EXHIBIT 10.4
[SECOND LIEN SECURITY AGREEMENT]
EXHIBIT L
TO SECOND LIEN CREDIT AGREEMENT
================================================================================
SECOND LIEN PLEDGE AND SECURITY AGREEMENT
By
PGT INDUSTRIES, INC.
and
THE GUARANTORS PARTY HERETO
and
UBS AG, STAMFORD BRANCH,
as Collateral Agent
----------------------
Dated as of February 14, 2006
================================================================================
TABLE OF CONTENTS
Page
----
PREAMBLE................................................................... 1
RECITALS................................................................... 1
AGREEMENT.................................................................. 2
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions................................................... 2
SECTION 1.2. Interpretation................................................ 11
SECTION 1.3. Resolution of Drafting Ambiguities............................ 11
SECTION 1.4. Perfection Certificate........................................ 11
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. Grant of Security Interests................................... 11
SECTION 2.2. Filings....................................................... 12
SECTION 2.3. Second Priority Nature of Liens............................... 13
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. Delivery of Certificated Securities Collateral................ 14
SECTION 3.2. Perfection of Uncertificated Securities Collateral............ 15
SECTION 3.3. Financing Statements and Other Filings; Maintenance of
Perfected Second Priority Security Interest................... 15
SECTION 3.4. Other Actions................................................. 16
SECTION 3.5. Joinder of Additional Guarantors.............................. 21
SECTION 3.6. Supplements; Further Assurances............................... 21
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1. Title ........................................................ 22
-i-
Page
----
SECTION 4.2. Validity of Security Interest................................. 22
SECTION 4.3. Defense of Claims; Transferability of Pledged Collateral...... 22
SECTION 4.4. Other Financing Statements.................................... 23
SECTION 4.5. Chief Executive Office; Change of Name; Jurisdiction of
Organization.................................................. 23
SECTION 4.6. Location of Inventory and Equipment........................... 23
SECTION 4.7. Due Authorization and Issuance................................ 24
SECTION 4.8. Consents, etc................................................. 24
SECTION 4.9. Pledged Collateral............................................ 24
SECTION 4.10 Insurance..................................................... 24
SECTION 4.11 Payment of Taxes; Compliance with Laws; Contesting Liens;
Claims........................................................ 24
SECTION 4.12 Access to Pledged Collateral, Books and Records; Other
Information................................................... 25
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1. Pledge of Additional Securities Collateral.................... 25
SECTION 5.2. Voting Rights; Distributions; etc............................. 26
SECTION 5.3. Defaults, etc................................................. 27
SECTION 5.4. Certain Agreements of Pledgors as Issuers and Holders of
Equity Interests.............................................. 27
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1. Grant of License.............................................. 28
SECTION 6.2. Protection of Collateral Agent's Security..................... 28
SECTION 6.3. After-Acquired Property....................................... 29
SECTION 6.4. Litigation.................................................... 29
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1. Maintenance of Records........................................ 30
SECTION 7.2. Legend........................................................ 30
SECTION 7.3. Modification of Terms, etc.................................... 31
SECTION 7.4. Collection.................................................... 31
-ii-
Page
----
ARTICLE VIII
TRANSFERS
SECTION 8.1. Transfers of Pledged Collateral.............................. 31
ARTICLE IX
REMEDIES
SECTION 9.1. Remedies..................................................... 32
SECTION 9.2. Notice of Sale............................................... 34
SECTION 9.3. Waiver of Notice and Claims.................................. 34
SECTION 9.4. Certain Sales of Pledged Collateral.......................... 34
SECTION 9.5. No Waiver; Cumulative Remedies............................... 36
SECTION 9.6. Certain Additional Actions Regarding Intellectual Property... 36
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS;
APPLICATION OF PROCEEDS
SECTION 10.1. Proceeds of Casualty Events and Collateral Dispositions..... 37
SECTION 10.2. Application of Proceeds..................................... 37
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Concerning Collateral Agent................................. 37
SECTION 11.2. Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact............................................ 38
SECTION 11.3. Continuing Security Interest; Assignment.................... 39
SECTION 11.4. Termination; Release........................................ 39
SECTION 11.5. Modification in Writing..................................... 39
SECTION 11.6. Notices..................................................... 40
SECTION 11.7. Governing Law; Consent to Jurisdiction and Service of
Process; Waiver of Jury Trial............................... 40
SECTION 11.8. Severability of Provisions.................................. 41
SECTION 11.9. Execution in Counterparts................................... 41
SECTION 11.10. Business Days.............................................. 41
SECTION 11.11. Waiver of Stay............................................. 41
SECTION 11.12. No Credit for Payment of Taxes or Imposition............... 42
SECTION 11.13. No Claims Against Collateral Agent......................... 42
-iii-
Page
----
SECTION 11.14. No Release............................................... 42
SECTION 11.15. Obligations Absolute..................................... 42
SECTION 11.16. Intercreditor Agreement.................................. 43
SIGNATURES.............................................................. S-1
-iv-
SECOND LIEN PLEDGE AND SECURITY AGREEMENT
SECOND LIEN PLEDGE AND SECURITY AGREEMENT dated as of February 14,
2006 (as further amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with the provisions hereof, the
"Agreement") made by PGT INDUSTRIES, INC., a Florida corporation ("PGT
Industries" or the "Borrower"), and THE GUARANTORS LISTED ON THE SIGNATURE PAGES
HERETO (the "Original Guarantors") OR FROM TIME TO TIME PARTY HERETO BY
EXECUTION OF A JOINDER AGREEMENT (the "Additional Guarantors," and together with
the Original Guarantors, the "Guarantors"), as pledgors, assignors and debtors
(the Borrower, together with the Guarantors, in such capacities and together
with any successors in such capacities, the "Pledgors," and each, a "Pledgor"),
in favor of UBS AG, STAMFORD BRANCH, in its capacity as collateral agent (in
such capacity and together with any successor in such capacity, the "Collateral
Agent") on behalf of the Secured Parties (as defined in the Second Lien Credit
Agreement) pursuant to the Second Lien Credit Agreement (as hereinafter
defined), as pledgee, assignee and secured party.
R E C I T A L S :
A. PGT Industries, the Original Guarantors, the Collateral Agent and
the Lenders (as defined therein) (the "Lenders") have, in connection with the
execution and delivery of this Agreement, entered into that certain Second Lien
Credit Agreement, dated as of February 14, 2006 (as further amended, amended and
restated, supplemented or otherwise modified from time to time, the "Second Lien
Credit Agreement").
B. Each Original Guarantor has, pursuant to the Second Lien Credit
Agreement, unconditionally guaranteed the Obligations.
C. The Borrower and each Original Guarantor has and will continue to
receive substantial benefits from the execution, delivery and performance of the
obligations under the Second Lien Credit Agreement and the other Loan Documents
and each is, therefore, willing to enter into this Agreement.
D. Each Pledgor is or, as to Pledged Collateral (as hereinafter
defined) acquired by such Pledgor after the Closing Date will be, the legal
and/or beneficial owner of the Pledged Collateral pledged by it hereunder.
E. This Agreement is given by each Pledgor in favor of the
Collateral Agent for the benefit of the Secured Parties to secure the payment
and performance of all of the Obligations.
F. It is a condition to the obligations of the Lenders to make the
Loans under the Second Lien Credit Agreement that each Pledgor execute and
deliver the applicable Loan Documents (as defined in the Second Lien Credit
Agreement), including this Agreement.
-2-
G. In order to secure the obligations under the First Lien Credit
Agreement, the Pledgors are concurrently granting to the collateral agent under
the First Lien Credit Agreement (the "First Lien Collateral Agent"), for the
benefit of the holders of obligations under the First Lien Credit Agreement and
certain other secured parties, a first priority security interest in the Pledged
Collateral, it being understood that the relative rights and priorities of the
grantees in respect of the Pledged Collateral are governed by the Intercreditor
Agreement (as hereinafter defined).
A G R E E M E N T :
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor and the Collateral Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions.
(a) Unless otherwise defined herein or in the Second Lien Credit
Agreement, capitalized terms used herein that are defined in the UCC shall have
the meanings assigned to them in the UCC.
(b) Terms used but not otherwise defined herein that are defined in
the Second Lien Credit Agreement shall have the meanings given to them in the
Second Lien Credit Agreement. Sections 1.03 and 1.05 of the Second Lien Credit
Agreement shall apply herein mutatis mutandis.
(c) The following terms shall have the following meanings:
"Acquisition Document Rights" shall mean, with respect to each
Pledgor, collectively, all of such Pledgor's rights, title and interest in, to
and under the Acquisition Documents, including (i) all rights and remedies
relating to monetary damages, including indemnification rights and remedies, and
claims for damages or other relief pursuant to or in respect of the Acquisition
Documents (as defined in the First Lien Credit Agreement), (ii) all rights and
remedies relating to monetary damages, including indemnification rights and
remedies, and claims for monetary damages under or in respect of the agreements,
documents and instruments referred to in the Acquisition Documents or related
thereto and (iii) all proceeds, collections, recoveries and rights of
subrogation with respect to the foregoing.
-3-
"Additional Guarantors" shall have the meaning assigned to such term
in the Preamble hereof.
"Additional Pledged Interests" shall mean, collectively, with
respect to each Pledgor, (i) all options, warrants, rights, agreements,
additional membership, partnership or other equity interests of whatever class
of any issuer of Initial Pledged Interests or any interest in any such issuer,
together with all rights, privileges, authority and powers of such Pledgor
relating to such interests in each such issuer or under any Organizational
Document of any such issuer, and the certificates, instruments and agreements
representing such membership, partnership or other interests and any and all
interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such membership, partnership or other equity
interests from time to time acquired by such Pledgor in any manner and (ii) all
membership, partnership or other equity interests, as applicable, of each
limited liability company, partnership or other entity (other than a
corporation) hereafter acquired or formed by such Pledgor and all options,
warrants, rights, agreements, additional membership, partnership or other equity
interests of whatever class of such limited liability company, partnership or
other entity, together with all rights, privileges, authority and powers of such
Pledgor relating to such interests or under any Organizational Document of any
such issuer, and the certificates, instruments and agreements representing such
membership, partnership or other equity interests and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such membership, partnership or other interests, from time to time
acquired by such Pledgor in any manner.
"Additional Pledged Shares" shall mean, collectively, with respect
to each Pledgor, (i) all options, warrants, rights, agreements, additional
shares of capital stock of whatever class of any issuer of the Initial Pledged
Shares or any other equity interest in any such issuer, together with all
rights, privileges, authority and powers of such Pledgor relating to such
interests issued by any such issuer under any Organizational Document of any
such issuer, and the certificates, instruments and agreements representing such
interests and any and all interest of such Pledgor in the entries on the books
of any financial intermediary pertaining to such interests, from time to time
acquired by such Pledgor in any manner and (ii) all the issued and outstanding
shares of capital stock of each corporation hereafter acquired or formed by such
Pledgor and all options, warrants, rights, agreements or additional shares of
capital stock of whatever class of such corporation, together with all rights,
privileges, authority and powers of such Pledgor relating to such shares or
under any Organizational Document of such corporation, and the certificates,
instruments and agreements representing such shares and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such shares, from time to time acquired by such Pledgor in any
manner.
"Agreement" shall have the meaning assigned to such term in the
Preamble hereof.
"Bailee Letter" shall be an agreement in form substantially similar
to Exhibit 9 annexed hereto.
-4-
"Bank" shall have the meaning assigned to it in Section 9-102 of the
UCC.
"Claims" shall mean any and all property and other taxes,
assessments and special assessments, levies, fees and all governmental charges
imposed upon or assessed against, and landlords', carriers', mechanics',
workmen's, repairmen's, laborers', materialmen's, suppliers' and warehousemen's
Liens and other claims arising by operation of law against, all or any portion
of the Pledged Collateral.
"Collateral Account" shall mean each account number set forth on
Schedule 16 annexed to the Perfection Certificate, each in the name set forth
opposite such account number and established and maintained at the financial
institution set forth opposite such account name and number, and all property
from time to time on deposit in the Collateral Account.
"Collateral Agent" shall have the meaning set forth in the preamble.
"Commodity Account Control Agreement" shall mean a commodity account
control agreement in a form that is reasonably satisfactory to the Collateral
Agent.
"Contested Liens" shall mean, collectively, any Liens incurred in
respect of any Claims to the extent that the amounts owing in respect thereof
are not yet delinquent or are being contested and otherwise comply with the
provisions of Section 4.11 hereof; provided, however, that such Liens shall in
all respects be subject and subordinate in priority to the Lien and security
interest created by this Agreement, except if and to the extent that the law or
regulation creating, permitting or authorizing such Lien provides that such Lien
must be superior to the Lien and security interest created and evidenced hereby.
"Contracts" shall mean, collectively, with respect to each Pledgor,
all sale, service, performance, equipment or property lease contracts,
agreements and grants and all other contracts, agreements or grants (in each
case, whether written or oral, or third party or intercompany), between such
Pledgor and third parties, and all assignments, amendments, restatements,
supplements, extensions, renewals, replacements or modifications thereof.
"Control" shall mean (i) in the case of each Deposit Account,
"control," as such term is defined in Section 9-104 of the UCC, and (ii) in the
case of any Security Entitlement, "control," as such term is defined in Section
8-106 of the UCC and (iii) in the case of any Commodity Contract, "control," as
such term is defined in Section 9-106 of the UCC.
"Control Agreements" shall mean, collectively, the Deposit Account
Control Agreements, the Securities Account Control Agreements and the Commodity
Account Control Agreements.
"Copyrights" shall mean, collectively, with respect to each Pledgor,
all copyrights (whether statutory or common law, whether established or
registered in the United States or any other country or any political
subdivision thereof, whether registered or unregistered and whether
-5-
published or unpublished) and all copyright registrations and applications made
by such Pledgor, in each case, whether now owned or hereafter created or
acquired by or assigned to such Pledgor, together with any and all (i) rights
and privileges arising under applicable law with respect to such Pledgor's use
of such copyrights, (ii) renewals and extensions thereof, (iii) income, fees,
royalties, damages, claims and payments now or hereafter due and/or payable with
respect thereto, including damages and payments for past, present or future
infringements thereof, (iv) rights corresponding thereto throughout the world
and (v) rights to ▇▇▇ for past, present or future infringements thereof.
"Deposit Account Control Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 5 or such other form that is
reasonably satisfactory to the Collateral Agent.
"Deposit Accounts" shall mean, collectively, with respect to each
Pledgor, (i) all "deposit accounts" as such term is defined in the UCC and in
any event shall include the Collateral Account and all accounts and sub-accounts
relating to any of the foregoing accounts and (ii) all cash, funds, checks,
notes and instruments from time to time on deposit in any of the accounts or
sub-accounts described in clause (i) of this definition.
"Discharge of First Lien Obligations" shall have the meaning
assigned to such term in the Intercreditor Agreement.
"Distributions" shall mean, collectively, with respect to each
Pledgor, all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits and
other property, interests (debt or equity) or proceeds, including as a result of
a split, revision, reclassification or other like change of the Pledged
Securities, from time to time received, receivable or otherwise distributed to
such Pledgor in respect of or in exchange for any or all of the Pledged
Securities or Intercompany Notes.
"Excluded Account" shall mean (a) any Deposit Account maintained
solely for payroll and/or employee benefit purposes, and (b) any Deposit
Account, Securities Account or Commodities Account maintained solely to cash
collateralize unrealized losses on Hedging Obligations; provided that the
counterparty to such Hedging Obligation has a Lien permitted under such Section
6.02(p) of the Second Lien Credit Agreement on such Account or the property on
deposit therein.
"Excluded Property" shall mean:
(a) any permit, lease, license, contract or other agreement held by
any Pledgor or any contract or agreement to which any Pledgor is a party
(including any rights thereunder) that validly prohibits the creation by such
Pledgor of a security interest therein or under the terms of which the creation
of a security interest therein shall constitute or result (i) in the
abandonment, invalidation or unenforceability of any right, title or interest of
any Pledgor therein or (ii) in a breach or termination pursuant to the terms of,
or a de-
-6-
fault under, any such lease, license, contract, property rights or agreement
(other than any such permit, lease, license, contract or other agreement, the
terms of which prohibiting creation of a security interest or having the result
described in clauses (i) and (ii) above would be rendered ineffective pursuant
to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision
or provisions) of any relevant jurisdiction or any other applicable law
(including the Bankruptcy Code) or principles of equity);
(b) any permit, lease, license, contract or other agreement held by
any Pledgor to the extent that any Requirement of Law applicable thereto
prohibits the creation of a security interest therein (other than any such
permit, lease, license, contract or other agreement, to the extent that any
Requirement of Law applicable thereto prohibiting the creation of a security
interest therein would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity); and
(c) Equipment owned by any Pledgor on the Effective Date or
thereafter acquired that is subject to a Lien securing a Purchase Money
Obligation or Capital Lease Obligation permitted to be incurred pursuant to the
provisions of the Second Lien Credit Agreement if the contract or other
agreement in which such Lien is granted (or the documentation providing for such
Purchase Money Obligation or Capital Lease Obligation) validly prohibits the
creation of any other Lien on such Equipment;
provided, however, that in each case described in clauses (a), (b) and (c) of
this definition, such property shall constitute "Excluded Property" only to the
extent and for so long as such permit, lease, license, contract or other
agreement or Requirement of Law applicable thereto validly prohibits the
creation of a Lien on such property in favor of the Collateral Agent and, upon
the termination of such prohibition (howsoever occurring), such property shall
cease to constitute "Excluded Property."
"First Lien Collateral Agent" shall have the meaning assigned to
such term in recital G hereof.
"General Intangibles" shall mean, collectively, with respect to each
Pledgor, all "general intangibles," as such term is defined in the UCC, of such
Pledgor and, in any event, shall include (i) all of such Pledgor's rights, title
and interest in, to and under all insurance policies and Contracts, (ii) all
know-how and warranties relating to any of the Pledged Collateral or the
Mortgaged Property, (iii) any and all other rights, claims, choses-in-action and
causes of action of such Pledgor against any other person and the benefits of
any and all collateral or other security given by any other person in connection
therewith, (iv) all guarantees, endorsements and indemnifications on, or of, any
of the Pledged Collateral or any of the Mortgaged Property, (v) all lists,
books, records, correspondence, ledgers, printouts, files (whether in printed
form or stored electronically), tapes and other papers or materials containing
information relating to any of the Pledged Collateral or any of the Mortgaged
Property, including all customer or tenant lists,
-7-
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, appraisals, recorded knowledge, surveys, studies, engineering reports,
test reports, manuals, standards, processing standards, performance standards,
catalogs, research data, computer and automatic machinery software and programs
and the like, field repair data, accounting information pertaining to such
Pledgor's operations or any of the Pledged Collateral or any of the Mortgaged
Property and all media in which or on which any of the information or knowledge
or data or records may be recorded or stored and all computer programs used for
the compilation or printout of such information, knowledge, records or data,
(vi) all licenses, consents, permits, variances, certifications, authorizations
and approvals, however characterized, of any Governmental Authority (or any
person acting on behalf of a Governmental Authority) now or hereafter acquired
or held by such Pledgor pertaining to operations now or hereafter conducted by
such Pledgor or any of the Pledged Collateral or any of the Mortgaged Property
including building permits, certificates of occupancy, environmental
certificates, industrial permits or licenses and certificates of operation,
(vii) all rights to reserves, deferred payments, deposits, refunds,
indemnification of claims to the extent the foregoing relate to any Pledged
Collateral or Mortgaged Property and claims for tax or other refunds against any
Governmental Authority relating to any Pledged Collateral or any of the
Mortgaged Property and (viii) Goodwill.
"Goodwill" shall mean, collectively, with respect to each Pledgor,
the goodwill connected with such Pledgor's business including (i) all goodwill
connected with the use of and symbolized by any Trademark in which such Pledgor
has any interest, and (ii) all know-how, trade secrets, customer and supplier
lists, proprietary information, inventions, methods, procedures, formulae,
descriptions, compositions, technical data, drawings, specifications, name
plates, catalogs, confidential information and the right to limit the use or
disclosure thereof by any person, pricing and cost information, business and
marketing plans and proposals, consulting agreements, engineering contracts and
such other assets which relate to such goodwill.
"Guarantors" shall have the meaning assigned to such term in the
Preamble hereof.
"Initial Pledged Interests" shall mean, with respect to each
Pledgor, all membership, partnership or other equity interests (other than in a
corporation), as applicable, of each issuer described in Schedule 11 annexed to
the Perfection Certificate, together with all rights, privileges, authority and
powers of such Pledgor in and to each such issuer or under any Organizational
Document of each such issuer, and the certificates, instruments and agreements
representing such membership, partnership or other interests and any and all
interest of such Pledgor in the entries on the books of any financial
intermediary pertaining to such membership, partnership or other interests.
"Initial Pledged Shares" shall mean, collectively, with respect to
each Pledgor, the issued and outstanding shares of capital stock of each issuer
described in Schedule 11 annexed to the Perfection Certificate together with all
rights, privileges, authority and powers of such Pledgor relating to such
interests in each such issuer or under any Organizational Document
-8-
of each such issuer, and the certificates, instruments and agreements
representing such shares of capital stock and any and all interest of such
Pledgor in the entries on the books of any financial intermediary pertaining to
the Initial Pledged Shares.
"Instruments" shall mean, collectively, with respect to each
Pledgor, all "instruments," as such term is defined in Article 9 of the UCC, and
shall include all promissory notes, drafts, bills of exchange or acceptances.
"Intellectual Property Collateral" shall mean, collectively, the
Patents, Trademarks, Copyrights and Licenses.
"Intercompany Notes" shall mean, with respect to each Pledgor, all
intercompany notes described in Schedule 12 annexed to the Perfection
Certificate and intercompany notes hereafter acquired by such Pledgor and all
certificates, instruments or agreements evidencing such intercompany notes, and
all assignments, amendments, restatements, supplements, extensions, renewals,
replacements or modifications thereof to the extent permitted pursuant to the
terms hereof.
"Intercreditor Agreement" shall mean that certain intercreditor
agreement dated as of February 14, 2006, and entered into by and between UBS AG,
Stamford Branch, in its capacity as collateral agent for the First Lien Secured
Parties (as defined therein), including its successors and assigns from time to
time and UBS AG, Stamford Branch, in its capacity as collateral agent for the
Second Lien Secured Parties (as defined therein), including its successors and
assigns from time to time.
"Investment Property" shall mean all securities, whether
certificated or uncertificated, Security Entitlements, Securities Accounts,
Commodity Contracts or Commodity Accounts, excluding, however, the Securities
Collateral.
"Joinder Agreement" shall mean an agreement substantially in the
form annexed hereto as Exhibit 3.
"Lenders" shall have the meaning assigned to such term in Recital A
hereof.
"Licenses" shall mean, collectively, with respect to each Pledgor,
all license and distribution agreements with, and covenants not to ▇▇▇, any
other party with respect to any Patent, Trademark or Copyright or any other
patent, trademark or copyright, whether such Pledgor is a licensor or licensee,
distributor or distributee under any such license or distribution agreement,
together with any and all (i) renewals, extensions, supplements and
continuations thereof, (ii) income, fees, royalties, damages, claims and
payments now and hereafter due and/or payable thereunder and with respect
thereto including damages and payments for past, present or future violations
thereof, (iii) rights to ▇▇▇ for past, present and future violations thereof and
(iv) other rights to use, exploit or practice any or all of the Patents,
Trademarks or Copyrights or any other patent, trademark or copyright of third
parties.
-9-
"March 2006 Note" means that certain note, made by Secura Screen
Inc. in favor of Borrower, which matures on March 15, 2006 and is identified on
Schedule 12 to the Perfection certificate.
"Mortgaged Property" shall have the meaning assigned to such term in
the Mortgages.
"Original Guarantors" shall have the meaning assigned to such term
in the Preamble hereof.
"Patents" shall mean, collectively, with respect to each Pledgor,
all patents issued or assigned to and all patent applications and registrations
made by such Pledgor (whether established or registered or recorded in the
United States or any other country or any political subdivision thereof),
together with any and all (i) rights and privileges arising under applicable law
with respect to such Pledgor's use of any patents, (ii) inventions and
improvements described and claimed therein, (iii) reissues, divisionals,
continuations, extensions and continuations-in-part thereof, (iv) income, fees,
royalties, damages, claims and payments now or hereafter due and/or payable
thereunder and with respect thereto including damages and payments for past,
present or future infringements thereof, (v) rights corresponding thereto
throughout the world and (vi) rights to ▇▇▇ for past, present or future
infringements thereof.
"Perfection Certificate" shall mean that certain perfection
certificate dated February 14, 2006, executed and delivered by each Pledgor in
favor of the Collateral Agent for the benefit of the Secured Parties, and each
other Perfection Certificate (which shall be in form and substance reasonably
acceptable to the Collateral Agent) executed and delivered by the applicable
Guarantor in favor of the Collateral Agent for the benefit of the Secured
Parties contemporaneously with the execution and delivery of each Joinder
Agreement executed in accordance with Section 3.5 hereof, in each case, as the
same may be amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with the Second Lien Credit Agreement or upon
the request of the Collateral Agent.
"Pledge Amendment" shall have the meaning assigned to such term in
Section 5.1 hereof.
"Pledged Collateral" shall have the meaning assigned to such term in
Section 2.1(b) hereof.
"Pledged Interests" shall mean, collectively, the Initial Pledged
Interests and the Additional Pledged Interests;
"Pledged Securities" shall mean, collectively, the Pledged
Interests, the Pledged Shares and the Successor Interests.
-10-
"Pledged Shares" shall mean, collectively, the Initial Pledged
Shares and the Additional Pledged Shares
"Pledgor" shall have the meaning assigned to such term in the
Preamble hereof.
"Second Lien Copyright Security Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 6.
"Second Lien Credit Agreement" shall have the meaning assigned to
such term in Recital A hereof.
"Second Lien Patent Security Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 7.
"Second Lien Trademark Security Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 8.
"Second Priority" shall mean, with respect to any Lien purported to
be created in any Collateral pursuant to any Loan Documents, that such Lien is
second in priority only to the Liens created under the First Lien Loan Documents
and other Permitted Collateral Liens.
"Securities Account Control Agreement" shall mean an agreement
substantially in the form annexed hereto as Exhibit 4 or such other form that is
reasonably satisfactory to the Collateral Agent.
"Securities Collateral" shall mean, collectively, the Pledged
Securities, the Intercompany Notes and the Distributions.
"Security Interest" shall have the meaning assigned to such term in
Section 2.2.
"Successor Interests" shall mean, collectively, with respect to each
Pledgor, all shares of each class of the capital stock of the successor
corporation or interests or certificates of the successor limited liability
company, partnership or other entity owned by such Pledgor (unless such
successor is such Pledgor itself) formed by or resulting from any consolidation
or merger in which any person listed in Schedule 1(a) annexed to the Perfection
Certificate is not the surviving entity.
"Trademarks" shall mean, collectively, with respect to each Pledgor,
all trademarks (including service marks), slogans, logos, certification marks,
trade dress, domain names, corporate names and trade names, whether registered
or unregistered, owned by or assigned to such Pledgor and all registrations and
applications for the foregoing (whether statutory or common law and whether
established or registered in the United States or any other country or any
political subdivision thereof), together with any and all (i) rights and
privileges arising under applicable law with respect to such Pledgor's use of
any trademarks and all goodwill of the busi-
-11-
ness connected with the use of any symbolized by any Trademarks, (ii) extensions
and renewals thereof, (iii) income, fees, royalties, damages and payments now
and hereafter due and/or payable thereunder and with respect thereto, including
damages, claims and payments for past, present or future infringements thereof,
(iv) rights corresponding thereto throughout the world and (v) rights to ▇▇▇ for
past, present and future infringements thereof.
"UCC" shall mean the Uniform Commercial Code as in effect on the
Closing Date in the State of New York; provided, however, that if by reason of
mandatory provisions of law, any or all of the perfection or priority of the
Collateral Agent's and the Secured Parties' security interest in any item or
portion of the Pledged Collateral is governed by the Uniform Commercial Code as
in effect in a jurisdiction other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in effect on the Closing Date in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or priority and for purposes of definitions relating to such
provisions.
SECTION 1.2. Interpretation. The rules of interpretation specified
in the Second Lien Credit Agreement (including Section 1.03 thereof) shall be
applicable to this Agreement.
SECTION 1.3. Resolution of Drafting Ambiguities. Each Pledgor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Collateral Agent) shall not be employed in the
interpretation hereof.
SECTION 1.4. Perfection Certificate. The Collateral Agent and each
Secured Party agree that the Perfection Certificate and all descriptions of
Pledged Collateral, schedules, amendments and supplements thereto are and shall
at all times remain a part of this Agreement.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. Grant of Security Interests.
(a) As collateral security for the payment and performance in full
of all of the Obligations, each Pledgor hereby pledges and grants to the
Collateral Agent for the benefit of the Secured Parties a lien on and security
interest in and to all of the right, title and interest of such Pledgor in, to
and under the Pledged Collateral. The Liens granted hereunder to secure the
Obligations are collectively referred to herein as the "Security Interest."
-12-
(b) "Pledged Collateral" shall mean all of the following, in each
case, wherever located, whether now existing or hereafter arising or acquired
from time to time:
(i) all Accounts;
(ii) all Equipment, Goods, Inventory and Fixtures;
(iii) all Documents, Instruments and Chattel Paper;
(iv) all Letters of Credit and Letter-of-Credit Rights;
(v) all Securities Collateral;
(vi) all Collateral Accounts;
(vii) all Investment Property;
(viii) all Intellectual Property Collateral;
(ix) the Commercial Tort Claims described on Schedule 15 to the
Perfection Certificate;
(x) all General Intangibles;
(xi) all Deposit Accounts;
(xii) all Acquisition Documents and Acquisition Document Rights;
(xiii) all Supporting Obligations;
(xiv) all books and records relating to any or all of the foregoing;
and
(xv) to the extent not covered by clauses (i) through (xiv) of this
sentence, all other personal property of such Pledgor, whether tangible or
intangible and all Proceeds and products of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of, each of the foregoing, any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such Pledgor from time to time with
respect to any of the foregoing.
Notwithstanding anything to the contrary contained in clauses (i)
through (xv) above, the security interest created by this Agreement shall not
extend to, and the term "Pledged Collateral" shall not include, (a) any Excluded
Property, (b) any Equity Interests of a Foreign Subsidiary to the extent not
required to be pledged pursuant to Section 5.11 of the Credit Agreement and (c)
applications for trademarks or service marks filed pursuant to Section
1051(1)(b) of the ▇▇▇▇▇▇ Act on the basis of the Pledgor's "intent-to-use" such
trademark or service ▇▇▇▇ un-
-13-
til such time as Pledgor has filed, and the U.S. Patent and Trademark Office
accepts, an amendment to allege use or a statement of use pursuant to Section
1051(c) or 1051(d) of the ▇▇▇▇▇▇ Act, at which time any such intent-to-use
trademark or service ▇▇▇▇ application shall automatically be included in the
Pledged Collateral, and Pledgor agrees, notwithstanding Section 6.02 of the
Second Lien Credit Agreement, not to grant any consensual Lien in such
intent-to-use application, unless and until such time as such intent-to-use
application is included in the Pledged Collateral; and (i) the Pledgors shall
from time to time at the request of the Collateral Agent give written notice to
the Collateral Agent identifying in reasonable detail the Excluded Property (and
stating in such notice that such property constitutes "Excluded Property") and
shall provide to the Collateral Agent such other information regarding the
Excluded Property as the Collateral Agent may reasonably request and (ii) from
and after the Closing Date, no Pledgor shall permit to become effective in any
document creating, governing or providing for any material permit, lease or
license, a provision that would prohibit the creation of a Lien on such permit,
lease or license in favor of the Collateral Agent unless such Pledgor believes,
in its reasonable judgment, that such prohibition is usual and customary in
transactions of such type.
SECTION 2.2. Filings.
(a) Each Pledgor hereby irrevocably authorizes the Collateral Agent
at any time and from time to time to file in any relevant jurisdiction any
initial financing statements (including fixture filings), amendments thereto and
terminations thereof that contain the information required by Article 9 of the
Uniform Commercial Code of each applicable jurisdiction for the filing of any
financing statement or amendment relating to the Pledged Collateral, including
(i) whether such Pledgor is an organization, the type of organization and any
organizational identification number issued to such Pledgor, (ii) any financing
or continuation statements or other documents without the signature of such
Pledgor where permitted by law, including the filing of a financing statement
describing the Pledged Collateral as "all assets in which the Pledgor now owns
or hereafter acquires rights and all proceeds thereof" and (iii) in the case of
a financing statement filed as a fixture filing or covering Pledged Collateral
constituting minerals or the like to be extracted or timber to be cut, a
sufficient description of the real property to which such Pledged Collateral
relates. Each Pledgor agrees to provide all information described in the
immediately preceding sentence to the Collateral Agent promptly upon its
request.
(b) Each Pledgor hereby further authorizes the Collateral Agent to
file 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), the Second Lien Copyright Security Agreement, the Second Lien Patent
Security Agreement and the Second Lien Trademark Security Agreement, or other
documents for the purpose of perfecting, confirming, continuing, enforcing or
protecting the security interest granted by such Pledgor hereunder, without the
signature of such Pledgor, and naming such Pledgor, as debtor, and the
Collateral Agent, as secured party.
-14-
SECTION 2.3. Second Priority Nature of Liens. Notwithstanding
anything herein to the contrary, the liens and security interests granted to the
Collateral Agent pursuant to this Agreement shall be Second Priority liens on
the security interests in the Pledged Collateral (second only to the lien
securing the First Lien Obligations (as defined in the Intercreditor Agreement))
and other Permitted Collateral Liens and the exercise of any right or remedy by
the Collateral Agent hereunder is subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern and control. Notwithstanding any thing herein to the contrary, prior to
the Discharge of First Lien Obligations, (i) the requirements of this Agreement
to endorse, sign or deliver Collateral to the Collateral Agent shall be deemed
satisfied by endorsement, assignment or delivery of such Collateral to the First
Lien Collateral Agent (as bailee for the Collateral Agent) and (ii) any
endorsement, assignment or delivery to the First Lien Collateral Agent (as
bailee for the Collateral Agent) shall be deemed an endorsement, assignment or
delivery to the Collateral Agent for all purposes hereunder.
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. Delivery of Certificated Securities Collateral. Each
Pledgor represents and warrants that all certificates, agreements or instruments
representing or evidencing the Securities Collateral (other than Distributions
in the form of Instruments) in existence on the Effective Date have been
delivered to the Collateral Agent in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in blank and
that the Collateral Agent has a perfected Second Priority security interest
(subject to Permitted Collateral Liens) therein. Each Pledgor hereby agrees that
all certificates, agreements or instruments representing or evidencing
Securities Collateral (other than Distributions in the form of Instruments)
acquired by such Pledgor after the Effective Date shall promptly upon receipt
thereof by such Pledgor be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto. All certificated Securities Collateral shall
be in suitable form for transfer by delivery or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time upon the occurrence and during the continuance of any
Event of Default, to endorse, assign or otherwise transfer to or to register in
the name of the Collateral Agent or any of its nominees or endorse for
negotiation any or all of the Securities Collateral, without any indication that
such Securities Collateral is subject to the security interest hereunder. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right at any time to exchange certificates
representing or evidencing Securities Collateral for certificates of smaller or
larger denominations.
-15-
SECTION 3.2. Perfection of Uncertificated Securities Collateral.
Each Pledgor represents and warrants that, upon the filing of all UCC financing
statements naming each Pledgor as "debtor" and the Collateral Agent as "secured
party" and describing the Pledged Collateral in the filing offices set forth
opposite such Pledgor's name on Schedule 7 annexed to the Perfection Certificate
(as such schedule may be amended or supplemented from time to time), the
Collateral Agent will have a perfected Second Priority security interest
(subject to Permitted Collateral Liens) in all uncertificated Pledged Securities
pledged by such Pledgor hereunder that are in existence on the Effective Date.
Each Pledgor hereby agrees that if any of the Pledged Securities are at any time
not evidenced by certificates of ownership, then each applicable Pledgor shall,
to the extent permitted by applicable law, (i) if necessary or desirable to
perfect a security interest in such Pledged Securities, cause such pledge to be
recorded on the equityholder register or the books of the issuer, cause the
issuer to execute and deliver to the Collateral Agent an acknowledgment of the
pledge of such Pledged Securities substantially in the form of Exhibit 1 annexed
hereto, execute any customary pledge forms or other documents necessary or
appropriate to complete the pledge and give the Collateral Agent the right to
transfer such Pledged Securities under the terms hereof and, upon request,
provide to the Collateral Agent an opinion of counsel, in form and substance
reasonably satisfactory to the Collateral Agent, confirming such pledge and
perfection thereof and (ii) after the occurrence and during the continuance of
an Event of Default, use its commercially reasonable efforts to cause such
Pledged Securities to become certificated and delivered to the Collateral Agent
in accordance with the provisions of Section 3.1.
SECTION 3.3. Financing Statements and Other Filings; Maintenance of
Perfected Second Priority Security Interest. Each Pledgor represents and
warrants that all filings necessary to perfect the security interest granted by
it to the Collateral Agent in respect of the Pledged Collateral have been
delivered to the Collateral Agent in completed and, to the extent necessary or
appropriate, duly executed form for filing in each governmental, municipal or
other office specified in Schedule 7 annexed to the Perfection Certificate;
provided, however, that the subsequent recordation of one or more of the
documents attached hereto as Exhibit 6, 7 or 8 may be necessary to perfect the
security interest in any issued registrations and applications for other U.S.
Copyrights, Patents or Trademarks that are acquired by any of the Pledgors after
the date of the Security Agreement and additional filings and/or other actions
may be necessary to perfect the Collateral Agent's security interest in any
Copyrights, Patents or Trademarks that are created under the laws of
jurisdictions outside the United States. Each Pledgor agrees that at the sole
cost and expense of the Pledgors, (i) such Pledgor will maintain the security
interest created by this Agreement in the Pledged Collateral as a perfected
Second Priority security interest (subject to Permitted Collateral Liens) to the
extent such priority and perfection may be legally obtained and maintained and
shall defend such security interest against the claims and demands of all
persons except Permitted Collateral Liens, (ii) such Pledgor shall furnish to
the Collateral Agent from time to time statements and schedules further
identifying and describing the Pledged Collateral and such other reports in
connection with the Pledged Collateral as the Collateral Agent may reasonably
request, all in reasonable detail, and (iii) at any time and from time to time,
upon the written request of the Collateral Agent, such Pledgor shall promptly
and duly execute and
-16-
deliver, and file and have recorded, such further instruments and documents and
take such further action as the Collateral Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and the
rights and powers herein granted, including the filing of any financing
statements, continuation statements and other documents under the Uniform
Commercial Code (or other similar laws) in effect in any jurisdiction with
respect to the security interest created hereby and the execution and delivery
of Control Agreements, all in form reasonably satisfactory to the Collateral
Agent and in such offices (including the United States Patent and Trademark
Office and the United States Copyright Office) wherever reasonably required by
law to perfect, continue and maintain a valid, enforceable, Second Priority
security interest in the Pledged Collateral (subject to Permitted Collateral
Liens) as provided herein to the extent such perfection and priority may be
achieved by the filing of such documents and to preserve the other rights and
interests granted to the Collateral Agent hereunder, as against third parties,
with respect to the Pledged Collateral.
SECTION 3.4. Other Actions. In order to further ensure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Collateral Agent's security interests in the Pledged Collateral,
each Pledgor represents and warrants (as to itself) as follows and agrees, in
each case at such Pledgor's own expense, to take the following actions with
respect to the following Pledged Collateral:
(a) Instruments and Tangible Chattel Paper. (i) No amounts payable
under or in connection with any of the Pledged Collateral are evidenced by any
Instrument or Tangible Chattel Paper other than such Instruments and Tangible
Chattel Paper listed in Schedule 12 annexed to the Perfection Certificate and
(ii) each Instrument and each item of Tangible Chattel Paper listed in Schedule
12 annexed to the Perfection Certificate has been properly endorsed, assigned
and delivered to, or otherwise subjected to the control of, the Collateral
Agent, accompanied by instruments of transfer or assignment duly executed in
blank (other than the March 2006 Note). If any amount then payable under or in
connection with any of the Pledged Collateral shall be evidenced by any
Instrument or Tangible Chattel Paper, and such amount, together with all amounts
payable evidenced by any Instrument or Tangible Chattel Paper not previously
delivered to the Collateral Agent exceeds $500,000 in the aggregate for all
Pledgors, the Pledgor acquiring such Instrument or Tangible Chattel Paper shall
forthwith endorse, assign and deliver the same to, or otherwise subjected to the
control of, the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
specify. Notwithstanding the foregoing, the Pledgors shall not be required to
deliver the March 2006 Note to the Collateral Agent unless and until such
delivery is required b Section 5.14 of the Second Lien Credit Agreement.
(b) Deposit Accounts. (i) Each Pledgor has neither opened nor
maintains any Deposit Accounts other than the accounts listed in Schedule 16
annexed to the Perfection Certificate and (ii) the Collateral Agent has a
perfected Second Priority security interest in each Deposit Account listed in
Schedule 16 annexed to the Perfection Certificate by
-17-
Control (other than Excluded Accounts). No Pledgor shall hereafter establish and
maintain any Deposit Account unless (1) the applicable Pledgor shall have given
the Collateral Agent 15 days' prior written notice of its intention to establish
such new Deposit Account with a Bank, (2) such Bank shall be reasonably
acceptable to the Collateral Agent and (3) such Bank and such Pledgor shall have
duly executed and delivered to the Collateral Agent a Deposit Account Control
Agreement with respect to such Deposit Account (other than an Excluded Account).
Each Pledgor agrees that at the time it establishes any additional Deposit
Accounts (other than Excluded Accounts) it shall enter into a duly authorized,
executed and delivered Deposit Account Control Agreement with respect to such
Deposit Account. The Collateral Agent agrees with each Pledgor that the
Collateral Agent shall not give any instructions directing the disposition of
funds from time to time credited to any Deposit Account or withhold any
withdrawal rights from such Pledgor with respect to funds from time to time
credited to any Deposit Account unless an Event of Default has occurred and is
continuing. The provisions of this Section 3.4(b) shall not apply to the
Collateral Account or to any other Deposit Accounts for which the Collateral
Agent is the Bank. No Pledgor shall grant Control of any Deposit Account (other
than a Deposit Account which is deemed an Excluded Account pursuant to clause
(b) of the definition of "Excluded Account") to any person other than the
Collateral Agent and, prior to the Discharge of First Lien Obligations, the
First Lien Collateral Agent. Notwithstanding anything to the contrary herein, no
Pledgor shall be required to deliver a Deposit Account Control Agreement with
respect to the Deposit Accounts designated on Schedule 16 to the Perfection
Certificate as Deposit Accounts to be closed by Borrower; provided that such
Deposit Account are permanently closed not later than ninety (90) days following
the Effective Date.
(c) Investment Property. (i) Each Pledgor (1) has no Securities
Accounts or Commodity Accounts other than those listed in Schedule 16 annexed to
the Perfection Certificate and the Collateral Agent has a perfected Second
Priority security interest (subject to Permitted Collateral Liens) in such
Securities Accounts and Commodity Accounts (other than Excluded Accounts) by
Control, (2) does not hold, own or have any interest in any certificated
securities or uncertificated securities other than those constituting Pledged
Securities and those maintained in Securities Accounts or Commodity Accounts
listed in Schedule 16 annexed to the Perfection Certificate and (3) as of the
Effective Date, has entered into a duly authorized, executed and delivered
Securities Account Control Agreement or a Commodity Account Control Agreement
with respect to each Securities Account or Commodity Account listed in Schedule
16 annexed to the Perfection Certificate (other than Excluded Accounts), as
applicable.
(ii) If any Pledgor shall at any time hold or acquire any
certificated securities constituting Investment Property, such Pledgor shall
promptly (a) endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank, all in form and substance reasonably satisfactory to the Collateral Agent
or (b) deliver such securities into a Securities Account with respect to
-18-
which a Control Agreement is in effect in favor of the Collateral Agent. If any
securities now or hereafter acquired by any Pledgor constituting Investment
Property are uncertificated and are issued to such Pledgor or its nominee
directly by the issuer thereof, such Pledgor shall promptly notify the
Collateral Agent thereof and pursuant to an agreement in form and substance
satisfactory to the Collateral Agent, either (a) cause the issuer to agree to
comply with instructions from the Collateral Agent as to such securities,
without further consent of any Pledgor or such nominee, (b) cause a Security
Entitlement with respect to such uncertificated security to be held in a
Securities Account with respect to which the Collateral Agent has Control or (c)
arrange for the Collateral Agent to become the registered owner of the
securities. Pledgor shall not hereafter establish and maintain any Securities
Account or Commodity Account with any Securities Intermediary or Commodity
Intermediary unless (1) the applicable Pledgor shall have given the Collateral
Agent 30 days' (or such shorter period as the Collateral Agent may approve)
prior written notice of its intention to establish such new Securities Account
or Commodity Account with such Securities Intermediary or Commodity
Intermediary, (2) such Securities Intermediary or Commodity Intermediary shall
be reasonably acceptable to the Collateral Agent and (3) such Securities
Intermediary or Commodity Intermediary, as the case may be, and such Pledgor
shall have duly executed and delivered a Control Agreement with respect to such
Securities Account or Commodity Account, as the case may be, upon which Schedule
16 shall be deemed to be amended to cover such additional Collateral. Each
Pledgor shall accept any cash and Investment Property in trust for the benefit
of the Collateral Agent and within three (3) Business Days of actual receipt
thereof, deposit any cash or Investment Property and any new securities,
instruments, documents or other property by reason of ownership of the
Investment Property (other than payments of a kind described in Section 7.4
hereof) received by it into a Controlled Account. The Collateral Agent agrees
with each Pledgor that the Collateral Agent shall not give any Entitlement
Orders or instructions or directions to any issuer of uncertificated securities,
Securities Intermediary or Commodity Intermediary, and shall not withhold its
consent to the exercise of any withdrawal or dealing rights by such Pledgor,
unless an Event of Default has occurred and is continuing, or, after giving
effect to any such investment and withdrawal rights would occur. The provisions
of this Section 3.4(c) shall not apply to any Financial Assets credited to a
Securities Account for which the Collateral Agent is the Securities
Intermediary. No Pledgor shall grant control over any Investment Property (other
than a Deposit Account which is deemed an Excluded Account pursuant to clause
(b) of the definition of "Excluded Account") to any person other than the
Collateral Agent and, prior to the Discharge of First Lien Obligations, the
First Lien Collateral Agent.
(iii) As between the Collateral Agent and the Pledgors, the Pledgors
shall bear the investment risk with respect to the Investment Property and
Pledged Securities, and the risk of loss of, damage to, or the destruction of
the Investment Property and Pledged Securities, whether in the possession of, or
maintained as a security entitlement or deposit by, or subject to the control
of, the Collateral Agent, a Securities Intermediary, Commod-
-19-
ity Intermediary, any Pledgor or any other person; provided, however, that
nothing contained in this Section 3.4(c) shall release or relieve any Securities
Intermediary or Commodity Intermediary of its duties and obligations to the
Pledgors or any other person under any Control Agreement or under applicable
law. Each Pledgor shall promptly pay all Claims and fees of whatever kind or
nature with respect to the Investment Property and Pledged Securities pledged by
it under this Agreement. In the event any Pledgor shall fail to make such
payment contemplated in the immediately preceding sentence, the Collateral Agent
may do so for the account of such Pledgor and the Pledgors shall promptly
reimburse and indemnify the Collateral Agent from all costs and expenses
incurred by the Collateral Agent under this Section 3.4(c) in accordance with
Section 11.03 of the Second Lien Credit Agreement.
(d) Electronic Chattel Paper and Transferable Records. No amount
under or in connection with any of the Pledged Collateral is evidenced by any
Electronic Chattel Paper or any "transferable record" (as that term is defined
in Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction) other than such Electronic Chattel Paper
and transferable records listed in Schedule 12 annexed to the Perfection
Certificate. If any amount payable under or in connection with any of the
Pledged Collateral shall be evidenced by any Electronic Chattel Paper or any
transferable record, the Pledgor acquiring such Electronic Chattel Paper or
transferable record shall promptly notify the Collateral Agent thereof and shall
take such action as the Collateral Agent may reasonably request to vest in the
Collateral Agent, after the Discharge of First Lien Obligations, control under
UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201
of the Federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record. The requirement in the
preceding sentence shall apply to the extent that such amount, together with all
amounts payable evidenced by Electronic Chattel Paper or any transferable record
in which the Collateral Agent has not been vested control within the meaning of
the statutes described in this sentence exceeds $500,000 in the aggregate for
all Pledgors. The Collateral Agent agrees with such Pledgor that the Collateral
Agent will arrange, pursuant to procedures satisfactory to the Collateral Agent
and so long as such procedures will not result in the Collateral Agent's loss of
control, for the Pledgor to make alterations to the Electronic Chattel Paper or
transferable record permitted under UCC Section 9-105 or, as the case may be,
Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or Section 16 of the Uniform Electronic Transactions Act for a party in
control to allow without loss of control, unless an Event of Default has
occurred and is continuing or would occur after taking into account any action
by such Pledgor with respect to such Electronic Chattel Paper or transferable
record.
(e) Letter-of-Credit Rights. If any Pledgor is at any time a
beneficiary under a Letter of Credit now or hereafter issued in favor of such
Pledgor, other than a Letter of
-20-
Credit issued pursuant to the First Lien Credit Agreement, such Pledgor shall
promptly notify the Collateral Agent thereof and, after the Discharge of First
Lien Obligations, such Pledgor shall, at the request of the Collateral Agent,
pursuant to an agreement in form and substance reasonably satisfactory to the
Collateral Agent, either (i) arrange for the issuer and any confirmer of such
Letter of Credit to consent to an assignment to the Collateral Agent of the
proceeds of any drawing under the Letter of Credit or (ii) arrange for the
Collateral Agent to become the transferee beneficiary of such Letter of Credit,
with the Collateral Agent agreeing, in each case, that the proceeds of any
drawing under the Letter of Credit are to be applied as provided in the First
Lien Credit Agreement. The actions in the preceding sentence shall be taken to
the extent that the amount under such Letter of Credit, together with all
amounts under Letters of Credit for which the actions described above in clause
(i) and (ii) have not been taken, exceeds $500,000 in the aggregate for all
Pledgors.
(f) Commercial Tort Claims. As of the Effective Date each Pledgor
hereby represents and warrants that it holds no Commercial Tort Claims other
than those listed in Schedule 15 annexed to the Perfection Certificate. If any
Pledgor shall at any time hold or acquire a Commercial Tort Claim having a value
together with all other Commercial Tort Claims of all Pledgors in which the
Collateral Agent does not have a security interest in excess of $500,000 in the
aggregate, such Pledgor shall immediately notify the Collateral Agent in writing
signed by such Pledgor of the brief details thereof and grant to the Collateral
Agent in such writing a security interest therein and in the Proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent.
(g) Landlord's Access Agreements/Bailee Letters. Each Pledgor shall
use commercially reasonable efforts to obtain a Bailee Letter, Landlord Access
Agreement and/or landlord's lien waiver, as applicable, from all such bailees
and landlords, as applicable, who from time to time have possession of Pledged
Collateral in the ordinary course of such Pledgor's business and if reasonably
requested by the Collateral Agent. A waiver of bailee's lien shall not be
required if the value of the Pledged Collateral held by such bailee is less then
$250,000, provided that the aggregate value of the Pledged Collateral held by
all bailees who have not delivered a Bailee Letter is less than $500,000 in the
aggregate.
(h) Motor Vehicles. Upon the request of the Collateral Agent, each
Pledgor shall deliver to the Collateral Agent originals of the certificates of
title or ownership for the motor vehicles (and any other Equipment covered by
Certificates of Title or ownership) owned by it with the Collateral Agent listed
as lienholder therein. Such requirement shall apply to the Pledgors if any such
motor vehicle (or any such other Equipment) is valued at over $150,000, provided
that the value of all such motor vehicles (and such Equipment as to which any
Pledgor has not delivered a Certificate of Title or ownership) is over
$1,000,000.
-21-
SECTION 3.5. Joinder of Additional Guarantors. The Pledgors shall
cause each Subsidiary of the Borrower which, from time to time, after the
Effective Date shall be required to pledge any assets to the Collateral Agent
for the benefit of the respective Secured Parties pursuant to the provisions of
the Second Lien Credit Agreement, (a) in the case of a Subsidiary organized in
the United States, to execute and deliver to the Collateral Agent (i) a Joinder
Agreement substantially in the form of Exhibit 3 annexed hereto within thirty
(30) Business Days (or such longer period agreed to by the Collateral Agent in
its sole discretion) of the date on which it was acquired or created and (ii) a
Perfection Certificate, in each case, within thirty (30) Business Days (or such
longer period agreed to by the Collateral Agent in its sole discretion) of the
date on which it was acquired or created, or (b) in the case of a Subsidiary
organized outside of the United States required to pledge any assets to the
Collateral Agent, to execute and deliver such documentation as the Collateral
Agent shall reasonably request and, in each case, upon such execution and
delivery, such Subsidiary shall constitute a "Guarantor" and a "Pledgor" for all
purposes hereunder with the same force and effect as if originally named as a
Guarantor and Pledgor herein. The execution and delivery of such Joinder
Agreements shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor or Borrower and Pledgor as a
party to this Agreement.
SECTION 3.6. Supplements; Further Assurances. Each Pledgor shall
take such further actions, and execute and deliver to the Collateral Agent such
additional assignments, agreements, supplements, powers and instruments, as the
Collateral Agent may in its reasonable judgment deem necessary or appropriate,
wherever required by law, in order to perfect, preserve and protect the security
interest in the Pledged Collateral as provided herein and the rights and
interests granted to the Collateral Agent hereunder, to carry into effect the
purposes hereof or better to assure and confirm unto the Collateral Agent the
Pledged Collateral or permit the Collateral Agent to exercise and enforce its
rights, powers and remedies hereunder with respect to any Pledged Collateral.
Without limiting the generality of the foregoing, each Pledgor shall make,
execute, endorse, acknowledge, file or refile and/or deliver to the Collateral
Agent from time to time upon reasonable request such lists, descriptions and
designations of the Pledged Collateral, copies of warehouse receipts, receipts
in the nature of warehouse receipts, bills of lading, documents of title,
vouchers, invoices, schedules, confirmatory assignments, supplements, additional
security agreements, conveyances, financing statements, transfer endorsements,
powers of attorney, certificates, reports and other assurances or instruments as
the Collateral Agent shall reasonably request. If an Event of Default has
occurred and is continuing, the Collateral Agent may institute and maintain, in
its own name or in the name of any Pledgor, such suits and proceedings as the
Collateral Agent may be advised by counsel shall be necessary or expedient to
prevent any impairment of the security interest in or the perfection thereof in
the Pledged Collateral. All of the foregoing shall be at the sole cost and
expense of the Pledgors.
-22-
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants as follows:
SECTION 4.1. Title. Except for the security interest granted to the
Collateral Agent for the ratable benefit of the Secured Parties pursuant to this
Agreement and Permitted Collateral Liens, such Pledgor owns and, as to Pledged
Collateral acquired by it from time to time after the Effective Date, will own
the rights in each item of Pledged Collateral pledged by it hereunder free and
clear of any and all Liens or claims of others other than Permitted Collateral
Liens. In addition, no Liens or claims exist on the Securities Collateral, other
than as permitted by Section 6.02 of the Second Lien Credit Agreement. Such
Pledgor has not filed, nor authorized any third party to file a financing
statement or other public notice with respect to all or any part of the Pledged
Collateral on file or of record in any public office, except such as have been
filed in favor of the Collateral Agent pursuant to this Agreement or as are
permitted by the Second Lien Credit Agreement or financing statements or public
notices relating to the termination statements listed on Schedule 9 to the
Perfection Certificate. No person other than the Collateral Agent has control or
possession of all or any part of the Pledged Collateral, except as permitted by
the Second Lien Credit Agreement.
SECTION 4.2. Validity of Security Interest. The security interest in
and Lien on the Pledged Collateral granted to the Collateral Agent for the
benefit of the Secured Parties hereunder constitutes and will at all time
constitute (a) a legal and valid security interest in all the Pledged Collateral
securing the payment and performance of the Obligations, and (b) subject to the
filing of (i) the Second Lien Patent Security Agreement and the Second Lien
Trademark Security Agreement in the U.S. Patent and Trademark Office within
three months of the date of such grant (ii) the Second Lien Copyright Security
Agreement in the U.S. Copyright Office within one month after its execution, and
(iii) the appropriate Uniform Commercial Code financing statements, and any
other filings and actions described in Schedule 7 annexed to the Perfection
Certificate, a perfected Second Priority continuing security interest in all the
Pledged Collateral (other than the Pledged Collateral in which a security
interest cannot be perfected under the UCC or other applicable law), provided,
however, that the subsequent recordation of one or more of the documents
attached hereto as Exhibit 6, 7 or 8 may be necessary to perfect the security
interest in any issued registrations and applications for other U.S. Copyrights,
Patents or Trademarks that are acquired by any of the Pledgors after the date of
this Agreement and additional filings and/or other actions may be necessary to
perfect the Collateral Agent's security interest in any Copyrights, Patents or
Trademarks that are created under the laws of jurisdictions outside the United
States.
SECTION 4.3. Defense of Claims; Transferability of Pledged
Collateral. Each Pledgor shall, at its own cost and expense, defend title to the
Pledged Collateral pledged by it hereunder and the security interest therein and
Lien thereon granted to the Collateral Agent and
-23-
the priority thereof against all claims and demands of all persons, at its own
cost and expense, at any time claiming any interest therein adverse to the
Collateral Agent or any other Secured Party other than Permitted Collateral
Liens (other than Contested Liens). There is no agreement, and no Pledgor shall
enter into any agreement or take any other action, that would restrict the
transferability of any of the Pledged Collateral or otherwise impair or conflict
with such Pledgors' obligations or the rights of the Collateral Agent hereunder.
SECTION 4.4. Other Financing Statements. It has not filed, nor
authorized any third party to file (nor will there be any) valid or effective
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Pledged Collateral other than financing statements and other
statements and instruments relating to Permitted Collateral Liens. So long as
any of the Obligations remain unpaid, no Pledgor shall execute, authorize or
permit to be filed in any public office any financing statement (or similar
statement or instrument of registration under the law of any jurisdiction)
relating to any Pledged Collateral, except financing statements and other
statements and instruments filed or to be filed in respect of and covering the
security interests granted by such Pledgor to the holder of the Permitted
Collateral Liens.
SECTION 4.5. Chief Executive Office; Change of Name; Jurisdiction of
Organization.
(a) It shall comply with the provisions of Section 5.13(a) of the
Second Lien Credit Agreement.
(b) The Collateral Agent may rely on opinions of counsel as to
whether any or all UCC financing statements of the Pledgors need to be amended
as a result of any of the changes described in Section 5.13(a) of the Second
Lien Credit Agreement. If any Pledgor fails to provide information to the
Collateral Agent about such changes on a timely basis, the Collateral Agent
shall not be liable or responsible to any party for any failure to maintain a
perfected security interest in such Pledgor's property constituting Pledged
Collateral, for which the Collateral Agent needed to have information relating
to such changes. The Collateral Agent shall not have any duty to inquire about
such changes if any Pledgor does not inform the Collateral Agent of such
changes, the parties acknowledging and agreeing that it would not be feasible or
practical for the Collateral Agent to search for information on such changes if
such information is not provided by any Pledgor.
SECTION 4.6. Location of Inventory and Equipment. It shall not move
any Equipment or Inventory to any location other than any location that is
listed in the relevant Schedules to the Perfection Certificate unless (i) it
shall have given the Collateral Agent not less than 30 days' prior written
notice (or such lesser notice period agreed to by the Collateral Agent in its
sole discretion) (in the form of an Officers' Certificate) of its intention so
to do, clearly describing such new location and providing such other information
in connection therewith as the Collateral Agent may request and (ii) with
respect to such new location, such Pledgor shall have taken all action
reasonably satisfactory to the Collateral Agent to maintain the perfection and
-24-
priority of the security interests of the Collateral Agent for the benefit of
the Secured Parties in the Pledged Collateral intended to be granted hereby,
including using commercially reasonable efforts to obtain waivers of landlord's
or warehousemen's and/or bailee's liens with respect to such new location, if
applicable, and if requested by the Collateral Agent. Such Pledgor agrees to
provide the Collateral Agent with prompt notice following the movement of any
Equipment (except for Equipment which is in the process of being moved to a
location listed in the Schedules to the Perfection Certificate and which is
temporarily located at another location) or Inventory to any location other than
one that is listed in the relevant Schedules to the Perfection Certificate.
SECTION 4.7. Due Authorization and Issuance. All of the Initial
Pledged Shares have been, and to the extent any Pledged Shares are hereafter
issued, such Pledged Shares will be, upon such issuance, duly authorized,
validly issued and fully paid and non-assessable. All of the Initial Pledged
Interests have been fully paid for, and there is no amount or other obligation
owing by any Pledgor to any issuer of the Initial Pledged Interests in exchange
for or in connection with the issuance of the Initial Pledged Interests or any
Pledgor's status as a partner or a member of any issuer of the Initial Pledged
Interests.
SECTION 4.8. Consents, etc. In the event that the Collateral Agent
desires to exercise any remedies, voting or consensual rights or
attorney-in-fact powers set forth in this Agreement and determines it necessary
to obtain any approvals or consents of any Governmental Authority or any other
person therefor, then, upon the reasonable request of the Collateral Agent, such
Pledgor agrees to use its best efforts to assist and aid the Collateral Agent to
obtain as soon as practicable any necessary approvals or consents for the
exercise of any such remedies, rights and powers.
SECTION 4.9. Pledged Collateral. All information set forth herein,
including the schedules annexed hereto, and all information contained in any
documents, schedules and lists heretofore delivered to any Secured Party,
including the Perfection Certificate and the schedules thereto, in connection
with this Agreement, in each case, relating to the Pledged Collateral, is
accurate and complete in all material respects as of the time given. The Pledged
Collateral described on the schedules annexed to the Perfection Certificate
constitutes all of the property of such type of Pledged Collateral owned or held
by the Pledgors as of the Effective Date.
SECTION 4.10. Insurance. In the event that the proceeds of any
insurance claim are paid after the Collateral Agent has exercised its right to
foreclose after an Event of Default, such Net Cash Proceeds shall be paid to the
Collateral Agent to satisfy any deficiency remaining after such foreclosure.
SECTION 4.11. Payment of Taxes; Compliance with Laws; Contesting
Liens; Claims. Each Pledgor represents and warrants that all Claims imposed upon
or assessed against the Pledged Collateral have been paid and discharged except
to the extent such Claims constitute a Lien not yet due and payable which is a
Contested Lien or a Permitted Collateral Lien. Each
-25-
Pledgor shall comply with all Requirements of Law applicable to the Pledged
Collateral the failure to comply with which would, individually or in the
aggregate, have a Material Adverse Effect. Each Pledgor may at its own expense
contest the validity, amount or applicability of any Claims so long as the
contest thereof shall be conducted in accordance with, and permitted pursuant to
the provisions of the Second Lien Credit Agreement. Notwithstanding the
foregoing provisions of this Section 4.11, (i) no contest of any such obligation
may be pursued by such Pledgor if such contest would expose the Collateral Agent
or any other Secured Party to (A) any possible criminal liability or (B) any
additional civil liability for failure to comply with such obligations unless
such Pledgor shall have furnished a bond or other security therefor satisfactory
to the Collateral Agent, or such Secured Party, as the case may be and (ii) if
at any time payment or performance of any obligation contested by such Pledgor
pursuant to this Section 4.11 shall become necessary to prevent the imposition
of remedies because of non-payment, such Pledgor shall pay or perform the same
in sufficient time to prevent the imposition of remedies in respect of such
default or prospective default.
SECTION 4.12. Access to Pledged Collateral, Books and Records; Other
Information. Upon reasonable request to each Pledgor, the Collateral Agent, its
agents, accountants and attorneys shall have full and free access to visit and
inspect, as applicable, during normal business hours and such other reasonable
times as may be requested by the Collateral Agent all of the Pledged Collateral
and Mortgaged Property including all of the books, correspondence and records of
such Pledgor relating thereto. The Collateral Agent and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and such
Pledgor agrees to render to the Collateral Agent, at such Pledgor's cost and
expense, such clerical and other assistance as may be reasonably requested by
the Collateral Agent with regard thereto. Such Pledgor shall, at any and all
times, within a reasonable time after written request by the Collateral Agent,
furnish or cause to be furnished to the Collateral Agent, in such manner and in
such detail as may be reasonably requested by the Collateral Agent, additional
information with respect to the Pledged Collateral.
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1. Pledge of Additional Securities Collateral. Each
Pledgor shall, upon obtaining any Pledged Securities or Intercompany Notes of
any person, accept the same in trust for the benefit of the Collateral Agent and
forthwith deliver to the Collateral Agent a pledge amendment, duly executed by
such Pledgor, in substantially the form of Exhibit 2 annexed hereto (each, a
"Pledge Amendment"), and the certificates and other documents required under
Section 3.1 and Section 3.2 hereof in respect of the additional Pledged
Securities or Intercompany Notes which are to be pledged pursuant to this
Agreement, and confirming the attachment of the Lien hereby created on and in
respect of such additional Pledged Securities or Intercompany Notes. Each
Pledgor hereby authorizes the Collateral Agent to attach each Pledge
-26-
Amendment to this Agreement and agrees that all Pledged Securities or
Intercompany Notes listed on any Pledge Amendment delivered to the Collateral
Agent shall for all purposes hereunder be considered Pledged Collateral.
SECTION 5.2. Voting Rights; Distributions; etc.
(i) So long as no Event of Default shall have occurred and be
continuing:
(A) Each Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Securities Collateral or any
part thereof for any purpose not inconsistent with the terms or purposes
hereof, the Second Lien Credit Agreement or any other document evidencing
the Obligations; provided, however, that no Pledgor shall in any event
exercise such rights in any manner which could reasonably be expected to
have a Material Adverse Effect.
(B) Each Pledgor shall be entitled to receive and retain, and to
utilize free and clear of the Lien hereof, any and all Distributions, but
only if and to the extent made in accordance with the provisions of the
Second Lien Credit Agreement; provided, however, that any and all such
Distributions consisting of rights or interests in the form of securities
shall be forthwith delivered to the Collateral Agent to hold as Pledged
Collateral and shall, if received by any Pledgor, be received in trust for
the benefit of the Collateral Agent, be segregated from the other property
or funds of such Pledgor and be forthwith delivered to the Collateral
Agent as Pledged Collateral in the same form as so received (with any
necessary endorsement).
(ii) The Collateral Agent shall be deemed without further action or
formality to have granted to each Pledgor all necessary consents relating to
voting rights and shall, if necessary, upon written request of any Pledgor and
at the sole cost and expense of the Pledgors, from time to time execute and
deliver (or cause to be executed and delivered) to such Pledgor all such
instruments as such Pledgor may reasonably request in order to permit such
Pledgor to exercise the voting and other rights which it is entitled to exercise
pursuant to Section 5.2(i)(A) hereof and to receive the Distributions which it
is authorized to receive and retain pursuant to Section 5.2(i)(B) hereof.
(iii)Upon the occurrence and during the continuance of any Event of
Default, subject to the terms of the Intercreditor Agreement:
(A) All rights of each Pledgor to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to
Section 5.2(i)(A) hereof shall cease, and, after the Discharge of First
Lien Obligations, all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to exercise
such voting and other consensual rights.
-27-
(B) All rights of each Pledgor to receive Distributions which it
would otherwise be authorized to receive and retain pursuant to Section
5.2(i)(B) hereof shall cease and, after the Discharge of First Lien
Obligations, all such rights shall thereupon become vested in the
Collateral Agent, which shall thereupon have the sole right to receive and
hold as Pledged Collateral such Distributions.
(iv) Each Pledgor shall, at its sole cost and expense, from time to
time execute and deliver to the Collateral Agent appropriate instruments as the
Collateral Agent may request in order to permit the Collateral Agent to exercise
the voting and other rights which it may be entitled to exercise pursuant to
Section 5.2(i)(A) hereof and to receive all Distributions which it may be
entitled to receive under Section 5.2(i)(B) hereof.
(v) All Distributions which are received by any Pledgor contrary to
the provisions of Section 5.2(i)(B) hereof shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds of such
Pledgor and, after the Discharge of First Lien Obligations, shall immediately be
paid over to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).
SECTION 5.3. Defaults, etc. Such Pledgor represents and warrants
that (a) it is not in default in the payment of any portion of any mandatory
capital contribution, if any, required to be made under any agreement to which
such Pledgor is a party relating to the Pledged Securities pledged by it, and
such Pledgor is not in violation of any other provisions of any such agreement
to which such Pledgor is a party, or otherwise in default or violation
thereunder, and (b) no Securities Collateral pledged by such Pledgor is subject
to any defense, offset or counterclaim, nor have any of the foregoing been
asserted or alleged against such Pledgor by any person with respect thereto, and
as of the Effective Date, there are no certificates, instruments, documents or
other writings (other than the Organizational Documents and certificates, if
any, delivered to the Collateral Agent) which evidence any Pledged Securities of
such Pledgor.
SECTION 5.4. Certain Agreements of Pledgors as Issuers and Holders
of Equity Interests.
(i) In the case of each Pledgor which is an issuer of Securities
Collateral, such Pledgor agrees to be bound by the terms of this Agreement
relating to the Securities Collateral issued by it and will comply with such
terms insofar as such terms are applicable to it.
(ii) In the case of each Pledgor which is a partner in a
partnership, limited liability company or other entity, such Pledgor hereby
consents to the extent required by the applicable Organizational Document to the
pledge by each other Pledgor, pursuant to the terms hereof, of the Pledged
Interests in such partnership, limited liability company or other entity and,
upon the occurrence and during the continuance of an Event of Default, to the
transfer of such Pledged Interests to the Collateral Agent or its nominee and to
the substitution of the Collateral Agent or its nominee as a substituted partner
or member in such partnership, limited liability
-28-
company or other entity with all the rights, powers and duties of a general
partner or a limited partner or member, as the case may be.
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1. Grant of License. For the purpose of enabling the
Collateral Agent, during the continuance of an Event of Default, to exercise
rights and remedies under Article IX hereof at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, subject to the
terms of the Intercreditor Agreement, and for no other purpose, each Pledgor
hereby grants to the Collateral Agent, to the extent assignable, an irrevocable
during the term of this Agreement, non-exclusive license to use, assign, license
or sublicense any of the Intellectual Property Collateral now owned or hereafter
acquired by such Pledgor, wherever the same may be located; provided, however,
that (i) in the case of Trademarks and any property of similar nature, the
foregoing shall be subject to sufficient rights to quality control and
inspection in favor of the applicable Pledgor to avoid the risk of invalidation
of said Trademarks and property of a similar nature and (ii) the foregoing
license grant is subject to any exclusive licenses granted by any Pledgor in
compliance with the provisions of this Agreement prior to the occurrence of an
Event of Default. Such license shall include access to all media in which any of
the licensed items may be recorded or stored and to all computer programs used
for the compilation or printout hereof.
SECTION 6.2. Protection of Collateral Agent's Security. On a
continuing basis, each Pledgor shall, at its sole cost and expense, (i) promptly
following its becoming aware thereof, notify the Collateral Agent of (A) any
materially adverse determination in any proceeding in the United States Patent
and Trademark Office or the United States Copyright Office with respect to any
material Patent, Trademark or Copyright or (B) the institution of any proceeding
or any adverse determination in any federal, state or local court or
administrative body regarding such Pledgor's claim of ownership in or right to
use any of the Intellectual Property Collateral material to the business of such
Pledgor, its right to register such Intellectual Property Collateral or its
right to keep and maintain such registration in full force and effect, (ii)
maintain the Intellectual Property Collateral material to the business of such
Pledgor as presently used and operated and as contemplated by the Second Lien
Credit Agreement, (iii) not permit to lapse or become abandoned any Intellectual
Property Collateral material to the business of such Pledgor as presently used
and operated and as contemplated by the Second Lien Credit Agreement, and not
settle or compromise any pending or future litigation or administrative
proceeding with respect to such Intellectual Property Collateral, in each case
except as shall be consistent with commercially reasonable business judgment,
(iv) upon such Pledgor obtaining knowledge thereof, promptly notify the
Collateral Agent in writing of any event which may be reasonably expected to
materially and adversely affect the value or utility of the Intellectual
Property Collateral or any
-29-
portion thereof material to the business of such Pledgor, the ability of such
Pledgor or the Collateral Agent to dispose of the Intellectual Property
Collateral material to the business of such Pledgor or any portion thereof or
the rights and remedies of the Collateral Agent in relation thereto including a
levy or threat of levy or any legal process against the Intellectual Property
Collateral material to the business of such Pledgor or any portion thereof, (v)
not license the Intellectual Property Collateral other than licenses entered
into by such Pledgor in, or incidental to, the ordinary course of business, or
amend or permit the amendment of any of the licenses in a manner that materially
and adversely affects the right to receive payments thereunder, or in any manner
that would materially impair the value of the Intellectual Property Collateral
material to the business of such Pledgor or the Lien on and security interest in
the Intellectual Property Collateral intended to be granted to the Collateral
Agent for the benefit of the Secured Parties, without the consent of the
Collateral Agent, and (vi) furnish to the Collateral Agent from time to time
upon the Collateral Agent's request therefor reasonably detailed statements and
amended schedules further identifying and describing the Intellectual Property
Collateral and such other materials evidencing or reports pertaining to the
Intellectual Property Collateral as the Collateral Agent may from time to time
reasonably request.
SECTION 6.3. After-Acquired Property. If any Pledgor shall, at any
time before the Obligations have been paid in full (other than contingent
indemnification obligations which, pursuant to the provisions of the Second Lien
Credit Agreement or the Security Documents, survive the termination thereof),
(i) obtain any rights to any additional Intellectual Property Collateral or (ii)
become entitled to the benefit of any additional Intellectual Property
Collateral or any renewal or extension thereof, including any reissue,
divisional, continuation, or continuation-in-part of any Intellectual Property
Collateral, or any improvement on any Intellectual Property Collateral, the
provisions hereof shall automatically apply thereto and any such item enumerated
in clause (i) or (ii) of this Section 6.3 with respect to such Pledgor shall
automatically constitute Intellectual Property Collateral if such would have
constituted Intellectual Property Collateral at the time of execution hereof and
be subject to the Lien and security interest created by this Agreement without
further action by any party. Each Pledgor shall promptly (i) provide to the
Collateral Agent written notice of any Intellectual Property Collateral which is
the subject of a registration or application and is acquired by, filed by or
issued to such Pledgor after the date hereof and (ii) confirm the attachment of
the Lien and security interest created by this Agreement to any rights described
in clauses (i) and (ii) of the immediately preceding sentence of this Section
6.3 by execution of an instrument in form reasonably acceptable to the
Collateral Agent and the filing of any instruments or statements as shall be
reasonably necessary to preserve, protect or perfect the Collateral Agent's
security interests in such Intellectual Property Collateral. Further, each
Pledgor authorizes the Collateral Agent to modify this Agreement by amending
Schedules 14(a) and 14(b) annexed to the Perfection Certificate to include any
such Intellectual Property Collateral acquired or arising after the Effective
Date of such Pledgor.
SECTION 6.4. Litigation. Unless there shall occur and be continuing
any Event of Default, each Pledgor shall have the right to commence and
prosecute in its own name, as the party in interest, for its own benefit and at
the sole cost and expense of the Pledgors, such
-30-
applications for protection of the Intellectual Property Collateral and suits,
proceedings or other actions to prevent the infringement, counterfeiting, unfair
competition, dilution, diminution in value or other damage as are necessary to
protect the Intellectual Property Collateral. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent shall have the right
but shall in no way be obligated to file applications for protection of the
Intellectual Property Collateral and/or bring suit in the name of any Pledgor,
the Collateral Agent or the Secured Parties to enforce the Intellectual Property
Collateral. In the event of such suit, each Pledgor shall, at the reasonable
request of the Collateral Agent, do any and all lawful acts and execute any and
all documents reasonably requested by the Collateral Agent in aid of such
enforcement and the Pledgors shall promptly reimburse and indemnify the
Collateral Agent for all costs and expenses incurred by the Collateral Agent in
the exercise of its rights under this Section 6.4 in accordance with Section
11.03 of the Second Lien Credit Agreement. In the event that the Collateral
Agent shall elect not to bring such suit to enforce the Intellectual Property
Collateral, each Pledgor agrees, at the reasonable request of the Collateral
Agent, to take all commercially reasonable actions necessary, whether by suit,
proceeding or other action, to prevent the infringement, counterfeiting, unfair
competition, dilution, diminution in value of or other damage to any of the
Intellectual Property Collateral by others and for that purpose agrees to use
commercially reasonable efforts to diligently maintain any suit, proceeding or
other action against any person so infringing necessary to prevent such
infringement.
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1. Maintenance of Records. Each Pledgor shall keep and
maintain at its own cost and expense complete records of each Account, in a
manner consistent with prudent business practice, including records of all
payments received, all credits granted thereon, all merchandise returned and all
other documentation relating thereto. Each Pledgor shall, at such Pledgor's sole
cost and expense, upon the Collateral Agent's demand made at any time after the
occurrence and during the continuance of any Event of Default, deliver all
tangible evidence of Accounts, including all documents evidencing Accounts and
any books and records relating thereto to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Pledgor). Upon the occurrence and during the continuance of any Event of
Default, the Collateral Agent may transfer a full and complete copy of any
Pledgor's books, records, credit information, reports, memoranda and all other
writings relating to the Accounts to and for the use by any person that has
acquired or is contemplating acquisition of an interest in the Accounts or the
Collateral Agent's security interest therein without the consent of any Pledgor.
SECTION 7.2. Legend. Each Pledgor shall legend, at the reasonable
request of the Collateral Agent and in form and manner reasonably satisfactory
to the Collateral Agent, the Accounts and the other books, records and documents
of such Pledgor evidencing or pertaining
-31-
to the Accounts with an appropriate reference to the fact that the Accounts have
been assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has security interests therein.
SECTION 7.3. Modification of Terms, etc. No Pledgor shall rescind or
cancel any obligations evidenced by any Account or modify any term thereof or
make any adjustment with respect thereto except in the ordinary course of
business consistent with prudent business practice, or extend or renew any such
obligations except in the ordinary course of business consistent with prudent
business practice or compromise or settle any dispute, claim, suit or legal
proceeding relating thereto or sell any Account or interest therein except in
the ordinary course of business consistent with prudent business practice
without the prior written consent of the Collateral Agent. Each Pledgor shall in
all material respects timely fulfill all obligations on its part to be fulfilled
under or in connection with the Accounts.
SECTION 7.4. Collection. Each Pledgor shall cause to be collected
from the Account Debtor of each of the Accounts, as and when due in the ordinary
course of business and consistent with prudent business practice (including
Accounts that are delinquent, such Accounts to be collected in accordance with
generally accepted commercial collection procedures), any and all amounts owing
under or on account of such Account, and apply forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of such Account,
except that any Pledgor may, with respect to an Account, allow in the ordinary
course of business (i) a refund or credit due as a result of returned or damaged
or defective merchandise and (ii) such extensions of time to pay amounts due in
respect of Accounts and such other modifications of payment terms or settlements
in respect of Accounts as shall be commercially reasonable in the circumstances,
all in accordance with such Pledgor's ordinary course of business consistent
with its collection practices as in effect from time to time. The reasonable
costs and expenses (including attorneys' fees) of collection, in any case,
whether incurred by any Pledgor, the Collateral Agent or any Secured Party,
shall be paid by the Pledgors.
ARTICLE VIII
TRANSFERS
SECTION 8.1. Transfers of Pledged Collateral. No Pledgor shall sell,
convey, assign or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral pledged by it hereunder except as permitted by the
Second Lien Credit Agreement.
-32-
ARTICLE IX
REMEDIES
SECTION 9.1. Remedies. Upon the occurrence and during the
continuance of any Event of Default the Collateral Agent may from time to time
exercise in respect of the Pledged Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to it, the following
remedies, in each case, subject to the terms of the Intercreditor Agreement:
(i) Personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from any Pledgor
or any other person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon any
Pledgor's premises where any of the Pledged Collateral is located, remove
such Pledged Collateral, remain present at such premises to receive copies
of all communications and remittances relating to the Pledged Collateral
and use in connection with such removal and possession any and all
services, supplies, aids and other facilities of any Pledgor;
(ii) Demand, ▇▇▇ for, collect or receive any money or property at
any time payable or receivable in respect of the Pledged Collateral
including instructing the obligor or obligors on any agreement, instrument
or other obligation constituting part of the Pledged Collateral to make
any payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent, and in connection with any of
the foregoing, compromise, settle, extend the time for payment and make
other modifications with respect thereto; provided, however, that in the
event that any such payments are made directly to any Pledgor, prior to
receipt by any such obligor of such instruction, such Pledgor shall
segregate all amounts received pursuant thereto in trust for the benefit
of the Collateral Agent and shall promptly (but in no event later than one
(1) Business Day after receipt thereof) pay such amounts to the Collateral
Agent;
(iii)Sell, assign, grant a license to use or otherwise liquidate, or
direct any Pledgor to sell, assign, grant a license to use or otherwise
liquidate, any and all investments made in whole or in part with the
Pledged Collateral or any part thereof, and take possession of the
proceeds of any such sale, assignment, license or liquidation;
(iv) Take possession of the Pledged Collateral or any part thereof,
by directing any Pledgor in writing to deliver the same to the Collateral
Agent at any place or places so designated by the Collateral Agent, in
which event such Pledgor shall at its own expense: (A) forthwith cause the
same to be moved to the place or places designated by the Collateral Agent
and therewith delivered to the Collateral Agent, (B) store and keep any
Pledged Collateral so delivered to the Collateral Agent at such place or
places pending further action by the Collateral Agent and (C) while the
Pledged Collateral shall be so
-33-
stored and kept, provide such security and maintenance services as shall
be necessary to protect the same and to preserve and maintain them in good
condition. Each Pledgor's obligation to deliver the Pledged Collateral as
contemplated in this Section 9.1(iv) is of the essence hereof. Upon
application to a court of equity having jurisdiction, the Collateral Agent
shall be entitled to a decree requiring specific performance by any
Pledgor of such obligation;
(v) Withdraw all moneys, instruments, securities and other property
in any bank, financial securities, deposit or other account of any Pledgor
constituting Pledged Collateral for application to the Obligations as
provided in Article X hereof;
(vi) Retain and apply the Distributions to the Obligations as
provided in Article X hereof;
(vii)Exercise any and all rights as beneficial and legal owner of
the Pledged Collateral, including perfecting assignment of and exercising
any and all voting, consensual and other rights and powers with respect to
any Pledged Collateral; and
(viii) Exercise all the rights and remedies of a secured party on
default under the UCC, and the Collateral Agent may also in its sole
discretion, without notice except as specified in Section 9.2 hereof,
sell, assign or grant a license to use the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and at such price or prices
and upon such other terms as the Collateral Agent may deem commercially
reasonable. The Collateral Agent or any other Secured Party or any of
their respective Affiliates may be the purchaser, licensee, assignee or
recipient of any or all of the Pledged Collateral at any such sale and
shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Pledged
Collateral sold, assigned or licensed at such sale, to use and apply any
of the Obligations owed to such person as a credit on account of the
purchase price of any Pledged Collateral payable by such person at such
sale. Each purchaser, assignee, licensee or recipient at any such sale
shall acquire the property sold, assigned or licensed absolutely free from
any claim or right on the part of any Pledgor, and each Pledgor hereby
waives, to the fullest extent permitted by law, all rights of redemption,
stay and/or appraisal which it 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 not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor hereby waives, to the fullest extent permitted by
law, any claims against the Collateral Agent arising by reason of the fact
that the price at which any Pledged Collateral may have been sold,
assigned or licensed at such a private sale was less than the price which
might have
-34-
been obtained at a public sale, even if the Collateral Agent accepts the
first offer received and does not offer such Pledged Collateral to more
than one offeree.
SECTION 9.2. Notice of Sale. Each Pledgor acknowledges and agrees
that, to the extent notice of sale or other disposition of Pledged Collateral
shall be required by law, ten (10) days' prior notice to such Pledgor of the
time and place of any public sale or of the time after which any private sale or
other intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to any Pledgor if it
has signed, after the occurrence of an Event of Default, a statement renouncing
or modifying any right to notification of sale or other intended disposition.
SECTION 9.3. Waiver of Notice and Claims. Each Pledgor hereby
waives, to the fullest extent permitted by applicable law, notice or judicial
hearing in connection with the Collateral Agent's taking possession or the
Collateral Agent's disposition of any of the Pledged Collateral, including any
and all prior notice and hearing for any prejudgment remedy or remedies and any
such right which such Pledgor would otherwise have under law, and each Pledgor
hereby further waives, to the fullest extent permitted by applicable law: (i)
all damages occasioned by such taking of possession, (ii) all other requirements
as to the time, place and terms of sale or other requirements with respect to
the enforcement of the Collateral Agent's rights hereunder and (iii) all rights
of redemption, appraisal, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law. The Collateral Agent shall not be
liable for any incorrect or improper payment made pursuant to this Article IX in
the absence of gross negligence or willful misconduct. Any sale of, or the grant
of options to purchase, or any other realization upon, any Pledged Collateral
shall operate to divest all right, title, interest, claim and demand, either at
law or in equity, of the applicable Pledgor therein and thereto, and shall be a
perpetual bar both at law and in equity against such Pledgor and against any and
all persons claiming or attempting to claim the Pledged Collateral so sold,
optioned or realized upon, or any part thereof, from, through or under such
Pledgor.
SECTION 9.4. Certain Sales of Pledged Collateral.
(i) Each Pledgor recognizes that, by reason of certain prohibitions
contained in law, rules, regulations or orders of any Governmental Authority,
the Collateral Agent may be compelled, with respect to any sale of all or any
part of the Pledged Collateral, to limit purchasers to those who meet the
requirements of such Governmental Authority. Each Pledgor acknowledges that any
such sales may be at prices and on terms less favorable to the Collateral Agent
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such restricted sale shall
be deemed to have been made in a commercially reasonable manner and that, except
as may be required by applicable law, the Collateral Agent shall have no
obligation to engage in public sales.
(ii) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act, and applicable state securities laws, the
Collateral Agent may be compelled, with respect to any sale of all or any part
of the Securities Collateral and Investment
-35-
Property, to limit purchasers to persons who will agree, among other things, to
acquire such Securities Collateral or Investment Property for their own account,
for investment and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges that any such private sales may be at prices and on terms
less favorable to the Collateral Agent than those obtainable through a public
sale without such restrictions (including a public offering made pursuant to a
registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Securities Collateral or Investment Property for the period of time
necessary to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would agree to do so.
(iii)Notwithstanding the foregoing, each Pledgor shall, upon the
occurrence and during the continuance of any Event of Default, at the reasonable
request of the Collateral Agent, for the benefit of the Collateral Agent, cause
any registration, qualification under or compliance with any Federal or state
securities law or laws to be effected with respect to all or any part of the
Securities Collateral as soon as practicable and at the sole cost and expense of
the Pledgors. Each Pledgor will use its commercially reasonable efforts to cause
such registration to be effected (and be kept effective) and will use its
commercially reasonable efforts to cause such qualification and compliance to be
effected (and be kept effective) as may be so requested and as would permit or
facilitate the sale and distribution of such Securities Collateral including
registration under the Securities Act (or any similar statute then in effect),
appropriate qualifications under applicable blue sky or other state securities
laws and appropriate compliance with all other requirements of any Governmental
Authority. Each Pledgor shall use its commercially reasonable efforts to cause
the Collateral Agent to be kept advised in writing as to the progress of each
such registration, qualification or compliance and as to the completion thereof,
shall furnish to the Collateral Agent such number of prospectuses, offering
circulars or other documents incident thereto as the Collateral Agent from time
to time may request, and shall indemnify and shall cause the issuer of the
Securities Collateral to indemnify the Collateral Agent and all others
participating in the distribution of such Securities Collateral against all
claims, losses, damages and liabilities caused by any untrue statement (or
alleged untrue statement) of a material fact contained therein (or in any
related registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(iv) If the Collateral Agent determines to exercise its right to
sell any or all of the Securities Collateral or Investment Property, upon
written request, the applicable Pledgor shall from time to time furnish to the
Collateral Agent all such information as the Collateral Agent may request in
order to determine the number of securities included in the Securities
Collateral or Investment Property which may be sold by the Collateral Agent as
exempt transactions
-36-
under the Securities Act and the rules of the Securities and Exchange Commission
thereunder, as the same are from time to time in effect.
(v) Each Pledgor further agrees that a breach of any of the
covenants contained in this Section 9.4 will cause irreparable injury to the
Collateral Agent and other Secured Parties, that the Collateral Agent and the
other Secured Parties have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
9.4 shall be specifically enforceable against such Pledgor, and such Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred and is continuing.
SECTION 9.5. No Waiver; Cumulative Remedies.
(i) No failure on the part of the Collateral Agent to exercise, no
course of dealing with respect to, and no delay on the part of the Collateral
Agent in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy; nor shall the Collateral Agent be
required to look first to, enforce or exhaust any other security, collateral or
guaranties. The remedies herein provided are cumulative and are not exclusive of
any remedies provided by law.
(ii) In the event that the Collateral Agent shall have instituted
any proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Collateral Agent, then and in every such case, the Pledgors, the
Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies and powers of the Collateral Agent and the
other Secured Parties shall continue as if no such proceeding had been
instituted.
SECTION 9.6. Certain Additional Actions Regarding Intellectual
Property. Subject to the terms of the Intercreditor Agreement, if any Event of
Default shall have occurred and be continuing, upon the written demand of the
Collateral Agent, each Pledgor shall execute and deliver to the Collateral Agent
an assignment or assignments of the registered Patents, Trademarks and/or
Copyrights and Goodwill and such other documents as are necessary or appropriate
to carry out the intent and purposes hereof. Subject to the terms of the
Intercreditor Agreement, within five (5) Business Days of written notice
thereafter from the Collateral Agent, each Pledgor shall make available to the
Collateral Agent, to the extent within such Pledgor's power and authority, such
personnel in such Pledgor's employ on the date of the Event of Default as the
Collateral Agent may reasonably designate to permit such Pledgor to continue,
directly or indirectly, to produce, advertise and sell the products and services
sold by such Pledgor under the registered Patents, Trademarks and/or Copyrights.
-37-
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS;
APPLICATION OF PROCEEDS
SECTION 10.1. Proceeds of Casualty Events and Collateral
Dispositions. The Pledgors shall take all actions required by the Second Lien
Credit Agreement with respect to any Net Cash Proceeds of any Casualty Event or
from the sale or disposition of any Pledged Collateral.
SECTION 10.2. Application of Proceeds. The proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Collateral pursuant to the exercise by the
Collateral Agent of its remedies shall be applied, together with any other sums
then held by the Collateral Agent pursuant to this Agreement, in accordance with
the Second Lien Credit Agreement and the Intercreditor Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Concerning Collateral Agent.
(i) The Collateral Agent has been appointed as collateral agent
pursuant to the Second Lien Credit Agreement. The actions of the Collateral
Agent hereunder are subject to the provisions of the Second Lien Credit
Agreement and the Intercreditor Agreement. The Collateral Agent shall have the
right hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including the
release or substitution of the Pledged Collateral), in accordance with this
Agreement and the Second Lien Credit Agreement and subject to the Intercreditor
Agreement. The Collateral Agent may employ agents and attorneys-in-fact in
connection herewith and shall not be liable for the negligence or misconduct of
any such agents or attorneys-in-fact selected by it in good faith. The
Collateral Agent may resign and a successor Collateral Agent may be appointed in
the manner provided in the Second Lien Credit Agreement. Upon the acceptance of
any appointment as the Collateral Agent by a successor Collateral Agent, that
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent under
this Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement. After any retiring
Collateral Agent's resignation, the provisions hereof shall inure to its benefit
as to any actions taken or omitted to be taken by it under this Agreement while
it was a Collateral Agent.
-38-
(ii) The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially
equivalent to that which the Collateral Agent, in its individual capacity,
accords its own property consisting of similar instruments or interests, it
being understood that neither the Collateral Agent nor any of the Secured
Parties shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Securities Collateral, whether or not the Collateral Agent or
any other Secured Party has or is deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against any person with
respect to any Pledged Collateral.
(iii)The Collateral Agent shall be entitled to rely upon any written
notice, statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person, and, with respect to all matters pertaining to this
Agreement and its duties hereunder, upon advice of counsel selected by it.
(iv) If any item of Pledged Collateral also constitutes collateral
granted to the Collateral Agent under any other deed of trust, mortgage,
security agreement, pledge or instrument of any type, in the event of any
conflict between the provisions hereof and the provisions of such other deed of
trust, mortgage, security agreement, pledge or instrument of any type in respect
of such collateral, the Collateral Agent, in its sole discretion, shall select
which provision or provisions shall control.
SECTION 11.2. Collateral Agent May Perform; Collateral Agent
Appointed Attorney-in-Fact. If any Pledgor shall fail to perform any covenants
contained in this Agreement (including such Pledgor's covenants to (i) pay the
premiums in respect of all required insurance policies hereunder, (ii) pay
Claims, (iii) make repairs, (iv) discharge Liens or (v) pay or perform any
obligations of such Pledgor under any Pledged Collateral) or if any
representation or warranty on the part of any Pledgor contained herein shall be
breached, the Collateral Agent may (but shall not be obligated to) do the same
or cause it to be done or remedy any such breach, and may expend funds for such
purpose; provided, however, that the Collateral Agent shall in no event be bound
to inquire into the validity of any tax, lien, imposition or other obligation
which such Pledgor fails to pay or perform as and when required hereby and which
such Pledgor does not contest in accordance with the provisions of Section 4.11
hereof. Any and all amounts so expended by the Collateral Agent shall be paid by
the Pledgors in accordance with the provisions of Section 11.03 of the Second
Lien Credit Agreement. Neither the provisions of this Section 11.2 nor any
action taken by the Collateral Agent pursuant to the provisions of this Section
11.2 shall prevent any such failure to observe any covenant contained in this
Agreement nor any breach of representation or warranty from constituting an
Event of Default. Each Pledgor hereby appoints the Collateral Agent its
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such Pledgor, or otherwise, from time to time in the Collateral
Agent's discretion to take any action and to execute any instrument consistent
with the terms of
-39-
the Second Lien Credit Agreement, this Agreement and the other Security
Documents which the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof. The foregoing grant of authority is a power of
attorney coupled with an interest and such appointment shall be irrevocable for
the term hereof. Each Pledgor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof.
SECTION 11.3. Continuing Security Interest; Assignment. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) be binding upon the Pledgors, their respective successors and
assigns and (ii) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and the other Secured
Parties and each of their respective successors, transferees and assigns. No
other persons (including any other creditor of any Pledgor) shall have any
interest herein or any right or benefit with respect hereto. Without limiting
the generality of the foregoing clause (ii), any Secured Party may assign or
otherwise transfer any indebtedness held by it secured by this Agreement to any
other person, and such other person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party, herein or otherwise,
subject however, to the provisions of the Second Lien Credit Agreement and any
Hedging Agreement.
SECTION 11.4. Termination; Release. The Pledged Collateral shall be
released from the Lien of this Agreement in accordance with the provisions of
Section 6.05 or 6.06, as applicable, of the Second Lien Credit Agreement and the
provisions of the Intercreditor Agreement. When all the Obligations have been
paid in full and the Commitments of the Lenders to make any Loan under the
Second Lien Credit Agreement shall have expired or been sooner terminated, this
Agreement shall terminate. Subject to the Intercreditor Agreement, upon
termination hereof or any release of Pledged Collateral in accordance with the
provisions of the Second Lien Credit Agreement, the Collateral Agent shall, upon
the request and at the sole cost and expense of the Pledgors, assign, transfer
and deliver to the applicable Pledgor, against receipt and without recourse to
or warranty by the Collateral Agent except as to the fact that the Collateral
Agent has not encumbered the released assets, such of the Pledged Collateral to
be released (in the case of a release) as may be in possession of the Collateral
Agent and as shall not have been sold or otherwise applied pursuant to the terms
hereof, and, with respect to any other Pledged Collateral, proper documents and
instruments (including UCC-3 termination statements or releases) acknowledging
the termination hereof or the release of such Pledged Collateral, as the case
may be.
SECTION 11.5. Modification in Writing. Subject to the terms of the
Intercreditor Agreement, no amendment, modification, supplement, termination or
waiver of or to any provision hereof, nor consent to any departure by any
Pledgor therefrom, shall be effective unless the same shall be made in
accordance with the terms of the Second Lien Credit Agreement and unless in
writing and signed by the Collateral Agent. Any amendment, modification or
supplement of or to any provision hereof, any waiver of any provision hereof and
any consent to any departure by any Pledgor from the terms of any provision
hereof shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice
-40-
is specifically required by this Agreement or any other document evidencing the
Obligations, no notice to or demand on any Pledgor in any case shall entitle any
Pledgor to any other or further notice or demand in similar or other
circumstances.
SECTION 11.6. Notices. Unless otherwise provided herein or in the
Second Lien Credit Agreement, any notice or other communication herein required
or permitted to be given shall be given in the manner and become effective as
set forth in the Second Lien Credit Agreement, as to any Pledgor, addressed to
it at the address of the Borrower set forth in the Second Lien Credit Agreement
and as to the Collateral Agent, addressed to it at the address set forth in the
Second Lien Credit Agreement, or in each case at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 11.6.
SECTION 11.7. Governing Law; Consent to Jurisdiction and Service of
Process; Waiver of Jury Trial.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York, without regard to conflicts of law
principles that would require the application of the laws of another
jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Second Lien Credit Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or the Second Lien Credit Agreement
shall affect any right that the Collateral Agent may otherwise have to bring any
action or proceeding relating to this Agreement or the Second Lien Credit
Agreement against any Pledgor or its properties in the courts of any
jurisdiction.
(c) Each Pledgor 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 Second Lien
Credit Agreement in any court referred to in Section 11.09(b) of the Second Lien
Credit Agreement. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
-41-
(d) Each party to this Agreement irrevocably consents to service of
process in any action or proceeding arising out of or relating to this Agreement
or the Second Lien Credit Agreement, in the manner provided for notices (other
than telecopy) in Section 11.01 of the Second Lien Credit Agreement. Nothing in
this Agreement or the Second Lien Credit Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by
applicable law.
(e) Waiver of Jury Trial. Each Pledgor hereby waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
any legal proceeding directly or indirectly arising out of or relating to this
Agreement or the Second Lien Credit Agreement (whether based on contract, tort
or any other theory). Each party hereto (a) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties hereto have
been induced to enter into this Agreement by, among other things, the mutual
waivers and certifications in this Section.
SECTION 11.8. Severability of Provisions. Any provision hereof which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11.9. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 11.10. Business Days. In the event any time period or any
date provided in this Agreement ends or falls on a day other than a Business
Day, then such time period shall be deemed to end and such date shall be deemed
to fall on the next succeeding Business Day, and performance herein may be made
on such Business Day, with the same force and effect as if made on such other
day.
SECTION 11.11. Waiver of Stay. Each Pledgor covenants (to the extent
it may lawfully do so) that in the event that such Pledgor or any property or
assets of such Pledgor shall hereafter become the subject of a voluntary or
involuntary proceeding under the Code or such Pledgor shall otherwise be a party
to any federal or state bankruptcy, insolvency, moratorium or similar proceeding
to which the provisions relating to the automatic stay under Section 362 of the
Code or any similar provision in any such law is applicable, then, in any such
case, whether or not the Collateral Agent has commenced foreclosure proceedings
under this Agreement, such Pledgor shall not, and each Pledgor hereby expressly
waives their right to (to the extent it may lawfully do so) at any time insist
upon, plead or in any whatsoever, claim or take the benefit or advantage of any
such automatic stay or such similar provision as it relates to the exercise of
any of the rights and remedies (including any foreclosure proceedings) available
to the Collateral
-42-
Agent as provided in this Agreement, in any other Security Document or any other
document evidencing the Obligations. Each Pledgor further covenants (to the
extent it may lawfully do so) that it will not hinder, delay or impede the
execution of any power granted herein to the Collateral Agent, but will suffer
and permit the execution of every such power as though no law relating to any
stay or similar provision had been enacted.
SECTION 11.12. No Credit for Payment of Taxes or Imposition. Such
Pledgor shall not be entitled to any credit against the principal, premium, if
any, or interest payable under the Second Lien Credit Agreement, and such
Pledgor shall not be entitled to any credit against any other sums which may
become payable under the terms thereof or hereof, by reason of the payment of
any Tax on the Pledged Collateral or any part thereof.
SECTION 11.13. No Claims Against Collateral Agent. Nothing contained
in this Agreement shall constitute any consent or request by the Collateral
Agent, express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in respect of the Pledged
Collateral or any part thereof, nor as giving any Pledgor any right, power or
authority to contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as would
permit the making of any claim against the Collateral Agent in respect thereof
or any claim that any Lien based on the performance of such labor or services or
the furnishing of any such materials or other property is prior to the Lien
hereof.
SECTION 11.14. No Release. Nothing set forth in this Agreement shall
relieve any Pledgor from the performance of any term, covenant, condition or
agreement on such Pledgor's part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any person under or in
respect of any of the Pledged Collateral or shall impose any obligation on the
Collateral Agent or any other Secured Party to perform or observe any such term,
covenant, condition or agreement on such Pledgor's part to be so performed or
observed or shall impose any liability on the Collateral Agent or any other
Secured Party for any act or omission on the part of such Pledgor relating
thereto or for any breach of any representation or warranty on the part of such
Pledgor contained in this Agreement, the Second Lien Credit Agreement or the
other Loan Documents, or under or in respect of the Pledged Collateral or made
in connection herewith or therewith. The obligations of each Pledgor contained
in this Section 11.14 shall survive the termination hereof and the discharge of
such Pledgor's other obligations under this Agreement, the Second Lien Credit
Agreement and the other Loan Documents.
SECTION 11.15. Obligations Absolute. All obligations of each Pledgor
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor;
-43-
(ii) any lack of validity or enforceability of the Second Lien
Credit Agreement, any Hedging Agreement or any other Loan Document, or any
other agreement or instrument relating thereto;
(iii)any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to any departure from the Second Lien Credit
Agreement, any Hedging Agreement or any other Loan Document or any other
agreement or instrument relating thereto;
(iv) any pledge, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Obligations;
(v) any exercise, non-exercise or waiver of any right, remedy, power
or privilege under or in respect hereof, the Second Lien Credit Agreement,
any Hedging Agreement or any other Loan Document except as specifically
set forth in a waiver granted pursuant to the provisions of Section 11.5
hereof; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, any Pledgor.
SECTION 11.16. Intercreditor Agreement. In the event of a conflict
between the terms of the Intercreditor Agreement and this Agreement, the terms
of the Intercreditor Agreement shall govern and control.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
S-1
IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have
caused this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
PGT INDUSTRIES, INC.,
as Pledgor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
and Treasurer
S-2
JLL WINDOW HOLDINGS, INC.,
as Pledgor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
and Treasurer
S-3
UBS AG, STAMFORD BRANCH,
as Collateral Agent
By: /s/ ▇▇▇▇▇▇ Oh
--------------------------
Name: ▇▇▇▇▇▇ Oh
Title: Associate Director,
Banking Products
Services, US
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director,
Banking Products
Services, US