section
4.01.
"SUBSIDIARY PARTIES" means (a) the Subsidiaries identified on Schedule
I and (b) each other Subsidiary that becomes a party to this Agreement as a
Subsidiary Party after the Effective Date.
"TRADEMARK LICENSE" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any trademark or service
▇▇▇▇ now or hereafter owned by any third party, and all rights of any Grantor
under any such agreement.
"TRADEMARKS" means all of the following now owned or hereafter acquired
by any Grantor: (a) all trademarks, service marks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, trade
dress, logos, other source or business identifiers, designs and general
intangibles of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations and
registration applications in the United States Patent and Trademark Office or
any similar offices in any State of the United States or any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule III, (b) all goodwill associated therewith or
symbolized thereby and (c) all other trademark and service ▇▇▇▇ rights and
interests that uniquely reflect or embody such goodwill.
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ARTICLE II
GUARANTEE
SECTION 2.01. GUARANTEE. Each Guarantor absolutely, irrevocably and
unconditionally guarantees, jointly with the other Guarantors and severally, as
a primary obligor and not merely as a surety, the due and punctual payment and
performance of the Obligations. Each of the Guarantors further agrees that the
Obligations may be extended or renewed, in whole or in part, or amended or
modified, without notice to or further assent from it, and that it will remain
bound upon its guarantee notwithstanding any extension or renewal, or amendment
or modification, of any Obligation. Each of the Guarantors waives presentment
to, demand of payment from and protest to the Borrower or any other Loan Party
of any of the Obligations, and also waives notice of acceptance of its guarantee
and notice of protest for nonpayment.
SECTION 2.02. GUARANTEE OF PAYMENT. Each of the Guarantors further
agrees that its guarantee hereunder constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had by
the Collateral Agent or any other Secured Party to any security held for the
payment of the Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other Person.
SECTION 2.03. NO LIMITATIONS. (a) Except for termination of a
Guarantor's obligations hereunder as expressly provided in Section 7.13, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or set-off, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by (i) the failure of the Collateral Agent or any other Secured Party
to assert any claim or demand or to enforce any right or remedy under the
provisions of any Loan Document or otherwise; (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of, any Loan Document or any other agreement, including with respect to any
other Guarantor under this Agreement; (iii) the release of, or any impairment of
or failure to perfect any Lien on or security interest in, any security held by
the Collateral Agent or any other Secured Party for the Obligations or any of
them; (iv) any default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or (v) any other act or omission that may or
might in any manner or to any extent vary the risk of any Guarantor or otherwise
operate as a discharge of any Guarantor as a matter of law or equity (other than
the indefeasible payment in full in cash of all the Obligations). Each Guarantor
expressly authorizes the Secured Parties to take and hold security for the
payment and performance of the Obligations, to exchange, waive or release any or
all such security (with or without consideration), to enforce or apply such
security and direct the order and manner of any sale thereof in their sole
discretion or to release or substitute any one or more other
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guarantors or obligors upon or in respect of the Obligations, all without
affecting the obligations of any Guarantor hereunder.
(b) To the fullest extent permitted by applicable law, each
Guarantor waives any defense based on or arising out of any defense of the
Borrower or any other Loan Party or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral Agent and the
other Secured Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with the Borrower or any
other Loan Party or exercise any other right or remedy available to them against
the Borrower or any other Loan Party, without affecting or impairing in any way
the liability of any Guarantor hereunder except to the extent the Obligations
have been fully and indefeasibly paid in full in cash. To the fullest extent
permitted by applicable law, each Guarantor waives any defense arising out of
any such election even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against the Borrower or any other Loan
Party, as the case may be, or any security.
SECTION 2.04. REINSTATEMENT. Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other
Loan Party or otherwise.
SECTION 2.05. AGREEMENT TO PAY; SUBROGATION. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against any Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
for distribution to the applicable Secured Parties in cash the amount of such
unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral
Agent as provided above, all rights of such Guarantor against the Borrower or
any other Loan Party arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article VI.
SECTION 2.06. INFORMATION. Each Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's and each
other Loan Party's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations and the
nature, scope and extent of the risks that such Guarantor assumes and incurs
hereunder, and agrees that none of the Collateral Agent or the other Secured
Parties will have any duty to advise such Guarantor of information known to it
or any of them regarding such circumstances or risks.
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ARTICLE III
PLEDGE OF SECURITIES
SECTION 3.01. PLEDGE. As security for the payment or performance,
as the case may be, in full of the Obligations, each Grantor hereby assigns and
pledges to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title and interest in, to and
under (a) the shares of capital stock and other Equity Interests owned by it and
listed on Schedule II and any other Equity Interests obtained in the future by
such Grantor and the certificates representing all such Equity Interests (the
"PLEDGED Stock"); PROVIDED that the Pledged Stock shall not include (i) more
than 65% of the issued and outstanding voting Equity Interests of any Foreign
Subsidiary that is not a Loan Party but is owned directly by a Loan Party, (ii)
any Equity Interest of a Foreign Subsidiary that is not owned directly by a Loan
Party and (iii) any Equity Interests in a Joint Venture or Glenwood Acquisition
LLC; (b)(i) the debt securities listed opposite the name of such Grantor on
Schedule II, (ii) any debt securities in the future issued to such Grantor and
(iii) the promissory notes and any other instruments evidencing such debt
securities (the "PLEDGED DEBT SECURITIES"); (c) all other property that may be
delivered to and held by the Collateral Agent pursuant to the terms of this
Section 3.01; (d) subject to Section 3.06, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of, in exchange for or
upon the conversion of, and all other Proceeds received in respect of, the
securities referred to in clauses (a) and (b) above; (e) subject to Section
3.06, all rights and privileges of such Grantor with respect to the securities
and other property referred to in clauses (a), (b), (c) and (d) above; and (f)
all Proceeds of any of the foregoing (the items referred to in clauses (a)
through (f) above being collectively referred to as the "PLEDGED COLLATERAL").
TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; SUBJECT, HOWEVER, to the terms,
covenants and conditions hereinafter set forth.
SECTION 3.02. DELIVERY OF THE PLEDGED COLLATERAL. (a) Each Grantor
agrees promptly to deliver or cause to be delivered to the Collateral Agent any
and all certificates or other instruments evidencing any Pledged Securities.
(b) In the event any Indebtedness for borrowed money owed to any
Grantor by any Person is in excess of $250,000, or if in the aggregate all such
Indebtedness owed to any Grantor shall exceed $500,000, such Grantor shall cause
any such Indebtedness to be evidenced by a duly executed promissory note that is
pledged and delivered to the Collateral Agent pursuant to the terms hereof.
(c) Upon delivery to the Collateral Agent, (i) any Pledged
Securities shall be accompanied by undated stock powers duly executed in blank
or other undated
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instruments of transfer reasonably satisfactory to the Collateral Agent and duly
executed in blank and by such other instruments and documents as the Collateral
Agent may reasonably request and (ii) all other property comprising part of the
Pledged Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Grantor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing such Pledged Securities, which
schedule shall be attached hereto as an amended and restated Schedule II and
made a part hereof; PROVIDED that failure to attach any such schedule hereto
shall not affect the validity of such pledge of such Pledged Securities. Each
schedule so delivered shall supplement any prior schedules so delivered.
SECTION 3.03. REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Grantors jointly and severally represent, warrant and covenant to and with the
Collateral Agent, for the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the issued
and outstanding shares of each class of the Equity Interests of the
issuer thereof represented by Pledged Stock and includes all Equity
Interests, debt securities and promissory notes required to be pledged
hereunder in order to satisfy the Collateral and Guarantee Requirement;
(b) the Pledged Stock and, to the best of each Grantor's
knowledge, the Pledged Debt Securities have been duly and validly
authorized and issued by the issuers thereof and (i) in the case of
Pledged Stock, are fully paid and nonassessable and (ii) in the case of
Pledged Debt Securities, to the best of each Grantor's knowledge, are
legal, valid and binding obligations of the issuers thereof, and there
exists no defense, offset or counterclaim to any obligation of the
maker or issuer of any Pledged Debt Securities;
(c) except for the security interests granted hereunder, each of
the Grantors (i) is and, subject to any transfers made in compliance
with the Credit Agreement, will continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II as owned by such Grantor, (ii) holds the same free and
clear of all Liens, other than Liens created by this Agreement,
Permitted Encumbrances and transfers made in compliance with the Credit
Agreement, (iii) will make no assignment, pledge, hypothecation or
transfer of, or create or permit to exist any security interest in or
other Lien on, the Pledged Collateral, other than Liens created by this
Agreement, Permitted Encumbrances and transfers made in compliance with
the Credit Agreement, and (iv) will defend its title or interest
thereto or therein against any and all Liens (other than the Lien
created by this Agreement and Permitted Encumbrances), however arising,
of all Persons whomsoever;
(d) except for restrictions and limitations imposed by the Loan
Documents or securities laws generally, the Pledged Collateral is and
will continue to be freely transferable and assignable, and none of the
Pledged Collateral is or will be
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subject to any option, right of first refusal, shareholders agreement,
charter or by-law provisions or contractual restriction of any nature
that might prohibit, impair, delay or otherwise affect the pledge of
such Pledged Collateral hereunder, the sale or disposition thereof
pursuant hereto or the exercise by the Collateral Agent of rights and
remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the
validity of the pledge effected hereby (other than such as have been
obtained and are in full force and effect);
(g) by virtue of the execution and delivery by the Grantors of
this Agreement, when any Pledged Securities are delivered to the
Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain, for the benefit of the Secured Parties, a legal,
valid and perfected first priority lien upon and security interest in
such Pledged Securities as security for the payment and performance of
the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the benefit of the Secured Parties, the rights of
the Collateral Agent in the Pledged Collateral as set forth herein.
SECTION 3.04. CERTIFICATION OF LIMITED LIABILITY COMPANY AND
LIMITED PARTNERSHIP INTERESTS. Each Grantor shall cause each interest in any
limited liability company or limited partnership controlled by such Grantor and
pledged hereunder to be represented by a certificate and to be a "security"
within the meaning of Article 8 of the New York UCC and governed by Article 8 of
the New York UCC.
SECTION 3.05. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
applicable Grantor, endorsed or assigned in blank or in favor of the Collateral
Agent. Each Grantor will promptly give to the Collateral Agent copies of any
material notices or other communications received by it with respect to Pledged
Securities registered in the name of such Grantor. The Collateral Agent shall at
all times have the right to exchange the certificates representing Pledged
Securities for certificates of smaller or larger denominations for any purpose
consistent with this Agreement.
SECTION 3.06. VOTING RIGHTS; DIVIDENDS AND INTEREST. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 3.06 are being suspended:
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(i) Each Grantor shall be entitled to exercise any and all voting
and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; PROVIDED that such rights and powers shall not be exercised
in any manner that could materially and adversely affect the rights
inuring to a holder of any Pledged Securities or the rights and
remedies of any of the Collateral Agent or the other Secured Parties
under this Agreement or the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Grantor, or cause to be executed and delivered to such Grantor, all
such proxies, powers of attorney and other instruments as such Grantor
may reasonably request for the purpose of enabling such Grantor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above.
(iii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest, principal and other distributions paid on or
distributed in respect of the Pledged Securities to the extent and only
to the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable laws; PROVIDED that any noncash
dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or
other exchange of assets to which such issuer may be a party or
otherwise, shall be and become part of the Pledged Collateral, and, if
received by any Grantor, shall not be commingled by such Grantor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Collateral
Agent and the other Secured Parties and shall be forthwith delivered to
the Collateral Agent in the same form as so received (endorsed in a
manner reasonably satisfactory to the Collateral Agent).
(b) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.06, then
all rights of any Grantor to dividends, interest, principal or other
distributions that such Grantor is authorized to receive pursuant to paragraph
(a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal or
other distributions. All dividends, interest, principal or other distributions
received by any Grantor contrary to the provisions of this Section 3.06 shall be
held in trust for the benefit of the Collateral Agent and the other Secured
Parties, shall be segregated from other property or funds of such Grantor and
shall be forthwith delivered to the Collateral
11
Agent upon demand in the same form as so received (endorsed in a manner
reasonably satisfactory to the Collateral Agent). Any and all money and other
property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of Section
5.03. After all Events of Default have been cured or waived and the Borrower has
delivered to the Collateral Agent a certificate to that effect, the Collateral
Agent shall promptly repay to each Grantor (without interest) all dividends,
interest, principal or other distributions that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section
3.06 and that remain in such account.
(c) Upon the occurrence and during the continuance of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(i) of this Section 3.06, then all
rights of any Grantor to exercise the voting and consensual rights and powers it
is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and
the obligations of the Collateral Agent under paragraph (a)(ii) of this Section
3.06, shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority to
exercise such voting and consensual rights and powers; PROVIDED that, unless
otherwise directed by the Required Lenders, the Collateral Agent shall have the
right from time to time following and during the continuance of an Event of
Default to permit the Grantors to exercise such rights.
(d) Any notice given by the Collateral Agent to the Grantors
suspending their rights under paragraph (a) of this Section 3.06 (i) may be
given by telephone if promptly confirmed in writing, (ii) may be given to one or
more of the Grantors at the same or different times and (iii) may suspend the
rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part
without suspending all such rights (as specified by the Collateral Agent in its
sole and absolute discretion) and without waiving or otherwise affecting the
Collateral Agent's rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is
continuing.
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 4.01. SECURITY INTEREST. (a) As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and assigns, for the
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest (the "SECURITY INTEREST") in, all right, title or interest in or to any
and all of the following assets and properties now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at any
time in the future may acquire any right, title or interest (collectively, the
"ARTICLE 9 COLLATERAL"):
12
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all cash and Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all letter-of-credit rights;
(xi) all commercial tort claims specified on Schedule V;
(xii) all books and records pertaining to the Article 9 Collateral;
and
(xiii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to
any of the foregoing; PROVIDED that, for the avoidance of
doubt, the foregoing shall not include (A) any asset in which
a Grantor has a leasehold interest pursuant to a capital lease
(as determined in accordance with GAAP), (B) any asset of any
Subsidiary acquired by any Grantor after the date hereof which
is not permitted to be pledged hereunder pursuant to any
Indebtedness of such Subsidiary existing prior to such
acquisition and permitted by the Credit Agreement or (C) any
Collateral not permitted to be pledged by any Grantor pursuant
to a non-assignment provision that is not rendered ineffective
by the New York UCC; PROVIDED FURTHER that in the case of this
clause (C), (1) the Grantor shall have used its commercially
reasonable efforts to permit the pledge of any such Collateral
pursuant to this Agreement and (2) the fair market value of
any such Collateral excluded from the Article 9 Collateral
pursuant to this clause (C) shall not exceed $250,000 in any
fiscal year of such Grantor.
(b) Each Grantor hereby irrevocably authorizes the Collateral
Agent at any time and from time to time to file in any relevant jurisdiction any
initial financing statements (including fixture filings) with respect to the
Article 9 Collateral or any part thereof and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (a) whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor and (b) in
the case of a financing statement filed as a fixture filing or covering Article
9
13
Collateral constituting minerals or the like to be extracted or timber to be
cut, a sufficient description of the real property to which such Article 9
Collateral relates. Each Grantor agrees to provide such information to the
Collateral Agent promptly upon request.
Each Grantor also ratifies its authorization for the Collateral Agent
to file in any relevant jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) such documents as
may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall
not subject the Collateral Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with respect to or
arising out of the Article 9 Collateral.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES. The Grantors jointly
and severally represent and warrant to the Collateral Agent and the other
Secured Parties that:
(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Collateral
Agent, for the benefit of the Secured Parties, the Security Interest in Article
9 Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person other than any consent or approval that has been obtained.
(b) The Perfection Certificate has been duly prepared, completed
and executed and the information set forth therein, including the exact legal
name of each Grantor, is correct and complete as of the Effective Date. The
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations prepared
by the Collateral Agent based upon the information provided to the Collateral
Agent in the Perfection Certificate for filing in each governmental, municipal
or other office specified in Schedule 2 to the Perfection Certificate (or
specified by notice from the Borrower to the Collateral Agent after the
Effective Date in the case of filings, recordings or registrations required by
Section 5.03(a) or 5.12 of the Credit Agreement), are all the filings,
recordings and registrations (other than filings required to be made in the
United States Patent and Trademark Office and the United States Copyright Office
in order to perfect the Security Interest in Article ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Patents, Trademarks and Copyrights) that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for
14
the benefit of the Secured Parties) in respect of all Article 9 Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements. Each Grantor shall ensure that a fully executed
agreement and containing a description of all Article 9 Collateral consisting of
applicable Intellectual Property shall have been received and recorded within
three months after the execution of this Agreement with respect to United States
Patents and United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and within one month after the
execution of this Agreement with respect to United States registered Copyrights
by the United States Patent and Trademark Office and the United States Copyright
Office, respectively, pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17
U.S.C. ss. 205 and the regulations thereunder, as applicable, to protect the
validity of and to establish a legal, valid and perfected security interest in
favor of the Collateral Agent (for the benefit of the Secured Parties) in
respect of all Article 9 Collateral consisting of Patents, Trademarks and
Copyrights in which a security interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).
(c) The Security Interest constitutes (i) a legal and valid
security interest in all the Article 9 Collateral securing the payment and
performance of the Obligations, (ii) subject to the filings described in Section
4.02(b), a perfected security interest in all Article 9 Collateral in which a
security interest may be perfected by filing, recording or registering a
financing statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three-month period
(commencing as of the date hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C.
ss. 1060 or the one-month period (commencing as of the date hereof) pursuant to
17 U.S.C. ss. 205. The Security Interest is and shall be prior to any other Lien
on any of the Article 9 Collateral, other than Permitted Encumbrances that have
priority as a matter of law and Liens expressly permitted to be prior to the
Security Interest pursuant to Section 6.02 of the Credit Agreement.
(d) The Article 9 Collateral is owned by the Grantors free and
clear of any Lien, except for Liens expressly permitted pursuant to Section 6.02
of the Credit Agreement. None of the Grantors has filed or consented to the
filing of (i) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Article 9 Collateral,
(ii) any assignment in which any
15
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with the United States Patent and Trademark
Office or the United States Copyright Office or (iii) any assignment in which
any Grantor assigns any Article 9 Collateral or any security agreement or
similar instrument covering any Article 9 Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect, except, in each case, for Liens expressly permitted pursuant to Section
6.02 of the Credit Agreement.
SECTION 4.03. COVENANTS. (a) Each Grantor agrees to maintain, at
its own cost and expense, such complete and accurate records with respect to the
Article 9 Collateral owned by it as is consistent with its current practices and
in accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged, but in any
event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Article 9 Collateral, and, at
such time or times as the Collateral Agent may reasonably request, promptly to
prepare and deliver to the Collateral Agent a duly certified schedule or
schedules in form and detail satisfactory to the Collateral Agent showing the
identity, amount and location of any and all Article 9 Collateral.
(b) Each Grantor shall, at its own expense, take any and all
actions necessary to defend title to the Article 9 Collateral against all
Persons and to defend the Security Interest of the Collateral Agent hereunder in
the Article 9 Collateral and the priority thereof against any Lien not expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement.
(c) Each Grantor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time reasonably request to better assure, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Article 9 Collateral shall be or become evidenced by any
promissory note or other instrument in excess of $250,000, such note or
instrument shall be immediately pledged and delivered to the Collateral Agent
(for the benefit of the Secured Parties), duly endorsed in a manner satisfactory
to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule III or adding additional
schedules hereto to specifically identify any asset or item that may constitute
Copyrights, Licenses, Patents or Trademarks; PROVIDED that any Grantor shall
have the right, exercisable within 10 Business Days after it has been notified
by the Collateral Agent of the specific identification of such Collateral, to
advise the Collateral Agent in writing of any inaccuracy of the representations
and warranties made by such Grantor hereunder with
16
respect to such Collateral. Each Grantor agrees that it will use its
commercially reasonable efforts to take such action as shall be necessary in
order that all representations and warranties hereunder shall be true and
correct with respect to such Collateral within 30 days after the date it has
been notified by the Collateral Agent of the specific identification of such
Collateral.
(d) The Collateral Agent and such Persons as the Collateral Agent
may reasonably designate shall have the right, at the Grantors' own cost and
expense, to inspect the Article 9 Collateral, all records related thereto (and
to make extracts and copies from such records) and the premises upon which any
of the Article 9 Collateral is located, to discuss the Grantors' affairs with
the officers of the Grantors and their independent accountants and to verify
under reasonable procedures, in accordance with Section 5.03 of the Credit
Agreement, the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Article 9 Collateral, including, in the
case of Accounts or other Article 9 Collateral in the possession of any third
person, by contacting Account Debtors or the third person possessing such
Article 9 Collateral for the purpose of making such a verification. The
Collateral Agent shall have the absolute right to share any information it gains
from such inspection or verification with any Secured Party.
(e) At its option, the Collateral Agent may discharge past due
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Article 9 Collateral and not
permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; PROVIDED that nothing in this paragraph
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to taxes,
assessments, charges, fees, Liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
(f) If at any time any Grantor shall take a security interest in
any property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent for the benefit of the Secured Parties. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other Person granting the security interest.
(g) Each Grantor shall remain liable to observe and perform all
the conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
other Secured Parties from and against any and all liability for such
performance.
17
(h) None of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as permitted by
the Credit Agreement. None of the Grantors shall make or permit to be made any
transfer of the Article 9 Collateral, and each Grantor shall remain at all times
in possession of the Article 9 Collateral owned by it, except that unless and
until the Collateral Agent shall notify the Grantors (which notice may be given
by telephone if promptly confirmed in writing) that an Event of Default shall
have occurred and be continuing and that during the continuance thereof the
Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of
any Article 9 Collateral (other than (i) Inventory in the ordinary course of
business consistent with its past practice and (ii) other Collateral which,
prior to the receipt of such notice, the Grantor is obligated to sell), the
Grantors may use and dispose of the Article 9 Collateral in any lawful manner
not inconsistent with the provisions of this Agreement, the Credit Agreement or
any other Loan Document. Notwithstanding the foregoing, in the event any
Grantor, in the exercise of its reasonable business judgment, decides to abandon
or let lapse any Article 9 Collateral consisting of Intellectual Property with a
value not in excess of $250,000, such Grantor may do so, provided it shall
promptly give written notice to the Collateral Agent identifying such collateral
and indicating its fair market value. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory with a
value in excess of $250,000 to be in the possession or control of any
warehouseman, agent, bailee, or processor at any time unless such warehouseman,
bailee, agent or processor shall have been notified of the Security Interest and
shall have acknowledged in writing, in form and substance reasonably
satisfactory to the Collateral Agent, that such warehouseman, agent, bailee or
processor holds the Inventory for the benefit of the Collateral Agent and the
other Secured Parties subject to the Security Interest and shall act upon the
instructions of the Collateral Agent without further consent from the Grantor,
and that such warehouseman, agent, bailee or processor further agrees to waive
and release any Lien held by it with respect to such Inventory, whether arising
by operation of law or otherwise.
(i) None of the Grantors will, without the Collateral Agent's
prior written consent, grant any extension of the time of payment of any
Accounts included in the Article 9 Collateral, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, compromises, settlements, releases, credits or
discounts granted or made in the ordinary course of business and consistent with
its current practices.
(j) The Grantors, at their own expense, shall maintain or cause to
be maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Schedule IV hereto
and Section 5.07 of the Credit Agreement. Each Grantor shall notify the
Collateral Agent immediately of any notice specified in paragraph (b) of
Schedule IV provided by any insurer to the Borrower. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during the continuance
of an Event of Default, of making, settling and adjusting claims in respect of
Article 9
18
Collateral under policies of insurance, endorsing the name of such Grantor on
any check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect thereto. In the event that any Grantor at any time or times shall fail
to obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Collateral Agent may, without
waiving or releasing any obligation or liability of the Grantors hereunder or
any Event of Default, in its sole discretion, obtain and maintain such policies
of insurance and pay such premium and take any other actions with respect
thereto as the Collateral Agent deems advisable. All sums disbursed by the
Collateral Agent in connection with this paragraph, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, upon demand, by the Grantors to the Collateral Agent and shall be
additional Obligations secured hereby.
(k) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.
SECTION 4.04. OTHER ACTIONS. In order to further insure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Security Interest, each Grantor agrees, in each case at such
Grantor's own expense, to take the following actions with respect to the
following Article 9 Collateral:
(a) INSTRUMENTS. If any Grantor shall at any time hold or acquire
any Instruments with a value in excess of $250,000, such Grantor shall
forthwith endorse, assign and deliver the same to the Collateral Agent,
accompanied by such undated instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time
reasonably request.
(b) INVESTMENT PROPERTY. Except to the extent otherwise provided
in Article III, if any Grantor shall at any time hold or acquire any
certificated securities, such Grantor shall forthwith endorse, assign
and deliver the same to the Collateral Agent, accompanied by such
undated instruments of transfer or assignment duly executed in blank as
the Collateral Agent may from time to time specify. If any securities
now or hereafter acquired by any Grantor are uncertificated and are
issued to such Grantor or its nominee directly by the issuer thereof,
such Grantor shall immediately notify the Collateral Agent thereof and,
at the Collateral Agent's request and option, pursuant to an agreement
in form and substance reasonably satisfactory to the Collateral Agent,
either (i) cause the issuer to agree to comply with instructions from
the Collateral Agent as to such securities, without further consent of
any Grantor or such nominee, or (ii) arrange for the Collateral Agent
to become the registered owner of the such securities. If any
securities, whether certificated or uncertificated, or other Investment
Property now or hereafter acquired by any Grantor are held by such
Grantor or its nominee through a securities intermediary or commodity
intermediary, such Grantor shall immediately notify the Collateral
Agent thereof and, at the Collateral Agent's request and option,
pursuant to an agreement in form and substance reasonably satisfactory
to the Collateral Agent, either (i) cause such securities intermediary
or
19
(as the case may be) commodity intermediary to agree to comply with
entitlement orders or other instructions from the Collateral Agent to
such securities intermediary as to such security entitlements, or (as
the case may be) to apply any value distributed on account of any
commodity contract as directed by the Collateral Agent to such
commodity intermediary, in each case without further consent of any
Grantor or such nominee, or (ii) in the case of Financial Assets or
other Investment Property held through a securities intermediary,
arrange for the Collateral Agent to become the entitlement holder with
respect to such Investment Property, with the Grantor being permitted,
only with the consent of the Collateral Agent, to exercise rights to
withdraw or otherwise deal with such Investment Property. The
Collateral Agent agrees with each of the Grantors that the Collateral
Agent shall not give any such entitlement orders or instructions or
directions to any such issuer, securities intermediary or commodity
intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by any Grantor, unless an Event of Default
has occurred and is continuing, or, after giving effect to any such
investment and withdrawal rights would occur. The provisions of this
paragraph shall not apply to any financial assets credited to a
securities account for which the Collateral Agent is the securities
intermediary.
(c) ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If any
Grantor at any time holds or acquires an interest in any electronic
chattel paper or any "transferable record," as that term is defined in
Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions
Act as in effect in any relevant jurisdiction, such Grantor shall
promptly notify the Collateral Agent thereof and, at the request of the
Collateral Agent, shall take such action as the Collateral Agent may
reasonably request to vest in the Collateral Agent control under New
York UCC Section 9-105 of such electronic chattel paper or control
under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of
such transferable record. The Collateral Agent agrees with such Grantor
that the Collateral Agent will arrange, pursuant to procedures
reasonably satisfactory to the Collateral Agent and so long as such
procedures will not result in the Collateral Agent's loss of control,
for the Grantor to make alterations to the electronic chattel paper or
transferable record permitted under UCC Section 9-105 or, as the case
may be, Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to allow without loss of
control, unless an Event of Default has occurred and is continuing or
would occur after taking into account any action by such Grantor with
respect to such electronic chattel paper or transferable record.
(d) LETTER-OF-CREDIT RIGHTS. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor
of such Grantor, such Grantor shall promptly notify the Collateral
Agent thereof and, at the request and option of the Collateral Agent,
such Grantor shall, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either
20
(i) arrange for the issuer and any confirmer of such letter of credit
to consent to an assignment to the Collateral Agent of the proceeds of
any drawing under such letter of credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of such letter of
credit, with the Collateral Agent agreeing, in each case, that the
proceeds of any drawing under such letter of credit are to be paid to
the applicable Grantor unless an Event of Default has occurred or is
continuing.
(e) COMMERCIAL TORT CLAIMS. If any Grantor shall at any time hold
or acquire a commercial tort claim in an amount reasonably estimated to
exceed $250,000 such Grantor shall promptly notify the Collateral Agent
thereof in a writing signed by such Grantor including a summary
description of such claim and grant to the Collateral Agent for the
benefit of the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance reasonably
satisfactory to the Collateral Agent.
SECTION 4.05. COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT
COLLATERAL. (a) Each Grantor agrees that it will not do any act or omit do to
any act (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act or omitting to do any act) whereby any Patent that
is material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue, consistent with its
past practice, to ▇▇▇▇ any products covered by a Patent with the relevant patent
number as necessary and sufficient to establish and preserve its rights under
applicable patent laws; PROVIDED that this provision shall cease to apply with
respect to any Patent which, in the Grantor's reasonable business judgment, is
no longer material to the conduct of such Grantor's business, PROVIDED FURTHER
that, in such event, such Grantor shall promptly give written notice to the
Collateral Agent identifying such Patent and indicating its fair market value.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark, consistent with its past practice, in
full force free from any claim of abandonment or invalidity for non-use, (ii)
maintain the quality of products and services offered under such Trademark,
consistent with its past practice, (iii) display such Trademark, consistent with
its past practice, with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights; PROVIDED that this provision
shall cease to apply with respect to any Trademark which, in such Grantor's
reasonable business judgment, is no longer material to the conduct of such
Grantor's business, PROVIDED FURTHER that, in such event, such Grantor shall
promptly give written notice to the Collateral Agent identifying such Trademark
and indicating its fair market value.
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, consistent with its past practice, for each work covered by
a material Copyright, continue to ▇▇▇▇ such work with appropriate copyright
notice as necessary and sufficient to establish and preserve its rights under
applicable copyright laws.
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(d) Each Grantor shall notify the Collateral Agent promptly if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any materially adverse determination or material development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, its right to register
the same, or its right to keep and maintain the same.
(e) In the event that any Grantor, either itself or through any
agent, employee, licensee or designee, files an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, the United States Copyright
Office or any office or agency in any political subdivision of the United States
or in any other country or any political subdivision thereof, it shall inform
the Collateral Agent, within 10 Business Days of such application and, upon
request of the Collateral Agent, it shall execute and deliver any and all
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest
hereunder in such Patent, Trademark or Copyright.
(f) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright material to
the conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly ▇▇▇ for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Article 9 Collateral.
(h) Upon and during the continuance of an Event of Default and
upon notice from the Collateral Agent, each Grantor shall use its commercially
reasonable best efforts to obtain all requisite consents or approvals by the
licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all such Grantor's right, title and interest thereunder
to the Collateral Agent or its designee for the benefit of the Secured Parties.
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ARTICLE V
REMEDIES
SECTION 5.01. REMEDIES UPON DEFAULT. Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each item
of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Article 9 Collateral by the applicable Grantors to the Collateral Agent (for the
benefit of the Secured Parties), or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis, any
such Article 9 Collateral throughout the world on such terms and conditions and
in such manner as the Collateral Agent shall determine (other than in violation
of any then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Article 9 Collateral
and without liability for trespass to enter any premises where the Article 9
Collateral may be located for the purpose of taking possession of or removing
the Article 9 Collateral and, generally, to exercise any and all rights afforded
to a secured party under the Uniform Commercial Code or other applicable law.
Without limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale of securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any sale of Collateral shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10 days'
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral
23
Agent may fix and state in the notice (if any) of such sale. At any such sale,
the Collateral , or portion thereof, to be sold may be sold in one lot as an
entirety or in separate parcels, as the Collateral Agent may (in its sole and
absolute discretion) determine. The Collateral Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Collateral is made on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the sale price is paid by the purchaser or purchasers thereof, but the
Collateral Agent and the other Secured Parties shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent permitted by law,
private) sale made pursuant to this Agreement, any Secured Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights being
also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as a
credit against the purchase price (but in the case of such payment, such Secured
Party will promptly notify the Collateral Agent of the amount of such credit),
and such Secured Party may, upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to any Grantor
therefor. For purposes hereof, a written agreement to purchase the Collateral or
any portion thereof shall be treated as a sale thereof; the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and no Grantor
shall be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court or courts
having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver. Any sale pursuant to the provisions of this Section 5.01 shall be
deemed to conform to the commercially reasonable standards as provided in
Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.
SECTION 5.02. PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT. In
addition to any rights of the Collateral Agent and the Lenders specified in this
Agreement, if an Event of Default shall occur and be continuing, at the request
of the Collateral Agent, all Proceeds received by any Grantor consisting of
cash, checks and other near-cash items shall be held by such Grantor in trust
for the Collateral Agent and the other Secured Parties, segregated from other
funds of such Grantor, in a deposit account, and shall, forthwith upon receipt
by such Grantor, be turned over to the Collateral Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Collateral Agent,
if required). All Proceeds received by the Collateral
24
Agent hereunder shall be held by the Collateral Agent in an account maintained
under its sole dominion and control either (i) with the Collateral Agent or an
Affiliate or authorized agent thereof or (ii) in a deposit account with respect
to which the depositary bank has agreed to comply with instructions from the
Collateral Agent to such depositary bank directing the disposition of funds from
time to time credited to such account, without further consent of such Grantor
or any other Person, pursuant to an agreement satisfactory to the Collateral
Agent. All Proceeds while held by the Collateral Agent in a Collateral Account
(or by such Grantor in trust for the Collateral Agent and the other Secured
Parties) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 5.03.
SECTION 5.03. APPLICATION OF PROCEEDS. The proceeds of any
collection or sale of Collateral, including any Collateral consisting of cash,
shall be applied as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such collection or sale or
otherwise in connection with this Agreement, any other Loan Document or
any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Loan Document
on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under
any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 5.04. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For
the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Agreement at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Article 9 Collateral consisting of
25
Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof. The use of such license by the Collateral Agent may be exercised, at
the option of the Collateral Agent, upon the occurrence and during the
continuation of an Event of Default; PROVIDED that any license, sublicense or
other transaction entered into by the Collateral Agent in accordance herewith
shall be binding upon the Grantors notwithstanding any subsequent cure of an
Event of Default.
SECTION 5.05. SECURITIES ACT. In view of the position of the
Grantors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "FEDERAL SECURITIES LAWS") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Grantor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Grantor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
Collateral Agent and the other Secured Parties shall incur no responsibility or
liability for a sale of all or any part of the Pledged Collateral at a price
that the Collateral Agent, in its sole and absolute discretion, may in good
▇▇▇▇▇ ▇▇▇▇ reasonable under the circumstances, notwithstanding the possibility
that a substantially higher price might have been realized if the sale were
deferred until after registration as aforesaid or if more than a single
purchaser were approached. The provisions of this Section 5.05 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
SECTION 5.06. REGISTRATION. Each Grantor agrees that, upon the
occurrence and during the continuance of an Event of Default, if for any reason
the Collateral Agent desires to sell any of the Pledged Collateral at a public
sale, it will, at
26
any time and from time to time, upon the written request of the Collateral
Agent, use its best efforts to take or to cause the issuer of such Pledged
Collateral to take such action, and prepare, distribute and/or file such
documents, as are required or advisable in the reasonable opinion of counsel for
the Collateral Agent to permit the public sale of such Pledged Collateral. Each
Grantor further agrees to indemnify, defend and hold harmless the Collateral
Agent, each other Secured Party, any underwriter and their respective officers,
directors, affiliates and controlling persons from and against all loss,
liability, expenses, costs of counsel (including, without limitation, reasonable
fees and expenses to the Collateral Agent of legal counsel), and claims
(including the costs of investigation) that they may incur insofar as such loss,
liability, expense or claim arises out of or is based upon any alleged untrue
statement of a material fact contained in any prospectus (or any amendment or
supplement thereto) or in any notification or offering circular, or arises out
of or is based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any thereof not
misleading, except insofar as the same may have been caused by any untrue
statement or omission based upon information furnished in writing to such
Grantor or the issuer of such Pledged Collateral by the Collateral Agent or any
other Secured Party expressly for use therein. Each Grantor further agrees, upon
such written request referred to above, to use its best efforts to qualify, file
or register, or cause the issuer of such Pledged Collateral to qualify, file or
register, any of the Pledged Collateral under the Blue Sky or other securities
laws of such states as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations. Each Grantor will bear all costs and expenses of carrying out its
obligations under this Section 5.06. Each Grantor acknowledges that there is no
adequate remedy at law for failure by it to comply with the provisions of this
Section 5.06 and that such failure would not be adequately compensable in
damages, and therefore agrees that its agreements contained in this Section 5.06
may be specifically enforced.
ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 6.01. INDEMNITY AND SUBROGATION. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 6.03), the Borrower agrees that (a) in the event a
payment of an obligation shall be made by any Guarantor under this Agreement,
the Borrower shall indemnify such Guarantor for the full amount of such payment
and such Guarantor shall be subrogated to the rights of the Person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Grantor shall be sold pursuant to this Agreement or any other
Security Document to satisfy in whole or in part an obligation owed to any
Secured Party, the Borrower shall indemnify such Grantor in an amount equal to
the greater of the book value or the fair market value of the assets so sold.
SECTION 6.02. CONTRIBUTION AND SUBROGATION. Each Guarantor and
Grantor (a "CONTRIBUTING PARTY") agrees (subject to Section 6.03) that, in the
event a payment shall be made by any other Guarantor hereunder in respect of any
Obligation or
27
assets of any other Grantor shall be sold pursuant to any Security Document to
satisfy any Obligation owed to any Secured Party and such other Guarantor or
Grantor (the "CLAIMING PARTY") shall not have been fully indemnified by the
Borrower as provided in Section 6.01, the Contributing Party shall indemnify the
Claiming Party in an amount equal to the amount of such payment or the greater
of the book value or the fair market value of such assets, as the case may be,
in each case multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Party on the date hereof and the denominator shall be
the aggregate net worth of all the Guarantors and Grantors on the date hereof
(or, in the case of any Guarantor or Grantor becoming a party hereto pursuant to
Section 7.16, the date of the supplement hereto executed and delivered by such
Guarantor or Grantor). Any Contributing Party making any payment to a Claiming
Party pursuant to this Section 6.02 shall be subrogated to the rights of such
Claiming Party under Section 6.01 to the extent of such payment.
SECTION 6.03. SUBORDINATION. (a) Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the part
of the Borrower or any Guarantor or Grantor to make the payments required by
Sections 6.01 and 6.02 (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of any
Guarantor or Grantor with respect to its obligations hereunder, and each
Guarantor and Grantor shall remain liable for the full amount of the obligations
of such Guarantor or Grantor hereunder.
(b) Each Guarantor and Grantor hereby agrees that all Indebtedness
and other monetary obligations owed by it to any other Guarantor, Grantor or any
other Subsidiary shall be fully subordinated to the indefeasible payment in full
in cash of the Obligations.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. NOTICES. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Party shall be given to it in care of the
Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02. WAIVERS; AMENDMENT. (a) No failure or delay by the
Collateral Agent, the Issuing Banks or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent, the Issuing
Banks and the Lenders hereunder and under the other
28
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section
7.02, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the Collateral
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default at the time. No notice or demand on any Loan Party in any case shall
entitle any Loan Party to any other or further notice or demand in similar or
other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.02 of the Credit Agreement.
SECTION 7.03. COLLATERAL AGENT'S FEES AND EXPENSES;
INDEMNIFICATION. (a) The parties hereto agree that the Collateral Agent shall be
entitled to reimbursement of its expenses incurred hereunder as provided in
Section 9.03 of the Credit Agreement.
(b) Without limitation of its indemnification obligations under
the other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating to
any of the foregoing, or to the Collateral, whether or not any Indemnitee is a
party thereto; PROVIDED that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee or any of its Related Parties. To the extent
permitted by applicable law, each Grantor and each Guarantor shall not assert,
and hereby waives, any claims against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of proceeds thereof.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.03 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity
29
or unenforceability of any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 7.03 shall be
payable on written demand therefor.
SECTION 7.04. SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Guarantor, Grantor or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their respective successors and assigns and shall inure to the
benefit of the other Secured Parties and their respective successors and
assigns.
SECTION 7.05. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Collateral Agent, any
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended under
the Credit Agreement, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under any Loan Document is outstanding and unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not expired or
terminated.
SECTION 7.06. COUNTERPARTS; EFFECTIVENESS; SEVERAL AGREEMENT. This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which when taken together shall constitute a single
contract, and shall become effective as provided in this Section 7.06. Delivery
of an executed signature page to this Agreement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this Agreement.
This Agreement shall become effective as to any Loan Party when a counterpart
hereof executed on behalf of such Loan Party shall have been delivered to the
Collateral Agent and a counterpart hereof shall have been executed on behalf of
the Collateral Agent, and thereafter shall be binding upon such Loan Party and
the Collateral Agent and their respective permitted successors and assigns, and
shall inure to the benefit of such Loan Party, the Collateral Agent and the
other Secured Parties and their respective successors and assigns, except that
no Loan Party shall have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral without the
prior written consent of the Lenders (and any such assignment or transfer shall
be void) except as expressly contemplated by this Agreement or the Credit
Agreement. This Agreement shall be construed as a separate agreement with
respect to each Loan Party and may be amended, modified, supplemented, waived or
released with respect to any Loan Party without the approval of any other Loan
Party and without affecting the obligations of any other Loan Party hereunder.
30
SECTION 7.07. SEVERABILITY. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
uneforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.08. RIGHT OF SET-OFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted 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 obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Subsidiary Party against any of and all the obligations of such Subsidiary Party
now or hereafter existing under this agreement owed to such Lender, irrespective
of whether or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The applicable Lender shall
notify the Borrower and the Collateral Agent of such set-off or application;
PROVIDED that any failure to give or delay in giving such notice shall not
affect the validity of a set-off or application under this Section 7.08. The
rights of each Lender under this Section 7.08 are in addition to other rights
and remedies (including other rights of set-off) which such Lender may have.
SECTION 7.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the Loan Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Collateral Agent, the Issuing Banks or
any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Grantor or Guarantor, or its
properties in the courts of any jurisdiction.
(c) Each of the Loan Parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it
31
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section 7.09. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 7.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 7.12. SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Collateral and all obligations of each Grantor and Guarantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Credit Agreement, any other Loan Document, any
agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Credit Agreement, any other Loan Document or any other agreement or instrument,
(c) any exchange, release or non-perfection of any Lien on other collateral, or
any release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor or Guarantor in respect of the Obligations or this
Agreement.
32
SECTION 7.13. TERMINATION OR RELEASE. (a) This Agreement, the
Guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate when all the Loan Document Obligations then due
and owing have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the LC Exposure has been reduced
to zero and the Issuing Banks have no further obligations to issue Letters of
Credit under the Credit Agreement, PROVIDED that this Agreement shall not
terminate with respect to any Obligations that remain outstanding after the
indefeasible payment in full of the Loan Document Obligations and after giving
effect to the termination of the security interests granted herein, unless such
Obligations are secured substantially to the same extent as under this
Agreement, as determined in the reasonable discretion of the Secured Parties
owed such remaining Obligations.
(b) A Subsidiary Party shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Subsidiary Party shall be automatically released upon the consummation of any
transaction permitted by the Credit Agreement as a result of which such
Subsidiary Party ceases to be a Subsidiary; PROVIDED that the Required Lenders
shall have consented to such transaction (to the extent required by the Credit
Agreement) and the terms of such consent did not provide otherwise.
(c) Upon any sale or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement to any Person that is
not a Grantor, or upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to Section
9.02 of the Credit Agreement, the security interest in such Collateral shall be
automatically released.
(d) In connection with any termination or release pursuant to
paragraph (a), (b) or (c), the Collateral Agent shall execute and deliver to any
Grantor, at such Grantor's expense, all documents that such Grantor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 7.13 shall be without recourse to
or warranty by the Collateral Agent or any other Secured Party.
SECTION 7.14. ADDITIONAL SUBSIDIARIES. Pursuant to Section 5.12 of
the Credit Agreement, each Subsidiary of a Loan Party that was not in existence
or not a Subsidiary on the date of the Credit Agreement and is not a Foreign
Subsidiary is required to enter in this Agreement as a Subsidiary Party upon
becoming such a Subsidiary. Upon execution and delivery by the Collateral Agent
and a Subsidiary of an instrument in the form of Exhibit I hereto, such
Subsidiary shall become a Subsidiary Party hereunder with the same force and
effect as if originally named as a Subsidiary Party herein. The execution and
delivery of any such instrument shall not require the consent of any other Loan
Party hereunder. The rights and obligations of each Loan Party hereunder shall
remain in full force and effect notwithstanding the addition of any new Loan
Party as a party to this Agreement.
SECTION 7.15. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the
33
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent's name or in the name of such Grantor (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice or ▇▇▇▇ of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral; (g)
to notify, or to require any Grantor to notify, Account Debtors to make payment
directly to the Collateral Agent; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Collateral
Agent were the absolute owner of the Collateral for all purposes; PROVIDED that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other Secured Parties
shall be accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or
wilful misconduct.
34
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
INTERLINE BRANDS, INC.
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO
by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Financial Officer
35
CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands branch, as
Collateral Agent,
by
/s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Director
by
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Schedule I to
the Guarantee and
Collateral Agreement
SUBSIDIARY PARTIES
Wilmar Holdings, Inc.
Wilmar Financial, Inc.
Glenwood Acquisition LLC
Schedule II to
the Guarantee and
Collateral Agreement
EQUITY INTERESTS
NUMBER AND
NUMBER OF REGISTERED CLASS OF PERCENTAGE
ISSUER CERTIFICATE OWNER EQUITY INTEREST OF EQUITY INTERESTS
------ ----------- ----- --------------- -------------------
DEBT SECURITIES
PRINCIPAL
ISSUER AMOUNT DATE OF NOTE MATURITY DATE
------ ------ ------------ -------------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. COPYRIGHTS OWNED BY INTERLINE BRANDS, INC. AND ITS
SUBSIDIARIES
[Make a separate page of Schedule III for each Grantor and state if no
copyrights are owned. List in numerical order by Registration No.]
U.S. COPYRIGHT REGISTRATIONS
TITLE REG. NO. AUTHOR
----- -------- ------
PENDING U.S. COPYRIGHT APPLICATIONS FOR REGISTRATION
TITLE AUTHOR CLASS DATE FILED
----- ------ ----- ----------
NON-U.S. COPYRIGHT REGISTRATIONS
[List in alphabetical order by country/numerical order by Registration No.
within each country]
COUNTRY TITLE REG. NO. AUTHOR
------- ----- -------- ------
NON-U.S. PENDING COPYRIGHT APPLICATIONS FOR REGISTRATION
[List in alphabetical order by country.]
COUNTRY TITLE AUTHOR CLASS DATE FILED
------- ----- ------ ----- ----------
Schedule III to
the Guarantee and
Collateral Agreement
LICENSES
[Make a separate page of Schedule III for each Grantor, and state if any Grantor
is not a party to a license/sublicense.]
I. LICENSES/SUBLICENSEES OF INTERLINE BRANDS, INC. AND ITS SUBSIDIARIES AS
LICENSOR ON DATE HEREOF
A. COPYRIGHTS
[List U.S. copyrights in numerical order by Registration No. List non-U.S.
copyrights by country in alphabetical order with Registration Nos. within each
country in numerical order.]
U.S. COPYRIGHTS
TITLE OF
LICENSEE NAME DATE OF LICENSE/ U.S.
AND ADDRESS SUBLICENSE COPYRIGHT AUTHOR REG. NO.
----------- ---------- --------- ------ --------
NON-U.S. COPYRIGHTS
DATE OF TITLE OF
LICENSEE NAME LICENSE/ NON-U.S.
COUNTRY AND ADDRESS SUBLICENSEE COPYRIGHTS AUTHOR REG. NO.
------- ----------- ----------- ---------- ------ --------
B. PATENTS
[List U.S. patent nos. and U.S. patent application nos. in numerical order. List
non-U.S. patent nos. and non-U.S. application in alphabetical order by country,
with numbers within each country in numerical order.]
Schedule III to
the Guarantee and
Collateral Agreement
U.S. PATENTS
LICENSEE NAME DATE OF LICENSE/
AND ADDRESS SUBLICENSE ISSUE DATE PATENT NO.
----------- ---------- ---------- ----------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. PATENT APPLICATIONS
LICENSEE NAME DATE OF LICENSE/
AND ADDRESS SUBLICENSE DATE FILED APPLICATION NO.
----------- ---------- ---------- ---------------
NON-U.S. PATENTS
LICENSEE NAME DATE OF LICENSE/ ISSUE NON-U.S.
COUNTRY AND ADDRESS SUBLICENSE DATE PATENT NO.
------- ----------- ---------- ---- ----------
NON-U.S. PATENT APPLICATIONS
LICENSEE NAME DATE OF LICENSE/ DATE APPLICATION
COUNTRY AND ADDRESS SUBLICENSE FILED NO.
------- ----------- ---------- ----- ---
C. TRADEMARKS
[List U.S. trademark nos. and U.S. trademark application nos. in numerical
order. List non-U.S. trademark nos. and non-U.S. application nos. with trademark
nos. within each country in numerical order.]
U.S. TRADEMARKS
LICENSEE NAME DATE OF LICENSE/
AND ADDRESS SUBLICENSE U.S. ▇▇▇▇ REG. DATE REG. NO.
----------- ---------- --------- --------- --------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. TRADEMARK APPLICATIONS
LICENSEE NAME DATE OF LICENSE/ APPLICATION
AND ADDRESS SUBLICENSE U.S. ▇▇▇▇ DATE FILED NO.
----------- ---------- --------- ---------- ---
NON-U.S. TRADEMARKS
LICENSEE NAME DATE OF LICENSE/ NON-U.S.
COUNTRY AND ADDRESS SUBLICENSE ▇▇▇▇ REG. DATE REG. NO.
------- ----------- ---------- ---- --------- --------
NON-U.S. TRADEMARK APPLICATIONS
LICENSEE NAME DATE OF LICENSE/ NON-U.S. DATE APPLICATION
COUNTRY AND ADDRESS SUBLICENSE ▇▇▇▇ FILED NO.
------- ----------- ---------- ---- ----- ---
D. OTHERS
LICENSEE NAME DATE OF LICENSE/ SUBJECT
AND ADDRESS SUBLICENSE MATTER
----------- ---------- ------
Schedule III to
the Guarantee and
Collateral Agreement
II. LICENSEES/SUBLICENSES OF INTERLINE BRANDS, INC. AND ITS SUBSIDIARIES AS
LICENSEE ON DATE HEREOF
A. COPYRIGHTS
[List U.S. copyrights in numerical order by Registration No. List non-U.S.
copyrights by country in alphabetical order, with Registration Nos. within each
country in numerical order.]
U.S. COPYRIGHTS
LICENSOR NAME AND DATE OF LICENSE/ TITLE OF
ADDRESS SUBLICENSE U.S. COPYRIGHT AUTHOR REG. NO.
------- ---------- -------------- ------ --------
NON-U.S. COPYRIGHTS
DATE OF TITLE OF
LICENSOR NAME LICENSE/ NON-U.S.
COUNTRY AND ADDRESS SUBLICENSEE COPYRIGHTS AUTHOR REG. NO.
------- ----------- ----------- ---------- ------ --------
B. PATENTS
[List U.S. patent nos. and U.S. patent application nos. in numerical order. List
non-U.S. patent nos. and non-U.S. application nos. in alphabetical order by
country with patent nos. within each country in numerical order.]
U.S. PATENTS
DATE OF
LICENSOR NAME LICENSE/
AND ADDRESS SUBLICENSE ISSUE DATE PATENT NO.
----------- ---------- ---------- ----------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. PATENT APPLICATIONS
LICENSOR NAME DATE OF LICENSE/
AND ADDRESS SUBLICENSE DATE FILED APPLICATION NO.
----------- ---------- ---------- ---------------
NON-U.S. PATENTS
LICENSOR NAME DATE OF LICENSE/ ISSUE NON-U.S.
COUNTRY AND ADDRESS SUBLICENSE DATE PATENT NO.
------- ----------- ---------- ---- ----------
NON-U.S. PATENT APPLICATIONS
LICENSOR NAME DATE OF LICENSE/ DATE APPLICATION
COUNTRY AND ADDRESS SUBLICENSE FILED NO.
------- ----------- ---------- ----- ---
C. TRADEMARKS
[List U.S. trademark nos. and U.S. trademark application nos. in numerical
order. List non-U.S. trademark nos. and non-U.S. application nos. with trademark
nos. within each country in numerical order.]
U.S. TRADEMARKS
LICENSOR NAME DATE OF LICENSE/
AND ADDRESS SUBLICENSE U.S. ▇▇▇▇ REG. DATE REG. NO.
----------- ---------- --------- --------- --------
Schedule III to
the Guarantee and
Collateral Agreement
U.S. TRADEMARK APPLICATIONS
LICENSOR NAME DATE OF LICENSE/ DATE APPLICATION
AND ADDRESS SUBLICENSE U.S. ▇▇▇▇ FILED NO.
----------- ---------- --------- ----- ---
NON-U.S. TRADEMARKS
LICENSOR NAME DATE OF LICENSE/ NON-U.S.
COUNTRY AND ADDRESS SUBLICENSE ▇▇▇▇ REG. DATE REG. NO.
------- ----------- ---------- ---- --------- --------
NON-U.S. TRADEMARK APPLICATIONS
LICENSOR NAME DATE OF LICENSE/ NON-U.S. DATE APPLICATION
COUNTRY AND ADDRESS SUBLICENSE ▇▇▇▇ FILED NO.
------- ----------- ---------- ---- ----- ---
D. OTHERS
DATE OF LICENSE/
LICENSOR NAME AND ADDRESS SUBLICENSE SUBJECT MATTER
------------------------- ---------- --------------
Schedule III to
the Guarantee and
Collateral Agreement
PATENTS OWNED BY INTERLINE BRANDS, INC. AND ITS SUBSIDIARIES
[Make a separate page of Schedule III for each Grantor and state if no patents
are owned. List in numerical order by Patent No./Patent Application No.]
U.S. PATENT REGISTRATIONS
PATENT NUMBERS ISSUE DATE
-------------- ----------
U.S. PATENT APPLICATIONS
PATENT APPLICATION NO. FILING DATE
---------------------- -----------
NON-U.S. PATENT REGISTRATIONS
[List in alphabetical order by country/numerical order by Patent No. within each
country]
COUNTRY ISSUE DATE PATENT NO.
------- ---------- ----------
NON-U.S. PATENT REGISTRATIONS
[List in alphabetical order by country/numerical order by Application No. within
each country]
COUNTRY FILING DATE PATENT APPLICATION NO.
------- ----------- ----------------------
Schedule III to
the Guarantee and
Collateral Agreement
TRADEMARK/TRADE NAMES OWNED BY INTERLINE BRANDS, INC. AND ITS
SUBSIDIARIES
[Make a separate page of Schedule III for each Grantor and state if no
trademarks/trade names are owned. List in numerical order by trademark
registration/application no.]
U.S. TRADEMARK REGISTRATIONS
▇▇▇▇ REG. DATE REG. NO.
---- --------- --------
U.S. TRADEMARK APPLICATIONS
▇▇▇▇ FILING DATE APPLICATION NO.
---- ----------- ---------------
STATE TRADEMARK REGISTRATIONS
[List in alphabetical order by state/numerical order by trademark no. within
each state]
STATE ▇▇▇▇ FILING DATE APPLICATION NO.
----- ---- ----------- ---------------
NON-U.S. TRADEMARK REGISTRATIONS
[List in alphabetical order by country/numerical order by trademark no. within
each country]
COUNTRY ▇▇▇▇ REG. DATE REG. NO.
------- ---- --------- --------
Schedule III to
the Guarantee and
Collateral Agreement
NON-U.S. TRADEMARK APPLICATIONS
[List in alphabetical order by country/numerical order by application no.]
COUNTRY ▇▇▇▇ APPLICATION DATE APPLICATION NO.
------- ---- ---------------- ---------------
TRADE NAMES
COUNTRY(S) WHERE USED TRADE NAMES
--------------------- -----------
Schedule IV to
the Guarantee and
Collateral Agreement
INSURANCE REQUIREMENTS
(a) The Borrower and the Subsidiary Parties will maintain (or
cause to be maintained on their behalf), with financially sound and reputable
insurance companies:
(i) fire, boiler and machinery, and extended coverage
insurance, on a replacement cost basis, with respect to all personal
property and improvements to real property (in each case constituting
Collateral), in such amounts as are customarily maintained by companies
in the same or similar business operating in the same or similar
locations;
(ii) commercial general liability insurance against claims
for bodily injury, death or property damage occurring upon, about or in
connection with the use of any properties owned, occupied or controlled
by it, providing coverage on an occurrence basis with a combined single
limit of not less than $1,000,000 and including the broad form
commercial general liability endorsement;
(iii) business interruption insurance, insuring against
loss of gross earnings for a period of not less than 12 months arising
from any risks or occurrences required to be covered by insurance
pursuant to clause (i) above;
(iv) an umbrella insurance policy in an amount
satisfactory to the Collateral Agent that will immediately enter into
effect in the event any type of insurance described in the previous
paragraphs has reached its maximum limit; and
(v) such other insurance as may be required by law.
Deductibles or self-insured retention shall not exceed $1,000,000 for fire,
boiler and machinery and extended coverage policies, $1,000,000 for commercial
general liability policies or 14 days for business interruption policies.
(b) Fire, boiler and machinery and extended coverage policies
maintained with respect to any Collateral shall be endorsed or otherwise amended
to include (i) a lenders' loss payable clause in favor of the Collateral Agent
and providing for losses thereunder to be payable to the Collateral Agent or its
designee, (ii) a provision to the effect that neither any Loan Party, the
Collateral Agent nor any other party shall be a coinsurer and (iii) such other
provisions as the Collateral Agent may reasonably require from time to time to
protect the interests of the Secured Parties. Commercial general liability
policies shall be endorsed to name the Collateral Agent as an additional
insured. Business interruption policies shall name the Collateral Agent as loss
payee. Each such policy referred to in this paragraph also shall provide that it
shall not be canceled, modified or not renewed (i) by reason of nonpayment of
premium except upon not less than 10 days' prior written notice thereof by the
insurer to the Borrower (giving the Borrower the right to cure defaults in the
payment of premiums) or (ii) for any other
2
reason except upon not less than 30 days' prior written notice thereof by the
insurer to the Borrower. The Borrower shall deliver to the Collateral Agent,
prior to the cancellation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously delivered to the Collateral Agent) together with
evidence reasonably satisfactory to the Collateral Agent of payment of the
premium therefor.
Schedule V to
the Guarantee and
Collateral Agreement
COMMERCIAL TORT CLAIMS
Exhibit I to the
Guarantee and
Collateral Agreement
SUPPLEMENT NO. __ dated as of _____________,
to the Guarantee and Collateral Agreement dated as of
May 29, 2003 among INTERLINE BRANDS, INC., a New
Jersey corporation (the "BORROWER"), each subsidiary
of the Borrower listed on Schedule I thereto (each
such subsidiary individually a "SUBSIDIARY GUARANTOR"
and collectively, the "SUBSIDIARY GUARANTORS"; the
Subsidiary Guarantors and the Borrower are referred
to collectively herein as the "GRANTORS") and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland, acting through its Cayman Islands
branch ("CSFB"), as Collateral Agent (in such
capacity, the "COLLATERAL AGENT").
A. Reference is made to the Credit Agreement dated as of May 29,
2003 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among the Borrower, the lenders from time to time party
thereto and, CSFB, as Administrative Agent.
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement and the
Collateral Agreement referred to therein.
C. The Grantors have entered into the Collateral Agreement in
order to induce the Lenders to make Loans and the Issuing Banks to issue Letters
of Credit. Section 7.14 of the Collateral Agreement provides that additional
Subsidiaries may become Subsidiary Parties under the Collateral Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "NEW SUBSIDIARY") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Subsidiary
Party under the Collateral Agreement in order to induce the Lenders to make
additional Loans and the Issuing Banks to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.
Accordingly, the Collateral Agent and the New Subsidiary agree as
follows:
SECTION 1. In accordance with Section 7.14 of the Collateral
Agreement, the New Subsidiary by its signature below becomes a Subsidiary Party
(and accordingly, becomes a Guarantor and a Grantor), Grantor and Guarantor
under the Collateral Agreement with the same force and effect as if originally
named therein as a Subsidiary Party and the New Subsidiary hereby (a) agrees to
all the terms and provisions of the Collateral Agreement applicable to it as a
Subsidiary Party, Grantor and Guarantor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Grantor and
Guarantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Subsidiary, as security for the payment
2
and performance in full of the Obligations, does hereby (a) create and grant to
the Collateral Agent, its successors and assigns, for the benefit of the Secured
Parties, their successors and assigns, a security interest in and lien on all of
the New Subsidiary's right, title and interest in and to the Collateral of the
New Subsidiary and (b) guarantee the Obligations as set forth in Section 2 of
the Collateral Agreement. Each reference to a "Guarantor" or "Grantor" in the
Collateral Agreement shall be deemed to include the New Subsidiary. Schedule I
to the Collateral Agreement is hereby amended to include the New Subsidiary. The
Collateral Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received a counterpart of this Supplement that bears the
signature of the New Subsidiary and the Collateral Agent has executed a
counterpart hereof. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.
SECTION 4. The New Subsidiary hereby represents and warrants
that (a) set forth on Schedule I attached hereto is a true and correct schedule
of the location of any and all Collateral of the New Subsidiary and (b) set
forth under its signature hereto, is the true and correct legal name of the New
Subsidiary, its jurisdiction of formation and the location of its chief
executive office.
SECTION 5. Except as expressly supplemented hereby, the
Collateral Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions contained
in this Supplement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and in the Collateral Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
hereto shall endeavor in good-faith negotiations to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
3
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 7.01 of the Collateral Agreement.
SECTION 9. The New Subsidiary agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Subsidiary and the Collateral Agent have
duly executed this Supplement to the Collateral Agreement as of the day and year
first above written.
[NAME OF NEW SUBSIDIARY],
by
_______________________________________
Name:
Title:
Legal Name:
Jurisdiction of Formation:
Location of Chief Executive office:
CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands branch,
as Collateral Agent
by
_______________________________________
Name:
Title:
Schedule I
to the Supplement No __ to the
Guarantee and
Collateral Agreement
LOCATION OF COLLATERAL
DESCRIPTION LOCATION
----------- --------
EQUITY INTERESTS
NUMBER AND
NUMBER OF REGISTERED CLASS OF PERCENTAGE
ISSUER CERTIFICATE OWNER EQUITY INTERESTS OF EQUITY INTERESTS
------ ----------- ----- ---------------- -------------------
DEBT SECURITIES
PRINCIPAL
ISSUER AMOUNT DATE OF NOTE MATURITY DATE
------ ------ ------------ -------------
INTELLECTUAL PROPERTY