EXHIBIT 10.9
SECURITY AGREEMENT
among
RC TRANSACTION CORP.,
CERTAIN OF ITS SUBSIDIARIES,
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of April 1, 1999
TABLE OF CONTENTS
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ARTICLE I
SECURITY INTERESTS........................................................2
1.1. Grant of Security Interests.....................................2
1.2. Power of Attorney...............................................3
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.........................3
2.1. Necessary Filings...............................................3
2.2. No Liens........................................................
2.3. Other Financing Statements......................................4
2.4. Chief Executive Office..........................................4
2 5. Location of Inventory and Equipment.............................4
2.6. Recourse........................................................4
2.7. Trade Names: Change of Name.....................................4
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES,
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER...............................5
3.1. Additional Representations and Warranties.......................5
3.2. Maintenance of Records..........................................5
3.3. Direction to Account Debtors, Contracting Parties; etc..........5
3.4. Modification of Terms: etc......................................6
3.5. Collection......................................................6
3.6. Instruments.....................................................6
3.7. Assignors Remain Liable Under Receivables.......................6
3.8. Assignors Remain Liable Under Contracts.........................7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS..................................7
4.1. Additional Representations and Warranties.......................7
4.2. Divestitures....................................................8
4.3. Infringements...................................................8
4.4. Preservation of Marks...........................................8
4.5. Maintenance of Registration.....................................8
4.6. Future Registered Marks.........................................8
4.7. Remedies........................................................8
ARTICLE V
(i)
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..........................9
5.1. Additional Representations and Warranties.............9
5.2. Divestures............................................9
5.3. Infringements.........................................9
5.4. Maintenance of Patents or Copyright..................10
5.5. Prosecution of Patent Applications...................10
5.6. Other Patents and Copyrights.........................10
5.7. Remedies.............................................10
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL..........................10
6.1. Protection of Collateral Agent's Security............10
6.2. Warehouse Receipts Non-negotiable....................11
6.3. Further Actions......................................11
6.4. Financing Statements..... ..........................11
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT.................11
7.1. Remedies; Obtaining the Collateral Upon Default.....11
7.2. Remedies; Disposition of the Collateral.............13
7.3. Waiver of Claims....................................13
7.4. Application of Proceeds.............................14
7.5. Remedies Cumulative.................................16
7.6. Discontinuance of Proceedings.......................16
ARTICLE VIII
INDEMNITY....................................................17
8.1. Indemnity...........................................17
ANNEX A Schedule of Chief Executive Offices/Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Schedule of Trade and Fictitious Names
ANNEX D Schedule of Marks
ANNEX E Schedule of Patents
ANNEX F Schedule of Copyrights
ANNEX G Form of Assignment of Security Interest in
Certain United States Trademarks and Patents
ANNEX H Form of Assignment of Security Interest in United States Copyrights
(ii)
SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of April 1, 1999, made by each of the
undersigned assignors (each an "Assignor" and, together with any other entity
that becomes an assignor hereunder pursuant to Section 10.13 hereof, the
"Assignors") in favor of Bankers Trust Company, as Collateral Agent (the
"Collateral Agent"), for the benefit of the Secured Creditors (as defined
below). Except as otherwise defined herein, capitalized terms used herein and
defined in the Credit Agreement (as defined below) shall be used herein as so
defined.
WITNESSETH:
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WHEREAS, RC Transaction Corp. ("Holdings"), RCLLC Acquisition Corp.
(the "Borrower", which term shall mean Re:sources Connection LLC from and after
the consummation of the Merger), Re:sources Connection LLC, the lenders party
from time to time party thereto (the "Lenders"), Bankers Trust Company, as
Administrative Agent and Lead Arranger (together with any successor
administrative agent, the "Administrative Agent"), BankBoston, N.A., as
Syndication Agent (the "Syndication Agent"), and U.S. Bank National Association,
as Documentation Agent (the "Documentation Agent"), have entered into a Credit
Agreement, dated as of April 1, 1999, providing for the making of Loans to, and
the issuance of Letters of Credit for the account of, the Borrower as
contemplated therein (as amended, modified or supplemented from time to time,
the "Credit Agreement") (the Lenders, the Administrative Agent, the Syndication
Agent, the Documentation Agent, the Issuing Lender and the Collateral Agent are
herein called the "Lender Creditors");
WHEREAS, the Borrower may at any time and from time to time enter into
one or more Interest Rate Protection Agreements or Other Hedging Agreements with
one or more Lenders or any affiliate thereof (each such Lender or affiliate,
even if the respective Lender subsequently ceases to be a Lender under the
Credit Agreement for any reason, together with such Lender's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Lender Creditors, are herein called the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor has jointly and severally guaranteed to the Secured Creditors the
payment when due of all Guaranteed Obligations as described therein;
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed to
the Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;
WHEREAS, it is a condition precedent to the making of Loans to, and
the issuance of Letters of Credit for the account of, the Borrower under the
Credit Agreement that each Assignor shall have executed and delivered to the
Collateral Agent this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of
Loans by, and the issuance of Letters of Credit for the account of, the Borrower
under the Credit Agreement and the entering into by the Borrower of Interest
Rate Protection Agreements and Other Hedging Agreements and, accordingly, each
Assignor desires to enter into this Agreement in order to satisfy the condition
described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
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complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest in, all of the right, title and
interest of such Assignor in, to and under all of the following, whether now
existing or hereafter from time to time acquired: (i) each and every Receivable,
(ii) all Contracts, together with all Contract Rights arising thereunder, (iii)
all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, (vii) all computer programs of such Assignor and all intellectual
property rights therein and all other proprietary information of such Assignor,
including, but not limited to, Trade Secrets Rights, (viii) all other Goods,
General Intangibles, Investment Property, Permits, Chattel Paper, Documents,
Instruments and other assets (including cash), (ix) the Cash Collateral Account
and all monies, securities, instruments and other investments deposited or
required to be deposited in such Cash Collateral Account, (x) all other bank,
demand, time savings, cash management, passbook, certificates of deposit and
similar accounts maintained by such Assignor and all monies, securities,
instruments and other investments deposited or required to be deposited in any
of the foregoing accounts, and (xi) all Proceeds and products of any and all of
the foregoing (all of the above, collectively, the " Collateral"); provided
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however, that (x) in the case of any Instruments, Contracts, Chattel Paper or
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General Intangibles that would otherwise be included in the Collateral, no
security interest in the right, title and interest of any Assignor thereunder or
therein will be granted pursuant to this Section 1.1 (and such Instruments,
Contracts, Chattel Paper or General Intangibles shall not be deemed to
constitute a part of the Collateral) for so long as, and to the extent that, the
granting of a security interest in the right, title and interest of such
Assignor thereunder or therein pursuant to the terms hereof would result in a
breach, default or termination of such Instruments, Contracts, Chattel Paper or
General Intangibles, although the provisions of this clause (x) shall not apply
to (and the security interests created hereunder shall extend to) (i) the right
to receive monies due or to become due pursuant to such Instruments, Contracts,
Chattel Paper or General Intangibles, (ii) any equity interests owned by any
Assignor in any Subsidiary of such Assignor, (iii) any such items of Collateral
by and among any Assignor and any Subsidiary of any Assignor and (iv) the
Transition Services Agreement and (y) in the case of any Equipment that would
otherwise be
included in the foregoing Collateral, the foregoing will not be deemed to grant
a security interest therein under this Agreement (and such Equipment shall not
be deemed to constitute a part of the Collateral) if such Equipment is subject
to a Lien permitted by Section 9.01(vii) of the Credit Agreement and the holder
of such Lien has not consented to the Collateral Agent having a junior Lien on
such Equipment.
(b) The security interest of the Collateral Agent under this Agreement
extends to all Collateral of the kind which is the subject of this Agreement
which any Assignor may acquire at any time during the term of this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and appoints
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the Collateral Agent its true and lawful attorney, irrevocably, with full power
after the occurrence of and during the continuance of an Event of Default (in
the name of such Assignor or otherwise) to act, require, demand, receive,
compound and give acquittance for any and all moneys and claims for moneys due
or to become due to such Assignor under or arising out of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute any proceedings which the
Collateral Agent may deem to be necessary or advisable to protect the interests
of the Secured Creditors, which appointment as attorney is coupled with an
interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2. 1. Necessary Filings. All filings, registrations and recordings
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necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been (or within days after the date hereof will be) accomplished
and the security interest granted to the Collateral Agent pursuant to this
Agreement in and to the Collateral creates (or will create, as the case may be)
a perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by filing a financing statement under the Uniform Commercial Code as enacted in
any relevant jurisdiction or in the United States Patent and Trademark Office or
in the United States Copyright Office.
2.2. No Liens. Except for the security interest created by this
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Agreement, such Assignor is, and as to Collateral acquired by it from time to
time after the date hereof such Assignor will be, the owner of all Collateral
free from any Lien, security interest, encumbrance or other right, title or
interest of any Person (other than Permitted Liens), and such Assignor shall
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there is no
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financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements filed in respect of
Permitted Liens), and so long as the Termination Date has not occurred, such
Assignor will not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by such Assignor or in connection with
Permitted Liens.
2.4. Chief Executive Office. The chief executive office of such
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Assignor is located at the address indicated on Annex A hereto for such
Assignor. Such Assignor will not move its chief executive office except to such
new location as such Assignor may establish in accordance with the last sentence
of this Section 2.4. No Assignor shall establish new locations for such offices
until (i) it shall have given to the Collateral Agent not less than 15 days'
prior written notice of its intention to do so, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new
location, it shall have taken all action reasonably satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and Equipment
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held on the date hereof by each Assignor is located at one of the locations
shown on Annex B hereto for such Assignor. Each Assignor agrees that all
Inventory and Equipment now held or subsequently acquired by it shall be kept at
(or shall be in transport to) any one of the locations shown on Annex B hereto
(or shall be in transport to a purchaser thereof), or such new location as such
Assignor may establish in accordance with the last sentence of this Section 2.5.
Any Assignor may establish a new location for Inventory and Equipment only if
(i) it shall have given to the Collateral Agent not less than 15 days' prior
written notice of its intention so to do, clearly describing such new location
and providing such other information in connection therewith as the Collateral
Agent may request and (ii) with respect to such new location, it shall have
taken all action reasonably satisfactory to the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.
2.6. Recourse. This Agreement is made with full recourse to each
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Assignor (including, without limitation, with full recourse to all assets of
such Assignor) and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of such Assignor contained herein, in the
other Secured Debt Agreements and otherwise in writing in connection herewith or
therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates in any
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jurisdiction under, or in the preceding five years has had or has operated in
any jurisdiction under, any trade names, fictitious names or other names except
its legal name and such other trade or fictitious names as are listed on Annex C
hereto for such Assignor. No Assignor shall change its legal name or assume or
operate in any jurisdiction under any trade, fictitious or other name
except those names listed on Annex C hereto for such Assignor and new names
established in accordance with the last sentence of this Section 2.7. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) it shall have given to the Collateral Agent
not less than 15 days' prior written notice of its intention so to do, clearly
describing such new name and the jurisdictions in which such new name shall be
used and providing such other information in connection therewith as the
Collateral Agent may reasonably request and (ii) with respect to such new
name, it shall have taken all action reasonably requested by the Collateral
Agent to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING RECEIVABLES;
CONTRACT RIGHTS; INSTRUMENTS; CHATTEL PAPER
3.1. Additional Representations and Warranties. As of the time when
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each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and such
Receivable will evidence true and valid obligations of the account debtor named
therein.
3.2. Maintenance of Records. Each Assignor will keep and maintain at
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its own cost and expense accurate records of its Receivables and Contracts,
including, but not limited to, originals of all documentation (including each
Contract) with respect thereto, records of all payments received, all credits
granted thereon, all merchandise returned and all other dealings therewith, and
such Assignor will make the same available on such Assignor's premises to the
Collateral Agent for inspection, at such Assignor's own cost and expense, at any
and all reasonable times upon prior notice to such Assignor. Upon the occurrence
and during the continuance of an Event of Default and at the request of the
Collateral Agent, such Assignor shall, at its own cost and expense, deliver all
tangible evidence of its Receivables and Contract Rights (including, without
limitation, all documents evidencing the Receivables and all Contracts) and such
books and records to the Collateral Agent or to its representatives (copies of
which evidence and books and records may be retained by such Assignor). Upon the
occurrence and during the continuance of an Event of Default and if the
Collateral Agent so reasonably directs, such Assignor shall legend, in form and
manner satisfactory to the Collateral Agent, the Receivables and the Contracts,
as well as books, records and documents (if any) of such Assignor evidencing or
pertaining to such Receivables and Contracts with an appropriate reference to
the fact that such Receivables and Contracts have been assigned to the
Collateral Agent and that the Collateral Agent has a security interest therein.
3.3. Direction to Account Debtors; Contracting Parties: etc. Upon the
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occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x), and (z)
that the Collateral Agent may enforce collection of any such Receivables and
Contracts and may adjust, settle or compromise the amount of payment thereof, in
the same manner and to the same extent as such Assignor. Without notice to or
assent by any Assignor, the Collateral Agent may apply any or all amounts then
in, or thereafter deposited in, the Cash Collateral Account which application
shall be effected in the manner provided in Section 7.4 of this Agreement. The
reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and costs and disbursements) of collection, whether incurred by an Assignor
or the Collateral Agent, shall be borne by the relevant Assignor. The
Collateral Agent shall deliver a copy of each notice referred to in the
preceding clause (y) to the relevant Assignor, provided that the failure
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by the Collateral Agent to so notify such Assignor shall not affect the
effectiveness of such notice or the other rights of the Collateral Agent created
by this Section 3.3.
3.4. Modification of Terms; etc. Except in accordance with such
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Assignor's ordinary course of business and consistent with reasonable business
judgment, no Assignor shall rescind or cancel any indebtedness evidenced by any
Receivable or under any Contract, or modify any term thereof or make any
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or sell any Receivable or Contract, or interest therein, without the prior
written consent of the Collateral Agent. Each Assignor will duly fulfill all
obligations on its part to be fulfilled under or in connection with the
Receivables and Contracts and will do nothing to impair the rights of the
Collateral Agent in the Receivables or Contracts.
3.5 Collection. Each Assignor shall endeavor in accordance with
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reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract except that,
prior to the occurrence of an Event of Default, any Assignor may make
adjustments to its Receivables and Contracts in accordance with reasonable
business practices. The reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) of collection, whether incurred by an
Assignor or the Collateral Agent, shall be borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument
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(other than a check) constituting Collateral, such Assignor will within 10
Business Days notify the Collateral Agent thereof, and upon request by the
Collateral Agent will promptly deliver such Instrument to the Collateral Agent
appropriately endorsed to the order of the Collateral Agent as further security
hereunder.
3.7. Assignors Remain Liable Under Receivables. Anything herein to the
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contrary notwithstanding, the Assignors shall remain liable under each of the
Receivables to observe and perform all of the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to such Receivables. Neither the Collateral Agent nor any
other Secured Creditor shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or
the receipt by the Collateral Agent or any other Secured Creditor of any payment
relating to such Receivable pursuant hereto, nor shall the Collateral Agent or
any other Secured Creditor be obligated in any manner to perform any of the
obligations of any Assignor under or pursuant to any Receivable (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by them or as to the
sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto), to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to them or to which they may be entitled at any time or
times.
3.8. Assignors Remain Liable Under Contracts. Anything herein to the
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contrary notwithstanding, the Assignors shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral Agent nor
any other Secured Creditor shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Creditor of any payment relating to such
contract pursuant hereto, nor shall the Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
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represents and warrants that it owns or otherwise has the right to use the
registered Marks listed in Annex D hereto for such Assignor and that Marks
listed in Annex D include all United States registrations and applications in
the United States Patent and Trademark Office that such Assignor owns or uses in
connection with its business as of the date hereof. Each Assignor represents and
warrants that it owns, is licensed to use or otherwise has the right to use, all
material Marks that it uses. Each Assignor further warrants that it has no
knowledge of any pending or threatened third party claim that any aspect of such
Assignor's present or contemplated business operations infringes any trademark,
service ▇▇▇▇ or trade name. Each Assignor represents and warrants that all U.S.
trademark registrations and applications listed in Annex D hereto are valid,
subsisting, have not been cancelled and that such Assignor is not aware of any
pending or threatened third-party claim that any of said registrations is
invalid or unenforceable, or is not aware that there is any reason that any of
said registrations is invalid or unenforceable. Each Assignor hereby grants to
the Collateral Agent an absolute power of attorney to sign, upon the occurrence
and during the continuance of an Event of Default, any document which may be
required by the United States Patent and Trademark Office in order to effect an
absolute assignment of all right, title and interest in each ▇▇▇▇, and record
the same.
4.2. Divestitures. Except to the extent not prohibited by the Secured
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Debt Agreements, each Assignor hereby agrees not to divest itself of any right
under any ▇▇▇▇ absent prior written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
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thereof, to notify the Collateral Agent of such pertinent information that may
be available with respect to any party who such Assignor believes is infringing
or diluting or otherwise violating in any material respect any of such
Assignor's rights in and to any material ▇▇▇▇, or with respect to any party
claiming that such Assignor's use of any material ▇▇▇▇ violates in any material
respect any property right of that party. Each Assignor further agrees, unless
otherwise agreed by the Collateral Agent, to prosecute any Person infringing any
▇▇▇▇ in accordance with reasonable business practices to the extent in its
reasonable judgment, it is appropriate to do so.
4.4. Preservation of Marks. Each Assignor agrees to use its material
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Marks that are registered in the United States Patent and Trademark Office in
interstate commerce during the time in which this Agreement is in effect and to
take all such other actions as are necessary to preserve such Marks as
trademarks or service marks under the laws of the United States.
4.5. Maintenance of Registration. Each Assignor shall, at its own
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expense, diligently process all documents required to maintain trademark
registrations, including but not limited to affidavits of use and applications
for renewals of registration in the United States Patent and Trademark Office
for all of its material Marks registered therein, and shall pay all fees and
disbursements in connection therewith and shall not abandon any such filing of
affidavit of use or any such application of renewal prior to the exhaustion of
all administrative and judicial remedies without prior written consent of the
Collateral Agent.
4.6. Future Registered Marks. If any ▇▇▇▇ registration is issued
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hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days
after the last day of the fiscal quarter in which such certificate is issued,
such Assignor shall deliver to the Collateral Agent a copy of such certificate,
and an assignment for security in such ▇▇▇▇, to the Collateral Agent and at the
expense of such Assignor, confirming the assignment for security in such ▇▇▇▇ to
the Collateral Agent hereunder, the form of such security to be substantially
the same as the form hereof or in such other form as may be reasonably
satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing,
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the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (ii) take and use or sell the Marks and the goodwill of
such Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to
refrain, in which event such Assignor shall refrain, from using the Marks in any
manner whatsoever, directly or indirectly, and such Assignor shall execute such
further documents that the Collateral Agent may reasonably request to further
confirm this and to transfer ownership of the Marks and registrations and any
pending trademark application in the United States Patent and Trademark Office
to the Collateral Agent; provided, however, that, with respect to any
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trademark application filed pursuant to 15 U.S.C. Section 1051(b) for which a
verified Statement of Use has not yet been filed pursuant to 15 U.S.C. Section
1051(d), the parties hereto agree to take only those actions necessary to
fulfill the foregoing obligations that do not threaten the validity of such
trademark applications under 15 U.S.C. Section 1060.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
-----------------------------------------
represents and warrants that it owns all rights in (i) all trade secrets and
proprietary information necessary to operate the business of the Assignor in the
United States (the "Trade Secret Rights"), (ii) the Patents listed in Annex E
hereto for such Assignor and that said Patents include all the United States
patents and applications for United States patents that such Assignor owns as of
the date hereof and (iii) the Copyrights listed in Annex F hereto for such
Assignor and that said Copyrights constitute all the United States copyrights
registered with the United States Copyright Office and applications to United
States copyrights that such Assignor owns as of the date hereof. Each Assignor
further warrants that it has no knowledge of any pending or threatened third
party claim that any aspect of such Assignor's present or contemplated business
operations infringes any patent or such Assignor has misappropriated any trade
secret or proprietary information. Each Assignor hereby grants to the Collateral
Agent an absolute power of attorney to sign, upon the occurrence and during the
continuance of any Event of Default, any document which may be required by the
United States Patent and Trademark Office in order to effect an absolute
assignment of all right, title and interest in each Patent, and to record the
same.
5.2. Divestures. Except to the extent not prohibited by the Secured
----------
Debt Agreements, each Assignor hereby agrees not to divest itself of any right
under any Patent or Copyright acquired after the date hereof absent prior
written approval of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
-------------
thereof, to furnish the Collateral Agent with all pertinent information
available to such Assignor with respect to any infringement, contributing
infringement or active inducement to infringe in any material Patent or
Copyright, that could reasonably be expected to have a Material Adverse Effect,
or to any claim that the practice of any material Patent or use of any material
Copyright violates any property right of a third party, or with respect to any
misappropriation of any Trade Secret Right or any claim that practice of any
Trade Secret Right violates any property right of a third party, in any respect,
that could reasonably be expected to have a Material Adverse Effect. Each
Assignor further agrees, unless otherwise agreed by the Collateral Agent to
prosecute any Person infringing any Patent or Copyright or any Person
misappropriating any Trade Secret Right in accordance
with reasonable business practices to the extent in its reasonable judgment it
is appropriate to do so.
5.4. Maintenance of Patents or Copyright. At its own expense, each
-----------------------------------
Assignor shall make timely payment of all post-issuance fees required pursuant
to 35 U.S.C. (S) 41 to maintain in force its rights under each material Patent
or Copyright, absent prior written consent of the Collateral Agent.
5.5. Prosecution of Patent Applications. At its own expense, each
----------------------------------
Assignor shall diligently prosecute all material applications for (i) United
States Patents listed in Annex E hereto and (ii) material Copyrights listed on
Annex F hereto, and shall not abandon any such application prior to exhaustion
of all administrative and judicial remedies, absent written consent of the
Collateral Agent.
5.6. Other Patents and Copyrights. Within 30 days after the last day
----------------------------
of the fiscal quarter in which the acquisition or issuance of a United States
Patent, registration of a Copyright, or acquisition of a registered Copyright,
or of filing of an application for a United States Patent or Copyright occurs,
the relevant Assignor shall deliver to the Collateral Agent a copy of said
Copyright or certificate or registration of, or application therefor, said
Patents, as the case may be, with an assignment for security as to such Patent
or Copyright, as the case may be, to the Collateral Agent and at the expense of
such Assignor, confirming the assignment for security, the form of such
assignment for security to be substantially the same as the form hereof or in
such other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing,
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the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such further
documents as the Collateral Agent may reasonably request further to confirm this
and to transfer ownership of the Patents and Copyrights to the Collateral Agent
for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will do
-----------------------------------------
nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense to the extent and in the
manner provided in the Credit Agreement. Except to the extent otherwise
permitted to be retained by such Assignor or applied by such Assignor pursuant
to the terms of the Credit Agreement, the Collateral Agent shall, at the time an
proceeds of such insurance are distributed to the Secured Creditors, apply such
proceeds in accordance with Section 7.4 hereof. Each Assignor assumes all
liability and responsibility in connection with the Collateral acquired by it
and the liability of such Assignor to pay the Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to such
Assignor.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if
---------------------------------
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such Assignor shall request that such
warehouse receipt or receipt in the nature thereof shall not be "negotiable" (as
such term is used in Section 7-104 of the UCC as in effect in any relevant
jurisdiction or under other relevant law).
6.3. Further Actions. Each Assignor will, at its own expense and
---------------
upon the reasonable request of the Collateral Agent, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
lists, descriptions and designations of its Collateral, warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps relating to the Collateral
and other property or rights covered by the security interest hereby granted,
which the Collateral Agent deems reasonably appropriate or advisable to perfect,
preserve or protect its security interest in the Collateral.
6.4. Financing Statements. Each Assignor agrees to execute and deliver
--------------------
to the Collateral Agent such financing statements, in form reasonably acceptable
to the Collateral Agent, as the Collateral Agent may from time to time
reasonably request or as are necessary or desirable in the reasonable opinion of
the Collateral Agent to establish and maintain a valid, enforceable, first
priority (subject to Permitted Liens) perfected security interest in the
Collateral as provided herein and the other rights and security contemplated
hereby all in accordance with the UCC as enacted in any and all relevant
jurisdictions or any other relevant law. Each Assignor will pay any applicable
filing fees, recordation taxes and related expenses relating to its Collateral.
Each Assignor hereby authorizes the Collateral Agent to file any such financing
statements without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7. 1. Remedies: Obtaining the Collateral Upon Default. Each Assignor
-----------------------------------------------
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under any UCC, and such additional rights and remedies to which a
secured creditor is entitled under the laws in effect, in all relevant
jurisdictions and may:
(i) personally, or by agents or attorneys, immediately take possession
of the Collateral or any part thereof, from such Assignor or any other Person
who then has possession of any part thereof with or without notice or process of
law, and for that purpose may enter upon such Assignor's premises where any of
the Collateral is located and remove the same and use in connection with such
removal any and all services, supplies, aids and other facilities of such
Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the terms
of such agreement, instrument or other obligation directly to the Collateral
Agent and may exercise any and all remedies of such Assignor in respect of such
Collateral;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with Section
7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the Collateral
or any part thereof in accordance with Section 7.2 hereof, or direct the
relevant Assignor to sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof, and, in each case, take possession of the
proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the Collateral
Agent at any place or places designated by the Collateral Agent, in which event
such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or places
so designated by the Collateral Agent and there delivered to the
Collateral Agent;
(y) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain the same in good condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for such term
and on such conditions and in such manner as the Collateral Agent shall in its
sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. By
accepting the benefits of this Agreement, the Secured Creditors agree that this
Agreement may be enforced only by the action of the Collateral Agent acting upon
the instructions of the Required Secured Creditors and that no other Secured
Creditor shall have any right individually to seek to enforce this Agreement or
to realize upon the security to be granted
hereby, it being understood and agreed that such rights and remedies may be
exercised by the Collateral Agent for the benefit of the Secured Creditors upon
the terms of this Agreement and the Credit Agreement.
7.2. Remedies; Disposition of the Collateral. If any Event of Default
---------------------------------------
shall have occurred and be continuing, then any Collateral repossessed by the
Collateral Agent under or pursuant to Section 7.1 hereof and any other
Collateral whether or not so repossessed by the Collateral Agent, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' prior written notice to the relevant Assignor specifying the time at which
such disposition is to be made and the intended sale price or other
consideration therefor, and shall be subject, for the 10 days after the giving
of such notice, to the right of the relevant Assignor or any nominee of such
Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified. Any such disposition which shall be a public sale permitted by
such requirements shall be made upon not less than 10 days' prior written notice
to the relevant Assignor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the Collateral Agent's option, be subject to reserve), after publication
of notice of such auction (where required by applicable law) not less than 10
days prior thereto. 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 the sale, and such sale
may be made at any time or place to which the sale may be so adjourned. To the
extent permitted by any such requirement of law, the Collateral Agent may bid
for and become the purchaser of the Collateral or any item thereof, offered for
sale in accordance with this Section 7.2 without accountability to the relevant
Assignor. If, under mandatory requirements of applicable law, the Collateral
Agent shall be required to make disposition of the Collateral within a period of
time which does not permit the giving of notice to the relevant Assignor as
hereinabove specified, the Collateral Agent need give such Assignor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. Each Assignor agrees to do or cause to
be done all such other acts and things as may be reasonably necessary to make
such sale or sales of all or any portion of the Collateral valid and binding and
in compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this
----------------
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF
ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE
AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Assignor hereby
further waives, to the extent permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross negligence
or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral Agent's
rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law in
order to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion thereof, and each Assignor, for itself and all
who may claim under it, insofar as it or they now or hereafter lawfully may,
hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title and interest, claim and
demand, either at law or in equity, of the relevant Assignor therein, and shall
be a perpetual bar both at law and in equity against such Assignor and against
any and all Persons claiming or attempting to claim the Collateral so sold,
optioned or realized upon, or any part thereof, from, through and under such
Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
-----------------------
Collateral Agent (or, to the extent the Pledge Agreement or any Additional
Security Document requires proceeds of collateral under such Security Document
to be applied in accordance with the provisions of this Agreement, the
Collateral Agent under such other Security Document) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows.
(i) first, to the payment of all amounts owing the Collateral Agent
of the type described in clauses (iii) and (iv) of the definition of
"Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding Primary
Obligations shall be paid to the Secured Creditors as provided in Section 7.4(e)
hereof, with each Secured Creditor receiving an amount equal to such outstanding
Primary Obligations or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share of the amount remaining to be
distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(e) hereof, with each Secured Creditor receiving an
amount equal to its outstanding Secondary Obligations or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its Pro Rata Share
of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and following
the termination of this Agreement
pursuant to Section 10.8(a) hereof, to the relevant Assignor or to whomever may
be lawfully entitled to receive such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the
Credit Document Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings and all Fees and (ii) in the case of the Other Obligations, all
amounts due under such Interest Rate Protection Agreements or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
attorneys' fees) and similar obligations and liabilities) and (z) "Secondary
Obligations" shall mean all Obligations other than Primary Obligations.
(c) When payments to Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) Each of the Secured Creditors, by their acceptance of the
benefits hereof, agrees and acknowledges that if the Lender Creditors are to
receive a distribution on account of undrawn amounts with respect to Letters of
Credit issued under the Credit Agreement (which shall only occur after all
outstanding Loans and Unpaid Drawings with respect to such Letters of Credit
have been paid in full), such amounts shall be paid to the Administrative Agent
under the Credit Agreement and held by it, for the equal and ratable benefit of
the Lender Creditors, as cash security for the repayment of Obligations owing to
the Lender Creditors as such. If any amounts are held as cash security pursuant
to the immediately preceding sentence, then upon the termination of all
outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Lender Creditors after
giving effect to the termination of all such Letters of Credit, if there remains
any excess cash, such excess cash shall be returned by the Administrative Agent
to the Collateral Agent for distribution in accordance with Section 7.4(a)
hereof.
(e) All payments required to be made hereunder shall be made (x) if
to the Lender Creditors, to the Administrative Agent under the Credit Agreement
for the account of the Lender Creditors, and (y) if to the Other Creditors, to
the trustee, paying agent or other similar
representative (each a "Representative") for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative for
the Other Creditors or, in the absence of such a Representative, upon the Other
Creditors for a determination (which the Administrative Agent and each
Representative for any Other Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Lender Creditors or the Other Creditors, as
the case may be. Unless it has actual knowledge (including by way of written
notice from a Lender Creditor or an Other Creditor) to the contrary, the
Administrative Agent and each Representative, in furnishing information pursuant
to the preceding sentence, and the Collateral Agent, in acting hereunder, shall
be entitled to assume that no Secondary Obligations are outstanding. Unless it
has actual knowledge (including by way of written notice from an Other Creditor)
to the contrary, the Collateral Agent, in acting hereunder, shall be entitled to
assume that no Interest Rate Protection Agreements or Other Hedging Agreements
are in existence.
(g) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the Obligations.
7.5. Remedies Cumulative. Each and every right, power and remedy
-------------------
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the other
Secured Debt Agreements or now or hereafter existing at law, in equity or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by the Collateral
Agent. All such rights, powers and remedies shall be cumulative and the exercise
or the beginning of the exercise of one shall not be deemed a waiver of the
right to exercise any other or others. No delay or omission of the Collateral
Agent in the exercise of any such right, power or remedy and no renewal or
extension of any of the Obligations shall impair any such right, power or remedy
or shall be construed to be a waiver of any Default or Event of Default or an
acquiescence thereof. No notice to or demand on any Assignor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Collateral
Agent to any other or further action in any circumstances without notice or
demand. In the event that the Collateral Agent shall bring any suit to enforce
any of its rights hereunder and shall be entitled to judgment, then in such suit
the Collateral Agent may recover reasonable expenses, including reasonable
attorneys' fees, and the amounts thereof shall be included in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
-----------------------------
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
---------
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents,
affiliates and servants (hereinafter in this Section 8.1 referred to
individually as "Indemnitee," and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all reasonable out-of-pocket
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement, any other Secured Debt Agreement or any other document executed in
connection herewith or therewith or in any other way connected with the
administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of (a) the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition, or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), (b) the violation of the laws of any country, state or
other governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage, in any case described in (b) above, to the extent the same relates to
the Collateral or the Lien created hereby), or (c) contract claim; provided that
--------
no Indemnitee shall be indemnified pursuant to this Section 8. 1 (a) for losses,
damages or liabilities to the extent caused by the gross negligence or willful
misconduct of such Indemnitee (as finally determined by a court of competent
jurisdiction). Each Assignor agrees that upon written notice by any Indemnitee
of the assertion of such a liability, obligation, damage, injury, penalty,
claim, demand, action, suit or judgment, the relevant Assignor shall assume full
responsibility for the defense thereof. Each Indemnitee agrees to promptly
notify the relevant Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other reasonable out-of-
pocket fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Collateral Agent's interest therein, whether
through judicial proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the Obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
Obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
-----------------------------------------------------
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all of the
other Obligations and notwithstanding the full payment of all the Notes issued
under the Credit Agreement, the termination of all Interest Rate Protection
Agreements and Other Hedging Agreements and all Letters of Credit and the
payment of all other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Administrative Agent" shall have the meaning provided in the recitals
of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower" shall have the meaning provided in the recitals of this
Agreement.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the UCC as in
effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor under each
Contract, including, without limitation, (i) any and all rights to receive and
demand payments under any or all Contracts, (ii) any and all rights to receive
and compel performance under any or all Contracts and (iii) any and all other
rights, interests and claims now existing or in the future arising in connection
with any or all Contracts.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreements or Other Hedging Agreements and any partnership
agreements, joint venture agreements, limited liability company agreements and
licensing agreements), but excluding any contract to the extent that the terms
thereof prohibit (after giving effect to any approvals or waivers) the
assignment of, or granting a security interest in, such contract (it being
understood and agreed, however, that notwithstanding the foregoing, all rights
to payment for money due or to become due pursuant to any such excluded contract
shall be subject to the security interests created by this Agreement).
"Copyrights" shall mean any United States copyright owned by any
Assignor, including any registrations of any Copyrights, in the United States
Copyright Office or any foreign equivalent office, as well as any application
for a copyright registration now or hereafter made by any Assignor with the
United States Copyright Office or any foreign equivalent office.
"Credit Agreement" shall have the meaning provided in the recitals of
this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time, or
both, would constitute an Event of Default.
"Documentation Agent" shall have the meaning provided in the recitals
of this Agreement.
"Documents" shall have the meaning provided in the UCC as in effect on
the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the
UCC as in effect on the date hereof in the State of New York, now or hereafter
owned by any Assignor and, in any event, shall include, but shall not be limited
to, all machinery, equipment, furnishings, fixtures and vehicles now or
hereafter owned by any Assignor and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit agreement and shall in any event include, without
limitation, any payment default on any of the Other Obligations after the
expiration of any applicable grace period.
"General Intangibles" shall have the meaning provided in the UCC as in
effect on the date hereof in the State of New York (and shall include all
partnership interests and all limited liability company and membership
interests).
"Goods" shall have the meaning provided in the UCC as in effect on the
date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the UCC as in effect
on the date hereof in the State of New York.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same, in all stages of production -- from raw materials through work-
in-process to finished goods -- and all products and proceeds of whatever sort
and wherever located and any portion thereof which may be returned, rejected,
reclaimed or repossessed by the Collateral Agent from any Assignor's customers,
and shall specifically include all "inventory" as such term is defined in the
UCC as in effect on the date hereof in the State of New York, now or hereafter
owned by any Assignor.
"Investment Property" shall have the meaning provided in the UCC as in
effect on the date hereof in the State of New York.
"Lender Creditors" shall have the meaning provided in the recitals of
this Agreement.
"Lenders" shall have the meaning provided in the recitals of this
Agreement.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any
trademarks, service marks and trade names now held or hereafter acquired by any
Assignor, including any registration of any trademarks and service marks in the
United States Patent and Trademark Office or in any equivalent foreign office
and any trade dress including logos and/or designs used by any Assignor.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations and indebtedness (including, without limitation, indemnities, fees
and interest thereon) of each Assignor to the Lender of Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with the
Credit Agreement and the other Credit Documents to which such Assignor is a
party (including all such obligations and indebtedness of such Assignor under
its Guaranty) and the due performance and compliance by such Assignor with all
of the terms, conditions and agreements contained in the Credit Agreement and
such other Credit Documents (all such obligations and
liabilities under this clause (i), except to the extent consisting of
obligations or indebtedness with respect to Interest Rate Protection Agreements
or Other Hedging Agreements, being herein collectively called the "Credit
Document Obligations"); (ii) the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of all obligations and
liabilities owing by such Assignor to the Other Creditors under, or with respect
to (including by reason of any Guaranty to which such Assignor is a party), any
Interest Rate Protection Agreement and Other Hedging Agreement, whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereafter arising, and the due performance and compliance by such
Assignor with all of the terms, conditions and agreements contained therein (all
such obligations and liabilities described in this clause (ii) being herein
collectively called the "Other Obligations"); (iii) any and all sums advanced by
the Collateral Agent in order to preserve the Collateral or preserve its
security interest in the Collateral; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
such Assignor referred to in clauses (i) and (ii) above, after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Collateral Agent of
its rights hereunder, together with reasonable attorneys' fees and court costs;
and (v) all amounts paid by any Indemnitee as to which such Indemnitee has the
right to reimbursement under Section 8.1 of this Agreement; it being
acknowledged and agreed that the "Obligations" shall include extensions of
credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the recitals of
this Agreement.
"Other Obligations" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Patents" shall mean any patent to which any Assignor now or
hereafter has title and any divisions or continuations thereof, as well as any
application for a patent now or hereafter made by any Assignor.
"Permits" shall mean any and all actions, approvals, certificates,
consents, waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights or licenses of or from any governmental authority or
agency.
"Primary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b) of
this Agreement.
"Proceeds" shall have the meaning provided in the UCC as in effect in
the State of New York on the date hereof or under other relevant law and, in any
event, shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Collateral Agent or
any Assignor from time to time with respect to any of the Collateral,
(ii) any and all payments (in any form whatsoever) made or due and payable to
any Assignor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the
UCC as in effect on the date hereof in the State of New York, now or hereafter
owned by any Assignor and, in any event, shall include, but shall not be limited
to, all of such Assignor's rights to payment for goods sold or leased or
services performed by such Assignor, whether now in existence or arising from
time to time hereafter, including, without limitation, rights evidenced by an
account, note, contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by such Assignor to secure the foregoing, (b)
all of any Assignor's right, title and interest in and to any goods, the sale of
which gave rise thereto, (c) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing, (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith, (e) all books, records, ledger cards, and invoices relating thereto,
(f) all evidences of the filing of financing statements and other statements and
the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers, (g) all credit information, reports and
memoranda relating thereto and (h) all other writings related in any way to the
foregoing.
"Representative" shall have the meaning provided in Section 7.4(e) of
this Agreement.
"Required Secured Creditors" shall mean (i) the Required Lenders (or,
to the extent required by Section 13.12 of the Credit Agreement, each of the
Lenders) under the Credit Agreement so long as any Credit Document Obligations
remain outstanding and (ii) in any situation not covered by the preceding
clause (i), the holders of a majority of the outstanding principal amount of the
Other Obligations.
"Requisite Creditors" shall have the meaning provided in Section 10.2
of this Agreement.
"Secondary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals of
this Agreement.
"Secured Debt Agreements" shall mean and include this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements and Other
Hedging Agreements.
"Syndication Agent" shall have the meaning provided in the recitals of
this Agreement.
"Termination Date" shall have the meaning provided in Section 10.8 of
this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
ARTICLE X
MISCELLANEOUS
10.1. Except as otherwise specified herein, all notices, requests,
demands or other communications to or upon the respective parties hereto shall
be deemed to have been duly given or made when delivered to the party to which
such notice, request, demand or other communication is required or permitted to
be given or made under this Agreement, addressed as follows:
(a) if to any Assignor, at the address set forth opposite such
Assignor's signature below;
(b) if to the Collateral Agent, at:
Bankers Trust Company
One Bankers Trust Plaza
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Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
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Fax. No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to any Lender Creditor, at such address as such Lender
Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this
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Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly effected thereby and the
Collateral Agent (with the written consent of the Required Secured Creditors);
provided, however, that any change, waiver, modification or variance affecting
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the rights and benefits of a single Class of Secured Creditors (and not all
Secured Creditors in a like or similar manner) shall require the written consent
of the
Requisite Creditors of such affected Class. For the purpose of this Agreement,
the term "Class" shall mean each of the two following classes of Secured
Creditors, i.e., whether (x) the Lender Creditors as holders of the Credit
---
Document Obligations or (y) the Other Creditors as the holders of the Other
Obligations. For the purpose of this Agreement, the term "Requisite Creditors"
of any Class shall mean each of (x) with respect to the Credit Document
Obligations, the Required Lenders and (y) with respect to the Other Obligations,
the holders of at least a majority of all Obligations outstanding from time to
time under the respective Interest Rate Protection Agreements or Other Hedging
Agreements.
10.3. Obligations Absolute. The Obligations of each Assignor hereunder
--------------------
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement; or (c) any amendment to or modification of any Secured Debt Agreement
or any security for any of the Obligations; whether or not such Assignor shall
have notice or knowledge of any of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon
----------------------
each Assignor and its successors and assigns (although no Assignor may assign
its rights and obligations hereunder except in accordance with the provisions of
the Secured Debt Agreements) and shall inure to the benefit of and be
enforceable by the Collateral Agent and the Secured Creditors and their
respective successors and assigns. All agreements, statements, representations
and warranties made by each Assignor herein or in any certificate or other
instrument delivered by such Assignor or on its behalf under this Agreement
shall be considered to have been relied upon by the Secured Creditors and shall
survive the execution and delivery of this Agreement and the other Secured Debt
Agreements regardless of any investigation made by the Secured Creditors or on
their behalf.
10. 5. Headings Descriptive. The headings of the several sections of
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this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
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THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein
-----------------
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of any Assignor under or with
respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this
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Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of
the respective Assignor, will promptly execute and deliver to such Assignor a
proper instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Commitment and all Interest Rate Protection Agreements and Other Hedging
Agreements have been terminated, no Note is outstanding (and all Loans have been
repaid in full), all Letters of Credit have been terminated and all Obligations
then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 9.02 of the Credit Agreement (other
than a sale to any Assignor or a Subsidiary thereof) or otherwise released at
the direction of the Required Secured Creditors and the proceeds of such sale or
sales or from such release are applied in accordance with the provisions of the
Credit Agreement, to the extent required to be so applied, such Collateral will
be sold free and clear of the Liens created by this Agreement and the Collateral
Agent, at the request and expense of the relevant Assignor, will duly assign,
transfer and deliver to such Assignor (without recourse and without any
representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that an Assignor desires that the Collateral Agent
take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 10.8(a) or (b), such Assignor shall deliver to
the Collateral Agent a certificate signed on behalf of such Assignor by a
principal executive officer of such Assignor stating that the release of the
respective Collateral is permitted pursuant to Section 10.8(a) or (b), as the
case may be.
10.9. Counterparts. This Agreement may be executed in any number of
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counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with each Assignor and the
Collateral Agent.
10.10. Severability. Any provision of this Agreement which is
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prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11. The Collateral Agent. The Collateral Agent will hold in
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accordance with this agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the Obligations
of the Collateral Agent as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement, are
only those expressly set forth in this Agreement and in Section 12 of the
Credit Agreement. The Collateral Agent shall act hereunder and thereunder on
the terms and conditions set forth herein and in Section 12 of the Credit
Agreement.
10.12. Additional Assignors. It is understood and agreed that any
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Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become an Assignor hereunder by executing a counterpart hereof and
delivering the same to the Collateral Agent.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Address:
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Three Imperial Promenade RC TRANSACTION CORP.,
Suite 600 as a Pledgor
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Telephone: By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Telecopier Title:
Three Imperial Promenade RCLLC ACQUISITION CORP.,
Suite 600 as a Pledgor
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Telephone: By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Telecopier Title:
Three Imperial Promenade RE:SOURCES CONNECTION LLC,
Suite 600 as a Pledgor
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Attention:
Telephone: By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Telecopier Title:
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Pledgee
By /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
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Title: