1
Exhibit 10.6
EXHIBIT G
[Conformed as executed]
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SECURITY AGREEMENT
among
MCMS, INC.,
CERTAIN SUBSIDIARIES
OF MCMS, INC.
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of February 26, 1998
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TABLE OF CONTENTS
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ARTICLE I
SECURITY INTERESTS........................ 2
1.1. Grant of Security Interests............................. 2
1.2. Power of Attorney....................................... 2
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS........ 3
2.1. Necessary Filings....................................... 3
2.2. No Liens................................................ 3
2.3. Other Financing Statements.............................. 3
2.4. Chief Executive Office; Records......................... 4
2.5. Location of Inventory and Equipment..................... 4
2.6. Recourse................................................ 5
2.7. Trade Names; Change of Name............................. 5
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS............ 5
3.1. Additional Representations and Warranties............... 5
3.2. Maintenance of Records.................................. 6
3.3. Direction to Account Debtors; Contracting Parties; etc.. 6
3.4. Modification of Terms; etc.............................. 6
3.5. Collection.............................................. 7
3.6. Instruments............................................. 7
3.7. Further Actions......................................... 7
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS............. 8
4.1. Additional Representations and Warranties............... 8
4.2. Licenses and Assignments................................ 8
(i)
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4.3. Infringements........................................... 8
4.4. Preservation of Marks................................... 9
4.5. Maintenance of Registration............................. 9
4.6. Future Registered Marks................................. 9
4.7. Remedies................................................ 9
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS.............. 10
5.1. Additional Representations and Warranties............... 10
5.2. Licenses and Assignments................................ 11
5.3. Infringements........................................... 11
5.4. Maintenance of Patents.................................. 11
5.5. Prosecution of Patent Application....................... 11
5.6. Other Patents and Copyrights............................ 11
5.7. Remedies................................................ 12
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL............... 12
6.1. Protection of Collateral Agent's Security............... 12
6.2. Warehouse Receipts Non-Negotiable....................... 13
6.3. Further Actions......................................... 13
6.4. Financing Statements.................................... 13
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT........... 14
7.1. Remedies; Obtaining the Collateral Upon Default......... 14
7.2. Remedies; Disposition of the Collateral................. 15
7.3. Waiver of Claims........................................ 16
7.4. Application of Proceeds................................. 17
7.5. Remedies Cumulative..................................... 18
7.6. Discontinuance of Proceedings........................... 18
ARTICLE VIII
INDEMNITY....................................... 19
8.1. Indemnity............................................... 19
8.2. Indemnity Obligations Secured by Collateral; Survival... 20
ARTICLE IX
(ii)
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DEFINITIONS..................................... 20
ARTICLE X
MISCELLANEOUS.................................... 25
10.1. Notices................................................ 25
10.2. Waiver; Amendment...................................... 25
10.3. Obligations Absolute................................... 26
10.4. Successors and Assigns................................. 26
10.5. Headings Descriptive................................... 26
10.6. Governing Law.......................................... 26
10.7. Assignor's Duties...................................... 26
10.8. Termination; Release................................... 27
10.9. Counterparts........................................... 27
10.10. The Collateral Agent.................................. 27
10.11. Additional Assignors.................................. 28
ANNEX A Schedule of Chief Executive Offices and other Record Locations
ANNEX B Schedule of Inventory and Equipment Locations
ANNEX C Trade and Fictitious Names
ANNEX D List of Marks
ANNEX E List of Patents and Applications
ANNEX F List of Copyrights and Applications
ANNEX G Grant of Security Interest in United States Trademarks and Patents
ANNEX H Grant of Security Interest in United States Copyrights
(iii)
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EXHIBIT G
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of February 26, 1998, among each of the
undersigned assignors (each, an "Assignor" and, together with any other entity
that becomes a party hereto pursuant to Section 10.11 hereof, the "Assignors")
and Bankers Trust Company, as Collateral Agent (the "Collateral Agent"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, MCMS, Inc. (the "Borrower"), the financial institutions
from time to time party thereto (the "Banks"), and Bankers Trust Company, as
Agent (the "Agent," and together with the Collateral Agent and the Banks, the
"Bank Creditors"), have entered into a Credit Agreement, dated as of February
26, 1998 (as amended, modified or supplemented from time to time, the "Credit
Agreement"), providing for the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit for the account of the Borrower, all
as contemplated therein;
WHEREAS, the Borrower may from time to time be party to one or more
(i) interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements or arrangements
designed to protect against the fluctuations in currency values and/or (iii)
other types of hedging agreements from time to time (each such agreement or
arrangement with an Other Creditor (as hereinafter defined), an "Interest Rate
Protection Agreement or Other Hedging Agreement"), with a Bank or an affiliate
of a Bank (each such Bank or affiliate, even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason, together with
such Bank's or affiliate's successors and assigns, collectively, the "Other
Creditors", and together with the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiary Guaranty when executed, each
Assignor (other than the Borrower) will have jointly and severally guaranteed to
the Secured Creditors the payment when due of all obligations and liabilities of
the Borrower under or with respect to the Credit Documents and the Interest Rate
Protection Agreements or Other Hedging Agreements;
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WHEREAS, it is a condition precedent to the making of Loans to the
Borrower under the Credit Agreement that each Assignor shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, each Assignor desires to execute this Agreement to satisfy
the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to each
Assignor, the receipt and sufficiency of which are hereby acknowledged, each
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of its Obligations, each
Assignor does hereby assign and transfer unto the Collateral Agent, and does
hereby pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors, a continuing security interest of first priority (subject to
Permitted Liens) in, all of the right, title and interest of such Assignor in,
to and under all of the following, whether now existing or hereafter from time
to time acquired: (i) each and every Receivable, (ii) all Contracts, together
with all Contract Rights arising thereunder (other than Contracts which by their
terms cannot be pledged (although the right to receive payments of money
thereunder shall not be excluded from the security interest created hereunder)),
(iii) all Inventory, (iv) all Equipment, (v) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, (vii) all computer pro grams of such Assignor and all intellectual
property rights therein (other than such programs and rights which by their
terms cannot be pledged) and all other proprietary information of such Assignor,
including, but not limited to, trade secrets, (viii) all other Goods, General
Intangibles, Chattel Paper, Documents and Instruments, (ix) the Cash Collateral
Account and all monies, securities and instruments deposited or required to be
deposited in such Cash Collateral Account, and (x) all Proceeds and products of
any and all of the foregoing (all of the above, collectively, the "Collateral").
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the
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occurrence of and during the continuance of an Event of Default (in the name of
such Assignor or other wise) to act, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies due or to become due to
such Assignor under or arising out of the Collateral, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings which the Collateral Agent may deem
to be reasonably necessary or advisable to protect the interests of the Secured
Creditors, which appointment as attorney is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been accomplished (or will have been accomplished on the
Business Day immediately following the Effective Date) and the security interest
granted to the Collateral Agent pursuant to this Agreement in and to the
Collateral creates a perfected security interest therein prior to the rights of
all other Persons therein and subject to no other Liens (other than Permitted
Liens) and is entitled to all the rights, priorities and benefits afforded by
the Uniform Commercial Code or other relevant law as enacted in any relevant
jurisdiction to perfected security interests, in each case to the extent that
the Collateral consists of the type of property in which a security interest may
be perfected by filing a financing statement under the Uniform Commercial Code
as enacted in any relevant jurisdiction or in the United States Patent and
Trademark Office or United States Copyright Office or, to the extent provided in
Section 6.3(b) hereof, in any foreign equivalent office of the United States
Patent and Trademark or United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of, or
has rights in, all Collateral free from any Lien, security interest, encumbrance
or other right, title or interest of any Person (other than Permitted Liens),
and such Assignor shall defend the Collateral to the extent of its rights
therein against all claims and demands of all Persons at any time claiming the
same or any interest therein adverse to the Collateral Agent.
2.3. Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other
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than financing statements filed in respect of Permitted Liens), and so long as
the Total Revolving Loan Commitment has not been terminated or any Note remains
unpaid or any of the Obligations (other than indemnities in the Credit Documents
which are not then due and payable) remain unpaid or any Interest Rate
Protection Agreement or Other Hedging Agreement or Letter of Credit remains in
effect (other than Letters of Credit, together with all Fees that have accrued
and will accrue thereon through the stated termination date of such Letters of
Credit, which have been supported in a manner satisfactory to the Letter of
Credit issuer in its sole and absolute discretion) or any Obligations are owed
with respect thereto, such Assignor will not execute or authorize to be filed in
any public office any financing statement (or similar statement or instrument
of registration under the law of any jurisdiction) or statements relating to the
Collateral, except (a) financing statements filed or to be filed in respect of
and covering the security interests granted hereby by such Assignor or as
permitted by the Credit Agreement and (b) financing statements with respect to
Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive office of
such Assignor is located at the address or addresses indicated on Annex A hereto
for such Assignor. Such Assignor will not move its chief executive office except
to such new location as such Assignor may establish in accordance with the last
sentence of this Section 2.4. The originals of all documents evidencing all
Receivables and Contract Rights of such Assignor and the only original books of
account and records of such Assignor relating thereto are, and will continue to
be, kept at such chief executive office, at one or more of the locations set
forth on Annex A hereto or at such new locations as such Assignor may establish
in accordance with the last sentence of this Section 2.4. All Receivables and
Contract Rights of such Assignor are, and will continue to be, maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from, the office locations described above or such new
location established in accordance with the last sentence of this Section 2.4.
No Assignor shall establish new locations for such offices until it shall have
given to the Collateral Agent notice of its intention to do so unless (i) such
Assignor shall give to the Collateral Agent written notice of any such
relocation of its chief executive office within 10 days following such
relocation, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new location, it shall take all action,
reasonably satisfactory to the Collateral Agent, to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor (other than (i) immaterial
portions of Inventory (x) sold on consignment or held on display for
demonstration purposes or (y) transferred to another location in connection with
a sale of such Inventory in the ordinary course of business, so long as such
sale occurs within 60 days from the date of such transfer, (ii) various spare
parts held for maintenance or repair of Equipment and (iii) motor vehicles).
Each Assignor
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agrees that all Inventory and Equipment now held or subsequently acquired by it
shall be kept at (or shall be in transport to) any one of the locations shown on
Annex B hereto, or such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.5 (other than (i) immaterial
portions of Inventory (x) sold on consignment or held on display for
demonstration purposes or (y) may be transferred to another location in
connection with a sale of such Inventory in the ordinary course of business, so
long as such sale occurs within 60 days from the date of such transfer, (ii)
various spare parts held for maintenance or repair of Equipment and (iii) motor
vehicles). Any Assignor may establish a new location for Inventory and Equipment
only if (i) it shall have given to the Collateral Agent written notice within 10
days following any such relocation clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may request and (ii) with respect to such new location, it shall have taken all
action reasonably satisfactory to the Collateral Agent to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect.
2.6. Recourse. This Agreement is made with full recourse to each
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection Agreements or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor has or operates in any
jurisdiction under, or in the preceding 12 months has had or has operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex C
hereto. No Assignor shall change its legal name or assume or operate in any
jurisdiction under any trade, fictitious or other name except those names listed
on Annex C hereto and new names established in accordance with the last sentence
of this Section 2.7. No Assignor shall assume or operate in any jurisdiction
under any new trade, fictitious or other name unless (i) it shall have given to
the Collateral Agent written notice within 10 days following any assumption of,
or operation under, such new name clearly describing such new name and the
jurisdictions in which such new name shall be used and providing such other
information in connection therewith as the Collateral Agent may reasonably
request and (ii) with respect to such new name, it shall have taken all action
requested by the Collateral Agent, to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect.
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ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Additional Representations and Warranties. As of the time when
each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are what they purport to be, and that all
papers and documents (if any) relating thereto will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein (other than copies created for general accounting purposes).
3.2. Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense accurate records of its Receivables and Contracts,
records of all payments received, all credits granted thereon, all merchandise
returned and all other dealings therewith, and such Assignor will make the same
available on such Assignor's premises to the Collateral Agent for inspection, at
such Assignor's own cost and expense, at any and all reasonable times upon prior
notice to an Authorized Officer of such Assignor. Upon the occurrence and during
the continuance of an Event of Default and at the request of the Collateral
Agent, such Assignor shall, at its own cost and expense, deliver all tangible
evidence of its Receivables and Contract Rights (including, without limitation,
all documents evidencing the Receivables and all Contracts) and such books and
records to the Collateral Agent or to its representatives (copies of which
evidence and books and records may be retained by such Assignor). Upon the
occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs, such Assignor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, the Receivables and the
Contracts, as well as books, records and documents (if any) of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.3. Direction to Account Debtors; Contracting Parties; etc. Upon
the occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
which application shall be effected in the manner provided in Section 7.4 of
this Agreement. The costs and expenses (including reasonable attorneys' fees) of
collection, whether incurred by the relevant
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Assignor or the Collateral Agent, shall be borne by the relevant Assignor. The
Collateral Agent shall deliver a copy of each notice referred to in the
preceding clause (y) to the relevant Assignor; provided, that the failure by the
Collateral Agent to so notify such Assignor shall not affect the effectiveness
of such notice or the other rights of the Collateral Agent created by this
Section 3.3.
3.4. Modification of Terms; etc. No Assignor shall rescind or cancel
any indebtedness evidenced by any Receivable or under any Contract, or modify in
any material respect any term thereof or make any material adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Receivable or Contract, or interest therein, without the prior written consent
of the Collateral Agent, except as permitted by Section 3.5 hereof or in the
Credit Agreement. Each Assignor will duly fulfill all obligations on its part to
be fulfilled under or in connection with the Receivables and Contracts and will
do nothing to impair the rights of the Collateral Agent in the Receivables or
Contracts.
3.5. Collection. Each Assignor shall endeavor in accordance with
reasonable business practices to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures)
any and all amounts owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Receivable or under such Contract, except that,
prior to the occurrence of an Event of Default, any Assignor may allow in the
ordinary course of business as adjustments to amounts owing under its
Receivables and Contracts (i) an extension or renewal of the time or times of
payment, or settlement for less than the total unpaid balance, which such
Assignor finds appropriate in accordance with reasonable business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which such Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, attorneys' fees) of
collection, whether incurred by an Assignor or the Collateral Agent, shall be
borne by the relevant Assignor.
3.6. Instruments. If any Assignor owns or acquires any Instrument
constituting Collateral, such Assignor will within 10 Business Days notify the
Collateral Agent thereof (to the extent such Collateral remains in the form of
an Instrument at such time), and upon request by the Collateral Agent will
promptly deliver such Instrument to the Collateral Agent appropriately endorsed
to the order of the Collateral Agent as further security hereunder.
3.7. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing
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statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to its
Receivables, Contracts, Instruments and other property or rights covered by the
security interest hereby granted, as the Collateral Agent may reasonably require
and consistent with the terms of this Agreement.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of the registered
Marks listed in Annex D hereto for such Assignor and that said listed Marks
constitute all the marks and applications for marks registered in the United
States Patent and Trademark Office or the equivalent thereof in any foreign
country that such Assignor presently owns. Each Assignor represents and warrants
that it owns, is licensed to use or otherwise has the right to use all Marks
that it uses. Each Assignor further warrants that it has no knowledge of any
third party claim that any aspect of such Assignor's present or contemplated
business operations infringes or will infringe any trademark, service ▇▇▇▇ or
trade name. Each Assignor represents and warrants that it is the true and lawful
owner of all trademark registrations and applications listed in Annex D hereto
and that said registrations are valid, subsisting, have not been cancelled and
that such Assignor is not aware of any third-party claim that any of said
registrations is invalid or unenforceable, or is not aware that there is any
reason that any of said registrations is invalid or unenforceable, or is not
aware that there is any reason that any of said applications will not pass to
registration. Each Assignor represents and warrants that upon the recordation of
a Grant of Security Interest in United States Trademarks and Patents in the form
of Annex G hereto in the United States Patent and Trademark Office, together
with filings on Form UCC-1 pursuant to this Agreement, all filings,
registrations and recordings necessary or appropriate to perfect the security
interest granted to the Collateral Agent in the United States Marks covered by
this Agreement under federal law will have been accomplished. Each Assignor
agrees to execute such a Grant of Security Interest in United States Trademark
and Patents covering all right, title and interest in each United States ▇▇▇▇,
and the associated goodwill, of such Assignor, and to record the same. Each
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of an Event of Default, any
document which may be required by the United States Patent and Trademark Office
or the equivalent thereof in any foreign country in order to effect an absolute
assignment of the Assignor's right, title and interest in each ▇▇▇▇, and record
the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any ▇▇▇▇ absent prior written approval of the
Collateral Agent.
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4.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of the name and address of,
and to furnish such pertinent information that may be available with respect to,
any party who such Assignor believes is infringing or diluting or otherwise
violating in any material respect any of such Assignor's rights in and to any
▇▇▇▇, or with respect to any party claiming that such Assignor's use of any ▇▇▇▇
violates in any material respect any property right of that party. Each Assignor
further agrees, unless otherwise agreed by the Collateral Agent, to prosecute
any Person infringing any ▇▇▇▇ in accordance with commercially reasonable
business practices.
4.4. Preservation of Marks. Each Assignor agrees to use its Marks in
interstate commerce (or the equivalent thereof in any foreign jurisdiction)
during the time in which this Agreement is in effect, sufficiently to preserve
such Marks as trademarks or service marks under the laws of the United States or
under the laws of the applicable foreign country, as the case may be; provided,
that, to the extent permitted by the Credit Agreement, no Assignor shall be
obligated to preserve any ▇▇▇▇ in the event such Assignor determines, in its
reasonable business judgment, that the preservation of such ▇▇▇▇ is no longer
desirable in the conduct of its business.
4.5. Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required by the Trademark Act of 1946,
15 U.S.C. ▇▇.▇▇. 1051 et seq. (or the equivalent thereof in any foreign
jurisdiction) to maintain trademark registrations, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office (or the equivalent thereof in any foreign
jurisdiction) for all of its registered Marks pursuant to 15 U.S.C. ▇▇.▇▇.
1058(a), 1059 and 1065 (or the equivalent thereof in any foreign jurisdiction),
and shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent; provided, that no Assignor shall
be obligated to maintain registration of any ▇▇▇▇ in the event that such
Assignor determines, in its reasonable business judgment, that such maintenance
of such ▇▇▇▇ is no longer necessary or desirable in the conduct of its business.
Each Assignor agrees to notify the Collateral Agent three (3) months prior to
the dates on which the affidavits of use or the applications for renewal
registration are due with respect to any registered ▇▇▇▇ that is being abandoned
in accordance with the guidelines set forth above.
4.6. Future Registered Marks. If any registration for a ▇▇▇▇ issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office (or the equivalent
thereof in any foreign jurisdiction), within 30 days of receipt of such
certificate, such Assignor shall deliver to the Collateral Agent a copy of such
certificate, and a grant of security in such ▇▇▇▇, to the Collateral Agent and
at the expense of such Assignor, confirming the grant of security in such ▇▇▇▇
to the Collateral Agent hereunder, the form of such security to be substantially
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the same as the form hereof or in such other form as may be reasonably
satisfactory to the Collateral Agent.
4.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks, together with all
trademark rights and rights of protection to the same, vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such rights,
title and interest shall immediately vest, in the Collateral Agent for the
benefit of the Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 4.1 hereof to execute,
cause to be acknowledged and notarized and record said absolute assignment with
the applicable agency; (ii) take and use or sell the Marks and the goodwill of
such Assignor's business symbolized by the Marks and the right to carry on the
business and use the assets of such Assignor in connection with which the Marks
have been used; and (iii) direct such Assignor to refrain, in which event such
Assignor shall refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor's
corporate name to eliminate therefrom any use of any ▇▇▇▇ and execute such other
and further documents that the Collateral Agent may request to further confirm
this and to transfer ownership of the Marks and registrations and any pending
trademark application in the United States Patent and Trademark Office (or the
equivalent thereof in any foreign jurisdiction) to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of or otherwise has
the right to use (i) all material United States and foreign trade secrets and
proprietary information necessary to operate the business of the Assignor (the
"Trade Secret Rights"), (ii) the Patents listed in Annex E hereto for such
Assignor and that said Patents constitute all the patents and applications for
patents that such Assignor now owns and (iii) the Copyrights listed in Annex F
hereto for such Assignor and that said Copyrights constitute all registrations
of copyrights and applications for copyright registrations that such Assignor
now owns. Each Assignor further warrants that it has no knowledge of any third
party claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any patent or any copyright or such
Assignor has misappropriated any trade secret or proprietary information. Each
Assignor represents and warrants that upon the recordation of a Grant of
Security Interest in United States Trademarks and Patents in the form of Annex G
hereto in the United States Patent and Trademark Office and the recordation of a
Grant of Security Interest in United States Copyrights in the form of Annex H
hereto in
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the United States Copyright Office, together with filings on Form UCC-1 pursuant
to this Agreement, all filings, registrations and recordings necessary or
appropriate to perfect the security interest granted to the Collateral Agent in
the United States Patents and United States Copyrights covered by this Agreement
under federal law will have been accomplished. Each Assignor agrees to execute
such a Grant of Security Interest in United States Trademarks and Patents
covering all right, title and interest in each United States Patent of such
Assignor and to record the same, and to execute such a Grant of Security
Interest in United States Copyrights covering all right, title and interest in
each United States Copyright of such Assignor and to record the same. Each
Assignor hereby grants to the Collateral Agent an absolute power of attorney to
sign, upon the occurrence and during the continuance of any Event of Default,
any document which may be required by the United States Patent and Trademark
Office (or the equivalent thereof in any foreign jurisdiction) or the United
States Copyright Office (or the equivalent thereof in any foreign jurisdiction)
in order to effect an absolute assignment of all right, title and interest in
each Patent and Copyright, and to record the same.
5.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreement or this Agreement, each Assignor hereby agrees not to divest
itself of any right under any Patent or Copyright absent prior written approval
of the Collateral Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to furnish the Collateral Agent in writing with all pertinent
information available to such Assignor with respect to any infringement,
contributing infringement or active inducement to infringe any of such
Assignor's rights in and to in any Patent or Copyright or to any claim that such
Assignor's practice of any Patent or use of any Copyright violates any property
right of a third party, or with respect to any misappropriation of any Trade
Secret Right or any claim that such Assignor's practice of any Trade Secret
Right violates any property right of a third party. Each Assignor further
agrees, absent direction of the Collateral Agent to the contrary, diligently to
prosecute any Person infringing any Patent or Copyright or any Person
misappropriating any Trade Secret Right in accordance with commercially
reasonable business practices.
5.4. Maintenance of Patents. At its own expense, each Assignor shall
make timely payment of all post-issuance fees required pursuant to 35 U.S.C. ss.
41 (or the equivalent thereof in any foreign jurisdiction) to maintain in force
rights under each Patent, absent prior written consent of the Collateral Agent;
provided, that, to the extent permitted by the Credit Agreement, no Assignor
shall be obligated to maintain any Patent in the event such Assignor determines,
in its reasonable business judgment, that the maintenance of such Patent is no
longer necessary or desirable in the conduct of its business.
5.5. Prosecution of Patent Application. At its own expense, each
Assignor shall diligently prosecute all applications for Patents listed in Annex
E hereto for such Assignor and shall not abandon any such application prior to
exhaustion of all
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administrative and judicial remedies, absent written consent of the Collateral
Agent; provided, that, to the extent permitted by the Credit Agreement, no
Assignor shall be obligated to prosecute any application in the event such
Assignor determines, in its reasonable business judgment, that the prosecuting
of such application is no longer necessary or desirable in the conduct of its
business.
5.6. Other Patents and Copyrights. Within 30 days of the acquisition
or issuance of a Patent, registration of a Copyright, or acquisition of a
registered Copyright, or of filing of an application for a Patent or
registration of Copyright, the relevant Assignor shall deliver to the Collateral
Agent a copy of said Copyright or certificate or registration of, or application
therefor, said Patents, as the case may be, with a grant of security in such
Patent or Copyright, as the case may be, to the Collateral Agent and at the
expense of such Assignor, confirming the grant of security, the form of such
grant of security to be substantially the same as the form hereof or in such
other form as may be reasonably satisfactory to the Collateral Agent.
5.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such other
and further documents as the Collateral Agent may request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense to the extent and in the
manner provided in the Credit Agreement; all policies or certificates with
respect to such insurance (and any other insurance maintained by such Assignor)
(i) shall be endorsed to the Collateral Agent's reasonable satisfaction for the
benefit of the Collateral Agent (including, without limitation, by naming the
Collateral Agent as additional insured and loss payee) and (ii) shall state that
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such insurance policies shall not be cancelled or revised without 30 days' prior
written notice thereof by the insurer to the Collateral Agent; and certified
copies of such policies or certificates shall be deposited with the Collateral
Agent. If any Assignor shall fail to insure its Inventory and Equipment in
accordance with the preceding sentence, or if any Assignor shall fail to so
endorse and deposit all policies or certificates with respect thereto, the
Collateral Agent shall have the right (but shall be under no obligation) to
procure such insurance and such Assignor agrees to promptly reimburse the
Collateral Agent for all costs and expenses of procuring such insurance. Except
as otherwise permitted to be retained by the relevant Assignor pursuant to the
Credit Agreement, the Collateral Agent hereunder shall, at the time such
proceeds of such insurance are distributed to the Secured Creditors hereunder,
apply such proceeds in accordance with Section 7.4 hereof. If the Collateral
Agent receives proceeds of insurance which are permitted to be retained by the
relevant Assignor pursuant to the Credit Agreement, the Collateral Agent will
distribute such proceeds to such Assignor. Each Assignor assumes all liability
and responsibility in connection with the Collateral acquired by it and the
liability of such Assignor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be lost, destroyed,
stolen, damaged or for any reason whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-Negotiable. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such warehouse receipt or receipt in the
nature thereof shall not be "negotiable" (as such term is used in Section 7-104
of the Uniform Commercial Code as in effect in any relevant jurisdiction or
under other relevant law) or, if any warehouse receipt or any receipt in the
nature of a warehouse receipt is "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law) then the respective Assignor shall promptly take
all action as may be required under the relevant jurisdiction to grant a
perfected security interest in such Collateral to the Collateral Agent for the
benefit of the Secured Creditors.
6.3. Further Actions. (a) Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral and consistent with the terms of this
Agreement.
(b) Each Assignor hereby agrees that it will from time to time, at
its own expense and at the request of the Collateral Agent or the Required
Banks, take all actions (including making all appropriate filings) as may be
necessary or in the reasonable
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opinion of the Collateral Agent desirable to perfect (and maintain the
perfection of) any security interest in any material foreign ▇▇▇▇, Patent and/or
Copyright, and in connection therewith shall deliver one or more opinions of
foreign counsel confirming the validity and perfection of the security interest
in such foreign Marks, Patents and/or Copyrights.
6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforce able, first priority
(subject to Permitted Liens) perfected security interest in the Collateral as
provided herein and the other rights and security contemplated hereby all in
accordance with the Uniform Commercial Code as enacted in any and all relevant
jurisdictions or any other relevant law. Each Assignor will pay any applicable
filing fees, recordation taxes and related expenses relating to its Collateral.
Each Assignor hereby authorizes the Collateral Agent to file any such financing
statements without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and
may:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and
the Contracts) constituting the Collateral to make any payment required
by the terms of such agreement, instrument or other obligation directly to
the Collateral Agent;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
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(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof, or
direct the relevant Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to
the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2 hereof; and
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition; and
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine (taking into account such
provisions as may be necessary to protect and preserve such Marks, Patents
and Copyrights);
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by such Assignor of said obligation. The
Secured Creditors agree that this Agreement may be enforced only by the action
of the Agent or the Collateral Agent, in each case acting upon the instructions
of the Required Banks (or, after the date on which all Credit Document
Obligations have been paid in full, the holders of at least the majority of the
outstanding Other Obligations) and that no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Agent or the Collateral Agent or the
holders of at least a majority of the outstanding Other Obligations, as the case
may be, for the benefit of the Secured Creditors in accordance with the terms of
this Agreement.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral
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whether or not so repossessed by the Collateral Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Collateral Agent may, in compliance with any
mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Collateral Agent or
after any overhaul or repair at the expense of the relevant Assignor which the
Collateral Agent shall determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private proceedings permitted
by such requirements shall be made upon not less than 10 days' written notice to
the relevant Assignor specifying the time at which such disposition is to be
made and the intended sale price or other consideration therefor, and shall be
subject, for the 10 days after the giving of such notice, to the right of the
relevant Assignor or any nominee of such Assignor to acquire the Collateral
involved at a price or for such other consideration at least equal to the
intended sale price or other consideration so specified. Any such disposition
which shall be a public sale permitted by such requirements shall be made upon
not less than 10 days' written notice to the relevant Assignor specifying the
time and place of such sale and, in the absence of applicable requirements of
law, shall be by public auction (which may, at the Collateral Agent's option, be
subject to reserve), after publication of notice of such auction not less than
10 days prior thereto in two newspapers in general circulation in the City of
New York. To the extent permitted by any such requirement of law, the Collateral
Agent may bid for and become the purchaser of the Collateral or any item
thereof, offered for sale in accordance with this Section without accountability
to the relevant Assignor. If, under mandatory requirements of applicable law,
the Collateral Agent shall be required to make disposition of the Collateral
within a period of time which does not permit the giving of notice to the
relevant Assignor as hereinabove specified, the Collateral Agent need give such
Assignor only such notice of disposition as shall be reasonably practicable in
view of such mandatory requirements of applicable law.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S
TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
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(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 here under; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent the Pledge Agreement, the Mortgages or the
Additional Security Documents require proceeds of collateral under such Security
Documents to be applied in accordance with the provisions of this Agreement, the
Pledgee or Mortgagee under such other Security Document) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (iii) and (iv) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors as provided in Section
7.4(c) hereof with each Secured Creditor receiving an amount equal to its
outstanding Obligations or, if the proceeds are insufficient to pay in
full all such Obligations, its Pro Rata Share (as defined below) of the
amount remaining to be distributed; and
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii) and following the
termination of this Agreement pursuant to Section 10.8 hereof, to the
relevant Assignor or, to the extent directed by such Assignor or a court
of competent jurisdiction, to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid
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amount of such Secured Creditor's Obligations and the denominator of which is
the then outstanding amount of all Obligations.
(c) All payments required to be made to the Bank Creditors hereunder
shall be made to the Agent under the Credit Agreement for the account of the
Bank Creditors and all payments required to be made to the Other Creditors
hereunder shall be made directly to the respective Other Creditor.
(d) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Agent under the Credit Agreement and (ii) the Other Creditors for a
determination (which the Agent, each Other Creditor and the Secured Creditors
agree to provide upon request of the Collateral Agent) of the outstanding
Obligations owed to the Bank Creditors or the Other Creditors, as the case may
be. Unless it has actual knowledge (including by way of written notice from a
Bank Creditor or an Other Creditor) to the contrary, the Agent under the Credit
Agreement, in furnishing information pursuant to the preceding sentence, and the
Collateral Agent, in acting hereunder, shall be entitled to assume that (x) no
Credit Document Obligations other than principal, interest and regularly
accruing fees are owing to any Bank Creditor and (y) no Interest Rate Protection
Agreement or Other Hedging Agreement, or Other Obligations in respect thereof,
are in existence.
(e) It is understood that each Assignor shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clause (a) of this Section 7.4 with respect to the relevant Assignor.
7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other
Credit Documents or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. No notice to or demand on any Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent to any other or
further action in any circumstances without notice or demand. In the event that
the Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover reasonable
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expenses, including attorneys' fees, and the amounts thereof shall be included
in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees and agents
(hereinafter in this Section 8.1 referred to individually as "Indemnitee," and
collectively as "Indemnitees") harmless from any and all liabilities,
obligations, damages, injuries, penalties, claims, demands, actions, suits,
judgments and any and all costs, expenses or disbursements (including reasonable
attorneys' fees and expenses) (for the purposes of this Section 8.1 the
foregoing are collectively called "expenses") of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement, any Interest Rate Protection
Agreement or Other Hedging Agreement, any other Credit Document or any other
document executed in connection herewith or therewith or in any other way
connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), the violation of the laws of any
country, state or other govern mental body or unit, any tort (including, without
limitation, claims arising or imposed under the doctrine of strict liability, or
for or on account of injury to or the death of any Person (including any
Indemnitee), or property damage), or contract claim; provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for losses, injuries,
penalties, claims, expenses, damages or liabilities to the extent caused by the
gross negligence or willful misconduct of such Indemnitee. Each Assignor agrees
that upon written notice by any Indemnitee of the assertion of such a liability,
obligation, damage, injury, penalty, claim, demand, action, suit or judgment,
the relevant Assignor shall assume full responsibility for the defense thereof.
Each Indem-
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▇▇▇▇▇ agrees to use its best efforts to promptly notify the relevant Assignor of
any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other fees, costs and
expenses in connection with protecting, maintaining or preserving the Collateral
and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) Without limiting the application of Section 8.1(a) or (b)
hereof, each Assignor agrees, jointly and severally, to pay, indemnify and hold
each Indemnitee harmless from and against any loss, costs, damages and expenses
which such Indemnitee may suffer, expend or incur in consequence of or growing
out of any misrepresentation by any Assignor in this Agreement, any Interest
Rate Protection Agreement or Other Hedging Agreement, any other Credit Document
or in any writing contemplated by or made or delivered pursuant to or in
connection with this Agreement, any Interest Rate Protection Agreement or Other
Hedging Agreement or any other Credit Document.
(d) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
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"Agent" shall have the meaning provided in the recitals to this
Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Borrower" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a cash collateral account
maintained with, and in the sole dominion and control of, the Collateral Agent
for the benefit of the Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, any Interest Rate
Protection Agreements or Other Hedging Agreements).
"Copyrights" shall mean any United States or foreign copyright owned
by any Assignor, including any registrations of any Copyrights, in the United
States Copyright Office or the equivalent thereof in any foreign country, as
well as any application for a United States or foreign copyright registration
now or hereafter made with the United States Copy right Office or the equivalent
thereof in any foreign country by any Assignor, other
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than those countries outside the United States where the grant of a security
interest would invalidate such Copyrights.
"Credit Agreement" shall have the meaning provided in the recitals
to this Agreement.
"Credit Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time,
or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Interest Rate Protection Agreements or Other Hedging Agreements"
shall have the meaning provided in the recitals to this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies,
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incidentals, packaging materials, labels, materials and any other items used or
usable in manufacturing, processing, packaging or shipping same; in all stages
of production -- from raw materials through work-in-process to finished goods --
and all products and proceeds of whatever sort and wherever located and any
portion thereof which may be returned, rejected, reclaimed or repossessed by the
Collateral Agent from any Assignor's customers, and shall specifically include
all "inventory" as such term is defined in the Uniform Commercial Code as in
effect on the date hereof in the State of New York, now or hereafter owned by
any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any
United States or foreign trademarks, service marks and trade names now held or
hereafter acquired by any Assignor, including any registration of any trademarks
and service marks in the United States Patent and Trademark Office, or the
equivalent thereof in any foreign country, other than those countries outside
the United States, where the grant of a security interest would invalidate such
trademarks, service marks and trade names, and any trade dress including logos
and/or designs used by any Assignor in the United States or any foreign country.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities of each
Assignor, now existing or hereafter incurred under, arising out of or in
connection with any Credit Document to which such Assignor is a party and the
due performance and compliance by each Assignor with the terms of each such
Credit Document (all such obligations and liabilities under this clause (i),
except to the extent consisting of obligations or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations"); (ii) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
of each Assignor now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement including, in the case of the Assignors other than the Borrower, all
obligations of such Assignor under the Subsidiary Guaranty in respect of
Interest Rate Protection Agreements or Other Hedging Agreements (all such
obligations and liabilities under this clause (ii) being herein collectively
called the "Other Obligations"); (iii) any and all sums advanced by the
Collateral Agent in order to preserve the Collateral or preserve its security
interest in the Col lateral; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
each Assignor referred to in clauses (i) and (ii), after an Event of Default
shall have occurred and be continuing, the reasonable expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
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realizing on the Collateral, or of any exercise by the Collateral Agent of its
rights hereunder, together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Section 8.1 of this Agreement.
"Other Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to which
any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by any Assignor, except those patents or patent applications in
those countries outside the United States where the granting of a security
interest in such patents is not permissible under the laws of that country.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or any Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to any Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b)
of this Agreement.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records,
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ledger cards, and invoices relating thereto, (f) all evidences of the filing of
financing statements and other statements and the registration of other
instruments in connection therewith and amendments thereto, notices to other
creditors or secured parties, and certificates from filing or other registration
officers, (g) all credit information, reports and memoranda relating thereto and
(h) all other writings related in any way to the foregoing.
"Requisite Creditors" shall have the meaning provided in Section
10.2 of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals
to this Agreement.
"Termination Date" shall have the meaning provided in Section 10.8
of this Agreement.
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1. Notices. Except as otherwise specified herein, all notices,
requests, demands or other communications to or upon the respective parties
hereto shall be deemed to have been duly given or made when delivered to the
party to which such notice, request, demand or other communication is required
or permitted to be given or made under this Agreement, addressed:
(a) if to any Assignor, at its address set forth opposite its
signature below;
(b) if to the Collateral Agent:
Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to any Bank Creditor (other than the Collateral Agent), at
such address as such Bank Creditor shall have specified in the Credit
Agreement;
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(d) if to any Other Creditor, at such address as such Other Creditor
shall have specified in writing to each Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
10.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby and the
Collateral Agent (with the consent of (x) either the Required Banks (or, to the
extent required by Section 12.12 of the Credit Agreement, all of the Banks) at
all times prior to the time on which all Credit Document Obligations have been
paid in full or (y) the holders of at least a majority of the outstanding Other
Obligations at all times after the time on which all Credit Document Obligations
have been paid in full); provided, that any change, waiver, modification or
variance affecting the rights and benefits of a single Class of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors of such Class of Secured
Creditors. For the purpose of this Agreement the term "Class" shall mean each
class of Secured Creditors, i.e., whether (x) the Bank Creditors as holders of
the Credit Document Obligations or (y) the Other Creditors as the holders of the
Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (x) with respect to the Credit
Document Obligations, the Required Banks (or all the Banks if required by
Section 12.12 of the Credit Agreement) and (y) with respect to the Other
Obligations, the holders of at least a majority of all obligations outstanding
from time to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
10.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document or
any Interest Rate Protection Agreement or Other Hedging Agreement; or (c) any
amendment to or modification of any Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement or any security for any of the
Obligations; whether or not any Assignor shall have notice or knowledge of any
of the foregoing.
10.4. Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and its successors and assigns; provided, that no Assignor
may transfer or assign any or all of its rights or obligations hereunder without
the prior written consent of the Collateral Agent. All agreements, statements,
representations and warranties made by each Assignor herein or in any
certificate or other instrument delivered by such Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents
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and the Interest Rate Protection Agreements or Other Hedging Agreements
regardless of any investigation made by the Secured Creditors or on their
behalf.
10.5. Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
10.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
10.7. Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of each Assignor under or with
respect to any Collateral.
10.8. Termination; Release. (a) After the Termination Date, this
Agreement shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 8.1 hereof shall survive such
termination) and the Collateral Agent, at the request and expense of the
respective Assignor, will promptly execute and deliver to such Assignor a proper
instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) such of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the Total
Revolving Loan Commitment and all Interest Rate Protection Agreements or Other
Hedging Agreements have been terminated, no Note, Loan or Letter of Credit is
outstanding (other than Letters of Credit, together with all Fees that have
accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Letter of Credit Issuer in its sole and absolute discretion) and all other
Obligations (other than any indemnities described in Section 8.1 hereof, in the
other Credit Documents and in Section 12.13 of the Credit Agreement which are
not then due and payable) have been paid in full.
(b) In the event that any part of the Collateral is sold or
otherwise disposed of in connection with a sale or other disposition permitted
by Section 8.02 of the Credit Agreement or is otherwise released at the
direction of the Required Banks (or all the Banks if required by Section 12.12
of the Credit Agreement), the Collateral Agent, at the request and expense of
such Assignor, will duly release from the security interest created hereby
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and assign, transfer and deliver to such Assignor (without recourse and without
any representation or warranty) such of the Collateral as is then being (or has
been) so sold or released and as may be in the possession of the Collateral
Agent and has not theretofore been released pursuant to this Agreement.
(c) At any time that the respective Assignor desires that Collateral
be released as provided in the foregoing Section 10.8(a) or (b), it shall
deliver to the Collateral Agent a certificate signed by an Authorized Officer of
such Assignor stating that the release of the respective Collateral is permitted
pursuant to Section 10.8(a) or (b) hereof.
10.9. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Collateral Agent.
10.10. The Collateral Agent. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed that the obligations
of the Collateral Agent as holder of the Collateral and interests therein and
with respect to the disposition thereof, and otherwise under this Agreement, are
only those expressly set forth in this Agreement and as provided in the Uniform
Commercial Code in the State of New York. The Collateral Agent shall act
hereunder on the terms and conditions set forth in Section 11 of the Credit
Agreement.
10.11. Additional Assignors. It is understood and agreed that any
Subsidiary of the Borrower that is required to execute a counterpart of this
Agreement after the date hereof pursuant to Sections 7.13 and/or 8.14 of the
Credit Agreement shall automatically become an Assignor hereunder by executing a
counterpart hereof and delivering the same to the Collateral Agent.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Address:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ MCMS, INC.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ as an Assignor
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Title: Vice President, Finance,
and CFO
With a copy to:
Cornerstone Equity Investors, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. (▇▇▇▇) ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
Title: Vice President