Exhibit 99.6
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of March 29, 2006 (this "Agreement") made by
AFG Enterprises USA, Inc. a Nevada Corporation (the "Company"), and, each of the
undersigned "Guarantors" (each "Guarantor" and together the "Guarantors", and
together with the Company each a "Grantor" and, collectively, the "Grantors"),
in favor of, THE BANK OF NEW YORK, a New York banking corporation, in its
capacity as collateral agent for the Holders (as defined below) (in such
capacity and together with its successors in such capacity, the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Company and The Bank of New York, as Trustee (the "Trustee")
are parties to an Indenture dated as of March 29, 2006 (as amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"),
providing, subject to the terms and conditions thereof, for the issuance by the
Company of the "Notes" (as defined in the Indenture) (as such Notes may be
amended, restated, replaced or otherwise modified from time to time in
accordance with the terms thereof, collectively, the "Notes");
WHEREAS, each of the "Holders" (as defined in the Indenture) (each a
"Holder" and collectively, the "Holders") has entered into a Securities Purchase
Agreement of even date herewith (as amended, restated or otherwise modified from
time to time, the "Securities Purchase Agreement") with the Company providing,
subject to the terms and conditions thereof, for the purchase of the Notes and
"Warrants" (as defined therein) from the Company;
WHEREAS, each of the Guarantors shall have executed and delivered to the
Collateral Agent the Guaranty of even date herewith (as amended, restated or
otherwise modified from time to time, the "Guaranty"), with respect to the
obligations of the Company under the Transaction Documents (as defined below);
WHEREAS, it is a condition precedent to the purchase by the Holders of the
Notes under the Indenture, that the Grantors shall have executed and delivered
to the Collateral Agent this Agreement providing for the grant to the Collateral
Agent for the benefit of the Holders of a security interest in all personal
property of the Grantors to secure all of (i) the Company's obligations under
the Indenture and the Notes (in the case of the Company) and (ii) the
Guarantors' obligations under the Guaranty ;
WHEREAS, each of Guarantors is a Subsidiary of the Company and will derive
substantial benefits from the execution of the Indenture by the Company;
WHEREAS, each of the Grantors by the Company are mutually dependent on
each other in the conduct of their respective businesses as an integrated
operation, with the credit needed from time to time by one often being provided
through financing obtained by the other and the ability to obtain such financing
being dependent on the successful operations of the Grantors; and
WHEREAS, each of the Guarantors has determined that the execution,
delivery and performance of this Agreement and the Guaranty directly benefits,
and are in the best interest of the Guarantor;
NOW, THEREFORE, in consideration of the premises and the agreements herein
and in order to induce the Trustee to enter into the Indenture and the Holders
to purchase the Securities pursuant to the Securities Purchase Agreements, each
Grantor agrees with the Collateral Agent, for the benefit of the Trustee and the
Holders, as follows:
SECTION 1. Definitions.
(a) Reference is hereby made to the Indenture, the Securities Purchase
Agreement and the Notes for a statement of the terms thereof. All terms used in
this Agreement and the recitals hereto which are defined in the Indenture, the
Securities Purchase Agreement, the Notes or in Articles 8 or 9 of the Uniform
Commercial Code (the "Code") as in effect from time to time in the State of New
York, and which are not otherwise defined herein shall have the same meanings
herein as set forth therein; provided that terms used herein which are defined
in the Code as in effect in the State of New York on the date hereof shall
continue to have the same meaning notwithstanding any replacement or amendment
of such statute except as the Collateral Agent may otherwise determine.
(b) The following terms shall have the respective meanings provided for in
the Code: "Accounts", "Cash Proceeds", "Chattel Paper", "Commercial Tort Claim",
"Commodity Account", "Commodity Contracts", "Deposit Account", "Documents",
"Equipment", "Fixtures", "General Intangibles", "Goods", "Instruments",
"Inventory", "Investment Property", "Letter-of-Credit Rights", "Noncash
Proceeds", "Payment Intangibles", "Proceeds", "Promissory Notes", "Security",
"Record", "Security Account", "Software", and "Supporting Obligations".
(c) As used in this Agreement, the following terms shall have the
respective meanings indicated below, such meanings to be applicable equally to
both the singular and plural forms of such terms:
"Copyright Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to use or sell any works covered by any
copyright (including, without limitation, all Copyright Licenses set forth in
Schedule II hereto).
"Copyrights" means all domestic and foreign copyrights, whether registered
or not, including, without limitation, all copyright rights throughout the
universe (whether now or hereafter arising) in any and all media (whether now or
hereafter developed), in and to all original works of authorship fixed in any
tangible medium of expression, acquired or used by any Grantor, all
applications, registrations and recordings thereof (including, without
limitation, applications, registrations and recordings in the United States
Copyright Office or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues,
divisions, continuations, continuations in part and extensions or renewals
thereof.
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"Escrow Account" shall have the meaning provided to such term in the
Indenture.
"Event of Default" shall have the meaning set forth in the Indenture.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the benefit of creditors, formal or informal moratoria, compositions, or
extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Intellectual Property" means the Copyrights, Trademarks and Patents.
"Licenses" means the Copyright Licenses, the Trademark Licenses and the
Patent Licenses.
"Lien" means any mortgage, deed of trust, pledge, lien (statutory or
otherwise), security interest, charge or other encumbrance or security or
preferential arrangement of any nature, including, without limitation, any
conditional sale or title retention arrangement, any capitalized lease and any
assignment, deposit arrangement or financing lease intended as, or having the
effect of, security.
"Patent Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensee or licensor and
providing for the grant of any right to manufacture, use or sell any invention
covered by any Patent (including, without limitation, all Patent Licenses set
forth in Schedule II hereto).
"Patents" means all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how,
formulae, rights of publicity and other general intangibles of like nature, now
existing or hereafter acquired (including, without limitation, all domestic and
foreign letters patent, design patents, utility patents, industrial designs,
inventions, trade secrets, ideas, concepts, methods, techniques, processes,
proprietary information, technology, know-how and formulae described in Schedule
II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United
States Patent and Trademark Office, or in any similar office or agency of the
United States or any other country or any political subdivision thereof), and
all reissues, divisions, continuations, continuations in part and extensions or
renewals thereof.
"Permitted Liens" shall have the meaning provided to such term in the
Indenture.
"Subsidiary" shall have the meaning provided to such term in the
Indenture.
"Trademark Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming any Grantor as licensor or licensee and
providing for the grant of any right concerning any Trademark, together with any
goodwill connected with and symbolized by any such trademark licenses, contracts
or agreements and the right to prepare for sale or lease and sell or lease any
and all Inventory now or hereafter owned by any Grantor and now or hereafter
covered by such licenses (including, without limitation, all Trademark Licenses
described in Schedule II hereto).
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"Trademarks" means all domestic and foreign trademarks, service marks,
collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business
identifiers and all general intangibles of like nature, now or hereafter owned,
adopted, acquired or used by any Grantor (including, without limitation, all
domestic and foreign trademarks, service marks, collective marks, certification
marks, trade names, business names, d/b/a's, Internet domain names, trade
styles, designs, logos and other source or business identifiers described in
Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in
the United States Patent and Trademark Office or in any similar office or agency
of the United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together
with all goodwill of the business symbolized by such marks and all customer
lists, formulae and other Records of any Grantor relating to the distribution of
products and services in connection with which any of such marks are used.
"Transaction Documents" shall have the meaning provided to such term in
the Securities Purchase Agreement.
SECTION 2. Grant of Security Interest. As collateral security for all of
the "Obligations" (as defined in Section 3 hereof), each Grantor hereby pledges
and assigns to the Collateral Agent for the benefit of the Holders, and grants
to the Collateral Agent for the benefit of the Holders a continuing security
interest in, all personal property of such Grantor, wherever located and whether
now or hereafter existing and whether now owned or hereafter acquired, of every
kind and description, tangible or intangible (collectively, the "Collateral"),
including, without limitation, the following:
(a) all Accounts;
(b) all Chattel Paper (whether tangible or electronic);
(c) the Commercial Tort Claims specified on Schedule VI hereto;
(d) all Deposit Accounts (including, without limitation, the Escrow
Account), all cash, and all other property from time to time deposited therein
and the monies and property in the possession or under the control of the
Collateral Agent or any Holder or any affiliate, representative, agent or
correspondent of the Collateral Agent or Holder;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
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(h) all General Intangibles (including, without limitation, all Payment
Intangibles);
(i) all Goods;
(j) all Instruments (including, without limitation, Promissory Notes and
each certificated Security);
(k) all Inventory;
(l) all Investment Property;
(m) all Copyrights, Patents and Trademarks, and all Licenses;
(n) all Letter-of-Credit Rights;
(o) all Supporting Obligations;
(p) all other tangible and intangible personal property of such Grantor
(whether or not subject to the Code), including, without limitation, all bank
and other accounts and all cash and all investments therein, all proceeds,
products, offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property of such Grantor described in the
preceding clauses of this Section 2 (including, without limitation, any proceeds
of insurance thereon and all causes of action, claims and warranties now or
hereafter held by such Grantor in respect of any of the items listed above), and
all books, correspondence, files and other Records, including, without
limitation, all tapes, desks, cards, Software, data and computer programs in the
possession or under the control of such Grantor or any other Person from time to
time acting for such Grantor that at any time evidence or contain information
relating to any of the property described in the preceding clauses of this
Section 2 or are otherwise necessary or helpful in the collection or realization
thereof; and
(q) all Proceeds, including all Cash Proceeds and Noncash Proceeds, and
products of any and all of the foregoing Collateral;
in each case howsoever such Grantor's interest therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
SECTION 3. Security for Obligations. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, whether now existing or hereafter incurred (collectively,
the "Obligations"):
(a) (i) in the case of the Company, the payment by the Company, as and
when due and payable (by scheduled maturity, required prepayment, acceleration,
demand or otherwise), of all amounts from time to time owing by it in respect of
the Indenture, the Securities and the other Transaction Documents, and (ii) in
the case of the Guarantors, the payment by each of the Guarantors, as and when
due and payable of all "Guaranteed Obligations" under (as defined in) the
Guaranty, including, without limitation, (A) all principal of and interest on
the Securities (including, without limitation, all interest that accrues after
the commencement of any Insolvency Proceeding of any Grantor, whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding), and (B) all fees, commissions, expense
reimbursements, indemnifications and all other amounts due or to become due
under any of the Transaction Documents, including without limitation any Make
Whole Premium payable in accordance with the terms of the Indenture (and defined
therein); and
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(b) the due performance and observance by each Grantor of all of its other
obligations from time to time existing in respect of any of the Transaction
Documents, including without limitation, with respect to any conversion or
redemption rights of the Holders under the Notes, for so long as the Notes are
outstanding.
SECTION 4. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Schedule I hereto sets forth (i) the exact legal name of such Grantor,
and (ii) the organizational identification number of such Grantor or states that
no such organizational identification number exists.
(b) There is no pending or notice threatening any action, suit, proceeding
or claim affecting such Grantor before any governmental authority or any
arbitrator, or any order, judgment or award by any governmental authority or
arbitrator, that may adversely affect the grant by such Grantor, or the
perfection, of the security interest purported to be created hereby in the
Collateral, or the exercise by the Collateral Agent of any of its rights or
remedies hereunder.
(c) All Federal, state and local tax returns and other reports required by
applicable law to be filed by such Grantor have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon such Grantor or any property of such Grantor (including, without
limitation, all federal income and social security taxes on employees' wages)
and which have become due and payable on or prior to the date hereof have been
paid, except to the extent contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment
thereof and with respect to which adequate reserves have been set aside for the
payment thereof in accordance with generally accepted accounting principles
consistently applied ("GAAP").
(d) All Equipment, Fixtures, Goods and Inventory of such Grantor now
existing are, and all Equipment, Fixtures, Goods and Inventory of such Grantor
hereafter existing will be, located and/or based at the addresses specified
therefor in Schedule III hereto, except that such Grantor will give the
Collateral Agent not less than 30 days' prior written notice of any change of
the location of any such Collateral, other than to locations set forth on
Schedule III and with respect to which the Collateral Agent has filed financing
statements and otherwise fully perfected its Liens thereon. Such Grantor's chief
place of business and chief executive office, the place where such Grantor keeps
its Records concerning Accounts and all originals of all Chattel Paper are
located at the addresses specified therefor in Schedule III hereto. None of the
Accounts is evidenced by Promissory Notes or other Instruments. Set forth in
Schedule IV hereto is a complete and accurate list, as of the date of this
Agreement, of (i) each Promissory Note, Company Security and other Instrument
owned by each Grantor and (ii) each Deposit Account, Securities Account and
Commodities Account of each Grantor, together with the name and address of each
institution at which each such Account is maintained, the account number for
each such Account and a description of the purpose of each such Account. Set
forth in Schedule II hereto is a complete and correct list of each trade name
used by each Grantor and the name of, and each trade name used by, each person
from which such Grantor has acquired any substantial part of the Collateral.
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(e) Such Grantor has delivered to the Collateral Agent complete and
correct copies of each License described in Schedule II hereto, including all
schedules and exhibits thereto, which represents all of the Licenses existing on
the date of this Agreement. Each such License sets forth the entire agreement
and understanding of the parties thereto relating to the subject matter thereof,
and there are no other agreements, arrangements or understandings, written or
oral, relating to the matters covered thereby or the rights of such Grantor or
any of its affiliates in respect thereof. Each material License now existing is,
and any material License entered into in the future will be, the legal, valid
and binding obligation of the parties thereto, enforceable against such parties
in accordance with its terms. No default under any material License by any such
party has occurred, nor does any defense, offset, deduction or counterclaim
exist thereunder in favor of any such party.
(f) Such Grantor owns and controls, or otherwise possesses adequate rights
to use, all Trademarks, Patents and Copyrights, which are the only trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and
technology, know-how, formulae, rights of publicity necessary to conduct its
business in substantially the same manner as conducted as of the date hereof.
Schedule II hereto sets forth a true and complete list of all registered
copyrights, issued Patents, Trademarks, and Licenses annually owned or used by
such Grantor as of the date hereof. To the best knowledge of each Grantor except
as otherwise disclosed on Schedule II hereto, all such Intellectual Property of
such Grantor is subsisting and in full force and effect, has not been adjudged
invalid or unenforceable, is valid and enforceable and has not been abandoned in
whole or in part. Except as set forth in Schedule II, no such Intellectual
Property is the subject of any licensing or franchising agreement. Such Grantor
has no knowledge of any conflict with the rights of others to any Intellectual
Property and, to the best knowledge of such Grantor, such Grantor is not now
infringing or in conflict with any such rights of others in any material
respect, and to the best knowledge of such Grantor, no other Person is now
infringing or in conflict in any material respect with any such properties,
assets and rights owned or used by such Grantor. Such Grantor has not received
any notice that it is violating or has violated the trademarks, patents,
copyrights, inventions, trade secrets, proprietary information and technology,
know-how, formulae, rights of publicity or other intellectual property rights of
any third party.
(g) Such Grantor is and will be at all times the sole and exclusive owner
of, or otherwise has and will have adequate rights in, the Collateral free and
clear of any Liens, except for Permitted Liens on any Collateral. No effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording or filing office except such
as may have been filed in favor of the Collateral Agent relating to this
Agreement or with respect to Permitted Liens.
(h) The exercise by the Collateral Agent of any of its rights and remedies
hereunder will not contravene any law or any contractual restriction binding on
or otherwise affecting such Grantor or any of its properties and will not result
in or require the creation of any Lien, upon or with respect to any of its
properties.
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(i) The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein is correct and complete.
(j) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or other regulatory body, or any other
Person, is required for (i) the grant by such Grantor, or the perfection, of the
security interest purported to be created hereby in the Collateral, or (ii) the
exercise by the Collateral Agent of any of its rights and remedies hereunder,
except (A) for the filing under the Uniform Commercial Code as in effect in the
applicable jurisdiction of the financing statements, all of which financing
statements, have been duly filed and are in full force and effect, (B) with
respect to the perfection of the security interest created hereby in the
Intellectual Property, for the recording of the appropriate Assignment for
Security, substantially in the form of Exhibit A hereto, as applicable, in the
United States Patent and Trademark Office or the United States Copyright Office,
as applicable, and (C) with respect to the perfection of the security interest
created hereby in foreign Intellectual Property and Licenses, for registrations
and filings in jurisdictions located outside of the United States and covering
rights in such jurisdictions relating to the Intellectual Property and Licenses.
(k) This Agreement creates in favor of the Collateral Agent a legal, valid
and enforceable security interest in the Collateral, as security for the
Obligations. The Collateral Agent's having possession of all Instruments and
cash (or entering into appropriate control documents) constituting Collateral
from time to time, the recording of the appropriate Assignment for Security
executed pursuant hereto in the United States Patent and Trademark Office and
the United States Copyright Office, as applicable, and the filing of the
financing statements and the other filings and recordings, as applicable,
described in Schedule V hereto and, with respect to the Intellectual Property
hereafter existing and not covered by an appropriate Assignment for Security,
the recording in the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, of appropriate instruments of
assignment, result in the perfection of such security interests. Such security
interests are, or in the case of Collateral in which such Grantor obtains rights
after the date hereof, will be, perfected, first priority security interests,
subject only to Permitted Liens and the recording of such instruments of
assignment. Such recordings and filings and all other action necessary or
desirable to perfect and protect such security interest have been duly taken,
except for the Collateral Agent's having possession of Instruments and cash
constituting Collateral after the date hereof and the other filings and
recordations described in Section 4(l) hereof.
(l) As of the date hereof, such Grantor does not hold any Commercial Tort
Claims nor is aware of any such pending claims, except for such claims described
in Schedule VI.
(m) Each of the Guarantors is a Subsidiary of the Company and are the only
Subsidiaries of the Company, as of the date hereof.
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SECTION 5. Covenants as to the Collateral. So long as any of the
Obligations shall remain outstanding, unless the Collateral Agent shall
otherwise consent in writing:
(a) Further Assurances. Each Grantor will at its expense, at any time and
from time to time, promptly execute and deliver all further instruments and
documents and take all further action as is necessary or otherwise as the
Collateral Agent may reasonably request in order to: (i) perfect and protect the
security interest purported to be created hereby; (ii) enable the Collateral
Agent to exercise and enforce its rights and remedies hereunder in respect of
the Collateral; or (iii) otherwise effect the purposes of this Agreement,
including, without limitation: (A) marking conspicuously all Chattel Paper and
each License and each of its Records pertaining to the Collateral with a legend,
in form and substance reasonably satisfactory to the Collateral Agent,
indicating that such Chattel Paper, License or Collateral is subject to the
security interest created hereby, (B) delivering and pledging to the Collateral
Agent hereunder each Promissory Note, Security, Chattel Paper or other
Instrument, now or hereafter owned by such Grantor, duly endorsed and
accompanied by executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Collateral Agent, (C) executing and
filing (to the extent, if any, that such Grantor's signature is required
thereon) or authenticating the filing of, such financing or continuation
statements, or amendments thereto, as may be necessary or desirable or that the
Collateral Agent may request in order to perfect and preserve the security
interest purported to be created hereby, (D) furnishing to the Collateral Agent
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral in each
case as the Collateral Agent may reasonably request, all in reasonable detail,
(E) if any Collateral shall be in the possession of a third party, notifying
such Person of the Collateral Agent's security interest created hereby and
obtaining a written acknowledgment from such Person that such Person holds
possession of the Collateral for the benefit of the Collateral Agent, which such
written acknowledgement shall be in form and substance reasonably satisfactory
to the Collateral Agent, (F) if at any time after the date hereof, such Grantor
acquires or holds any Commercial Tort Claim, promptly notifying the Collateral
Agent in a writing signed by such Grantor setting forth a brief description of
such Commercial Tort Claim and granting to the Collateral Agent a security
interest therein and in the proceeds thereof, which writing shall incorporate
the provisions hereof and shall be in form and substance reasonably satisfactory
to the Collateral Agent, (G) upon the acquisition after the date hereof by such
Grantor of any motor vehicle or other Equipment subject to a certificate of
title or ownership (other than a motor vehicle or Equipment that is subject to a
purchase money security interest), causing the Collateral Agent to be listed as
the lienholder on such certificate of title or ownership and delivering evidence
of the same to the Collateral Agent at the request of the Collateral Agent; and
(H) taking all actions required by any earlier versions of the Code or by other
law, as applicable, in any relevant Code jurisdiction, or by other law as
applicable in any foreign jurisdiction.
(b) Location of Equipment and Inventory. Each Grantor will keep the
Equipment and Inventory at the locations specified therefor in Section 4(g)
hereof or, at such other locations in the United States ; provided that the
Grantor shall provide the Collateral Agent with a new Schedule V hereto
indicating each new location of the Equipment and Inventory within five (5)
business days of any such change in location.
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(c) Condition of Equipment. Each Grantor will maintain or cause the
Equipment (necessary or useful to its business) to be maintained and preserved
in good condition, repair and working order, ordinary wear and tear excepted,
and will forthwith, or in the case of any loss or damage to any Equipment of
such Grantor within a commercially reasonable time after the occurrence thereof,
make or cause to be made all repairs, replacements and other improvements in
connection therewith which are necessary or desirable, consistent with past
practice, or which the Collateral Agent may request to such end. Such Grantor
will promptly furnish to the Collateral Agent a statement describing in
reasonable detail any such loss or damage in excess of $150,000 to any
Equipment.
(d) Taxes, Etc. Each Grantor agrees to pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is being
contested in good faith by proper proceedings which stay the imposition of any
penalty, fine or Lien resulting from the non-payment thereof and with respect to
which adequate reserves in accordance with GAAP have been set aside for the
payment thereof.
(e) Insurance.
(i) Each Grantor will, at its own expense, maintain insurance
(including, without limitation, commercial general liability and property
insurance) with respect to the Equipment and Inventory in such amounts, against
such risks, in such form and with responsible and reputable insurance companies
or associations as is required by any governmental authority having jurisdiction
with respect thereto or as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and in
any event, in amount, adequacy and scope reasonably satisfactory to the
Collateral Agent. Each such policy for liability insurance shall provide for all
losses to be paid on behalf of the Collateral Agent and such Grantor as their
respective interests may appear, and each policy for property damage insurance
shall provide for all losses to be adjusted with, and paid directly to, the
Collateral Agent. Each such policy shall in addition (A) name the Collateral
Agent as an additional insured party thereunder (without any representation or
warranty by or obligation upon the Collateral Agent) as their interests may
appear, (B) contain an agreement by the insurer that any loss thereunder shall
be payable to the Collateral Agent on its own account notwithstanding any
action, inaction or breach of representation or warranty by such Grantor, (C)
provide that there shall be no recourse against the Collateral Agent for payment
of premiums or other amounts with respect thereto, and (D) provide that at least
30 days' prior written notice of cancellation, lapse, expiration or other
adverse change shall be given to the Collateral Agent by the insurer. Such
Grantor will, if so requested by the Collateral Agent, deliver to the Collateral
Agent original or duplicate policies of such insurance and, as often as the
Collateral Agent may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Such Grantor will also, at the request of
the Collateral Agent, execute and deliver instruments of assignment of such
insurance policies and cause the respective insurers to acknowledge notice of
such assignment.
(ii) Reimbursement under any liability insurance maintained by a
Grantor pursuant to this Section 5(e) may be paid directly to the Person who
shall have incurred liability covered by such insurance. In the case of any loss
involving damage to Equipment or Inventory, any proceeds of insurance maintained
by a Grantor pursuant to this Section 5(e) shall be paid to the Collateral Agent
(except as to which paragraph (iii) of this Section 5(e) is not applicable),
such Grantor will make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
maintained by such Grantor pursuant to this Section 5(e) shall be paid by the
Collateral Agent to such Grantor as reimbursement for the costs of such repairs
or replacements.
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(iii) All insurance payments in respect of such Equipment or
Inventory shall be paid to the Collateral Agent and applied as specified in
Section 7(b) hereof.
(f) Provisions Concerning the Accounts and the Licenses.
(i) Each Grantor will (A) give the Collateral Agent at least 30
days' prior written notice of any change in such Grantor's name, identity or
organizational structure, (B) maintain its jurisdiction of incorporation as set
forth in Section 4(b) hereto, (C) immediately notify the Collateral Agent upon
obtaining an organizational identification number, if on the date hereof such
Grantor did not have such identification number, and (D) keep adequate records
concerning the Accounts and Chattel Paper and permit representatives of the
Collateral Agent during normal business hours on reasonable notice to such
Grantor, to inspect and make abstracts from such Records and Chattel Paper.
(ii) Each Grantor will, except as otherwise provided in this
subsection (f), continue to collect, at its own expense, all amounts due or to
become due under the Accounts. In connection with such collections, such Grantor
may (and, at the Collateral Agent's direction, will) take such action as such
Grantor or the Collateral Agent may reasonably deem necessary or advisable to
enforce collection or performance of the Accounts; provided, however, that the
Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent or its designated agent and, upon such notification and at the
expense of such Grantor and to the extent permitted by law, to enforce
collection of any such Accounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as such Grantor
might have done. After receipt by a Grantor of a notice from the Collateral
Agent that an Event of Default has occurred and that the Collateral Agent has
notified, intends to notify, or has enforced or intends to enforce a Grantor's
rights against the account debtors or obligors under any Accounts as referred to
in the proviso to the immediately preceding sentence, (A) all amounts and
proceeds (including Instruments) received by such Grantor in respect of the
Accounts shall be received in trust for the benefit of the Collateral Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be held as cash collateral and applied as
specified in Section 7(b) hereof, and (B) such Grantor will not adjust, settle
or compromise the amount or payment of any Account or release wholly or partly
any account debtor or obligor thereof or allow any credit or discount thereon.
In addition, upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may (in its sole and absolute discretion) direct
any or all of the banks and financial institutions with which such Grantor
either maintains a Deposit Account or a lockbox or deposits the proceeds of any
Accounts to send immediately to the Collateral Agent by wire transfer (to such
account as the Collateral Agent shall specify, or in such other manner as the
Collateral Agent shall direct) all or a portion of such securities, cash,
investments and other items held by such institution. Any such securities, cash,
investments and other items so received by the Collateral Agent shall (in the
sole and absolute discretion of the Collateral Agent) be held as additional
Collateral for the Obligations or distributed in accordance with Section 7
hereof.
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(iii) Upon the occurrence and during the continuance of any breach
or default under any material License referred to in Schedule II hereto by any
party thereto other than a Grantor, the Grantor party thereto will, promptly
after obtaining knowledge thereof, give the Collateral Agent written notice of
the nature and duration thereof, specifying what action, if any, it has taken
and proposes to take with respect thereto and thereafter will take reasonable
steps to protect and preserve its rights and remedies in respect of such breach
or default, or will obtain or acquire an appropriate substitute License.
(iv) Each Grantor will, at its expense, promptly deliver to the
Collateral Agent a copy of each notice or other communication received by it by
which any other party to any material License referred to in Schedule II hereto
purports to exercise any of its rights or affect any of its obligations
thereunder, together with a copy of any reply by such Grantor thereto.
(v) Each Grantor will exercise promptly and diligently each and
every right which it may have under each material License (other than any right
of termination) and will duly perform and observe in all respects all of its
obligations under each material License and will take all action reasonably
necessary to maintain such Licenses in full force and effect. No Grantor will,
without the prior written consent of the Collateral Agent, cancel, terminate,
amend or otherwise modify in any respect, or waive any provision of, any
material License referred to in Schedule II hereto.
(g) Transfers and Other Liens.
(i) No Grantor will sell, assign (by operation of law or otherwise),
lease, license, exchange or otherwise transfer or dispose of any of the
Collateral, except (A) Inventory in the ordinary course of business, and (B)
worn-out or obsolete assets not necessary to the business.
(ii) No Grantor will create, suffer to exist or grant any Lien upon
or with respect to any Collateral other than a Permitted Lien.
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(h) Intellectual Property.
(i) If applicable, each Grantor shall, upon the Collateral Agent's
written request, duly execute and deliver the applicable Assignment for Security
in the form attached hereto as Exhibit A. Each Grantor (either itself or through
licensees) will, and will cause each licensee thereof to, take all action
necessary to maintain all of the Intellectual Property in full force and effect,
including, without limitation, using the proper statutory notices and markings
and using the Trademarks on each applicable trademark class of goods in order to
so maintain the Trademarks in full force and free from any claim of abandonment
for non-use, and such Grantor will not (nor permit any licensee thereof to) do
any act or knowingly omit to do any act whereby any Intellectual Property may
become invalidated; provided, however, that so long as no Event of Default has
occurred and is continuing, such Grantor shall not have an obligation to use or
to maintain any Intellectual Property (A) that relates solely to any product or
work, that has been, or is in the process of being, discontinued, abandoned or
terminated, (B) that is being replaced with Intellectual Property substantially
similar to the Intellectual Property that may be abandoned or otherwise become
invalid, so long as the failure to use or maintain such Intellectual Property
does not materially adversely affect the validity of such replacement
Intellectual Property and so long as such replacement Intellectual Property is
subject to the Lien created by this Agreement or (C) that is substantially the
same as another Intellectual Property that is in full force, so long the failure
to use or maintain such Intellectual Property does not materially adversely
affect the validity of such replacement Intellectual Property and so long as
such other Intellectual Property is subject to the Lien and security interest
created by this Agreement. Each Grantor will cause to be taken all necessary
steps in any proceeding before the United States Patent and Trademark Office and
the United States Copyright Office or any similar office or agency in any other
country or political subdivision thereof to maintain each registration of the
Intellectual Property (other than the Intellectual Property described in the
proviso to the immediately preceding sentence), including, without limitation,
filing of renewals, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and payment of maintenance
fees, filing fees, taxes or other governmental fees. If any Intellectual
Property (other than Intellectual Property described in the proviso to the first
sentence of subsection (i) of this clause (h)) is infringed, misappropriated,
diluted or otherwise violated in any material respect by a third party, such
Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other violation, promptly notify the Collateral Agent and (y) to the extent
such Grantor shall deem appropriate under the circumstances, promptly ▇▇▇ for
infringement, misappropriation, dilution or other violation, seek injunctive
relief where appropriate and recover any and all damages for such infringement,
misappropriation, dilution or other violation, or take such other actions as
such Grantor shall deem appropriate under the circumstances to protect such
Intellectual Property. Each Grantor shall furnish to the Collateral Agent from
time to time upon its request statements and schedules further identifying and
describing the Intellectual Property and Licenses and such other reports in
connection with the Intellectual Property and Licenses as the Collateral Agent
may reasonably request, all in reasonable detail and promptly upon request of
the Collateral Agent, following receipt by the Collateral Agent of any such
statements, schedules or reports, such Grantor shall modify this Agreement by
amending Schedule II hereto, as the case may be, to include any Intellectual
Property and License, as the case may be, which becomes part of the Collateral
under this Agreement and shall execute and authenticate such documents and do
such acts as shall be necessary or, in the reasonable judgment of the Collateral
Agent, desirable to subject such Intellectual Property and Licenses to the Lien
and security interest created by this Agreement. Notwithstanding anything herein
to the contrary, upon the occurrence and during the continuance of an Event of
Default, such Grantor may not abandon or otherwise permit any Intellectual
Property to become invalid without the prior written consent of the Collateral
Agent, and if any Intellectual Property is infringed, misappropriated, diluted
or otherwise violated in any material respect by a third party, such Grantor
will take such action as the Collateral Agent shall deem appropriate under the
circumstances to protect such Intellectual Property.
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(ii) In no event shall a Grantor, either itself or through any
agent, employee, licensee or designee, file an application for the registration
of any Trademark or Copyright or the issuance of any Patent with the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, or in any similar office or agency of the United States or any
country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof. Upon request of the Collateral Agent, each
Grantor shall execute, authenticate and deliver any and all assignments,
agreements, instruments, documents and papers as the Collateral Agent may
reasonably request to evidence the Collateral Agent's security interest
hereunder in such Intellectual Property and the General Intangibles of such
Grantor relating thereto or represented thereby, and such Grantor hereby
appoints the Collateral Agent its attorney-in-fact to execute and/or
authenticate and file all such writings for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until the indefeasible payment in full in
cash of all of the Obligations in full and the termination of each of the
Transaction Documents.
(i) Deposit, Commodities and Securities Accounts. Upon the Collateral
Agent's written request, each Grantor shall cause each bank and other financial
institution with an account referred to in Schedule IV hereto to execute and
deliver to the Collateral Agent a control agreement, in form and substance
reasonably satisfactory to the Collateral Agent, duly executed by such Grantor
and such bank or financial institution, or enter into other arrangements in form
and substance satisfactory to the Collateral Agent, pursuant to which such
institution shall irrevocably agree, inter alia, that (i) it will comply at any
time with the instructions originated by the Collateral Agent to such bank or
financial institution directing the disposition of cash, Commodity Contracts,
Securities, Investment Property and other items from time to time credited to
such account, without further consent of such Grantor, which instructions the
Collateral Agent will not give to such bank or other financial institution in
the absence of a continuing Event of Default, (ii) all cash, Commodity
Contracts, securities, Investment Property and other items of such Grantor
deposited with such institution shall be subject to a perfected, first priority
security interest in favor of the Collateral Agent, (iii) any right of set off,
banker's Lien or other similar Lien, security interest or encumbrance shall be
fully waived as against the Collateral Agent, and (iv) upon receipt of written
notice from the Collateral Agent during the continuance of an Event of Default,
such bank or financial institution shall immediately send to the Collateral
Agent by wire transfer (to such account as the Collateral Agent shall specify,
or in such other manner as the Collateral Agent shall direct) all such cash, the
value of any Commodity Contracts, Securities, Investment Property and other
items held by it. Without the prior written consent of the Collateral Agent,
such Grantor shall not make or maintain any Deposit Account, Commodity Account
or Securities Account except for the accounts set forth in Schedule IV hereto.
The provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts
for which the Collateral Agent is the depositary and (ii) Deposit Accounts
specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of a Grantor's salaried
employees.
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(j) Motor Vehicles.
(i) Upon the Collateral Agent's written request, each Grantor shall
deliver to the Collateral Agent originals of the certificates of title or
ownership for all motor vehicles owned by it with a blue book value equal or in
excess of $50,000, with the Collateral Agent listed as lienholder, for the
benefit of the Holders.
(ii) Each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact, effective the date hereof and terminating upon the termination
of this Agreement, for the purpose of (A) executing on behalf of such Grantor
title or ownership applications for filing with appropriate state agencies to
enable motor vehicles now owned or hereafter acquired by such Grantor to be
retitled and the Collateral Agent listed as lienholder thereof, (B) filing such
applications with such state agencies, and (C) executing such other documents
and instruments on behalf of, and taking such other action in the name of, such
Grantor as the Collateral Agent may deem necessary or advisable to accomplish
the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on the motor vehicles and
exercising the rights and remedies of the Collateral Agent hereunder). This
appointment as attorney-in-fact is coupled with an interest and is irrevocable
until all of the Obligations are indefeasibly paid in full in cash and after all
Transaction Documents have been terminated.
(iii) Any certificates of title or ownership delivered pursuant to
the terms hereof shall be accompanied by odometer statements for each motor
vehicle covered thereby.
(iv) So long as no Event of Default shall have occurred and be
continuing, upon the request of such Grantor, the Collateral Agent shall execute
and deliver to such Grantor such instruments as such Grantor shall reasonably
request to remove the notation of the Collateral Agent as lienholder on any
certificate of title for any motor vehicle; provided, however, that any such
instruments shall be delivered, and the release effective, only upon receipt by
the Collateral Agent of a certificate from such Grantor stating that such motor
vehicle is to be sold or has suffered a casualty loss (with title thereto
passing to the casualty insurance company therefor in settlement of the claim
for such loss) and the amount that such Grantor will receive as sale proceeds or
insurance proceeds. Any proceeds of such sale or casualty loss shall be paid to
the Collateral Agent hereunder immediately upon receipt, to be applied to the
Obligations then outstanding.
(k) Control. Each Grantor hereby agrees to take any or all action that may
be necessary or desirable or that the Collateral Agent may reasonably request in
order for the Collateral Agent to obtain control in accordance with Sections
9-105 - 9-107 of the Code with respect to the following Collateral: (i)
Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit
Rights.
(l) Inspection and Reporting. Each Grantor shall permit the Collateral
Agent, or any agent or representatives thereof or such professionals or other
Persons as the Collateral Agent may designate, not more than twice a year in the
absence of an Event of Default, upon prior notice and during regular business
hours (i) to examine and make copies of and abstracts from such Grantor's
records and books of account, (ii) to visit and inspect its properties, (iii) to
verify materials, leases, Instruments, Accounts, Inventory and other assets of
such Grantor from time to time, (iii) to conduct audits, physical counts,
appraisals and/or valuations, examinations at the locations of such Grantor.
Each Grantor shall also permit the Collateral Agent, or any agent or
representatives thereof or such professionals or other Persons as the Collateral
Agent may designate to discuss such Grantor's affairs, finances and accounts
with any of its directors, officers, managerial employees, independent
accountants or any of its other representatives.
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(m) Future Subsidiaries. If any Grantor shall hereafter create or acquire
any Subsidiary, simultaneously with the creation or acquisition of such
Subsidiary, such Grantor shall cause such Subsidiary to become a party to this
Agreement as an additional "Grantor" hereunder, and to duly execute and deliver
a guaranty of the Obligations in favor of the Collateral agent in form and
substance reasonably acceptable to the Collateral Agent and to duly execute
and/or deliver such opinions of counsel and other documents, in form and
substance reasonably acceptable to the Collateral Agent, as the Collateral Agent
shall reasonably request with respect thereto.
SECTION 6. Additional Provisions Concerning the Collateral.
(a) Each Grantor hereby (i) authorizes the Collateral Agent to cause the
filing of one or more Code financing or continuation statements, and amendments
thereto, relating to the Collateral and (ii) ratifies such authorization to the
extent that the Collateral Agent has filed any such financing or continuation
statements, or amendments thereto, prior to the date hereof. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Notwithstanding the foregoing, each Grantor shall at all
times maintain perfected the Security Interest granted hereunder without further
act on the part of the Collateral Agent.
(b) Each Grantor hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact and proxy, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, from time to time in the
Collateral Agent's discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of such Grantor under Section
5 hereof), including, without limitation, (i) to obtain and adjust insurance
required to be paid to the Collateral Agent pursuant to Section 5(e) hereof,
(ii) to ask, demand, collect, ▇▇▇ for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any Collateral, (iii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper in connection with clause (i) or (ii)
above, (iv) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of
any Collateral or otherwise to enforce the rights of the Collateral Agent and
the Holders with respect to any Collateral, and (v) to execute assignments,
licenses and other documents to enforce the rights of the Collateral Agent and
the Holders with respect to any Collateral. This power is coupled with an
interest and is irrevocable until all of the Obligations are indefeasibly paid
in full in cash.
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(c) For the purpose of enabling the Collateral Agent to exercise rights
and remedies hereunder, at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, and for no other purpose, each
Grantor hereby grants to the Collateral Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to such Grantor) to use, assign, license or sublicense any
Intellectual Property now owned or hereafter acquired by such Grantor, wherever
the same may be located, including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer programs used for the compilation or printout thereof. Notwithstanding
anything contained herein to the contrary, but subject to any provisions of the
Indenture that limit the right of such Grantor to dispose of its property and
Section 5(h) hereof, so long as no Event of Default shall have occurred and be
continuing, such Grantor may exploit, use, enjoy, protect, license, sublicense,
assign, sell, dispose of or take other actions with respect to the Intellectual
Property in the ordinary course of its business. In furtherance of the
foregoing, unless an Event of Default shall have occurred and be continuing, the
Collateral Agent shall from time to time, upon the request of a Grantor, execute
and deliver any instruments, certificates or other documents, in the form so
requested, which such Grantor shall have certified are appropriate (in such
Grantor's judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to this clause (c) as to any
Intellectual Property). Further, upon the indefeasible payment in full in cash
of all of the Obligations, the Collateral Agent (subject to Section 10(e)
hereof) shall release and reassign to such Grantor all of the Collateral Agent's
right, title and interest in and to the Intellectual Property, and the Licenses,
all without recourse, representation or warranty whatsoever. The exercise of
rights and remedies hereunder by the Collateral Agent shall not terminate the
rights of the holders of any licenses or sublicenses theretofore granted by such
Grantor in accordance with the second sentence of this clause (c). Each Grantor
hereby releases the Collateral Agent from any claims, causes of action and
demands at any time arising out of or with respect to any actions taken or
omitted to be taken by the Collateral Agent under the powers of attorney granted
herein other than actions taken or omitted to be taken through the Collateral
Agent's gross negligence or willful misconduct, as determined by a final
determination of a court of competent jurisdiction.
(d) If a Grantor fails to perform any agreement contained herein, the
Collateral Agent may itself perform, or cause performance of, such agreement or
obligation, in the name of such Grantor or the Collateral Agent, and the
expenses of the Collateral Agent incurred in connection therewith shall be
payable by such Grantor pursuant to Section 8 hereof and shall be secured by the
Collateral.
(e) The powers conferred on the Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
(f) Anything herein to the contrary notwithstanding (i) each Grantor shall
remain liable under the Licenses and otherwise with respect to any of the
Collateral to the extent set forth therein to perform all of its obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Collateral Agent of any of its rights hereunder shall not
release such Grantor from any of its obligations under the Licenses or otherwise
in respect of the Collateral, and (iii) the Collateral Agent shall not have any
obligation or liability by reason of this Agreement under the Licenses or with
respect to any of the other Collateral, nor shall the Collateral Agent be
obligated to perform any of the obligations or duties of such Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
-17-
SECTION 7. Remedies Upon Event of Default. If any Event of Default shall
have occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon default
under the Code (whether or not the Code applies to the affected Collateral), and
also may (i) take absolute control of the Collateral, including, without
limitation, transfer into the Collateral Agent's name or into the name of its
nominee or nominees (to the extent the Collateral Agent has not theretofore done
so) and thereafter receive, for the benefit of the Collateral Agent, all
payments made thereon, give all consents, waivers and ratifications in respect
thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that
it will at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of its respective Collateral as directed by the Collateral
Agent and make it available to the Collateral Agent at a place or places to be
designated by the Collateral Agent that is reasonably convenient to both
parties, and the Collateral Agent may enter into and occupy any premises owned
or leased by such Grantor where the Collateral or any part thereof is located or
assembled for a reasonable period in order to effectuate the Collateral Agent's
rights and remedies hereunder or under law, without obligation to such Grantor
in respect of such occupation, and (iii) without notice except as specified
below and without any obligation to prepare or process the Collateral for sale,
(A) sell the Collateral or any part thereof in one or more parcels at public or
private sale, 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 and/or (B)
lease, license or dispose of the Collateral or any part thereof upon such terms
as the Collateral Agent may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale or any other disposition of its respective
Collateral shall be required by law, at least ten (10) days' notice to such
Grantor of the time and place of any public sale or the time after which any
private sale or other disposition of its respective Collateral is to be made
shall constitute reasonable notification. The Collateral Agent shall not be
obligated to make any sale or other disposition of any 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 Grantor hereby waives any claims
against the Collateral Agent and the Holders arising by reason of the fact that
the price at which its respective Collateral may have been sold at a private
sale was less than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Obligations, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to
more than one offeree, and waives all rights that such Grantor may have to
require that all or any part of such Collateral be marshalled upon any sale
(public or private) thereof. Each Grantor hereby acknowledges that (i) any such
sale of its respective Collateral by the Collateral Agent shall be made without
warranty, (ii) the Collateral Agent may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set forth
in clauses (i) and (ii) above shall not adversely effect the commercial
reasonableness of any such sale of Collateral. In addition to the foregoing, (1)
upon written notice to any Grantor from the Collateral Agent, such Grantor shall
cease any use of the Intellectual Property or any trademark, patent or copyright
similar thereto for any purpose described in such notice; (2) the Collateral
Agent may, at any time and from time to time, upon 10 days' prior notice to such
Grantor, license, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any of the Intellectual Property, throughout
the universe for such term or terms, on such conditions, and in such manner, as
the Collateral Agent shall in its sole discretion determine; and (3) the
Collateral Agent may, at any time, pursuant to the authority granted in Section
6 hereof (such authority being effective upon the occurrence and during the
continuance of an Event of Default), execute and deliver on behalf of such
Grantor, one or more instruments of assignment of the Intellectual Property (or
any application or registration thereof), in form suitable for filing, recording
or registration in any country.
-18-
(b) Any cash held by the Collateral Agent as Collateral and all Cash
Proceeds received by the Collateral Agent in respect of any sale of or
collection from, or other realization upon, all or any part of the Collateral
may, in the discretion of the Collateral Agent, be held by the Collateral Agent
as collateral for, and/or then or at any time thereafter applied (after payment
of any amounts payable to the Collateral Agent pursuant to Section 8 hereof) in
whole or in part by the Collateral Agent against, all or any part of the
Obligations in such order as the Collateral Agent shall elect, consistent with
the provisions of the Indenture. Any surplus of such cash or Cash Proceeds held
by the Collateral Agent and remaining after the indefeasible payment in full in
cash of all of the Obligations shall be paid over to whomsoever shall be
lawfully entitled to receive the same or as a court of competent jurisdiction
shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Collateral Agent
and the Holders are legally entitled, each Grantor shall be liable for the
deficiency, together with interest thereon at the highest rate specified in any
of the applicable Transaction Documents for interest on overdue principal
thereof or such other rate as shall be fixed by applicable law, together with
the costs of collection and the reasonable fees, costs, expenses and other
client charges of any attorneys employed by the Collateral Agent to collect such
deficiency.
(d) Each Grantor hereby acknowledges that if the Collateral Agent complies
with any applicable state, provincial, or federal law requirements in connection
with a disposition of the Collateral, such compliance will not adversely affect
the commercial reasonableness of any sale or other disposition of the
Collateral.
(e) The Collateral Agent shall not be required to marshal any present or
future collateral security (including, but not limited to, this Agreement and
the Collateral) for, or other assurances of payment of, the Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of the Collateral Agent's rights hereunder and
in respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent that each Grantor lawfully may, such Grantor hereby agrees that it
will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of the Collateral Agent's rights under
this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, such Grantor hereby irrevocably waives the
benefits of all such laws.
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SECTION 8. Indemnity and Expenses.
(a) Each Grantor agrees, jointly and severally, to defend, protect,
indemnify and hold the Collateral Agent, the Trustee and each of the Holders,
jointly and severally, harmless from and against any and all claims, damages,
losses, liabilities, obligations, penalties, fees, costs and expenses
(including, without limitation, reasonable legal fees, costs, expenses, and
disbursements of such Person's counsel) to the extent that they arise out of or
otherwise result from this Agreement (including, without limitation, enforcement
of this Agreement), except claims, losses or liabilities resulting solely and
directly from such Person's gross negligence or willful misconduct, as
determined by a final judgment of a court of competent jurisdiction.
(b) Each Grantor agrees, jointly and severally, to upon demand pay to the
Collateral Agent the amount of any and all costs and expenses, including the
reasonable fees, costs, expenses and disbursements of counsel for the Collateral
Agent and of any experts and agents (including, without limitation, any
collateral trustee which may act as agent of the Collateral Agent), which the
Collateral Agent may incur in connection with (i) the preparation, negotiation,
execution, delivery, recordation, administration, amendment, waiver or other
modification or termination of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or
observe any of the provisions hereof.
SECTION 9. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to a Grantor
at its address specified below and if to the Collateral Agent to it, at its
address specified below; or as to any such Person, at such other address as
shall be designated by such Person in a written notice to such other Person
complying as to delivery with the terms of this Section 9. All such notices and
other communications shall be effective if sent by certified mail, return
receipt requested, when received.
SECTION 10. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by each Grantor and the Collateral Agent, and
no waiver of any provision of this Agreement, and no consent to any departure by
a Grantor therefrom, shall be effective unless it is in writing and signed by
the Collateral Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Collateral Agent to exercise, and no
delay in exercising, any right hereunder or under any of the other Transaction
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the Collateral Agent or
any Holder provided herein and in the other Transaction Documents are cumulative
and are in addition to, and not exclusive of, any rights or remedies provided by
law. The rights of the Collateral Agent or any Holder under any of the other
Transaction Documents against any party thereto are not conditional or
contingent on any attempt by such Person to exercise any of its rights under any
of the other Transaction Documents against such party or against any other
Person, including but not limited to, any Grantor.
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(c) All rights of the Collateral Agent hereunder, the security interest
created hereby and all obligations of the Grantors hereunder shall be absolute
and unconditional irrespective of (a) any lack of validity or enforceability of
any Transaction Document, any agreement with respect to any of the Obligations
or any other agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from any Transaction Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
(d) Any provision of this Agreement that 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 portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(e) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the indefeasible
payment in full in cash of the Obligations, and (ii) be binding on each Grantor
and all other Persons who become bound as debtor to this Agreement in accordance
with Section 9-203(d) of the Code and shall inure, together with all rights and
remedies of the Collateral Agent and the Holders hereunder, to the benefit of
the Collateral Agent and the Holders and their respective permitted successors,
transferees and assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, without notice to any Grantor, the Collateral
Agent and the Holders may assign or otherwise transfer their rights and
obligations under this Agreement and any of the other Transaction Documents to
any other Person (subject to the terms of the Indenture and the other
Transaction Documents) and such other Person shall thereupon become vested with
all of the benefits in respect thereof granted to the Collateral Agent and the
Holders herein or otherwise. Upon any such assignment or transfer, all
references in this Agreement to the Collateral Agent or any such Holder shall
mean the assignee of the Collateral Agent or such Holder. None of the rights or
obligations of any Grantor hereunder may be assigned or otherwise transferred
without the prior written consent of the Collateral Agent, and any such
assignment or transfer without the consent of the Collateral Agent shall be null
and void.
(f) Upon the indefeasible payment in full in cash of the Obligations, (i)
this Agreement and the security interests created hereby shall terminate and all
rights to the Collateral shall revert to the respective Grantor that granted
such security interests hereunder, and (ii) the Collateral Agent will, upon such
Grantor's request and at such Grantor's expense, (A) return to such Grantor such
of the Collateral as shall not have been sold or otherwise disposed of or
applied pursuant to the terms hereof, and (B) execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.
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(g) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND
PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF
THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
(h) ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇ IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT.
(i) EACH GRANTOR AND (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT)
THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES
HERETO.
(j) Each Grantor irrevocably consents to the service of process of any of
the aforesaid courts in any such action, suit or proceeding by the mailing of
copies thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to such Grantor at its address provided herein,
such service to become effective ten (10) days after such mailing.
(k) Nothing contained herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Grantor or any property of such
Grantor in any other jurisdiction.
-22-
(l) Each Grantor irrevocably and unconditionally waives any right it may
have to claim or recover in any legal action, suit or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
(m) Section headings herein are included for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
(n) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be deemed
to be an original, but all of which taken together constitute one in the same
Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Grantor has caused this Agreement to
be executed and delivered by its officer thereunto duly authorized, as of the
date first above written.
THE COMPANY:
AFG ENTERPRISES USA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
GUARANTORS:
FP TECHNOLOGY HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ACCEPTED BY:
-----------
THE BANK OF NEW YORK, as Collateral Agent
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Sched. VI-1
EXHIBIT A
ASSIGNMENT FOR SECURITY
[TRADEMARKS] [PATENTS] [COPYRIGHTS]
WHEREAS, ______________________________ (the "Assignor") [has adopted,
used and is using, and holds all right, title and interest in and to, the
trademarks and service marks listed on the annexed Schedule 1A, which trademarks
and service marks are registered or applied for in the United States Patent and
Trademark Office (the "Trademarks")] [holds all right, title and interest in the
letter patents, design patents and utility patents listed on the annexed
Schedule 1A, which patents are issued or applied for in the United States Patent
and Trademark Office (the "Patents")] [holds all right, title and interest in
the copyrights listed on the annexed Schedule 1A, which copyrights are
registered in the United States Copyright Office (the "Copyrights")];
WHEREAS, the Assignor has entered into a Security Agreement, dated as of
________________, 2006 (as amended, restated or otherwise modified from time to
time the "Security Agreement"), in favor of THE BANK OF NEW YORK, as collateral
agent for certain purchasers (the "Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned to
the Assignee and granted to the Assignee for the benefit of the Holders (as
defined in the Security Agreement) a continuing security interest in all right,
title and interest of the Assignor in, to and under the [Trademarks, together
with, among other things, the good-will of the business symbolized by the
Trademarks] [Patents] [Copyrights] and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof and any and
all damages arising from past, present and future violations thereof (the
"Collateral"), to secure the payment, performance and observance of the
"Obligations" (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor does hereby pledge,
convey, sell, assign, transfer and set over unto the Assignee and grants to the
Assignee for the benefit of the Holders a continuing security interest in the
Collateral to secure the prompt payment and performance of the Obligations.
The Assignor does hereby further acknowledge and affirm that the rights
and remedies of the Assignee with respect to the Collateral are more fully set
forth in the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Exh. A-1
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed by its officer thereunto duly authorized as of _____________, 20__
[GRANTOR]
By:
----------------------------
Name:
Title:
STATE OF ______________
ss.:
COUNTY OF _____________
On this ____ day of _______________, 20__, before me
personally came ________________, to me known to be the person who executed the
foregoing instrument, and who, being duly sworn by me, did depose and say that
s/he is the ________________ of _______________________________________, a
____________________, and that s/he executed the foregoing instrument in the
firm name of _______________________________________, and that s/he had
authority to sign the same, and s/he acknowledged to me that he executed the
same as the act and deed of said firm for the uses and purposes therein
mentioned.
---------------------------------
Exh. A-3
SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________