SECURITY AGREEMENT, dated July 1, 1999, made by the persons whose names appear
on the signature pages hereof as Grantors and Additional Grantors (as defined in
Section 21(c)), the "GRANTORS", and each, individually, a "GRANTOR"), to BANQUE
NATIONALE DE PARIS, ("BNP"), as agent (together with any successor agent
appointed pursuant to Article VII of the Credit Agreement, (as defined below)
the "AGENT") for the Secured Parties (as defined in the Credit Agreement).
PRELIMINARY STATEMENTS:
(1) International Rectifier Corporation (the "BORROWER"), is
party to a Credit Agreement dated as of July 1, 1999 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; the capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with certain Lender Parties party
thereto, Sanwa Bank California, as Syndication Agent and Banque Nationale de
Paris, as Sole Arranger, Issuing Bank and Administrative Agent.
(2) Each Grantor is the owner of the shares of stock or other
ownership interests set forth opposite such Grantor's name and as otherwise
described in Part A of Schedule I hereto and issued by the corporations or other
entities indicated therein (collectively, the "INITIAL PLEDGED SHARES"), the
indebtedness (whether or not evidenced by instruments) set forth opposite such
Grantor's name and as otherwise described in Part B of Schedule I hereto and
issued by the obligors indicated therein (collectively, the "INITIAL PLEDGED
INDEBTEDNESS"), the security entitlements (the "PLEDGED SECURITY ENTITLEMENTS")
described in Part C of Schedule I hereto and with respect to the financial
assets described, the securities intermediary named, and the securities account
referred to, therein and the commodity contracts (the "PLEDGED COMMODITY
CONTRACTS") described in Part D of Schedule I hereto and with respect to the
commodity intermediary named, and the commodity account referred to, therein.
(3) It is a condition precedent to the making of Advances by
the Lenders and the issuance of Letters of Credit by the Issuing Bank under the
Credit Agreement, that each of the Grantors shall have granted the assignment
and security interest and made the pledge and assignment contemplated by this
Agreement.
(4) Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. UNIFORM COMMERCIAL CODE") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and the Issuing Bank to issue Letters of
Credit under the Credit Agreement, each of the Grantors hereby agrees with the
Agent for its benefit and the ratable benefit of the other Secured Parties as
follows:
SECTION 1. GRANT OF SECURITY. Each of the Grantors hereby
assigns and pledges to the Agent for its benefit and the ratable benefit of the
other Secured Parties, and hereby grants to the Agent for its benefit and the
ratable benefit of the other Secured Parties, a
lien on and security interest in the following, in each case, as to each type
of property described below, whether now owned or hereafter acquired by such
Grantor, wherever located and whether now or hereafter existing
(collectively, the "COLLATERAL"):
(a) all of such Grantor's right, title and interest, in and to
all equipment in all of its forms (including, but not limited to all
steppers, dry etchers, wet etchers, difusion banks, implanters, metal
deposition tools, testers, probers, ovens, measurement tools, grinders
and cleaning equipment and all computer equipment and accessories), all
fixtures and all parts thereof and all accessions and additions thereto,
parts and appurtenances thereof, substitutions therefor and replacements
thereof (any and all such equipment, fixtures, parts, accessions,
additions, appurtenances, substitutions and replacements being the
"EQUIPMENT");
(b) all of such Grantor's right, title and interest, in and to
all inventory in all of its forms including, but not limited to, (i)
MOSFETs, IGBTs, Schottky diodes, fast- recovery diodes, high-voltage
integrated circuits, rectifiers, diodes, thyristors and modules for power
conversion processes, (ii) all raw materials and work in process
therefor, finished goods thereof and materials used or consumed in the
manufacture, production, preparation or shipping thereof, (iii) goods in
which such Grantor has an interest in mass or a joint or other interest
or right of any kind (including, without limitation, goods in which such
Grantor has an interest or right as consignee) and (iv) goods that are
returned to or repossessed or stopped in transit by such Grantor), and
all accessions thereto and products thereof and documents therefor (any
and all such inventory, accessions, products and documents being the
"INVENTORY");
(c) all of such Grantor's right, title and interest in and to
all accounts, contract rights, chattel paper, instruments, deposit
accounts and general intangibles and all other obligations of any kind,
whether or not arising out of or in connection with the sale or lease of
goods or the rendering of services, and whether or not earned by
performance (including, without limitation, any rights with respect to
workers' compensation or other deposits made by such Grantor and any
rights to receive tax refunds or other refunds, reimbursements and
payments from any federal, state or local government or any political
subdivision, agency or instrumentality thereof and rights to receive
payments under a subordinated promissory note from Silicon Power
Corporation), and all rights in and to all security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles or obligations (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles and
obligations, to the extent not referred to in clause (d), (e), (f), (g),
(h), (i), (j) or (k) of this Section 1, being the "RECEIVABLES", and any
and all such leases, security agreements and other contracts to the
extent not referred to in clause (e) of this Section 1, being the
"RELATED CONTRACTS");
(d) all of such Grantor's right, title and interest in and to
all of the following (collectively, the "SECURITY COLLATERAL"):
(i) the Initial Pledged Shares, together with the
certificates representing such Initial Pledged Shares, and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Initial Pledged Shares;
(ii) the Initial Pledged Indebtedness, together with the
instruments evidencing such Initial Pledged Indebtedness, all
security therefor and all interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
Initial Pledged Indebtedness;
(iii) the Pledged Security Entitlements and all dividends,
interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Pledged Security Entitlements;
(iv) all security entitlements from time to time carried
in any securities account, and all dividends, interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such security entitlements;
(v) all commodity contracts from time to time carried in
any commodities account, and all value, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
commodity contracts;
(vi) all additional shares of stock of any issuer of any
Initial Pledged Shares or of any other Person, from time to time
acquired by such Grantor in any manner, together with the
certificates representing such additional shares, and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares (together with the Initial
Pledged Shares, the "PLEDGED SHARES");
(vii) all additional indebtedness from time to time owed
to such Grantor by any obligor of the Initial Pledged Indebtedness
or any other Person (whether or not evidenced by instruments) and
the instruments, if any, evidencing such indebtedness, all
security therefor and all interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all such
indebtedness (together with the Initial Pledged Indebtedness, the
"PLEDGED INDEBTEDNESS"); and
(viii) all investment property, as defined in the N.Y.
Uniform Commercial Code (including, without limitation, all (A)
securities, whether certificated or uncertificated, (B)
security entitlements, as defined in Section 8-102(a)(17) of
the N.Y. Uniform Commercial Code or, in the case of any U.S.
Treasury book-entry securities, as defined in 31 C.F.R. Section
357.2, or, in the
case of any U.S. federal agency book-entry securities, as
defined in the corresponding U.S. federal regulations governing
such book-entry securities, (C) securities accounts, (D) commodity
contracts and (E) commodity accounts) in which such Grantor has or
acquires from time to time any right, title or interest in any
manner, and the certificates or instruments, if any, representing
or evidencing such investment property, and all dividends,
interest, distributions, value, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
investment property;
(e) all of such Grantor's right, title and interest in and to
each of the agreements set forth on Schedule II hereto and each Hedge
Agreement, Intercompany Note, Non-U.S. Security Agreement and Non-U.S.
Guaranty to which such Grantor is now or may hereafter become a party, or
in which such Grantor may have rights, including the right to receive
money or other distributions in respect thereof, in each case as such
agreements may be amended, supplemented or otherwise modified from time
to time (collectively, the "ASSIGNED AGREEMENTS"), including, without
limitation, (i) all rights of such Grantor to receive moneys due and to
become due under or pursuant to the Assigned Agreements, (ii) all rights
of such Grantor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements or any instruments,
opinions or documents delivered pursuant thereto, (iii) all rights of
such Grantor in and to all mortgages, security agreements, leases or
other contracts securing or otherwise relating to the Assigned
Agreements, (iv) all claims of such Grantor for damages arising out of or
for breach of or default under the Assigned Agreements and (v) all rights
of such Grantor to terminate any Assigned Agreement, to perform
thereunder and to compel performance and otherwise exercise all remedies
thereunder (all such Collateral being the "AGREEMENT COLLATERAL");
(f) all of such Grantor's right, title and interest in and to
all of the following (collectively, the "ACCOUNT COLLATERAL"):
(i) all Blocked Accounts (as hereinafter defined), all
funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing the Blocked Accounts;
(ii) all other deposit accounts of such Grantor, all
funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing such deposit
accounts;
(iii) all Collateral Investments (as hereinafter defined)
from time to time and all certificates and instruments, if any,
from time to time representing or evidencing the Collateral
Investments;
(iv) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time hereafter
delivered to or otherwise possessed or required to be delivered to
or otherwise possessed, by the Agent for or on behalf
of such Grantor, including, without limitation, those delivered
to or possessed in substitution for or in addition to any or
all of the then existing Account Collateral; and
(v) all interest, dividends, distributions, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of the then existing Account Collateral.
(g) all of such Grantor's right, title and interest in and to
all general intangibles (other than general intangibles for money due or
to become due, which are covered by clause (c) of this Section 1, and
other than any of the Intellectual Property Collateral (as hereinafter
defined), which is covered by clauses (h), (i), (j) and (k) of this
Section 1), including, but not limited to, (i) all partnership, corporate
and other interests in and to any Person (other than any Security
Collateral), (ii) all governmental permits, licenses (and any subsequent
renewals thereof), franchises, registrations, authorizations and
approvals, in each case to the extent that the grant of a security
interest therein is not prohibited by the applicable governmental
authority, (iii) all certificates, records, circulation lists, subscriber
lists, advertiser lists, supplier lists, customer lists, customer and
supplier contracts, sales orders, purchasing records and other rights,
privileges and goodwill obtained or used in connection with the
Collateral and (iv) all sales literature, promotional literature,
processes, practices, techniques, procedures, trade secrets, know-how and
other information and data (including, without limitation, all designs,
drawings, compilations of data, specifications, assembly procedures,
software and firmware);
(h) all of such Grantor's right, title and interest in and to
all copyrights, whether statutory or common law, and whether or not the
underlying works of authorship have been published, all copyright
registrations and copyright applications and all works of authorship and
other intellectual property rights therein, all copyrights of works based
on, incorporated in, derived from or relating to works covered by such
copyrights, and all rights to make and exploit all derivative works based
on or adopted from works covered by such copyrights (including without
limitation each registration and application set forth opposite the name
of such Grantor on Part A of Schedule IV) and any extensions or renewals
thereof, including, but not limited to, (i) the right to print, publish
and distribute any of the foregoing, (ii) the right to ▇▇▇ or otherwise
recover for any and all past, present and future infringements,
misappropriations and other violations thereof, (iii) all income,
royalties, damages, settlements and other payments now and hereafter due
and/or payable with respect thereto (including, without limitation,
payments under all licenses entered into in connection therewith, and
damages, settlements and payments for past or future infringements
thereof) and (iv) all rights corresponding thereto throughout the world
and all other rights of such Grantor of any kind whatsoever accruing
thereunder or pertaining thereto (all such copyrights, works of
authorship, copyrights of works, rights to make or exploit, copyright
registrations, copyright applications, extensions and renewals being the
"COPYRIGHTS");
(i) all of such Grantor's right, title and interest in and to
all trademarks, service marks, trade names, corporate names, company
names, business names, fictitious
names, trade dress, service marks, trade styles, logos and other
designs or sources of business identifiers or other indicia of trade
origin, all trademark and service ▇▇▇▇ registrations and applications
for trademark or service ▇▇▇▇ registrations (including, without
limitation, each registration and application set forth opposite the
name of such Grantor on Part B of Schedule IV hereto) and any and all
extensions and renewals of or with respect to any of the foregoing,
including, but not limited to, (i) the right to ▇▇▇ or otherwise
recover for any and all past, present and future infringements,
misappropriations and other violations thereof, (ii) all income,
royalties, damages, settlements and other payments now and hereafter
due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection
therewith, and damages, settlements and payments for past or future
infringements thereof) and (iii) all rights of such Grantor
corresponding thereto throughout the world and all other rights of
such Grantor of any kind whatsoever accruing thereunder or pertaining
thereto, together in each case with the goodwill of the business
connected with the use of, and symbolized by, any or all of the
foregoing throughout the world (all such trademarks, service marks,
trade names, corporate names, company names, business names,
fictitious names, trade dress, service marks, trade styles, logos,
designs, sources of business identifiers, indicia of trade origin,
registrations, applications, extensions and renewals (but excluding
any United States Intent to Use trademark application prior to the
filing and acceptance of a Statement of Use or an Amendment to Allege
Use in connection therewith to the extent that a valid security
interest may not be taken in such an Intent to Use trademark
application under applicable law), being the "TRADEMARKS");
(j) all of such Grantor's right, title and interest in and to
all patents, patent applications and patentable inventions (including,
without limitation, each patent and patent application set forth opposite
the name of such Grantor on Part C of Schedule IV hereto), including, but
not limited to, (i) all inventions and improvements described and claimed
therein, (ii) the right to ▇▇▇ or otherwise recover for any
misappropriations thereof, (iii) all income, royalties, damages,
settlements and other payments now and hereafter due and/or payable with
respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages, settlements
and payments for past and future infringements thereof) and (iv) all
rights corresponding thereto throughout the world and all reissues,
divisions, continuations, continuations-in-part, provisional
applications, substitutes, renewals and extensions thereof, all
improvements thereon and all other rights of such Grantor of any kind
whatsoever accruing thereunder or pertaining thereto (all such patents,
patent applications, patentable inventions, reissues, divisions,
continuations, continuations-in-part, provisional applications,
substitutes, renewals, extensions, improvements and other rights being
the "PATENTS");
(k) all of such Grantor's right, title and interest in and to
all license agreements with any other Person in connection with any of
the Copyrights, Trademarks or Patents, or such other Person's copyrights
or works of authorship, trade names, trademarks or patents, whether such
Grantor is a licensor or a licensee under any such license agreement, and
any right to prepare for sale, sell and advertise for sale all
Inventory now or hereafter owned by such Grantor and now or hereafter
covered by such licenses (all such license agreements and rights being
the "LICENSES" and, together with the Copyrights, Trademarks and
Patents, the "INTELLECTUAL PROPERTY COLLATERAL"); and
(l) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (k) of this Section 1) and, to the
extent not otherwise included, all (i) payments under insurance (whether
or not the Agent is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral and (ii) cash.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
in the case of each Grantor, the payment of all Obligations of such Grantor now
or hereafter existing under or in respect of the Loan Documents, whether for
principal, reimbursement obligations, interest, premiums, penalties, fees,
indemnifications, expenses or otherwise (all such Obligations secured hereby
being the "SECURED OBLIGATIONS"). Without limiting the generality of the
foregoing, this Agreement secures as to each Grantor the payment of all amounts
that constitute part of the Secured Obligations and that would be owed by such
Grantor to the Agent, or any of the other Secured Parties under the Loan
Documents but for the fact that such Secured Obligations are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Grantor or any other Grantor.
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein
to the contrary notwithstanding, (a) each of the Grantors shall remain liable
under the contracts and agreements included in the Collateral to which it is a
party to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Agent of any of its rights hereunder shall not
release any of the Grantors from any of their respective duties or obligations
under the contracts and agreements included in the Collateral to which it is a
party, and (c) neither of the Agent, nor any of the other Secured Parties shall
have any obligation or liability under the contracts and agreements included in
the Collateral by reason of this Agreement or any other Loan Document, nor shall
any of the Secured Parties be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. DELIVERY AND CONTROL OF SECURITY COLLATERAL, ACCOUNT
COLLATERAL AND AGREEMENT COLLATERAL. (a) Except as provided in section 4(c)
below, all certificated securities and all instruments representing or
evidencing any Grantor's interest in any Security Collateral, Account Collateral
or Agreement Collateral (and, to the extent requested by the Agent, any other
Collateral) shall be delivered to and held by or on behalf of the Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Agent. Upon the occurrence and during
the continuation of an Event of Default, Agent shall have the right and without
notice to any of the Grantors, to transfer to or register in the name of the
Agent or any of its nominees any or all of the Security Collateral and the
Account Collateral, subject only to the revocable rights specified in Section
15(a). In addition, the Agent shall have
the right at any time to exchange certificates or instruments representing or
evidencing Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
(b) With respect to any Security Collateral which is an
uncertificated security (as defined in the NYUCC) registered to the Grantor or
held by the Grantor other than as a security entitlement, the Grantor shall
cause the issuer thereof to either (i) register the Agent as owner of such
security or (ii) to agree in writing with such Grantor and the Agent that such
issuer will comply with instructions originated by the Agent with respect to
such security without further consent of such Grantor, such agreement to be in
form and substance satisfactory to the Agent.
(c) With respect to any Security Collateral that constitutes a
security entitlement, the applicable Grantor shall cause the securities
intermediary with respect to such security entitlement either (i) to identify in
its records the Agent as the entitlement holder (as defined in the NYUCC) with
respect to such security entitlement or (ii) to agree in writing with such
Grantor and the Agent that such securities intermediary will comply with
entitlement orders as defined in the NYUCC originated by the Agent without
further consent of such Grantor, such agreement to be in form and substance
satisfactory to the Agent.
(d) With respect to any Security Collateral that constitutes a
commodity contract, the applicable Grantor shall cause the commodity
intermediary with respect to such commodity contract to agree in writing with
such Grantor and the Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the Agent
without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Agent.
(e) With respect to any Security Collateral that constitutes a
securities account or a commodity account, the applicable Grantor will, in the
case of a securities account, comply with subsection (c) of this Section 4 with
respect to all security entitlements carried in such securities account and, in
the case of a commodity account, comply with subsection (d) of this Section 4
with respect to all commodity contracts carried in such commodity account.
SECTION 5. MAINTAINING THE BLOCKED ACCOUNTS. So long as any
Advance or any other Obligation of any Loan Party under or in respect of any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding,
any Secured Hedge Agreement shall be in effect or any Lender Party shall have
any Commitment under the Credit Agreement:
(a) Except as permitted by the Credit Agreement, each Grantor
shall maintain deposit accounts ("BLOCKED ACCOUNTS") only with banks
("BLOCKED ACCOUNT BANKS") that have either (i) in case of deposit
accounts located in states other than California, entered into letter
agreements in substantially the form of Exhibit A-1 (or such other form
as the Agent shall agree) with such Grantor and the Agent ("BLOCKED
ACCOUNT LETTERS"), or (ii) in the case of deposit accounts located in
California, received a notice in substantially the form of Exhibit A-2.
(b) Each Grantor shall immediately instruct each Person
obligated at any time to make any payment to such Grantor for any reason
(an "OBLIGOR") to make such payment to a Blocked Account and shall cause
such payment received by such Grantor to be deposited in a Blocked
Account. If an Event of Default shall have occurred and be continuing,
each Grantor shall, at the request of the Agent, pay to the Agent for
deposit in the Blocked Account designated by the Agent, at the end of
each Business Day, all proceeds of Collateral. So long as an Event of
Default shall not have occurred and be continuing or if the Agent shall
not have made the request referred to in the immediately preceding
sentence, such Grantor may operate the Blocked Account in accordance with
its past business practice.
(c) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by such
Grantor or any Blocked Account Bank, such Grantor shall immediately
notify all Obligors that were making payments to such Blocked Account to
make all future payments received by such Grantor and shall cause all
future payments to be deposited in another Blocked Account. Such Grantor
agrees to terminate any or all Blocked Accounts and Blocked Account
Letters upon request by the Agent upon non-compliance, or the Agent's
reasonable expectation of non-compliance, by such Blocked Account Bank.
SECTION 6. RELEASE OF AMOUNTS. So long as no Default shall
have occurred and be continuing, the Agent will pay and release to the Borrower
or at its order and at the request of the Borrower, the amount, if any, by which
the credit balance of the Blocked Accounts exceeds all amounts then due and
payable, or required to be held in the Blocked Accounts, under the Loan
Documents.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each of the
Grantors represents and warrants as follows:
(a) All of the Equipment and Inventory of such Grantor are
located at the places specified on Schedule III hereto or at such places
as are permitted by Section 9. The principal place of business and the
chief executive office of such Grantor and the office where such Grantor
keeps its records concerning the Receivables, and the original copies of
each Assigned Agreement and all originals of all Related Contracts and
all chattel paper, if any, that evidences Receivables (other than those
delivered to the Agent) are located at the address listed below the name
of such Grantor on the signature pages hereof or at such places as are
permitted by Section 12(a) or, in the case of any Additional Collateral
Grantor, at the address listed below the name of such Additional
Collateral Grantor on its Security Agreement Supplement (as defined in
Section 21(c)). Such Grantor has delivered to the Agent original copies
of all Assigned Agreements, all originals of all chattel paper that
evidence Receivables, and all original certificates or instruments
representing or evidencing any such Collateral. None of the Receivables
or Agreement Collateral is evidenced by a promissory note or other
instrument that has not been delivered to the Agent.
(b) Except as expressly permitted by the Credit Agreement, and
the other Loan Documents and subject to limitations in the title acquired
by the Grantor, such Grantor is the legal and beneficial owner of the
Collateral of such Grantor free and clear of any Lien, except for the
Liens and security interests created under this Agreement and Permitted
Liens. No effective financing statement or other instrument similar in
effect covering all or any part of such Collateral or listing such
Grantor or any of its Subsidiaries or any trade name of such Grantor or
any of its Subsidiaries as debtor is on file in any recording office,
except such as may have been filed in favor of the Agent relating to the
Loan Documents or may have been filed in connection with liens permitted
by the Credit Agreement. Each Grantor has the trade names set forth
below its name on Schedule IV hereto.
(c) Such Grantor has exclusive possession and control of the
Equipment and Inventory (other than equipment and inventory that is in
possession or control of any carrier, repairmen or warehousemen or other
Person in the ordinary course of business) of such Grantor.
(d) The Pledged Shares owned by such Grantor have been duly
authorized and validly issued and are fully paid and non-assessable. The
Pledged Indebtedness held by such Grantor has been duly authorized,
authenticated or issued and delivered, is the legal, valid and binding
obligation of the issuers thereof and as of the date hereof is not in
default.
(e) The Initial Pledged Shares owned by such Grantor constitute
the percentage of the issued and outstanding shares of stock of the
issuers thereof indicated on Schedule I hereto as of the date hereof.
The Initial Pledged Indebtedness constitutes all of the outstanding
indebtedness owed to such Grantor by the issuers thereof as of the date
hereof.
(f) The jurisdiction (for purposes of Section 8-110(c) of
the N.Y. Uniform Commercial Code) of the securities intermediary that
maintains the securities account carrying the Pledged Security
Entitlements is California. The jurisdiction (for purposes of Section
9-103(6)(e) of the N.Y. Uniform Commercial Code) of the commodity
intermediary that maintains the commodity account carrying the Pledged
Commodity Contracts is California.
(g) The Assigned Agreements listed on Schedule II hereto to
which such Grantor is a party, true and complete copies of which have
been furnished to each Secured Party, (i) have been duly authorized,
executed and delivered by the Grantor and each other Person party
thereto, (ii) as of the date hereof, have not been amended, supplemented
or otherwise modified, and are in full force and effect, and (iii) are
binding upon and enforceable against such Grantor and each other Person
party thereto in accordance with their terms. There exists no default
under any Assigned Agreement to which such Grantor is a party by such
Grantor or, to the knowledge of such Grantor, any other Person party
thereto. Each party to the Assigned Agreements, to which such Grantor is
a party (other than the Grantors), has executed and delivered to such
Grantor a
consent and agreement, in substantially the form of Exhibit B hereto
(or otherwise in form and substance satisfactory to the Agent),
consenting to the assignment of each of the Assigned Agreements to
which such Grantor is now or may hereafter become a party and of the
rights and interest of such Grantor thereunder to the Agent pursuant
to this Agreement from each of the other Persons party to each such
Assigned Agreement from which such consent and agreement is necessary
or in the judgment of the Agent advisable, duly executed by such
Person.
(h) Except as permitted by the Credit Agreement, such Grantor
has no deposit accounts other than the Blocked Accounts listed on
Schedule V hereto (or such other Blocked Accounts opened after the date
hereof with Blocked Account Banks that have entered in a Blocked Account
Letter with such Grantor). Each of the Grantors has instructed all
existing Obligors to make all payments to a Blocked Account.
(i) Except as otherwise permitted by the Credit Agreement or
the other Loan Documents, this Agreement, the pledge of the Security
Collateral pursuant hereto and the pledge and assignment of the
certificates representing the Account Collateral pursuant hereto create a
valid and perfected first priority security interest in the Collateral of
such Grantor that can be perfected by the filings and deliveries required
hereby securing the payment of the Secured Obligations of such Grantor,
and all filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken. Such Grantor is the
legal and beneficial owner of the Collateral of such Grantor, free and
clear of any Lien, except for the liens and security interests created or
permitted under this Agreement and the other Loan Documents and subject
to any limitation in title acquired by such Grantor.
(j) Set forth in Part A of Schedule IV hereto is a complete and
accurate list, as of the date of this Agreement (or, in the case of any
of the Additional Grantors, as of the date of the Security Agreement
Supplement pursuant to which such Additional Grantor became a party to
this Agreement) and as of the date of any amendment or supplement to
Schedule IV hereto of all copyright registrations and copyright
applications owned by such Grantor, showing, as of such date, the
registration number and date of registration therefor or the application
number and date of application therefor, respectively. Set forth in Part
B of Schedule IV hereto is a complete and accurate list as of the date of
this Agreement (or, in the case of any of the Additional Grantors, as of
the date of the Security Agreement Supplement pursuant to which such
Additional Grantor became a party to this Agreement) and as of the date
of any amendment or supplement to Schedule IV hereto of all trademark and
service ▇▇▇▇ registrations and all trademark and service ▇▇▇▇
applications owned by such Grantor, showing, as of such date, the
jurisdiction of registration or application thereof, the registration
number and date of registration thereof or the application number and
date of application therefor, respectively. Set forth in Part C of
Schedule IV hereto is a complete and accurate list as of the date of this
Agreement (or, in the case of any of the Additional Grantors, as of the
date of the Security Agreement Supplement pursuant to which such
Additional Grantor became a party to this Agreement) and as of the date
of any amendment or supplement to Schedule IV hereto of all patents and
all patent applications owned by such Grantor, showing, as of such date,
the patent number thereof and date of the patent or the application
number and date of application therefor, respectively, and the date of
expiration thereof.
(k) As of the date hereof, all of the copyright registrations,
trademark or service ▇▇▇▇ registrations and patents of such Grantor set
forth on Schedule IV hereto are subsisting and have not been adjudged
invalid, unregistrable or unenforceable, in whole or in part, and to such
Grantor's knowledge, are valid, registrable and enforceable. As of the
date hereof, all of the copyright applications, trademark or service ▇▇▇▇
applications, and patent applications of such Grantor set forth to the
knowledge of such Grantor, on Schedule IV hereto are pending and have not
been abandoned. As of the date hereof, all of the Licenses of such
Grantor are subsisting and have not been adjudged invalid or
unenforceable, in whole or in part, and are valid and enforceable. As of
the date hereof, such Grantor is not aware of any use of any of the items
of Intellectual Property Collateral which would be expected to result in
such item becoming subject to a material claim of infringement by a third
party or becoming invalid or unenforceable in any respect, including
unauthorized uses by third parties. Except as listed on Schedule VI, as
of the date hereof, such Grantor has not granted any license, release,
covenant not to ▇▇▇, or nonassertion assurance to or in favor of any
Person with respect to any of the Intellectual Property Collateral.
(l) No consent of any other Person and no authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or any other Person except for
the consents, authorizations, approvals, actions, notices and filings
listed on Schedule 4.01(d) to the Credit Agreement, all of which have
been duly obtained, taken, given or made and are in full force and effect
is required (i) for the grant by such Grantor of the assignment and
security interest granted hereby, for the pledge by such Grantor of the
Security Collateral pursuant hereto or for the execution, delivery or
performance of this Agreement by such Grantor, (ii) for the perfection or
maintenance of the pledge, assignment and security interest created
hereunder (including the first priority nature of such pledge, assignment
and security interest), except for the filing of financing and
continuation statements under the Uniform Commercial Code and the filing
of the Collateral Assignment of Security Interest in Trademarks - Short
Form, in substantially the form of Exhibit D-1 hereto and the Collateral
Assignment of Security Interest in Patents - Short Form, in substantially
the form of Exhibit D-2 hereto, in each case, in the United States Patent
and Trademark Office, which financing statements, Collateral Assignment
of Security Interest in Trademarks - Short Form and Collateral Assignment
of Security Interest in Patents - Short Form have been duly filed or will
have been duly filed within the time period specified therefor in Section
5.01(j) of the Credit Agreement, or (iii) for the exercise by the Agent
of its voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except
as may be required in connection with the disposition of any portion of
the Security Collateral by laws affecting the offering and sale of
securities generally.
(m) The Inventory, if any, that has been produced by such
Grantor or any of its Subsidiaries has been produced by such Grantor or
such Subsidiaries in compliance with all requirements of the Fair Labor
Standards Act.
(n) Such Grantor has independently and without reliance upon
any Secured Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter
into this Agreement, and such Grantor has established adequate means of
obtaining from any other Loan Parties on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely
familiar with, the financial condition, operations, properties and
prospects of such other Loan Parties.
SECTION 8. FURTHER ASSURANCES. (a) Each of the Grantors
agrees that from time to time, at the expense of such Grantor, such Grantor
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that the Agent
may request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted hereby (including, without
limitation, the first priority nature thereof) or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each of the
Grantors shall: (i) at the reasonable request of the Agent, ▇▇▇▇ conspicuously
each document included in the Inventory of such Grantor and each chattel paper,
Related Contract and Assigned Agreement of such Grantor included in the
Collateral and each of its records pertaining to the Collateral, with a legend,
in form and substance satisfactory to the Agent, indicating that such document,
chattel paper, Related Contract, Assigned Agreement or other Collateral is
subject to the security interest granted hereby; (ii) if any Collateral shall be
evidenced by a promissory note or other instrument or chattel paper, deliver and
pledge to the Agent for its benefit and the ratable benefit of the other Secured
Parties such note or instrument or chattel paper duly indorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Agent; (iii) deliver and pledge to the Agent for
its benefit and the ratable benefit of the other Secured Parties certificates
representing the Pledged Shares accompanied by undated stock powers executed in
blank and evidence that all other action that the Agent may deem necessary or
desirable in order to perfect and protect the liens and security interests
created under this Agreement has been taken; and (iv) execute and file such
financing or continuation statements, or amendments thereto, and such other
instrumens or notices, as may be necessary or desirable, or as the Agent may
request, in order to perfect and preserve the pledge, assignment and security
interests granted or purported to be granted hereunder.
(b) Each of the Grantors hereby authorizes the Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of such
Grantor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Each of the Grantors shall furnish to the Agent from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the Agent
may reasonably request, all in reasonable detail.
(d) The Borrower agrees to cause each of its Subsidiaries to
maintain borrowings under its Intercompany Note to the extent required by
applicable law to maintain the enforceability of the Intercompany Note and
Guaranty of such Subsidiary.
SECTION 9. AS TO EQUIPMENT AND INVENTORY. (a) Each of the
Grantors shall keep its Equipment and Inventory (other than Inventory sold in
the ordinary course of business) and its principal place of business or chief
executive office at the locations specified therefor in Section 7(a) or, upon 15
days' prior written notice to the Agent, at such other locations in
jurisdictions where all action required by Section 8 shall have been taken with
respect to such Equipment and Inventory and its principal place of business or
chief executive office; PROVIDED, HOWEVER, notwithstanding anything contained in
this agreement to the contrary, the Grantors may allow office equipment with an
aggregate value not to exceed $1,000,000 to be kept at the residences of its
employees or agents.
(b) Each of the Grantors shall cause the Equipment to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted with such Grantor's past practices, and
shall forthwith, or in the case of any loss or damage to the Equipment as soon
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable to such end and in accordance with such Grantor's past
practices. Each of the Grantors shall promptly furnish to the Agent a statement
respecting any material loss or damage to the Equipment of such Grantor.
(c) Each of the Grantors shall pay promptly when due all
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including, without limitation, claims for labor, materials
and supplies) against, the Equipment and Inventory. In producing the Inventory,
such Grantor shall comply with all requirements of the Fair Labor Standards Act.
(d) Upon the Agent's request at any time after the occurrence
and during the continuance of an Event of Default or, in any event, upon such
request as may be made once annually, each Grantor shall furnish to the Agent
and each of the Secured Parties a report detailing material changes in the
amount and condition of the Equipment, including purchases, depreciation, sales
and losses.
(e) Not more than once each year or after the occurrence and
during the continuance of any Event of Default promptly upon the request of the
Agent, each Grantor shall deliver to the Agent such warehouse receipts, bills of
lading and other documents of title with respect to Inventory and Equipment as
are requested, together with copies of all invoices with respect to the
Inventory and Equipment.
SECTION 10. AS TO THE INTELLECTUAL PROPERTY COLLATERAL. (a)
Each of the Grantors hereby agrees that:
(i) Grantor shall promptly at the end of each fiscal quarter
in which it files any copyright application with the United States
Copyright Office or any other applicable filing or recording office
therefor or acquiring any copyright application or registration,
deliver to the Agent (A) written notice thereof, and upon the
reasonable request of the Agent, a copy of the application for
copyright registration in respect thereof, all Copyright documentation
related thereto, all correspondence to and from the United States
Copyright Office relating thereto and, if applicable, the certificate
of registration for any such acquired copyright, (B) a Collateral
Assignment of Security Interest in Copyrights - Short Form, in
substantially the form of Exhibit D-3 hereto for recordation in the
United States Copyright Office, duly executed by such Grantor,
together with such other instruments or documents as may be necessary
or as the Agent may deem desirable in order to perfect and protect the
pledge, assignment and security interest granted or purported to be
granted hereunder in such Intellectual Property Collateral and (C)
such revisions and updates to Part A of Schedule IV as are necessary
to reflect such additional copyrights, copyright registrations or
copyright applications;
(ii) Grantor shall promptly at the end of each fiscal quarter in
which it files any trademark or service ▇▇▇▇ or patent application with
the United States Patent and Trademark Office or any other applicable
filing or recording office therefor or acquiring any trademark or service
▇▇▇▇ registration or patent or any trademark or service ▇▇▇▇ or patent
application, such Grantor shall deliver to the Agent (A) written notice
thereof, and the certificate of registration or patent for any such
acquired trademark or service ▇▇▇▇ or patent, and in the case of
trademarks or service marks, and upon the reasonable request of the
Agent, a copy of the application for trademark or service ▇▇▇▇
registration and all correspondence to and from the United States Patent
and Trademark Office relating thereto (B) a Collateral Assignment of
Security Interest in Patents - Short Form, in substantially the form of
Exhibit D-2 hereto, or a Collateral Assignment of Security Interest in
Trademarks - Short Form, in substantially in the form of Exhibit D-1
hereto, as applicable, for recordation in the United States Patent and
Trademark Office, duly executed by such Grantor, together with such other
instruments or documents as may be necessary or as the Agent may deem
desirable in order to perfect and protect the pledge, assignment and
security interest granted or purported to be granted hereunder in such
Intellectual Property Collateral (provided, however, no security interest
in any United States Intent to Use trademark application shall be
assigned prior to the filing and acceptance of a Statement of Use or an
Amendment to Allege Use), (C) such revisions and updates to Part B of
Schedule IV as are necessary to reflect such additional trademarks or
service marks, trademark or service ▇▇▇▇ applications or trademark or
service ▇▇▇▇ registrations, (D) filing and acceptance of a Statement of
Use or an Amendment to Allege Use in a United States Intent to Use
trademark application and (E) such revisions and updates to Part C of
Schedule IV as are necessary to reflect such additional patents, patent
applications, and patent registrations.
(b) Each of the Grantors hereby agrees to take, at its sole
expense, all actions that are reasonably necessary or in the commercially
reasonable opinion of the Agent advisable (including, without limitation,
actions in respect of the United States Patent and Trademark Office or the
United States Copyright Office or in any court or by or before any other
governmental authority) to (i) maintain each of its copyright registrations,
trademark or service ▇▇▇▇ registrations and patents (including, without
limitation, maintaining the quality of any and all products or services used or
provided in connection with any of such Intellectual Property
Collateral, consistent with the quality of the products and services of the
Borrower and its Subsidiaries as of the date of this Agreement, as may be
necessary to preserve its rights in such Trademarks, and requiring that all
licensed users of any of such Intellectual Property Collateral use such
consistent standards of quality, as may be necessary to preserve its right in
such Trademarks), (ii) pursue each of its copyright applications, trademark
or service ▇▇▇▇ applications and patent applications now or hereafter
included in its Intellectual Property Collateral, including, without
limitation, the filing of claims, amendments and responses to office actions
issued by the United States Patent and Trademark Office, the filing of
affidavits under Section 8 and Section 15 of the United States Trademark Act,
the filing of renewal applications under Section 9 of the United States
Trademark Act, the filing of divisional, continuation, continuation-in-part
and substitute applications, the filing of applications for reissue, renewal
or extensions, the payment of maintenance fees and the participation in
interference, reexamination, opposition, cancellation, infringement and
misappropriation proceedings and (iii) advise the Agent of the initiation by
any Person of an interference, reexamination, opposition, cancellation,
infringement or misappropriation proceeding in connection with any of its
Intellectual Property Collateral. Nothing in this Agreement shall limit or
restrict the right or ability of any of the Grantors to decide or elect not
to maintain any of its copyright registrations, trademark or service ▇▇▇▇
applications and patents, or not to pursue any of its copyright applications,
trademark or service ▇▇▇▇ applications and patent application now or
hereafter included in its Intellectual Property Collateral, when it is
reasonably determined by such Grantor that such maintenance or further
pursuit is not commercially reasonable.
(c) Each of the Grantors hereby agrees to continue (i) to use
proper statutory notice from time to time in connection with its use of each of
its Copyrights and Trademarks and to make commercially reasonable efforts to use
proper statutory notice in connection with each of its patents and (ii)
consistent with past practice, to enforce its rights with respect to
Intellectual Property Collateral against infringers where it is commercially
reasonable to do so.
(d) Each of the Grantors hereby agrees to notify the Agent on a
quarterly basis (i) if any item of its Intellectual Property Collateral has been
determined to have become abandoned or dedicated to the public or (ii) of any
final non appealable determination or upon obtaining knowledge of the
institution of any proceeding (including, without limitation, the institution of
any proceeding in the United States Patent and Trademark Office or any court)
regarding any item of the Intellectual Property Collateral.
SECTION 11. INSURANCE. (a) Each of the Grantors shall, at its
own expense, maintain insurance with respect to the Equipment and Inventory in
such amounts, against such risks, in such form and with such insurers, as shall
be satisfactory to the Agent from time to time. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Agent and
such Grantor as their interests may appear, and each policy for property damage
insurance shall provide for all losses except for losses of less than $500,000
per occurrence), to be paid directly to the Agent. Each such policy shall in
addition (i) name the Agent as an additional insured thereunder (without any
representation or warranty by or obligation upon the Agent) as its interests may
appear, (ii) contain the agreement by the insurer that any loss thereunder shall
be payable to the Agent notwithstanding any action, inaction or breach of
representation or warranty by such Grantor, (iii) provide that there shall be no
recourse against the Agent for
payment of premiums or other amounts with respect thereto and (iv) provide
that at least ten days' prior written notice of cancellation or of lapse
shall be given to the Agent by the insurer. Each of the Grantors shall, if
so requested by the Agent, deliver to the Agent original or duplicate
policies of such insurance and, as often at the Agent may request, a report
of a reputable insurance broker with respect to such insurance. Further, each
of the Grantors shall, at the request of the Agent, duly exercise and deliver
certificates of insurance to comply with the requirements of Section 8 and
cause the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by
any of the Grantors pursuant to this Section 11 may be paid directly to the
Person who shall have incurred liability covered by such insurance. In case of
any loss involving damage to any Equipment or Inventory of any of the Grantors
when Section 11(c) is not applicable, such Grantor shall make or cause to be
made the necessary repairs to or replacements of such Equipment or Inventory,
and any proceeds of insurance properly received by or released to such Grantor
shall be used by such Grantor, except as otherwise required hereunder or by the
Credit Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.
(c) Upon the occurrence and during the continuance of any Event
of Default, or the actual or constructive total loss (in excess of $500,000 per
occurrence) of any Equipment or Inventory, all insurance payments in respect of
such Equipment or Inventory shall be paid to and applied by the Agent as
specified in Section 19(b).
SECTION 12. AS TO RECEIVABLES AND RELATED CONTRACTS. (a) Each
of the Grantors shall keep its principal place of business and chief executive
office, and the office where it keeps its records concerning the Collateral of
such Grantor and the original copies of the Assigned Agreements, Related
Contracts and all chattel paper that evidences or constitutes Receivables (other
than that delivered to the Agent), at the location therefor specified in Section
7(a) or, upon 30 days' prior written notice to the Agent, at such other
locations in jurisdictions where all actions required by Section 8 shall have
been taken with respect to the Collateral of such Grantor. Each of the Grantors
shall hold and preserve such records, Assigned Agreements, Related Contracts and
chattel paper and shall permit representatives of the Agent at any time during
normal business hours to inspect and make abstracts from such records and other
documents. If the jurisdiction of the securities intermediary that maintains
the security account carrying the Pledged Security Entitlements or the
jurisdiction of the commodity intermediary that maintains the commodity account
carrying the Pledged Commodity Contracts shall change from that jurisdiction
specified in Section 7(f), the applicable Grantor shall promptly notify the
Agent of such change and of such new jurisdiction.
(b) Except as otherwise provided in this Section 12(b), each of
the Grantors shall continue to collect, at its own expense, all amounts due or
to become due such Grantor under the Receivables and Related Contracts. In
connection with such collections, such Grantor may take (and, at the Agent's
direction, shall take) such action as such Grantor or the Agent may deem
necessary or advisable to enforce collection of the Receivables and Related
Documents; PROVIDED, HOWEVER, that the Agent shall have the right upon the
occurrence and during the continuation of an Event of Default, upon written
notice to such Grantor of its intention to do so, to notify the Obligors under
any Receivables or Related Contracts of the assignment of such
Receivables or Related Contracts to the Agent and to direct such Obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to the Agent and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Receivables or Related Contracts,
and to adjust, settle or compromise the amount or payment thereof, in the
same manner and to the same extent as such Grantor might have done. After
receipt by such Grantor of the notice from the Agent referred to in the
preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Receivables or Related Contracts
shall be received in trust for the benefit of the Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over
to the Agent in the same form as so received (with any necessary indorsement
or assignment) to be held as cash collateral and applied as provided by
Section 19(b), and (ii) such Grantor shall not adjust, settle or compromise
the amount or payment of any Receivable or Related Contracts, release wholly
or partly any Obligor thereon, or allow any credit or discount thereon.
Anything contained herein to the contrary notwithstanding, such Grantor shall
not permit or agree to subordination of its rights to payment under any of
the Receivables or Related Contracts to any other indebtedness or obligations
of the Obligor thereof.
SECTION 13. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no
Event of Default shall have occurred and be continuing:
(i) Each of the Grantors shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Security
Collateral of such Grantor or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the other Loan
Documents; PROVIDED, HOWEVER, that no Grantor shall exercise or refrain
from exercising any such right if, in the Agent's reasonable judgment,
such action would have a material adverse effect on the value of the
Security Collateral or any part thereof.
(ii) Each of the Grantors shall be entitled to receive and
retain, and to utilize free and clear of the lien of this Agreement, any
and all dividends, interest and other distributions paid in respect of
the Security Collateral of such Grantor if and to the extent that the
payment thereof is not otherwise prohibited by the terms of the Loan
Documents; PROVIDED, HOWEVER, that any and all
(A) dividends, interest and other
distributions paid or payable other than in cash in respect of,
and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any
Security Collateral other than Security Collateral consisting of
cash and Cash Equivalents to the extent reinvested in Security
Collateral or Account Collateral,
(B) dividends and other distributions paid
or payable in cash in respect of any Security Collateral in
connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or
paid-in-surplus,
(C) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or in
exchange for, any Security
Collateral other than Security Collateral consisting of cash
and Cash Equivalents to the extent reinvested in Security
Collateral or Account Collateral, and
(D) cash dividends paid or payable in
violation of the terms of the Credit Agreement
shall be, and shall be forthwith delivered to the Agent to hold as,
Security Collateral and, if received by any of the Grantors, shall be
received in trust for the benefit of the Agent, shall be segregated from
other property or funds of such Grantor and be forthwith delivered to the
Agent as Security Collateral in the same form as so received (with any
necessary indorsement or assignment).
(iii) The Agent shall promptly execute and deliver (or cause to
be executed and delivered) to each of the Grantors all such proxies and
other instruments as such Grantor may reasonably request for the purpose
of enabling such Grantor to exercise the voting and other rights that it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends or interest payments that it is authorized to receive and
retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) All rights of each of the Grantors to (A) exercise or
refrain from exercising the voting and other consensual rights that such
Grantor would otherwise be entitled to exercise pursuant to subparagraph
(i) of Section 13(a) shall, upon notice to such Grantor by the Agent,
cease and (B) receive the dividends, interest and other distributions
that such Grantor would otherwise be authorized to receive and retain
pursuant to subparagraph (ii) of Section 13(a) shall automatically cease,
and all such rights shall thereupon become vested in the Agent, which
shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and
hold as Security Collateral such dividends, interest and other
distributions.
(ii) All dividends, interest and other distributions that are
received by any of the Grantors contrary to the provisions of clause (i)
of this Section 13(b) shall be received in trust for the benefit of the
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Agent as Security Collateral in the same form
as so received (with any necessary indorsement).
SECTION 14. AS TO THE ASSIGNED AGREEMENTS. (a) Each of the
Grantors shall, at its expense:
(i) perform and observe all terms and provisions of each
Assigned Agreement to be performed or observed by it, maintain the
Assigned Agreements to which it is a party in full force and effect,
enforce each of the Assigned Agreements in accordance with the terms
thereof, and take all such action to such end as may be from time to time
requested by the Agent; and
(ii) furnish to the Agent, promptly upon receipt thereof, copies
of all notices, requests and other documents received by such Grantor
under or pursuant to any Assigned Agreements to which it is a party and,
from time to time, (A) furnish to the Agent such information and reports
regarding the Collateral as the Agent may request and (B) upon the
request of the Agent, make to each other party to any Assigned Agreements
to which it is a party such demands and requests for information and
reports or for action as such Grantor is entitled to make thereunder.
(b) Each of the Grantors agrees that it shall not, except to
the extent otherwise permitted under the Credit Agreement:
(i) cancel or terminate any such Assigned Agreements to which
it is a party or consent to or accept any cancellation or termination
thereof,
(ii) amend or otherwise modify any such Assigned Agreement or
give any consent, waiver or approval thereunder, or
(iii) waive any default under or breach of any Assigned
Agreement, or
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with any such Assigned Agreement,
except as expressly provided therein, or
(v) take any other action in connection with any such Assigned
Agreement in each case that would impair the value of the interests or
rights of such Grantor thereunder or that would impair the interests or
rights of the Agent or any of the other Secured Parties.
(c) Each of the Grantors hereby consents on its behalf and on
behalf of its Subsidiaries to the assignment and pledge to the Agent for its
benefit and the ratable benefit of the other Secured Parties of each Assigned
Agreement to which it is a party by any other Grantor hereunder.
SECTION 15. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. (a)
Each of the Grantors agrees that it shall not (i) sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to,
any of the Collateral of such Grantor (other than sales, assignments, options
and other dispositions permitted under the terms of the Credit Agreement) or
(ii) create or suffer to exist any Lien upon or with respect to any of the
Collateral of such Grantor, except for the Liens created under this Agreement or
permitted under the terms of the Credit Agreement.
(b) Each of the Grantors agrees that it shall (i) cause each
issuer of the Pledged Shares owned by such Grantor not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer (except directors' qualifying shares), except to a Grantor, and
(ii) pledge to hereunder, immediately upon acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other
securities of each issuer of any Pledged Shares.
SECTION 16. AGENT APPOINTED ATTORNEY-IN-FACT. Each of the
Grantors hereby irrevocably appoints the Agent such Grantor's attorney-in-fact,
with full authority in the place and stead of such Grantor and in the name of
such Grantor or otherwise, from time to time after the occurrence and during the
continuance of an Event of Default in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Agent pursuant to Section 11;
(b) to ask for, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other
instruments, chattel paper and documents in connection with Section 16(a)
or 16(b) above, and
(d) to file any claims, to take any action or to institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Assigned Agreement or the rights of
the Agent with respect to any of the Collateral,
PROVIDED, that with respect to the Assigned Agreements and all matters
incidental thereto, each of the Grantors hereby irrevocably appoints the Agent
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, from time to time in
the Agent's discretion, to take any action and to execute any instrument that
the Agent may deem necessary or advisable to accomplish the purposes of this
Agreement including, without limitation (x) to ask for, demand, collect, ▇▇▇
for, recover, compromise, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral, (y) to
receive, indorse and collect any drafts or other instruments, chattel paper and
documents in connection with Section 16(x) above, and (z) to file any claims, to
take any action or to institute any proceedings that the Agent may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce compliance with the terms and conditions of any Assigned Agreement or
the rights of the Agent with respect to any of the Collateral.
SECTION 17. AGENT MAY PERFORM. If any of the Grantors fails to
perform any agreement contained herein, the Agent may, as the Agent deems
reasonably necessary to protect the Secured Parties' security interest in the
Collateral or the value thereof, but without any obligation to do so and without
further notice, itself perform, or cause performance of, such agreement, and the
expenses of the Agent incurred in connection therewith shall be payable by such
Grantor under Section 20(b).
SECTION 18. THE AGENT'S DUTIES. The powers conferred on the
Agent hereunder are solely to protect its and the other Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Agent shall
have no duty as to any Collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Security Collateral, whether or not the Agent or any other
Secured Party has or is deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which the Agent accords its own property. Anything contained herein to the
contrary notwithstanding, the Agent may from time to time, when the Agent deems
it to be necessary, appoint one or more subagents (each a "SUBAGENT") for the
Agent hereunder with respect to all or any part of the Collateral. In the event
that the Agent so appoints any Subagent with respect to any Collateral, (1) the
assignment and pledge of such Collateral and the security interest granted in
such Collateral by each Grantor hereunder shall be deemed for purposes of this
Agreement to have been made to such Subagent for the ratable benefit of the
Secured Parties, as security for the Secured Obligations of such Grantor, (2)
such Subagent shall automatically be vested with all rights, powers, privileges,
interests and remedies of the Agent hereunder with respect to such Collateral
and (3) the term "Agent," when used herein in relation to any rights, powers,
privileges, interests and remedies of the Agent with respect to such Collateral,
shall include such Subagent; PROVIDED, HOWEVER, that no such Subagent shall be
authorized to take any action with respect to any such Collateral unless and
except to the extent expressly authorized in writing by the Agent.
SECTION 19. REMEDIES. If any Event of Default shall have
occurred and be continuing:
(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the N.Y. Uniform Commercial Code (whether or not the N.Y.
Uniform Commercial Code applies to the affected Collateral), and also may
(i) require any of the Grantors to, and each of the Grantors hereby
agrees that it shall at its own expense and upon request of the Agent
forthwith, assemble all or part of the Collateral as directed by the
Agent and make it available to the Agent at a place and time to be
designated by the Agent that is reasonably convenient to both parties,
(ii) without notice except as specified below, sell the Collateral or any
part thereof in one or more parcels at public or private sale or at any
of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may deem commercially
reasonable, and (iii) occupy any premises owned or leased by any of the
Grantors where the Collateral or any part thereof is assembled or located
for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect of
such occupation. Each of the Grantors agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the
applicable Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent
shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Agent may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Agent and all cash
proceeds received by or on behalf of the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Agent, be held by or on behalf
of the Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Agent pursuant to
Section 20) in whole or in part by the Agent for its benefit and the
ratable benefit of the other Secured Parties against, all or any part of
the Secured Obligations in such order as the Agent shall elect. Any
surplus of such cash or cash proceeds held by or on behalf of the Agent
and remaining after payment in full of all of the Secured Obligations
shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) The Agent may exercise any and all rights and remedies of
any Grantor under or in connection with the Assigned Agreements or
otherwise in respect of the Collateral, including, without limitation,
any and all rights of such Grantor to demand or otherwise require payment
of any amount under, or performance of any provision of, any Assigned
Agreement.
(d) All payments received by any of the applicable Grantors
under or in connection with any Assigned Agreement or otherwise in
respect of the Collateral shall be received in trust for the benefit of
the Agent, shall be segregated from other funds of such Grantor and shall
be forthwith paid over to the Agent in the same form as so received (with
any necessary indorsement or assignment).
(e) The Agent may, without notice to any of the Grantors,
except as required by law, and at any time or from time to time, charge,
set off and otherwise apply all or any part of the Secured Obligations
against the Blocked Accounts, or any part thereof.
(f) In the event of any sale, assignment or other disposition
of any of the Intellectual Property Collateral, the goodwill of the
business connected with and symbolized by any of the Intellectual
Property Collateral subject to such disposition shall be included, and
such Grantor shall supply the Agent or its designee with such Grantor's
know-how and expertise, and with documents and things embodying the same
relating to any of the Intellectual Property Collateral, subject to such
sale, assignment or other disposition, and such Grantor's customer lists
and other records and documents relating to such Intellectual Property
Collateral.
SECTION 20. INDEMNITY AND EXPENSES. (a) Each of the Grantors
agrees to defend, protect, indemnify and hold harmless the Agent, each of the
Secured Parties and each of their respective officers, directors, employees,
agents and advisors (each an "INDEMNIFIED PARTY") from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and reasonable expenses of counsel) arising out of
or resulting from
this Agreement (including, without limitation, enforcement of this
Agreement), except to the extent that such claims, losses or liabilities are
found in a final judgment of a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
(b) Each of the Grantors will upon demand pay to the Agent the
amount of any and all expenses (including, without limitation, the reasonable
fees and expenses of its counsel and of any experts and agents) that the Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of the Agent or any other Secured
Party against such Grantor or (iv) the failure by any of the Grantors to perform
or observe any of the provisions hereof.
SECTION 21. AMENDMENTS; WAIVERS; ETC. (a) No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
any of the Grantors herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) No failure on the part of the Agent to exercise, and no
delay in exercising, any right, power or privilege hereunder shall operate as a
waiver thereof or consent thereto; nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
(c) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit C hereto (each a
"SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor, and each reference in
this Agreement to "Grantor" shall also mean and be a reference to such
Additional Grantor and (ii) the Schedules attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
Schedules I through VI hereto, and the Agent may attach such Schedules as
supplements to such Schedules, and each reference to such Schedules shall mean
and be a reference to such Schedules, as supplemented pursuant hereto.
(c) Delivery by telecopies of an executed counterpart of any
amendment or waiver of any provision of this Agreement or of any Supplement or
Schedule hereto shall be effective as delivery of a manually executed
counterpart thereof.
SECTION 22. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered, addressed to the party at its address specified in
the Credit Agreement, or as to either the Borrower or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the Borrowers and the Agent.
All such notices and other communications shall,
when mailed, telecopied, telegraphed or telexed, be effective when deposited
in the mails, delivered to the telegraph company, transmitted by telecopier
or confirmed by telex answerback, respectively, except that notices and
communications to the Agent shall not be effective until received by the
Agent.
SECTION 23. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
CREDIT AGREEMENT. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the latest of
the payment in full in cash of the Secured Obligations (other than contingent
obligations expressed to survive the termination of the Credit Agreement or any
other Loan Document), the Termination Date and the termination or expiration of
all Secured Hedge Agreements, (b) be binding upon each of the Grantors and each
of their respective successors and assigns and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Secured
Parties and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Lender Party may assign
or otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as provided in Section 8.07 of the Credit Agreement.
SECTION 24. RELEASE AND TERMINATION. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral in accordance with the
terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business which shall automatically be released upon such sale), the
Agent shall, at the applicable Grantor's expense, execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby; PROVIDED, HOWEVER, that (i) at the time of such request and such
release, no Default shall have occurred and be continuing, (ii) such Grantor
shall have delivered to the Agent, at least ten Business Days prior to the date
of the proposed release, a written request for release describing the item of
Collateral to the extent required by the Credit Agreement and the terms of the
sale, lease, transfer or other disposition in reasonable detail (including,
without limitation, the price thereof and any expenses in connection therewith),
and a certification by such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the Agent may
reasonably request, (iii) to the extent that the proceeds of any such sale,
lease or transfer or other disposition are required to be applied in accordance
with Section 2.06 of the Credit Agreement, such proceeds shall be paid to, or in
accordance with the instructions of, the Agent at the closing thereof and (iv)
the Agent shall have approved such sale, lease, transfer or other disposition in
writing, except if such sale, lease, transfer or other disposition is permitted
under the Credit Agreement.
(b) Upon the latest of the payment in full of the Secured
Obligations (other than contingent obligations expressed to survive the
termination of the Credit Agreement or any other Loan Document), the Termination
Date and the termination or expiration of all Secured Hedge Agreements, the
pledge, assignment and security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the applicable Grantor. Upon any such
termination,
the Agent shall, at the applicable Grantor's expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to
evidence such termination.
(c) If all of the capital stock (or other equity interests) of
one or more Grantor is sold or otherwise disposed of (except to the Borrower or
any of its Subsidiaries) or liquidated in compliance with the requirements of
the Credit Agreement (or such sale or other disposition or liquidation has been
approved in writing by the Required Lenders) and the proceeds of such sale,
disposition or liquidation are applied in accordance with the provisions of the
Credit Agreement, such Grantor shall be released from this Agreement and this
Agreement shall, as to each such Grantor or Grantors, automatically and
completely terminate, have no further force or effect and be forever discharged
(it being understood and agreed that the sale of one or more Persons that own,
directly or indirectly, all of the capital stock (or other equity interests) of
any Grantor shall be deemed to be a sale of such Grantor for purposes of this
Section 24(c)). In such event, the Agent shall, at the applicable Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to release from the assignment and security interest
granted hereby the items of Collateral pledged and assigned by such Grantor.
SECTION 25. THE MORTGAGES. In the event that any of the
Collateral hereunder is also subject to a valid and enforceable Lien under the
terms of any Mortgage and the terms of such Mortgage are inconsistent with the
terms of this Agreement, then, with respect to such Collateral, the terms of
such Mortgage shall be controlling in the case of fixtures and leases, letting
and licenses of, and contracts and agreements relating to, the lease of real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.
SECTION 26. ANNUAL COLLATERAL AUDIT. Each Grantor agrees that,
at the expense of such Grantor, the Agent may conduct an appraisal and valuation
of all the Collateral of such Grantor not more frequently than once in any
Fiscal Year.
SECTION 27. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that the validity or perfection of the security interest hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of New York.
SECTION 28. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the Grantors has caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
INTERNATIONAL RECTIFIER CORPORATION
By________________________
Name:
Title:
Address:
IR INTERNATIONAL HOLDINGS, INC.
By________________________
Name:
Title:
IR INTERNATIONAL HOLDINGS CHINA, INC.
By_________________________
Name:
Title:
INTERNATIONAL RECTIFIER
CORPORATION, FLORIDA
By_________________________
Name:
Title:
INTERNATIONAL RECTIFIER
CORPORATION, PENNSYLVANIA
By_________________________
Name:
Title:
INTERNATIONAL RECTIFIER
CORPORATION, NORTH CAROLINA
By_________________________
Name:
Title:
INTERNATIONAL RECTIFIER
CORPORATION, ILLINOIS
By_________________________
Name:
Title:
MOSFET, INC.
By_________________________
Name:
Title:
INTERNATIONAL RECTIFIER
CORPORATION, WISCONSIN
By_________________________
Name:
Title:
R LABCO, INC.
By_________________________
Name:
Title:
U.S. TRANSISTORS, INC.
By_________________________
Name:
Title:
SCHEDULE I
to
Security Agreement
Pledged Shares
PART A
----------------------------------------------------------------------------------------------------------------------------
CLASS OF STOCK NUMBER PERCENTAGE OF
GRANTOR ISSUER STOCK PAR CERTIFICATE OF SHARES ISSUED AND
------- ------ ----- VALUE NUMBER --------- OUTSTANDING
----- ----------- SHARES OF ISSUER
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Pledged Indebtedness
PART B
----------------------------------------------------------------------------------------------------------------------------
GRANTOR ISSUER DESCRIPTION OF DEBT FINAL MATURITY OUTSTANDING
------- ------ ------------------- -------------- PRINCIPAL AMOUNT
----------------
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
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Pledged Security Entitlements
PART C
Pledged Commodity Contracts
PART D
SCHEDULE II
to
Security Agreement
ASSIGNED AGREEMENTS
SCHEDULE III
to
Security Agreement
LOCATIONS OF EQUIPMENT AND INVENTORY
SCHEDULE IV
to
Security Agreement
INTELLECTUAL PROPERTY
Copyrights
PART A
Trademarks and Trade Names
PART B
Patents
PART C
SCHEDULE V
to
Security Agreement
DEPOSIT ACCOUNTS
SCHEDULE VI
LICENSES
EXHIBIT A-1
to
Security Agreement
BLOCKED ACCOUNT LETTER
July 1, 1999
[Blocked Account Bank Address]
Attn: [ ]
[NAME OF GRANTOR]
Ladies and Gentlemen:
Reference is made to the deposit accounts listed on the
attached Schedule I into which certain monies, instruments and other
properties are deposited from time to time (the "ACCOUNTS") maintained with
you by [Name of Grantor], a [ ] corporation (the "COMPANY").
Pursuant to a Security Agreement dated as of July 1, 1999 (the "SECURITY
AGREEMENT"), the Company has granted to Banque Nationale de Paris, as agent
(the "AGENT") for the Secured Parties referred to in the Credit Agreement
dated as of July 1, 1999 (the "CREDIT AGREEMENT") with [the Company]
[International Rectifier Corporation], a security interest in certain
property of the Company, including, among other things, the following (the
"ACCOUNT COLLATERAL"): the Accounts, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Accounts, all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral and all proceeds of any and all of the foregoing Account
Collateral and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii)
cash. It is a condition to the continued maintenance of the Accounts with you
that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of the
Security Agreement and confirm to the Agent that you have received no notice
of any other pledge or assignment of the Accounts. Further, you hereby agree
with the Agent that:
(a) Notwithstanding anything to the contrary in any other
agreement relating to the Accounts, the Accounts are and will be subject
to the terms and conditions of the Security Agreement.
(b) Upon the written request of the Agent to you, which request
shall specify that an "Event of Default" under the Credit Agreement has
occurred and is continuing (which writing may be by telex or telecopy and
upon which you may conclusively rely, absent manifest error), you shall
immediately transfer (at the cost and expense of the Company) subject to
your usual deposit terms, all funds then or thereafter deposited in the
Accounts by wire transfer into the Agent's Account at the [ Federal
Reserve Bank of New York, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇, ABA
No.▇▇▇▇▇▇▇▇▇, for further credit to Account No.750420-701-03 ].
(c) From and after the date that the Agent shall have sent to
you a written notice (which writing may be by telex or telecopy and upon
which you may conclusively rely, absent manifest error) that an "Event of
Default" under the Credit Agreement has occurred and until the date, if
any, that the Agent shall have advised you in writing (which writing may
be by telex or telecopy and upon which you may conclusively rely, absent
manifest error) that no Event of Default is continuing (the Period
between such notices being the "DEFAULT PERIOD"), you shall not honor any
withdrawal or transfer from, or any check, draft or other item of payment
on, the Accounts, other than any withdrawal, transfer, check, draft or
other item made in writing by the Agent or bearing the written consent of
the Agent, and, to the extent of collected funds in the Accounts, you
shall honor each such withdrawal, transfer, check, draft or other item
made in writing by the Agent or bearing the written consent of the Agent.
Notwithstanding anything to the contrary contained herein, at all times
other than during any Default Period, the Company shall have the sole and
absolute right to withdraw, transfer or issue other instructions with
respect to funds deposited in the accounts and you agree to honor any
withdrawal, transfer, check, draft or other item made by the Company in
conformity with your usual operating procedures for the handling of such
items.
(d) You will follow your usual operating procedures for the
handling of the Accounts, including any remittance received in the
Accounts that contains restrictive endorsements, irregularities (such as
a variance between the written and numerical amounts), undated or
postdated items, missing signatures, incorrect payees, etc.
(e) You shall furnish to the Agent, promptly upon the written
request of the Agent in each instance, all information regarding the
Accounts, to the extent the same is provided to the Company, for the
period of time specified in such written notice, and the Company hereby
authorizes you to furnish same.
(f) You agree that you will not make, and you hereby waive all
of your rights to make, any charge, debit or offset to the Accounts for
any reason whatsoever, and waive any and all liens, whether contractual
or provided under law, which you may have or hereafter acquire on the
Accounts or funds therein, in each case, other than any charge, offset,
debit, lien or deposited checks returned in respect of your customary
service charges relating to the Accounts.
(g) All service charges and fees with respect to the Accounts
shall be payable by the Company by debiting the account.
(h) After the giving of notice referred to in paragraphs (b)
and (c) above, the Agent shall be entitled to exercise any and all rights
of the Company in respect of the Accounts, and the undersigned shall
comply in all respects with such exercise.
This letter agreement shall be binding upon you and your
successors and assigns and shall inure to the benefit of the Agent, the other
Secured Parties and their successors, transferees and assigns. You may
terminate this letter agreement only upon thirty days' prior written notice to
the Company and the Agent. Upon such termination you shall close the Accounts
and transfer all funds in the Accounts to the Agent's Account specified in
paragraph (b) above.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Very truly yours,
[NAME OF GRANTOR]
By
------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as Agent
By
------------
Name:
Title:
By
------------
Name:
Title:
Acknowledged and agreed to as of
the date first above written:
[BLOCKED ACCOUNT BANK NAME]
By
---------------------------------
Name:
Title:
SCHEDULE I
to
BLOCKED ACCOUNT LETTER
EXHIBIT A-2
to
Security Agreement
BLOCKED ACCOUNT LETTER
[CALIFORNIA]
[ ] Bank
[Address]
Attention:
July 1, 1999
[NAME OF GRANTOR]
Ladies and Gentlemen:
You are hereby notified that Banque Nationale de Paris ("BNP"), as
Agent, under the Security Agreement dated July 1, 1999 made between [Name of
Grantor], a [ ] corporation and BNP, has acquired a security
interest in [account no. ___-________][the accounts listed on the attached
schedule].
Very truly yours
Banque Nationale de Paris
as Agent
By
------------
Name:
Title:
SCHEDULE I
to
THE BLOCKED ACCOUNT LETTER
BANK ACCOUNT NO.
[ ] Bank
[NAME OF GRANTOR]
Ladies and Gentlemen:
EXHIBIT B
to
Security Agreement
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the
terms and provisions of, the Security Agreement dated July 1, 1999 (as amended,
supplemented or otherwise modified, the "SECURITY AGREEMENT"; unless otherwise
defined herein, terms defined therein are used herein as therein defined) from
International Rectifier Corporation, a Delaware corporation (the "BORROWER"),
and the other Grantors party thereto to Banque Nationale de Paris ("BNP"), as
agent (together with any successor agent thereto, the "AGENT") for the Lenders,
the Issuing Bank and the Hedge Banks, and hereby agrees with the Agent that:
1. The undersigned hereby acknowledges and agrees that the
execution and delivery [(i)] of this Consent and Agreement is a material
inducement to the willingness of the Lenders to make Advances under the
Credit Agreement, the Issuing Bank to issue Letters of Credit under the
Credit Agreement and the Hedge Banks to enter into the arrangements
permitted by Section 5.02(b)(i)(C) of the Credit Agreement and (ii)
repeats and reaffirms for the benefit of the Agent, the Lenders, the
Issuing Bank and the Hedge Banks the representations and warranties made
in the Assigned Agreement.
2. The undersigned will make, upon the occurrence and during
the continuance of any Event of Default (unless otherwise required to be
paid to the Lenders under the Credit Agreement), all payments to be made
by it under or in connection with the Agreement dated
, (as amended, supplemented or otherwise modified, the
"ASSIGNED AGREEMENT") between the undersigned and the Grantor in
accordance with the instructions of the Agent.
3. All payments referred to in paragraph 2 above shall be made
by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or setoff and shall be final, and the
undersigned will not seek to recover from the Agent, any Lender, the
Issuing Bank or any Hedge Bank for any reason any such payment once made.
4. The Agent shall be entitled to exercise any and all rights
and remedies of the Grantor under the Assigned Agreement in accordance
with the terms of the Security Agreement, and the undersigned shall
comply in all respects with such exercise.
5. The undersigned will not, without the prior written consent
of the Agent, (i) cancel or terminate the Assigned Agreement or consent
to or accept any cancellation or termination thereof or (ii) amend or
otherwise modify the Assigned Agreement in any manner.
6. Any notices to the Agent pursuant hereto shall be in
writing and shall be delivered to:
Banque Nationale de Paris, as Agent
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Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
7. This Consent and Agreement constitutes the entire agreement
of the parties hereto in respect of the subject matter hereof and may not
be amended, supplemented or otherwise modified without the written
agreement of the parties hereto.
This Consent and Agreement shall be binding upon the undersigned
and its successors and assigns, and shall inure, together with the rights and
remedies of the Agent hereunder, to the benefit of, and enforceable by, the
Issuing Bank, the Lenders, the Hedge Banks and their respective successors,
transferees and assigns. This Consent and Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent
and Agreement as of the date set opposite its name below.
Dated: , [NAME OF OBLIGOR]
By
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Name:
Title:
EXHIBIT C
to
Security Agreement
FORM OF SECURITY AGREEMENT SUPPLEMENT
, 1999
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Banque National de Paris, as Agent
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Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Security Agreement dated July 1, 1999
made by International Rectifier Corporation and the Collateral Grantors
NAMED THEREIN TO BANQUE NATIONAL DE PARIS, AS AGENT
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (as
amended, supplemented or otherwise modified, the "SECURITY AGREEMENT"). Unless
otherwise defined herein, terms defined in the Security Agreement are used
herein as therein defined.
The undersigned hereby agrees, as of the date first above written,
to become a Collateral Grantor under the Security Agreement as if it were an
original party thereto and agrees that each reference in the Security Agreement
to a "Collateral Grantor" or "Grantor" shall also mean and be a reference to the
undersigned.
The undersigned hereby assigns and pledges to the Agent for its
benefit and the ratable benefit of the Agent, the Lenders, the Issuing Bank and
the Hedge Banks and hereby grants to the Agent for its benefit and the ratable
benefit of the Agent, the Lenders, the Issuing Bank and the Hedge Banks as
collateral for the Secured Obligations a pledge and assignment of, and a
security interest in, all of the right, title and interest of the undersigned in
and to its Collateral, whether now owned or hereafter acquired, in accordance
with the Security Agreement.
The undersigned has attached hereto supplements to Schedules I
through V to the Security Agreement, and the undersigned hereby certifies that
such supplements have been prepared by the undersigned in substantially the form
of the Schedules to the Security Agreement and are accurate and complete as of
the date first above written.
The undersigned hereby makes each representation and warranty set
forth in Section 9 of the Security Agreement as to itself and as to its
Collateral to the same extent as each other Collateral Grantor and hereby agrees
to be bound as a Collateral Grantor by all of the terms and provisions of the
Security Agreement to the same extent as all other Collateral Grantors.
This letter shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
COLLATERAL GRANTOR]
By
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Name:
Title:
Address:
EXHIBIT D-1
to
Security Agreement
This COLLATERAL ASSIGNMENT OF SECURITY INTEREST dated
_________, ____ is made by [International Rectifier Corporation, a Delaware
corporation, having a principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇] [ ] (the "GRANTOR"), in favor
of Banque Nationale de Paris, having a place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the agent
(together with any successor thereto appointed pursuant to Article VII of the
Credit Agreement referred to below, the "GRANTEE") for the Secured Parties
(as defined in the Credit Agreement referred to below).
Grantor is party to a Credit Agreement dated as of July 1, 1999 (as
amended, supplemented or otherwise modified from time to time, and together with
all exhibits, schedules, documents, and instruments ancillary thereto, the
"CREDIT AGREEMENT") with the financial institutions party thereto from time to
time and the Grantee, as agent. Capitalized terms not otherwise defined herein
shall have the same meanings as specified therefor in the Credit Agreement or
the Security Agreement referred to below.
In connection with the Credit Agreement, the Grantor entered into a
Security Agreement dated July 1, 1999 (as amended, supplemented or otherwise
modified hereafter from time to time, the "SECURITY AGREEMENT") with the other
grantors party thereto in favor of the Grantee, pursuant to which the Grantor
has granted to the Grantee for its benefit and the ratable benefit of the other
Secured Parties a security interest in, inter alia, all of the Grantor's rights,
title, and interest in and to trademarks and trademark applications and
registrations therefor whether then owned or thereafter acquired or created,
including, without limitation, the trademarks and trademark applications and
registrations therefor listed on SCHEDULE A hereto (the "TRADEMARKS").
The parties desire to record the Grantor's grant of the security interest
in the Trademarks to the Grantee with the United States Patent & Trademark
Office.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor hereby agrees as follows:
SECTION 1. GRANT. Grantor hereby grants to Grantee for its benefit and
the ratable benefit of the other Secured Parties, a security interest in and to
all of the Grantor's right, title and interest in and to the following:
(i) the Trademarks (but excluding any United States Intent to Use
trademark application prior to the filing and acceptance of a Statement of Use
or an Amendment to Allege Use in connection therewith to the extent that a valid
security interest may not be taken in such
an Intent to Use trademark application under applicable law), together with
any and all extensions and renewals thereof;
(ii) any and all claims for damages for past, present , and future
infringement, misappropriation, or breach with respect to the Trademarks, with
the right, but not the obligation, to ▇▇▇ for and collect, or otherwise recover,
such damages; and
(iii) any and all proceeds of the foregoing.
SECTION 2. RECORDATION. The parties authorize and request that the
Commissioner of Patents and Trademarks and any other applicable government
officer record this Intellectual Property Transfer Agreement.
SECTION 3. CONFLICT. In the event that any term of this Agreement does
or may conflict with the terms of the Technology Transfer Agreement, the terms
of the Technology Transfer Agreement shall prevail.
SECTION 4. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Grantor has caused this Collateral Assignment
of Security Interest to be duly executed and delivered by its officer
thereunto duly authorized, as of the date first written above.
[NAMEF GRANTOR]
By ________
Name:
Title:
SCHEDULE A TO EXHIBIT ▇-▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇-▇
to
Security Agreement
This COLLATERAL ASSIGNMENT OF SECURITY INTEREST dated _________,
____ is made by [International Rectifier Corporation, a Delaware corporation,
having a principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇] [ ] (the
"GRANTOR"), in favor of Banque Nationale de Paris, having a place of business at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the
agent (together with any successor thereto appointed pursuant to Article VII of
the Credit Agreement referred to below, the "GRANTEE") for the Secured Parties
(as defined in the Credit Agreement referred to below).
Grantor is party to a Credit Agreement dated as of July 1, 1999 (as
amended, supplemented or otherwise modified from time to time, and together with
all exhibits, schedules, documents, and instruments ancillary thereto, the
"CREDIT AGREEMENT") with the financial institutions party thereto from time to
time and the Grantee, as agent. Capitalized terms not otherwise defined herein
shall have the same meanings as specified therefor in the Credit Agreement or
the Security Agreement referred to below.
In connection with the Credit Agreement, the Grantor entered into a
Security Agreement dated July 1, 1999 (as amended, supplemented or otherwise
modified hereafter from time to time, the "SECURITY AGREEMENT") with the other
grantors party thereto in favor of the Grantee, pursuant to which the Grantor
has granted to the Grantee for its benefit and the ratable benefit of the other
Secured Parties a security interest in, inter alia, all of the Grantor's rights,
title, and interest in and to inventions and patents and patent applications
therefor whether then owned or thereafter acquired or created, including,
without limitation, the inventions and patents and patent applications therefor
listed on SCHEDULE A hereto (the "PATENTS").
The parties desire to record the Grantor's grant of the security interest
in the Patents to the Grantee with the United States Patent & Trademark Office.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor hereby agrees as follows:
SECTION 1. GRANT. Grantor hereby grants to Grantee for its benefit and
the ratable benefit of the other Secured Parties, a security interest in and to
all of the Grantor's right, title and interest in and to the following:
(i) The Patents, together with all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof, and all rights
therein provided by international treaties or conventions;
(ii) any and all claims for damages for past, present , and future
infringement, misappropriation, or breach with respect to the Patents, with the
right, but not the obligation, to ▇▇▇ for and collect, or otherwise recover,
such damages; and
(iii) any and all proceeds of the foregoing.
SECTION 2. RECORDATION. The parties authorize and request that the
Commissioner of Patents and Trademarks and any other applicable government
officer record this Intellectual Property Transfer Agreement.
SECTION 3. CONFLICT. In the event that any term of this Agreement does
or may conflict with the terms of the Technology Transfer Agreement, the terms
of the Technology Transfer Agreement shall prevail.
SECTION 4. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Grantor has caused this Collateral Assignment of
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized, as of the date first written above.
[NAME OF GRANTOR]
By ______
Name:
Title:
SCHEDULE A TO EXHIBIT D-2
PATENTS
EXHIBIT D TO
CREDIT AGREEMENT
FORM OF SECURITY AGREEMENT
Dated July 1, 1999
From
THE GRANTORS NAMED HEREIN,
AS GRANTORS,
to
BANQUE NATIONALE DE PARIS,
AS AGENT
TABLE OF CONTENTS
Page
SECTION 1. Grant of Security 2
SECTION 2. Security for Obligations 7
SECTION 3. Grantor Remains Liable 8
SECTION 4. Delivery and Control of Security Collateral, Account Collateral
and Agreement Collateral 8
SECTION 5. Maintaining the Blocked Accounts 9
SECTION 6. Release of Amounts. 10
SECTION 7. Representations and Warranties 10
SECTION 8. Further Assurances 14
SECTION 9. As to Equipment and Inventory 15
SECTION 10. As to the Intellectual Property Collateral 16
SECTION 11. Insurance 18
SECTION 12. As to Receivables and Related Contracts 19
SECTION 13. Voting Rights; Dividends; Etc. 20
SECTION 14. As to the Assigned Agreements. 21
SECTION 15. Transfers and Other Liens; Additional Shares 22
SECTION 16. Agent Appointed Attorney-in-Fact 23
SECTION 17. Agent May Perform 24
SECTION 18. The Agent's Duties 24
SECTION 19. Remedies 25
SECTION 20. Indemnity and Expenses 26
SECTION 21. Amendments; Waivers; Etc. 27
SECTION 22. Addresses for Notices 27
SECTION 23. Continuing Security Interest; Assignments Under the Credit
Agreement 27
SECTION 24. Release and ▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇. The Mortgages 29
SECTION 26. Annual Collateral Audit 29
SECTION 27. Governing Law 29
SECTION 28. Execution in Counterparts 29
SCHEDULES
Schedule I - Pledged Shares and Pledged Indebtedness
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Trade Names
Schedule V - Deposit Accounts
EXHIBITS
Exhibit A-1 - Form of Blocked Account Letter
Exhibit A-2 - Form of Blocked Account Letter [California]
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of U.S. Security Agreement Supplement
Exhibit D-1 - Collateral Assignment of Security Interest in
Trademarks-Short Form
Exhibit D-2 - Collateral Assignment of Security Interest in Patents-Short Form
EXECUTION COPY
SECURITY AGREEMENT
Dated July 1, 1999
From
THE GRANTORS NAMED HEREIN,
AS GRANTORS,
to
BANQUE NATIONALE DE PARIS,
AS AGENT