EXHIBIT 4(a)(x)
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of April 23, 2002 (this "Agreement"),
is by and among KENWOOD SILVER COMPANY, INC., a New York corporation (herein
referred to as the "Grantor"), and JPMORGAN CHASE BANK (formerly known as The
Chase Manhattan Bank), a New York banking corporation ("Chase"), as collateral
agent (in such capacity, the "Collateral Agent") for the Secured Parties (as
defined below). All capitalized terms used herein shall have the respective
meanings given to them in Section 1.01 hereof.
R E C I T A L S
A. Pursuant to a 2001 Amended and Restated Note Purchase Agreement,
dated as of May 1, 2001 (such agreement, as has been or hereafter may be
modified, amended, renewed or replaced, the "Note Agreement"), by and among
Oneida Ltd. ("Borrower"), THC Systems, Inc. ("THC") and Allstate Life Insurance
Company, Allstate Insurance Company, and Pacific Life Insurance Company
(successor to Pacific Mutual Life Insurance Company (individually, a
"Noteholder" and collectively, the "Noteholders"), THC has issued and sold to
the Noteholders its Senior Notes due May 31, 2005 (the "Notes").
B. Pursuant to that certain Amended and Restated Credit Agreement,
dated as April 27, 2001 (as has been or hereafter may be modified, amended,
renewed or replaced, the "Credit Agreement"), by and among the Borrower, Chase,
as the Administrative Agent (in such capacity, the "Administrative Agent"), and
the financial institutions parties thereto (collectively, the "Lenders"), the
Lenders have made available to the Borrower certain credit facilities in the
original aggregate principal amount of up to $275,000,000 (all amounts
outstanding in respect of said credit facilities being hereinafter collectively
referred to as the "Loans").
▇. ▇▇▇▇▇ has established a $2,500,000 working capital line of credit
(the "Chase Working Capital Facility") in favor of Borrower pursuant to a Grid
Demand Promissory Note dated June 7, 2000 (as may be modified, amended, renewed
or replaced, the "Chase Working Capital Note"), under which Chase may make
working capital loans up to an aggregate principal amount of $2,500,000 (the
"Chase Loans").
D. Certain of the Lenders from time to time issue trade and standby
letters of credit and bankers' acceptances for the benefit of the Borrower and
its Subsidiaries, or purchase a participation interest therein.
E. The Borrower and its Subsidiaries from time to time enter into
hedging agreements with one or more Lenders or their Affiliates (as hereafter
defined) to manage or hedge certain interest rate, currency exchange rate or
commodity price risks inherent in the conduct of the Borrower's business (as may
be modified, amended, renewed or replaced, collectively, the "Hedging
Agreements").
F. The Bank of Nova Scotia ("Scotiabank") has established a precious
metal consignment line ("Scotiabank Metal Line") in favor of Borrower pursuant
to a letter agreement dated October 8, 1986 (as modified, amended, renewed or
replaced, the "Scotiabank Metal Agreement"). Under the Scotiabank Metal Line,
Scotiabank consigns to Borrower quantities of silver and gold bullion.
G. In connection with the Credit Agreement and in order to induce the
Lenders to make the Loans thereunder, the Grantor has guaranteed to the Lenders
the payment of the Loans and all other obligations of the Borrower arising in
connection with transactions contemplated by the Credit Agreement. The Grantor
also has guaranteed to the Noteholders the payment of the principal of, and
premium (if any) and interest on, the Notes and the payment of all other
obligations of the Borrower and THC under the Notes and the Note Agreement.
H. The Credit Agreement and the Note Agreement require the Grantor to
grant a security interest in or pledge certain of its assets to secure the
Borrower's or THC's obligations under the Credit Agreement and the Note
Agreement.
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I. The parties hereto desire that the collateral to be provided by the
Grantor will secure ratably for the benefit of the Lenders, Chase, the
Noteholders, Scotiabank and the Issuing Banks the obligations of the Grantor
under the Credit Agreement, the Note Agreement, the Reimbursement Agreements in
respect of the Secured LCs, the Chase Working Capital Facility, the Secured
Hedging Agreements, the Secured Metal Obligations, and the Subsidiary Guarantee
Agreements.
J. The Secured Parties and the Collateral Agent have entered into a
Collateral Agency and Intercreditor Agreement (as may be modified, amended,
supplemented or replaced, the "Collateral Agent Agreement") dated as of the date
hereof appointing Chase as their Collateral Agent and establishing their
relative rights with respect to such collateral pursuant to this Agreement and a
Pledge Agreement (as may be modified, amended, supplemented or replaced, the
"Pledge Agreement"), dated as of the date hereof, by and among the Grantor and
the Collateral Agent.
K. The Grantor is executing on the date hereof the Pledge Agreement in
favor of the Collateral Agent to more fully grant and perfect a security
interest in certain of such collateral.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the Grantor and the Collateral Agent, on behalf of itself and each
Secured Party (and each of their respective successors or assigns), hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Account Debtor" shall mean any Person who is or who may become
obligated to Grantor under, with respect to, or on account of an Account.
"Accounts" shall mean any and all right, title and interest of the
Grantor to payment for goods and services sold or leased, including chattel
paper and any right evidenced by chattel paper, whether due or to become due,
whether or not it has been earned by performance, and whether now or hereafter
acquired or arising in the future, including accounts receivable from Affiliates
of the Grantor.
"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether now existing or
owned or hereafter arising or acquired.
"Administrative Agent" shall have the meaning given to that term in the
recitals to this Agreement.
"Affiliate" shall mean, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person.
"Borrower" shall have the meaning given to that term in the recitals to
this Agreement.
"Chase" shall have the meaning given to that term in the first
paragraph of this Agreement.
"Chase Loans" shall have the meaning assigned to that term in the
recitals to this Agreement.
"Chase Working Capital Facility" shall have the meaning assigned to
that term in the recitals to this Agreement.
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"Chase Working Capital Note" shall have the meaning assigned to that
term in the recitals to this Agreement.
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) Fixtures, (e) General Intangibles, (f) Inventory, (g) cash on
hand and in Deposit Accounts, (h) Investment Property, (i) Instruments, and (j)
Proceeds, in each case whether now owned or hereafter acquired.
"Collateral Agent" shall have the meaning given to that term in the
first paragraph of this Agreement.
"Collateral Agent Agreement" shall have the meaning given to that term
in the recitals to this Agreement.
"Collateral Documents" shall mean, collectively, the Security
Agreement, the Pledge Agreement, the Copyright Security Agreement, the Patent
Security Agreement, the Trademark Security Agreement, the Mortgage, any Uniform
Commercial Code financing statements, any other documents filed with
governmental authorities to perfect, establish priority or give public notice of
the security interests granted by this Agreement or the Pledge Agreement, and
any certificate or other document contemplated by or delivered pursuant to this
Agreement or the Pledge Agreement.
"Commitments" shall mean the commitments of the Lenders to make Loans
under the Credit Agreement.
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an option
on a commodity futures contract, a commodity option or any other contract that,
in each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"Commodity Customer" shall mean a Person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a Person who is registered as a
futures commission merchant under the federal commodities laws or (b) a Person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by Grantor or which Grantor otherwise has the right to license,
or granting any right to Grantor under any Copyright now or hereafter owned by
any third party, and all rights of Grantor under any such agreement.
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"Copyrights" shall mean all of the following: (a) all copyright rights
in any work subject to the copyright laws of the United States, whether as
author, assignee, transferee or otherwise, and (b) all registrations and
applications for registration of any such copyright in the United States,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office, including
those listed on Schedule I.
"Copyright Security Agreement" shall mean, collectively, the Copyright
Security Agreement in substantially the form of Exhibit A annexed hereto and
being executed by Grantor concurrently herewith to be filed in the United States
Copyright Office and any similar Copyright Security Agreement previously or
hereafter executed by Borrower or any Subsidiary of the Borrower in favor of the
Collateral Agent.
"Credit Agreement" shall have the meaning given to that term in the
recitals to this Agreement.
"Deposit Account" means a demand, time, savings, passbook or like
account maintained with a bank, savings and loan association, credit union or
other financial institutions located in the United States, or a branch of any of
the foregoing.
"Documents" shall mean all documents of title and all files, records,
ledger sheets and documents covering or relating to any of the Collateral.
"Entitlement Holder" shall mean a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a Person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such Person is the
Entitlement Holder.
"Equipment" shall mean all equipment, furniture, and furnishings,
tools, parts, supplies, and all other goods and tangible personal property
(other than Inventory), and all improvements, accessions or appurtenances
thereto, that are now or hereafter owned by Grantor and located in the United
States. The term Equipment shall include Fixtures owned by Grantor and located
in the United States.
"Event of Default" shall mean (i) an event of default as such term may
be defined in the Credit Agreement or the Note Agreement or in any of the other
Transaction Documents evidencing indebtedness or obligations in excess of
$3,500,000, and (ii) any event or condition which, under the terms of the Credit
Agreement or the Note Agreement, or under any of the other Transaction Documents
evidencing indebtedness or obligations in excess of $3,500,000, would allow a
Secured Party to accelerate or declare due and payable indebtedness or
obligations owing under any of such Transaction Documents or require the
Borrower or any of the Guarantors to prepay, redeem, defease, or provide cash
collateral for, any such indebtedness or obligations.
"Fair Market Value" (a) when used in connection with a Security traded
on a securities exchange or reported by the National Association of Securities
Dealers, Inc. Automated Quotation System, shall mean the closing price thereof
or, in case there is no closing price, the average of the closing bid and asked
price, (b) when used in connection with a Security which is not traded on a
securities exchange or reported by the National Association of Securities
Dealers, Inc. Automated Quotation System, shall mean the fair market value
thereof as determined in good faith by the Collateral Agent, and (c) when used
in connection with an Instrument or debt security, shall mean the outstanding
principal amount thereof.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a
Person or a share, participation or other interest in a Person or in property or
an enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a Person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"Fixtures" shall mean all items of Equipment located in the United
States, whether now owned or hereafter acquired, of Grantor that become so
related to particular real estate that an interest in them arises under any real
estate law applicable thereto.
"General Intangibles" shall mean all choses in action and causes of
action and all other intangible personal property of Grantor of every kind and
nature (other than Accounts Receivable) now owned or hereafter acquired by
Grantor, including corporate or other business records, indemnification claims,
contract rights (including rights under leases, whether entered into as lessor
or lessee, and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security
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interest or other security held by or granted to Grantor to secure payment by an
Account Debtor of any of the Accounts Receivable.
"Grantor" shall have the meaning given to that term in the first
paragraph of this Agreement.
"Guarantor" shall mean any Person who has guaranteed the payment or
performance of any of the Obligations.
"Hedging Agreements" shall have the meaning given to that term in the
recitals to this Agreement.
"Indemnitee" shall mean, with respect to any Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Affiliates.
"Instrument" shall mean a negotiable instrument or any other writing
which evidences a right to the payment of money and is not itself a security
agreement or lease and is of a type which in the ordinary course of business in
transferred by delivery with any necessary endorsement or assignment.
"Intellectual Property" shall mean all intellectual and similar
property of Grantor of every kind and nature now owned or hereafter acquired by
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation
created or owned by Grantor, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing.
"Inventory" shall mean all goods of Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
Grantor under contracts of service, or consumed in Grantor's business and
located in the United States, including raw materials, intermediates, work in
process, packaging materials, finished goods, semi-finished inventory, scrap
inventory, manufacturing supplies and spare parts, and all such goods that have
been returned to or repossessed by or on behalf of Grantor.
"Investment Property" shall mean all Securities (whether certificated
or uncertificated), Security Entitlements, Securities Accounts, Commodity
Contracts and Commodity Accounts of Grantor, whether now owned or hereafter
acquired by Grantor.
"Issuing Banks" shall mean, collectively, the Lenders which issue LCs
in their capacity as the issuing bank thereof.
"LCs" shall mean, collectively, the Trade LCs and Standby LCs.
"LC Exposure" shall mean, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding LCs at such time, plus (b) the aggregate
amount of all payments made by the Issuing Banks pursuant to LCs that have not
yet been reimbursed by or on behalf of the Borrower or its Subsidiaries at such
time.
"Lenders" shall have the meaning given to that term in the recitals to
this Agreement.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which Grantor is a party, whether as
licensor or licensee (other than those license agreements in existence on the
date hereof or entered into after the date hereof, which by their terms prohibit
the grant of a security interest by Grantor as licensee thereunder).
"Liens" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially
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the same economic effect as any of the foregoing) relating to such asset and (c)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.
"Loans" shall have the meaning given to that term in the recitals to
this Agreement.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospect or condition (financial or otherwise)
of the Grantor taken as a whole, (b) the ability of Grantor to perform its
obligations under any Collateral Document, (c) the validity or enforceability of
any Collateral Document, or (d) the rights of or benefits available to the
Secured Parties under the Collateral Documents.
"Material Domestic Subsidiary" shall mean any Guarantor and any other
direct or indirect Subsidiary of the Borrower organized under the laws of the
United States of America, any State thereof, or the District of Columbia whose
assets, as of the end of the most recent fiscal quarter, account for 5% or more
of the total assets of the Borrower and its Subsidiaries, taken as a whole,
determined in accordance with generally accepted accounting principles.
"Material Foreign Subsidiary" shall mean any direct or indirect
Subsidiary of the Borrower organized under the laws of a jurisdiction other than
the United States of America, any State thereof, or the District of Columbia
whose assets, as of the end of the most recent fiscal quarter, account for 5% or
more of the total assets of the Borrower and its Subsidiaries, taken as a whole,
determined in accordance with generally accepted accounting principles.
"Maximum Hedging Exposure" shall mean, with respect to any Hedging
Agreement at any given time, the maximum aggregate amount (after giving effect
to any netting agreements) that the Borrower and its Subsidiaries would be
required to pay the counterparty if such Hedging Agreement were terminated at
such time.
"Mortgage" shall mean any mortgage (whether denominated a mortgage, a
mortgage and security agreement, a mortgage, assignment of leases and rents and
security agreement, a deed of trus or a debenture) previously or hereafter
executed by Borrower or any Subsidiary of Borrower in favor of the Collateral
Agent.
"Note Agreement" shall have the meaning given to that term in the
recitals to this Agreement.
"Noteholders" shall have the meaning given to that term in the recitals
to this Agreement.
"Notes" shall have the meaning given to that term in the recitals to
this Agreement.
_"Obligations" shall mean (a) the due and punctual payment by the
Borrower and THC, as the case may be, of (i) the principal of the Loans (in an
amount not to exceed $275,000,000), the Chase Loans (in an amount not to exceed
$2,500,000), and the Notes (in an amount not to exceed the principal amount
thereof as of the date hereof), when and as due, whether at maturity, by
acceleration, upon one or more dates set for repayment or otherwise, (ii) any
make-whole premium or other premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, the Chase Loans and the Notes, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (iii) each payment required to be made by the Borrower to the
Issuing Banks in respect of any Secured LC under the Reimbursement Agreement
relating thereto, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide cash
collateral, if any, (iv) each payment required to be made by the Borrower to a
Lender (or an Affiliate of a Lender) as counterparty under any Secured Hedging
Agreement, when and as due, (v) the Secured Metal Obligations, and (vi) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Secured Parties under any of the
Transaction Documents, and (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Borrower,
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THC and the Guarantors under or pursuant to any of the Transaction Documents,
including without limitation, the Subsidiary Guarantee Agreements.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a Patent, now or hereafter owned by Grantor or which Grantor otherwise
has the right to license, is in existence, or granting to Grantor any right to
make, use or sell any invention on which a Patent, now or hereafter owned by any
third party, is in existence, and all rights of Grantor under any such
agreement.
"Patents" shall mean all of the following: (a) all letters patent of
the United States, all registrations and recordings thereof, and all
applications for letters patent of the United States, including registrations,
recordings and pending applications in the United States Patent and Trademark
Office, including those listed on Schedule II, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof,
and the inventions disclosed or claimed therein, including the right to make,
use and/or sell the inventions disclosed or claimed therein.
"Patent Security Agreement" shall mean the Patent Security Agreement in
substantially the form of Exhibit B annexed hereto and being executed
concurrently herewith to be filed in the United States Patent and Trademark
Office and any similar Patent Security Agreement previously or hereafter
executed by Borrower or any Subsidiary of Borrower in favor of the Collateral
Agent.
"Perfection Certificate" shall mean a certificate substantially in the
form of Exhibit C hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by an executive officer of
the Grantor.
"Permitted Encumbrance" shall mean:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in good faith, provided that if such taxes are being contested
(i) the Grantor has set aside on its books adequate reserves with respect
thereto in accordance with generally accepted accounting principles, and (ii)
the failure to make payment pending such contest could not reasonably be
expected to have a Material Adverse Effect;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in good faith, provided that if such obligations are
being contested (i) the Grantor has set aside on its books adequate reserves
with respect thereto in accordance with generally accepted accounting
principles, and (ii) the failure to make payment pending such contest could not
reasonably be expected to have a Material Adverse Effect;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under any Transaction Document; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Grantor;
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provided that the term "Permitted Encumbrances" shall not include any Lien
securing indebtedness for borrowed money.
"Person" shall mean any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, governmental
authority or other entity.
"Pledge Agreement" shall mean, collectively, the Pledge Agreement
executed by Grantor concurrently herewith and any similar Pledge Agreement
previously or hereafter executed by Borrower or any Subsidiary of the Borrower
in favor of the Collateral Agent.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other Person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include, (a) any claim of Grantor against any third party
for (and the right to ▇▇▇ and recover for and the rights to damages or profits
due or accrued arising out of or in connection with) (i) past, present or future
infringement of any Patent now or hereafter owned by Grantor, or licensed under
a Patent License, (ii) past, present or future infringement or dilution of any
Trademark now or hereafter owned by Grantor or licensed under a Trademark
License or injury to the goodwill associated with or symbolized by any Trademark
now or hereafter owned by Grantor, (iii) past, present or future breach of any
License and (iv) past, present or future infringement of any Copyright now or
hereafter owned by Grantor or licensed under a Copyright License and (b) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Reimbursement Agreements" shall mean, collectively, any application,
agreement, instrument or commitment (regardless of how denominated) obligating
Grantor to reimburse, indemnify or provide security or cash collateral to, any
of the Issuing Banks in respect of LCs issued by it.
"Required Banks" shall mean the Lenders and other financial
institutions holding 70% or more of the sum of (i) the then aggregate
outstanding principal amount of the Loans and the Chase Loans, (ii) any unused
Commitments of the Lenders under the Credit Agreement which have not expired or
been terminated or suspended, (iii) the then aggregate LC Exposure under the
Secured LCs, (iv) any unused commitment of an Issuing Bank to issue an LC (to
the extent that such LC would then be a Secured LC if so issued), which
commitment has not expired or been terminated or suspended, (v) the maximum
aggregate amount (giving effect to any netting agreements) that the Borrower and
its Subsidiaries would be required to pay if all of the Secured Hedging
Agreements were terminated at such time, and (vi) the maximum amount of the
Secured Metal Obligations if the Scotiabank Metal Agreement was terminated at
such time; provided that when used in connection with any amendment,
modification, waiver or consent of or under this Agreement which has the effect
of releasing any Collateral or terminating any Collateral Document, the term
"Required Banks" shall mean 100% of the sum of (i) through (vi) above.
"Required Noteholders" shall mean Noteholders holding 70% or more of
the aggregate outstanding principal amount of the Notes; provided that when used
in connection with any amendment, modification, waiver or consent of or under
this Agreement which has the effect of releasing any Collateral or terminating
any Collateral Document, the term "Required Noteholders" shall mean Noteholders
holding 100% of the aggregate outstanding principal amount of the Notes.
"Required Secured Parties" shall mean the Required Banks and the
Required Noteholders, in each case voting separately as a class.
"Scotiabank" shall have the meaning given to that term in the recitals
to this Agreement.
"Scotiabank Metal Agreement" shall have the meaning given to that term
in the recitals to this Agreement.
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"Scotiabank Metal Line" shall have the meaning given to that term in
the recitals to this Agreement.
"Secured Hedging Agreements" shall mean, collectively at any given
time, those Hedging Agreements under which the then Maximum Hedging Exposure
does not exceed $5,000,000. In the event that the Maximum Hedging Exposure for
all of the Hedging Agreements then outstanding exceeds $5,000,000, the term
"Secured Hedging Agreements" shall exclude one or more of the most recent
Hedging Agreements (based upon the date thereof) until the Maximum Hedging
Exposure becomes $5,000,000 or less, provided that if such exclusion causes the
Maximum Hedging Exposure to be less than $5,000,000, then the last Hedging
Agreement so excluded shall become a Secured Hedging Agreement but only to the
extent of the difference between $5,000,000 and the Maximum Hedging Exposure
under the other Secured Hedging Agreements.
"Secured LCs" shall mean, collectively, the Secured Trade LCs and the
Secured Standby LCs.
"Secured Metal Obligations" shall mean an amount (not to exceed
$1,500,000 in the aggregate) equal to the difference between (a) amounts owed by
Borrower under the Scotiabank Metal Agreement, and (b) the value of the metal
bullion (determined in the manner set forth in the Scotiabank Metal Agreement)
recovered or recoverable by Scotiabank upon the occurrence of an Event of
Default.
"Secured Parties" shall mean (a) the Lenders, (b) the Noteholders, (c)
the Issuing Banks, (d) Chase, individually, (e) the Administrative Agent, (f)
the Collateral Agent, (g) Scotiabank, (h) each Lender (or Affiliate of a Lender)
which is a counterparty under a Secured Hedging Agreement, (i) the beneficiaries
of each indemnification obligation undertaken by Grantor under any Transaction
Document, and (j) the successors and assigns of each of the foregoing.
"Secured Standby LCs" shall mean, collectively at any given time, those
Standby LCs for which the aggregate LC Exposure thereunder does not exceed
$20,000,000. In the event that the aggregate LC Exposure under all of the
Standby LCs then outstanding exceeds $20,000,000, the term "Secured Standby LCs"
shall exclude one or more of the most recent Standby LCs (based upon the date of
issuance thereof) until such aggregate LC Exposure becomes $20,000,000 or less,
provided that if such exclusion causes such aggregate LC Exposure to be less
than $20,000,000, then the last Standby LC so excluded shall become a Secured
Standby LC but only to the extent of the difference between $20,000,000 and the
aggregate LC Exposure under the other Secured Standby LCs.
"Secured Trade LCs" shall mean, collectively at any given time, those
Trade LCs for which the aggregate LC Exposure thereunder does not exceed
$10,000,000. In the event that the aggregate LC Exposure under all of the Trade
LCs then outstanding exceeds $10,000,000, the term "Secured Trade LCs" shall
exclude one or more of the most recent Trade LCs (based upon the date of
issuance thereof) until such aggregate LC Exposure becomes $10,000,000 or less,
provided that if such exclusion causes such aggregate LC Exposure to be less
than $10,000,000, then the last Trade LC so excluded shall become a Secured
Trade LC but only to the extent of the difference between $10,000,000 and the
aggregate LC Exposure under the other Secured Trade LCs.
"Securities" shall mean any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or traded on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"Securities Account" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
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"Security Agreement" means this Agreement and any similar Security
Agreement executed by Borrower or any Subsidiary of Borrower in favor of the
Collateral Agent.
"Security Entitlements" shall mean the rights and property interests of
an Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning given to that term in
Section 2.01.
"Security Intermediary" shall mean (a) a clearing corporation or (b) a
Person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Standby LCs" shall mean, collectively, standby letters of credit
issued by Issuing Banks for the benefit or on the account of the Borrower or any
of its Subsidiaries, and any participation interest therein.
"Subsidiary" shall mean any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the Borrower in the Borrower's consolidated financial
statements if such financial statements were prepared in accordance with
generally accepted accounting principles, as well as any other corporation,
limited liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the ordinary voting power or, in the case of a partnership,
more than 50% of the general partnership interests are owned, controlled or
held, or (b) that is otherwise controlled, by the Borrower or one or more
subsidiaries of the Borrower or by the Borrower and one or more subsidiaries of
the Borrower.
"Subsidiary Guarantee Agreements" shall mean, collectively, the
subsidiary guarantee agreements executed and delivered by Buffalo China, Inc.,
Encore Promotions, Inc., THC, Delco International Ltd., Sakura, Inc., and
Grantor guaranteeing the obligations of the Borrower and THC under the Credit
Agreement and Note Agreement, together with any additional guarantee agreements
entered into by Subsidiaries of the Borrower in favor of the Administrative
Agent, the Lenders, the Noteholders, or the Collateral Agent.
"Subsidiary Subordination Agreements" shall mean, collectively, the
subordination agreements executed and delivered by the Borrower, Buffalo China,
Inc., Encore Promotions, Inc., THC, Delco International Ltd., Sakura, Inc., and
Grantor subordinating payment of any intra-company indebtedness owed to the
Borrower (other than intra-company indebtedness evidenced by promissory notes
pledged to the Collateral Agent) to the prior payment of the indebtedness under
the Credit Agreement or the Note Agreement, together with any additional
subordination agreements entered into by the Borrower and its Subsidiaries in
favor of the Administrative Agent, the Lenders or the Noteholders or the
Collateral Agent.
"THC" shall have the meaning given to that term in the recitals to this
Agreement.
"Trade LCs" shall mean, collectively, trade letters of credit and
bankers' acceptances issued by Issuing Banks for the benefit or on the account
of the Borrower or any of its Subsidiaries, and any participation interest
therein.
"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by Grantor or which Grantor otherwise has the right to license,
or granting to Grantor any right to use any Trademark now or hereafter owned by
any third party, and all rights of Grantor under any such agreement.
"Trademarks" shall mean all of the following: (a) all trademarks,
service marks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office or any State of the United States, and all
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extensions or renewals thereof, including those listed on Schedule III, (b) all
goodwill associated therewith or symbolized thereby and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.
"Trademark Security Agreement" shall mean the Trademark Security
Agreement in substantially the form of Exhibit D annexed hereto and being
executed concurrently herewith to be filed in the United States Patent and
Trademark Office, and any similar Trademark Security Agreement previously or
hereafter executed by Borrower or any Subsidiary of Borrower in favor of the
Collateral Agent.
"Transaction Documents" shall mean, collectively, this Agreement, the
Pledge Agreement, the Security Agreement, the Credit Agreement, the Subsidiary
Guarantee Agreements, the Subsidiary Subordination Agreements, the Note
Agreement, the Reimbursement Agreements for the Secured LCs, the Chase Working
Capital Note, the Secured Hedging Agreements, the Scotiabank Metal Agreement,
the Collateral Documents and any certificate or other document referred to or
provided for therein.
SECTION 1.02. Other Terms. Unless the context otherwise requires, terms
used in this Agreement (whether capitalized or not), other than those set forth
in Section 1.01 or elsewhere in this Agreement, shall have the meanings given to
them in the New York Uniform Commercial Code as in effect from time to time.
ARTICLE II
SECURITY INTEREST
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of Grantor's right, title and interest in,
to and under the Collateral (the "Security Interest"); provided that (a)
Securities having a Fair Market Value of $7,500 per issuer are excluded from the
Security Interest up to a maximum of $50,000 in the aggregate, (b) the Security
Interest in Securities of a Subsidiary of Grantor is limited to the Securities
of each such Subsidiary which qualifies as a Material Domestic Subsidiary and
65% of the issued and outstanding Securities of each such Subsidiary which
qualifies as a Material Foreign Subsidiary, and (c) Instruments and debt
securities having a Fair Market Value of less than $7,500 per issuer or obligor
are excluded from the Security Interest up to a maximum of $50,000 in the
aggregate. Without limiting the foregoing, the Collateral Agent is hereby
authorized to file one or more financing statements (including fixture filings),
continuation statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office or any similar
office in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
Grantor, without the signature of Grantor, and naming Grantor as debtor and the
Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
Grantor with respect to or arising out of the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Grantor represents and warrants to the Collateral Agent and the
Secured Parties that:
SECTION 3.01. Title and Authority. Grantor has good and valid rights in
and title to the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other Person other than
any consent or approval which has been obtained.
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SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in the Perfection Certificate, which are all
the filings, recordings and registrations (other than filings required to be
made in the United States Patent and Trademark Office and the United States
Copyright Office in order to perfect the Security Interest in Collateral
consisting of United States Patents, Trademarks and Copyrights) that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements.
(b) Grantor represents and warrants that a fully executed Copyright
Security Agreement, Patent Security Agreement and Trademark Security Agreement
containing descriptions of all Collateral consisting of Intellectual Property
with respect to United States Patents and United States registered Trademarks
(and Trademarks for which United States registration applications are pending)
and United States registered Copyrights have been delivered to the Collateral
Agent for recording by the United States Patent and Trademark Office and the
United States Copyright Office pursuant to 35 U.S.C. Section 261, 15 U.S.C.
Section 1060 or 17 U.S.C. Section 205 and the regulations thereunder, as
applicable, and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction, to protect the validity of and to establish a legal,
valid and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Collateral consisting
of Patents, Trademarks and Copyrights in which a security interest may be
perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, or in any
other necessary jurisdiction, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction (other than such actions as are necessary to perfect the Security
Interest with respect to any Collateral consisting of Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired or
developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other similar law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable. The Security Interest is and shall be
prior to any other Lien on any of the Collateral, other than Permitted
Encumbrances that have priority over the Security Interest by operation of law
and Liens expressly permitted by the Transaction Documents.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantor free and clear of any Lien, except for existing Liens set forth on
Schedule IV annexed hereto. The Grantor has not filed or consented to the filing
of (a) any financing statement or analogous document under the Uniform
Commercial Code or any other applicable laws covering any Collateral, (b) any
assignment in which Grantor assigns any Collateral or any security agreement or
similar instrument covering any Collateral with the United States Patent and
Trademark Office or the United States Copyright Office or (c) any assignment in
which Grantor assigns any Collateral or any security agreement or similar
instrument covering any Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document, assignment,
security agreement or similar instrument is still in effect, except, in each
case, for Liens expressly permitted pursuant to the Transaction Documents.
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ARTICLE IV
COVENANTS
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business.
(a) Grantor agrees promptly to notify the Collateral Agent in writing
of any change (i) in its corporate name or in any trade name used to identify it
in the conduct of its business or in the ownership of its properties, (ii) in
the location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility), (iii) in its identity,
corporate structure or jurisdiction of incorporation or (iv) in its Federal
Taxpayer Identification Number. Grantor agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Collateral Agent to continue at all times following such change to have a
valid, legal and perfected first priority security interest in all the
Collateral. Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by Grantor is damaged or
destroyed.
(b) Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which Grantor is engaged, but in any event to include complete accounting
records indicating all payments and proceeds received with respect to any part
of the Collateral and, at such time or times as the Collateral Agent may
reasonably request, promptly to prepare and deliver to the Collateral Agent a
duly certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. Protection of Security. Grantor shall, at its own cost
and expense, take any and all actions necessary to defend title to the
Collateral against all Persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien not
expressly permitted pursuant to the Transaction Documents.
SECTION 4.03 Maintenance of Collateral and Compliance with Laws.
(a) Grantor shall keep and maintain at its own cost and consistent with
its past practices satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts Receivable. Grantor shall furnish to the
Collateral Agent upon request such statements and schedules further identifying
and describing the Collateral as the Collateral Agent may reasonably request.
(b) Except as otherwise expressly permitted by this Agreement or the
other Transaction Documents, Grantor agrees to keep and maintain all Equipment
material to the operation of its business in good operating condition, ordinary
wear and tear excepted.
(c) Grantor shall comply in all material respects with all federal,
state and local laws, rules, regulations and decrees applicable to the
Collateral, provided that Grantor may contest the validity or applicability
thereof in good faith by proper proceedings long as such contest will not have a
Material Adverse Effect.
(d) Grantor shall maintain and preserve each contract and agreement
included within the Collateral if the failure to do so would have a Material
Adverse Effect, and will not amend or modify any such material contract or
agreement if the amendment or modification would impair the value of the
interest or rights of the Grantor thereunder.
SECTION 4.04. Additional Deliveries and Further Assurances.
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(a) Prior to or contemporaneously with the execution of this Agreement,
the Grantor shall cause to be delivered to the Collateral Agent the following
additional instruments or certificates:
(i) the Perfection Certificate, duly completed and executed;
(ii) originals of the Pledge Agreement, Copyright Security
Agreement, Patent Security Agreement and Trademark Security Agreement, duly
executed by Grantor, together with all documents and instruments required to be
delivered thereunder;
(iii) such documents and certificates as the Collateral Agent
or its counsel may reasonably request relating to the organization, existence
and good standing of Grantor, the due authorization of the Collateral Documents
by Grantor, and the incumbency of the officers executing any of the Collateral
Documents, all in form and substance reasonably satisfactory to the Collateral
Agent and its counsel;
(iv) such Uniform Commercial Code financing statements and
other documents as the Collateral Agent may reasonably request for the purpose
of perfecting the Security Interest granted by Grantor;
(v) Lien searches against Grantor conducted by a Person
reasonably satisfactory to the Collateral Agent in such jurisdictions as the
Collateral Agent may require showing the absence of Liens on the Collateral
except for Liens permitted by this Agreement;
(vi) such opinions of counsel to the Grantor as the Collateral
Agent may request and covering the matters set forth on Exhibit E, and such
other matters as the Collateral Agent may request;
(vii) certificates of insurance evidencing the insurance
required to be maintained pursuant to Section 4.11 of this Agreement; and
(viii) at the Collateral Agent's request, with respect to each
facility at which Collateral is located which is leased by the Grantor or on
which a mortgage Lien exists, landlord and/or mortgagee waivers in form and
substance reasonably satisfactory to the Collateral Agent.
(b) Grantor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be immediately pledged and
delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent. Grantor agrees that it will use its best efforts to take such
action as shall be necessary in order that all representations and warranties
hereunder shall be true and correct with respect to such Collateral within 30
days after the date it has been notified by the Collateral Agent of the specific
identification of such Collateral.
SECTION 4.05. Inspection and Verification. The Collateral Agent and
such Persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantor's own cost and expense, to (a) inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantor's affairs with the officers of the Grantor and to verify under
reasonable procedures the validity, amount, quality, quantity, value, condition
and status of, or any other matter relating to, the Collateral, and (b)
following the occurrence of an Event of Default, contact Account Debtors or any
third Person possessing such Collateral for the purpose of making such
verification. The Collateral Agent shall maintain the confidentiality of any
information it gains from such inspection or verification except that
information may be disclosed (a) to the Secured Parties, their Affiliates, and
their directors, officers, employees and agents, including accountants, legal
counsel and other advisors who need to know such information (it being
14
understood that the Person to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (e) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or participant in, or any prospective assignee of or participant in,
any of the Obligations, (f) with the prior written consent of the Borrower or
(g) to the extent such information (i) becomes publicly available other than as
a result of a breach of this Section or (ii) becomes available to the Collateral
Agent or any Secured Party on a nonconfidential basis from a source not known by
the Collateral Agent or Secured Party to be under an obligation of
confidentiality with respect thereto.
SECTION 4.06. Taxes; Encumbrances. The Grantor shall pay and discharge
all taxes, assessments, charges, fees or Liens at any time levied or placed on
the Collateral or payable in respect of the Collateral, except (a) Liens created
by the Collateral Documents, (b) Permitted Encumbrances, and (c) taxes,
assessments, changes or fees levied against the Collateral where (i) the
validity or amount thereof is being contested in good faith by proper
proceedings, (ii) the Grantor have set aside on their books adequate reserves
therefor in accordance with generally accepted accounting principles, and (iii)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect. At its option, the Collateral
Agent may discharge all such Liens and all such taxes, assessments, charges or
fees not being contested in accordance with the preceding sentence, and may pay
for the maintenance and preservation of the Collateral, in each case to the
extent Grantor fails to do so as required by this Agreement or any other
Transaction Document, and Grantor agrees to reimburse the Collateral Agent on
demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided, however, that nothing in this
Section 4.06 shall be interpreted as excusing Grantor from the performance of,
or imposing any obligation on the Collateral Agent or any Secured Party to cure
or perform, any covenants or other promises of Grantor with respect to taxes,
assessments, charges, fees or Liens and maintenance as set forth herein or in
the other Transaction Documents.
SECTION 4.07. Assignment of Security Interest. If at any time Grantor
shall take a security interest in any property having a fair market value of
$25,000 or more of an Account Debtor or any other Person to secure payment and
performance of an Account, Grantor shall promptly assign such security interest
to the Collateral Agent. Such assignment need not be filed of public record
unless necessary to continue the perfected status of the security interest
against creditors of and transferees from the Account Debtor or other Person
granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantor. Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and Grantor agrees to indemnify and hold harmless the Collateral Agent
and the Secured Parties from and against any and all liability for such
performance.
SECTION 4.09. Use and Disposition of Collateral. Grantor shall not make
or permit to be made an assignment, pledge or hypothecation of the Collateral or
shall not grant any other Lien in respect of the Collateral, except as expressly
permitted by the Transaction Documents. Grantor shall not make or permit to be
made any transfer of the Collateral and Grantor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory may be sold
in the ordinary course of business consistent with past practice and (b) unless
and until the Collateral Agent shall notify the Grantor that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantor shall not sell, convey, lease, assign, transfer or otherwise dispose
of any Collateral (which notice may be given by telephone if promptly confirmed
in writing), the Grantor may dispose of Collateral if permitted by the terms of
each Transaction Document. Without limiting the generality of the foregoing,
Grantor agrees that (a) it shall not permit any Inventory to be in the
possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest, (b) it shall use its best efforts to obtain
the written agreement of any such warehouseman, bailee, agent or processor to
hold the Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory,
15
whether arising by operation of law or otherwise, and (c) it will promptly
notify the Collateral Agent in the event any warehouseman, bailee, agent or
processor issues to Grantor a negotiable warehouse receipt or other negotiable
document with respect to Inventory and will use its best efforts to cause the
Collateral Agent to have a first priority perfected Lien therein.
SECTION 4.10. Limitation on Modification of Accounts. Grantor will not,
without the Collateral Agent's prior written consent, grant any extension of the
time of payment of any of the Accounts Receivable, compromise, compound or
settle the same for less than the full amount thereof, release, wholly or
partly, any Person liable for the payment thereof or allow any credit or
discount whatsoever thereon, other than extensions, credits, discounts,
compromises or settlements granted or made in the ordinary course of business
and consistent with its current practices.
SECTION 4.11. Insurance. Grantor will maintain or caused to be
maintained, at its own expense, with financially sound and reputable insurance
companies (a) casualty insurance covering the Collateral, including fire, theft
and other risks usually insured against by extended coverage, in an amount not
less than the fair market value of the Collateral, and (b) such other insurance
on the Collateral in such amounts (with no greater risk retention) and against
such risks as are customarily maintained by companies of established repute
engaged in the same or similar businesses operating in the same or similar
locations. Each policy of insurance covering the Collateral shall designate the
Collateral Agent as an additional insured and loss payee and shall provide 30
days minimum written notice of cancellation to the Collateral Agent. Grantor
will furnish Secured Party with certificates evidencing such insurance or, at
the Collateral Agent's request, a copy of each such policy of insurance,
together with such additional insurance information as the Collateral Agent may
reasonably request from time to time. Grantor shall give immediate written
notice to the Collateral Agent and to insurers of loss or damage to the
Collateral and shall promptly file proofs of loss with insurers. Grantor
irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as Grantor's
true and lawful agent (and attorney-in-fact) for the purpose, during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of Grantor
on any check, draft, instrument or other item of payment for the proceeds of
such policies of insurance and for making all determinations and decisions with
respect thereto. In the event that Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Collateral Agent may, without
waiving or releasing any obligation or liability of the Grantor hereunder or any
Event of Default, in its sole discretion, obtain and maintain such policies of
insurance and pay such premium and take any other actions with respect thereto
as the Collateral Agent deems advisable. All sums disbursed by the Collateral
Agent in connection with this Section 4.11, including reasonable attorneys'
fees, court costs, expenses and other charges relating thereto, shall be
payable, upon demand, by the Grantor to the Collateral Agent and shall be
additional Obligations secured hereby.
SECTION 4.12. Legend. Upon the request of the Collateral Agent, Grantor
shall legend, in form and manner satisfactory to the Collateral Agent, its
Accounts Receivable and any invoices evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and that
the Collateral Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral.
(a) Grantor agrees that it will not, nor will it permit any of its
licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of Grantor's business may become invalidated or
dedicated to the public, and agrees that, consistent with its past practices, it
shall continue to ▇▇▇▇ any products covered by a Patent with the relevant patent
number as necessary and sufficient to establish and preserve its maximum rights
under applicable patent laws.
(b) Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such
16
Trademark, (iii) display such Trademark with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law, and (iv) not use or knowingly permit
the use of such Trademark in violation of any third party rights, in each case
in a manner consistent with its past practices.
(c) Grantor (either itself or through licensees) will, for each work
covered by a material Copyright, continue to publish, reproduce, display, adopt
and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws in a manner consistent with its past practices.
(d) Grantor shall notify the Collateral Agent immediately if it knows
or has reason to know that any Patent, Trademark or Copyright material to the
conduct of its business may become abandoned, lost or dedicated to the public,
or of any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United States
Patent and Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding Grantor's ownership of any Patent,
Trademark or Copyright, its right to register the same, or to keep and maintain
the same.
(e) In no event shall Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States, unless it so
informs the Collateral Agent within 30 days after the end of the fiscal quarter
in which the application is filed and, upon request of the Collateral Agent,
executes and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence and perfect the
Collateral Agent's security interest in such Patent, Trademark or Copyright, and
Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an interest,
is irrevocable.
(f) Grantor will take all necessary steps that are consistent with the
practice in any proceeding before the United States Patent and Trademark Office,
United States Copyright Office or any office or agency in any political
subdivision of the United States, to maintain and pursue each material
application relating to the Patents, Trademarks and/or Copyrights (and to obtain
the relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
(g) In the event that Grantor has reason to believe that any Collateral
consisting of a Patent, Trademark or Copyright material to the conduct of
Grantor's business has been or is about to be infringed, misappropriated or
diluted by a third party, Grantor promptly shall notify the Collateral Agent and
shall, if consistent with good business judgment, promptly take appropriate
action to end such infringement, misappropriation or dilution, and take such
other action as is appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default, Grantor
shall use its best efforts to obtain all requisite consents or approvals from
the licensor of each Copyright License, Patent License or Trademark License to
effect the assignment of all of Grantor's right, title and interest thereunder
to the Collateral Agent or its designee.
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ARTICLE V
POWER OF ATTORNEY
Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as Grantor's true and lawful agent and attorney-in-fact, and in such capacity
the Collateral Agent shall have the right, with power of substitution for
Grantor and in Grantor's name or otherwise, for the use and benefit of the
Collateral Agent and the Secured Parties, upon the occurrence and during the
continuance of an Event of Default (a) to receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences of payment relating to the Collateral or any part thereof; (b) to
demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of Grantor on any
invoice or ▇▇▇▇ of lading relating to any of the Collateral; (d) to send
verifications of Accounts Receivable to any Account Debtor; (e) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to all or any of the Collateral; (g) to notify, or to require Grantor
to notify, Account Debtors to make payment directly to the Collateral Agent; and
(h) to use, sell, assign, transfer, pledge, make any agreement with respect to
or otherwise deal with all or any of the Collateral, and to do all other acts
and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent or any
Secured Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the monies due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of Grantor or to any claim or action against the Collateral
Agent or any Secured Party. It is understood and agreed that the appointment of
the Collateral Agent as the agent and attorney-in-fact of the Grantor for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Article shall in no event relieve Grantor of any of its
obligations hereunder or under any other Transaction Document with respect to
the Collateral or any part thereof or impose any obligation on the Collateral
Agent or any Secured Party to proceed in any particular manner with respect to
the Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which it may
have on the date of this Agreement or hereafter, whether hereunder, under any
other Transaction Document, by law or otherwise.
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ARTICLE VI
REMEDIES
SECTION 6.01. Remedies Upon Default. Upon the occurrence and during the
continuance of an Event of Default, Grantor agrees to deliver or make available
each item of Collateral to the Collateral Agent on demand at its current
location, and it is agreed that the Collateral Agent shall have the right to
take any or all of the following actions at the same or different times: (a)
with respect to any Collateral consisting of Intellectual Property, on demand,
to cause the Security Interest to become an assignment, transfer and conveyance
of any of or all such Collateral by the Grantor to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any such Collateral on such terms and
conditions and in such manner as the Collateral Agent shall determine, and (b)
with or without legal process and with or without prior notice or demand for
performance, to take possession of the Collateral and without liability for
trespass to enter any premises where the Collateral may be located for the
purpose of taking possession of or removing the Collateral and, generally, to
exercise any and all rights afforded to a secured party under the Uniform
Commercial Code or other applicable law. Without limiting the generality of the
foregoing, Grantor agrees that the Collateral Agent shall have the right,
subject to the mandatory requirements of applicable law, to sell or otherwise
dispose of all or any part of the Collateral, at public or private sale or at
any broker's board, on any securities exchange or in the over-the-counter
market, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the
Collateral for their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely, free from any claim or
right on the part of Grantor, and Grantor hereby waives (to the fullest extent
permitted by law) all rights of redemption, stay and appraisal which Grantor now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
The Collateral Agent shall give the Grantor ten (10) business days'
written notice (which Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Collateral Agent may fix and state in the
notice (if any) of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Section, any Secured Party may bid
for or purchase, free from any right of redemption, stay, valuation or appraisal
on the part of Grantor (all said rights being also hereby waived and released to
the fullest extent permitted by law), the Collateral or any part thereof offered
for sale and may make payment on account thereof by using any Obligation then
due and payable to such Secured Party from Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to Grantor therefor. For purposes hereof a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and
19
Grantor shall not be entitled to the return of the Collateral or any portion
thereof subject thereto, notwithstanding the fact that after the Collateral
Agent shall have entered into such an agreement, all Events of Default shall
have been remedied and the Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose on this Agreement
and to sell the Collateral or any portion thereof pursuant to a judgment or
decree of a court or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent
shall apply the proceeds of any collection or sale of the Collateral, as well as
any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent (in its capacity as such hereunder or under any
other Collateral Document) or by the Administrative Agent (in its
capacity as such under the Credit Agreement or under any related loan
documents) in connection with such collection or sale or otherwise in
connection with this Agreement or such other Transaction Documents,
including all court costs and the fees and expenses of its agents and
legal counsel, the repayment of all advances made by the Collateral
Agent or the Administrative Agent hereunder or under any other
Transaction Document on behalf of Grantor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Transaction Document;
SECOND, to the payment to the Secured Parties of all costs,
expenses, liabilities and advances made or incurred by each of them
under the Transaction Documents to enforce its rights to collect
payments for the Obligations owed to it, including all court costs and
the fees and expenses of its agents and legal counsel, all advances
made by a Secured Party under any other Transaction Document on behalf
of Grantor and any other costs or expenses incurred in connection with
the exercise of any right or remedy under any other Transaction
Document, and if such proceeds are insufficient to repay such amounts
in full, ratably in proportion to the amount of costs, expenses,
liabilities and advances made or incurred by each such Secured Party;
THIRD, to the payment in full of the other Obligations (the
amounts so applied to be distributed among the Secured Parties pro rata
in accordance with the terms of the Collateral Agent Agreement); and
FOURTH, to the Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, monies or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, Grantor hereby grants to the Collateral Agent
an irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantor notwithstanding any
subsequent cure of an Event of Default.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
If to the Grantor:
Kenwood Silver Company, Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President - Finance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Oneida Ltd.
▇▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Collateral Agent:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank
Bridgewater Place
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address or telecopy number for notice hereunder
by notice to the other parties. All notices given in accordance with this
Section shall be deemed to have been given on the date of receipt.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of any Transaction Document, any agreement with
respect to any of the Obligations or any other agreement or instrument relating
to any of the foregoing, (b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment to or waiver of or any consent to any departure from any Transaction
Document, or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, Grantor in
respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by Grantor herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Parties
and shall continue in full force and effect until this Agreement shall
terminate.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall
become effective when a counterpart hereof executed on behalf of Grantor shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent, and thereafter shall be binding
upon Grantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of Grantor, the Collateral Agent and the
Secured Parties and their respective successors and assigns, except that Grantor
shall not have the right to assign or transfer its rights or obligations
hereunder or any interest herein or in the Collateral (and any such assignment
or transfer shall be void) except as expressly contemplated by this Agreement
and each Transaction Document.
21
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of Grantor or the Collateral Agent that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Grantor agrees to pay upon demand to the Collateral Agent the amount of any
and all reasonable expenses, including the reasonable fees, disbursements and
other charges of its counsel and of any experts or agents, which the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from or other
realization upon any of the Collateral, (iii) the exercise, enforcement or
protection of any of the rights of the Collateral Agent hereunder, or (iv) the
failure of Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Transaction Documents, Grantor agrees to indemnify the Collateral Agent,
the Secured Parties and their Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any such Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Collateral Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Transaction
Document, the consummation of the transactions contemplated thereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Transaction Document or any
investigation made by or on behalf of the Collateral Agent or any Secured Party.
All amounts due under this Section 7.06 shall be payable on written demand
therefor given in accordance with Section 7.01.
SECTION 7.07. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent and the Secured Parties under the other Transaction
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provisions of this Agreement or any
other Transaction Documents or consent to any departure by Grantor therefrom
shall in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
Grantor in any case shall entitle Grantor to any other or further notice or
demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor with respect to which such
waiver, amendment or modification is to apply.
SECTION 7.09. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN
22
CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
cooperate in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one instrument, and shall become
effective as provided in Section 7.04. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process. (a) Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the State or Federal courts located in the
State of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and Grantor hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such State or Federal court or, to the extent permitted by
law, in such Federal court. Grantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any Secured Party may otherwise have to bring any action or proceeding relating
to this Agreement or the other Transaction Documents against Grantor or its
properties in the courts of any jurisdiction.
(b) Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Transaction Documents
in any New York State or Federal court described in subparagraph (a) above.
Grantor hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affected the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 7.14. Termination. This Agreement and the Security Interest
shall terminate when each of the following events shall have occurred: (a) all
the Obligations have been indefeasibly paid in full, (b) the Lenders have no
further commitment to lend under the Credit Agreement, (c) the LC Exposure has
been reduced to zero, (d) the Issuing Banks have no further obligation to issue
LCs or make payments to beneficiaries thereunder, (d) all Hedging Agreements
have been terminated and the obligations of Borrower and its Subsidiaries
thereunder have been satisfied, and (e) the Scotiabank Metal Agreement has been
terminated and the obligations of the Borrower thereunder have been satisfied.
This Agreement, or the Security Interest on any Collateral, may also be
terminated
23
by and with the written consent of the Collateral Agent, provided that the
Collateral Agent obtains written authorization to so consent by the Required
Secured Parties pursuant to the Collateral Agent Agreement. Upon termination of
this Agreement or the Security Interest on any Collateral, the Collateral Agent
shall execute and deliver to the Grantor, at the Grantor's expense, all
appropriate Uniform Commercial Code termination statements and similar documents
which the Grantor shall reasonably request to evidence such termination. Any
execution and delivery of termination statements or documents pursuant to this
Section 7.14 shall be without recourse to or warranty by the Collateral Agent.
[Remainder of page intentionally left blank]
24
IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.
KENWOOD SILVER COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President - Finance
JPMORGAN CHASE BANK (formerly known as The Chase
Manhattan Bank, as Collateral Agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
__________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Vice President
25