EXHIBIT 4(b)
GUARANTEE AND SECURITY AGREEMENT
dated as of
November 5, 2002
among
CUMMINS INC.,
THE SUBSIDIARY GUARANTORS PARTY HERETO
and
JPMORGAN CHASE BANK
as Collateral Agent
TABLE OF CONTENTS
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PAGE
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Section 1. DEFINITIONS.........................................................................1
Section 2. GUARANTEES BY SUBSIDIARY GUARANTORS................................................14
Section 3. GRANT OF TRANSACTION LIENS.........................................................17
Section 4. GENERAL REPRESENTATIONS AND WARRANTIES AND COVENANTS...............................19
Section 5. FURTHER ASSURANCES; GENERAL COVENANTS..............................................22
Section 6. ACCOUNTS...........................................................................25
Section 7. INSTRUMENTS........................................................................26
Section 8. RECORDABLE INTELLECTUAL PROPERTY...................................................26
Section 9. INVESTMENT PROPERTY................................................................27
Section 10. INVESTMENT PROPERTY COLLATERAL ACCOUNTS...........................................31
Section 11. CONTROLLED DEPOSIT ACCOUNTS.......................................................31
Section 12. CASH COLLATERAL ACCOUNTS..........................................................32
Section 13. OPERATION OF COLLATERAL ACCOUNTS..................................................33
Section 14. TRANSFER OF RECORD OWNERSHIP......................................................34
Section 15. RIGHT TO VOTE SECURITIES..........................................................35
Section 16. CERTAIN CASH DISTRIBUTIONS........................................................35
Section 17. REMEDIES UPON EVENT OF DEFAULT....................................................36
Section 18. APPLICATION OF PROCEEDS...........................................................37
Section 19. FEES AND EXPENSES; INDEMNIFICATION................................................39
Section 20. AUTHORITY TO ADMINISTER COLLATERAL................................................40
Section 21. LIMITATION ON DUTY IN RESPECT OF COLLATERAL.......................................41
Section 22. GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT................................41
Section 23. TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL...........................44
Section 24. ADDITIONAL SUBSIDIARY GUARANTORS AND LIEN GRANTORS................................45
Section 25. ADDITIONAL SECURED OBLIGATIONS....................................................45
Section 26. SECURITIZATION COLLATERAL.........................................................45
Section 27. NOTICES...........................................................................47
Section 28. NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE........................................48
Section 29. SUCCESSORS AND ASSIGNS............................................................48
Section 30. AMENDMENTS AND WAIVERS............................................................48
Section 31. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS........................48
Section 32. WAIVER OF JURY TRIAL..............................................................49
Section 33. JUDGMENT CURRENCY.................................................................49
SCHEDULES:
SCHEDULE 1 Equity Interests in Material Subsidiaries which are
Unrestricted Subsidiaries Owned by Original Lien Grantors
SCHEDULE 2 Other Investment Property Owned by Original Lien Grantors
SCHEDULE 3 Intellectual Property
EXHIBITS:
EXHIBIT A Security Agreement Supplement
EXHIBIT B Copyright Security Agreement
EXHIBIT C Patent Security Agreement
EXHIBIT D Trademark Security Agreement
EXHIBIT E Perfection Certificate
EXHIBIT F Issuer Control Agreement
EXHIBIT G Securities Account Control Agreement
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GUARANTEE AND SECURITY AGREEMENT
AGREEMENT dated as of November 5, 2002 among
CUMMINS INC., the SUBSIDIARY
GUARANTORS party hereto and JPMORGAN CHASE BANK, as Collateral Agent.
WHEREAS, the Borrowers are entering into the Credit Agreement described in
Section 1 hereof, pursuant to which the Borrowers intend to borrow funds and
obtain letters of credit for the purposes set forth therein;
WHEREAS, the Company is willing to secure (i) its obligations under the
Credit Agreement, and (ii) its guarantee of the obligations of the other
Borrowers under the Credit Agreement by granting Liens on its assets to the
Collateral Agent as provided in the Security Documents;
WHEREAS, the Company is willing to cause certain of its Subsidiaries to
guarantee the obligations of the Borrowers under the Credit Agreement and to
secure their guarantee thereof by granting Liens on their assets to the
Collateral Agent as provided in the Security Documents;
WHEREAS, the Lenders and the Issuing Bank are not willing to make loans or
issue or participate in letters of credit under the Credit Agreement unless (i)
the obligations of the Borrowers under the Credit Agreement are secured and
guaranteed as described above and (ii) each guarantee thereof is secured by
Liens on assets of the relevant Guarantor as provided in the Security Documents;
WHEREAS, upon any foreclosure or other enforcement of the Security
Documents, the net proceeds of the relevant Collateral are to be received by or
paid over to the Collateral Agent and applied as provided in Section 18 hereof;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. DEFINITIONS.
(a) TERMS DEFINED IN CREDIT AGREEMENT. Terms defined in the Credit
Agreement and not otherwise defined in subsection (b) or (c) of this Section
have, as used herein, the respective meanings provided for therein.
(b) TERMS DEFINED IN UCC. As used herein, each of the following terms has
the meaning specified in the UCC:
Term UCC
---- ---
Account 9-102
Authenticate 9-102
Certificated Security 8-102
Chattel Paper 9-102
Commercial Tort Claim 9-102
Commodity Account 9-102
Commodity Contract 9-102
Commodity Customer 9-102
Commodity Intermediary 9-102
Deposit Account 9-102
Document 9-102
Entitlement Holder 8-102
Entitlement Order 8-102
Equipment 9-102
Financial Asset 8-102 & 103
Fixture 9-102
General Intangibles 9-102
Instrument ▇-▇▇▇
▇▇▇▇▇▇▇▇▇ 9-102
Investment Property 9-102
Letter-of-Credit Right 9-102
Payment Intangible 9-102
Record 9-102
Securities Account 8-501
Securities Intermediary 8-102
Security 8-102 & 103
Security Entitlement 8-102
Supporting Obligations 9-102
Uncertificated Security 8-102
(c) ADDITIONAL DEFINITIONS. The following additional terms, as used
herein, have the following meanings:
"ARTICLE 9" means Article 9 of the UCC.
"ASSIGNMENT OF CLAIMS ACT" has the meaning specified in Section 4(o).
"CASH COLLATERAL ACCOUNT" has the meaning specified in Section 12.
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"CASH DISTRIBUTIONS" means dividends, interest and other distributions and
payments (including proceeds of liquidation, sale or other disposition) made or
received in cash upon or with respect to any Collateral.
"COLLATERAL" means all property, whether now owned or hereafter acquired,
on which a Lien is granted or purports to be granted to the Collateral Agent
pursuant to the Security Documents. When used with respect to a specific Lien
Grantor, the term "Collateral" means all its property on which such a Lien is
granted or purports to be granted.
"COLLATERAL ACCOUNTS" means the Cash Collateral Accounts, the Controlled
Deposit Accounts, the Controlled Securities Accounts and the Investment Property
Collateral Accounts.
"COLLATERAL AGENT" means JPMorgan Chase Bank, in its capacity as collateral
agent under the Loan Documents.
"COMMODITY ACCOUNT CONTROL AGREEMENT" means, with respect to any Commodity
Account as to which a Lien Grantor is the Commodity Customer, an agreement by
such Lien Grantor, the Collateral Agent and the relevant Commodity Intermediary
that the Commodity Intermediary will apply any value distributed on account of
the Commodity Contracts carried in such Commodity Account as directed by the
Collateral Agent without further consent by such Lien Grantor. Each such
agreement must be reasonably satisfactory in form and substance to the
Collateral Agent.
"COMPANY" means
Cummins Inc., an Indiana corporation.
"CONTINGENT SECURED OBLIGATION" means, at any time, any Secured Obligation
(or portion thereof) that is contingent in nature at such time, including any
Secured Obligation that is:
(i) an obligation to reimburse a bank for drawings not yet made
under a letter of credit issued by it and outstanding at such time;
(ii) an obligation under a Rate Protection Agreement to make
payments that cannot be quantified at such time;
(iii) any other obligation (including any guarantee) that is
contingent in nature at such time; or
(iv) an obligation to provide collateral to secure any of the
foregoing types of obligations;
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PROVIDED that in the case of clauses (ii) and (iii) above, contingent
obligations under general indemnification provisions (such as Sections
2.14, 2.16 and 12.03 of the Credit Agreement) and the like as to which no
claim is pending or reasonably foreseeable shall not be treated as
Contingent Secured Obligations for purposes of administration of this
Agreement.
"CONTROL" has the following meanings:
(a) when used with respect to any Security or Security Entitlement,
the meaning specified in UCC Section 8-106;
(b) when used with respect to any Deposit Account, the meaning
specified in UCC Section 9-104; and
(c) when used with respect to any Commodity Account or Commodity
Contract, the meaning specified in UCC Section 9-106(b).
"CONTROLLED COMMODITY ACCOUNT" means a Commodity Account as to which (i) a
Lien Grantor is the Commodity Customer and (ii) a Commodity Account Control
Agreement is in effect.
"CONTROLLED DEPOSIT ACCOUNT" means a Deposit Account (i) that is subject to
a Deposit Account Control Agreement or (ii) as to which the Collateral Agent is
the Depositary Bank's "customer" (as defined in UCC Section 4-104).
"CONTROLLED SECURITIES ACCOUNT" means a Securities Account that (i) is
maintained in the name of a Lien Grantor at an office of a Securities
Intermediary located in the United States and (ii) together with all Financial
Assets credited thereto and all related Security Entitlements, is subject to a
Securities Account Control Agreement among such Lien Grantor, the Collateral
Agent and such Securities Intermediary.
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which a
Copyright is in existence or may come into existence, including any agreement
identified in Schedule 1 to any Copyright Security Agreement.
"COPYRIGHTS" means all the following: (i) all copyrights under the laws of
the United States or any other country (whether or not the underlying works of
authorship have been published), all registrations and recordings thereof, all
copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including
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registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, including those
described in Schedule 1 to any Copyright Security Agreement, (ii) all renewals
of any of the foregoing, (iii) all claims for, and rights to ▇▇▇ for, past or
future infringements of any of the foregoing, and (iv) all income, royalties,
damages and payments now or hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or future infringements
thereof.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement,
substantially in the form of Exhibit B, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"CREDIT AGREEMENT" means the Credit Agreement dated as of November 5, 2002
among the Company, Cummins Engine Co. Ltd., Cummins Power Generation Ltd.,
Newage International Limited, the Lenders party thereto and JPMorgan Chase Bank,
as Administrative Agent, Collateral Agent, LC Issuing Bank and Swingline Lender.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means, with respect to any Deposit
Account of any Lien Grantor, an agreement among such Lien Grantor, the
Collateral Agent and the relevant Depositary Bank, set forth in an Authenticated
Record, (i) that such Depositary Bank will comply with instructions originated
by the Collateral Agent directing disposition of the funds in such Deposit
Account without further consent by such Lien Grantor and (ii) subordinating to
the relevant Transaction Lien all claims of the Depositary Bank to such Deposit
Account (except its right to deduct its normal operating charges and any
uncollected funds previously credited thereto and other similar exceptions
reasonably acceptable to the Collateral Agent).
"DEPOSITARY BANK" means a bank at which a Controlled Deposit Account is
maintained.
"EQUITY INTEREST" means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described
in this definition or (vi) any Security Entitlement in respect of any Equity
Interest described in this definition.
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"FEDERAL GOVERNMENT" means the federal government of the United States or
any agency or instrumentality thereof.
"GUARANTORS" means the Company and each Subsidiary Guarantor.
"INDENTURE" means the indenture dated as of March 1, 1986 between the
Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank,
formerly known as Chemical Bank, successor by merger to The Chase Manhattan Bank
(National Association)), as trustee, as amended and supplemented prior to the
Effective Date.
"INTELLECTUAL PROPERTY FILING" means (i) with respect to any Patent, Patent
License, Trademark or Trademark License, the filing of the applicable Patent
Security Agreement or Trademark Security Agreement with the United States Patent
and Trademark Office, together with an appropriately completed recordation form,
and (ii) with respect to any Copyright or Copyright License, the filing of the
applicable Copyright Security Agreement with the United States Copyright Office,
together with an appropriately completed recordation form, in each case
sufficient to record the Transaction Lien granted to the Collateral Agent in
such Recordable Intellectual Property.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means a Copyright Security
Agreement, a Patent Security Agreement or a Trademark Security Agreement.
"INVESTMENT PROPERTY COLLATERAL ACCOUNT" has the meaning specified in
Section 10.
"ISSUER CONTROL AGREEMENT" means an Issuer Control Agreement substantially
in the form of Exhibit F (with any changes that the Collateral Agent shall have
approved, such approval not to be unreasonably withheld).
"LIEN GRANTORS" means the Company and the Subsidiary Guarantors.
"LIQUID INVESTMENT" means a Permitted Investment that matures within 30
days after it is first included in the Collateral.
"LLC INTEREST" means a membership interest or similar interest in a limited
liability company.
"MATERIAL COMMERCIAL TORT CLAIM" means a Commercial Tort Claim that the
Company has determined in good faith could reasonably be expected to result in a
recovery by the Company or the applicable Subsidiary Guarantor of more than
$5,000,000.
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"MATERIAL GOVERNMENT CONTRACT" means a contract, between a Lien Grantor and
either (i) the Federal Government or (ii) a state or local government or any
agency or instrumentality thereof, that provides (or can reasonably be expected
to provide) for payments to such Lien Grantor in an aggregate amount exceeding
$5,000,000.
"MATERIAL RECORDABLE INTELLECTUAL PROPERTY" means (a) the Recordable
Intellectual Property listed on Schedule 3 hereto, (b) the Recordable
Intellectual Property identified in Intellectual Property Security Agreements
delivered in accordance with the second sentence of subsection 8(a) and (c) any
other Recordable Intellectual Property with a fair market value of more than
$1,000,000 as reasonably determined by either the Company or, after consultation
with the Company, the Collateral Agent.
"MAXIMUM GUARANTEED AMOUNT" has the meaning set forth in Section 2(i)(ii).
"NEW INDENTURE" means any indenture governing the terms of notes or bonds
issued by the Company after the Effective Date.
"NOMINATED PERSON" means a Person whom the issuer of a letter of credit (i)
designates or authorizes to pay, accept, negotiate or otherwise give value under
such letter of credit and (ii) undertakes by agreement or custom and practice to
reimburse.
"NON-CONTINGENT SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"OPINION OF COUNSEL" means a written opinion of legal counsel (who may be
counsel to a Lien Grantor or other counsel, in either case approved by the
Collateral Agent, such approval not to be unreasonably withheld) addressed and
delivered to the Collateral Agent.
"ORIGINAL LIEN GRANTOR" means any Lien Grantor that grants a Lien on any of
its assets hereunder on the Effective Date.
"OWN" refers to the possession of sufficient rights in property to grant a
security interest therein as contemplated by UCC Section 9-203, and "ACQUIRE"
refers to the acquisition of any such rights.
"PARTNERSHIP INTEREST" means a partnership interest, whether general or
limited.
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"PATENT LICENSE" means any agreement now or hereafter in existence granting
to any Lien Grantor, or pursuant to which any Lien Grantor grants to any other
Person, any right with respect to any Patent or any invention now or hereafter
in existence, whether patentable or not, whether a patent or application for
patent is in existence on such invention or not, and whether a patent or
application for patent on such invention may come into existence or not,
including any agreement identified in Schedule 1 to any Patent Security
Agreement.
"PATENTS" means (i) all letters patent and design letters patent of the
United States or any other country and all applications for letters patent or
design letters patent of the United States or any other country, including
applications 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, including those described in Schedule 1 to
any Patent Security Agreement, (ii) all reissues, divisions, continuations,
continuations in part, revisions and extensions of any of the foregoing, (iii)
all claims for, and rights to ▇▇▇ for, past or future infringements of any of
the foregoing and (iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including damages
and payments for past or future infringements thereof.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement,
substantially in the form of Exhibit C, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"PERFECTION CERTIFICATE" means, with respect to any Lien Grantor, a
certificate substantially in the form of Exhibit E, completed and supplemented
with the schedules contemplated thereby to the reasonable satisfaction of the
Collateral Agent, and signed by an officer of such Lien Grantor.
"PERMITTED INVESTMENT" means:
(a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States), in each case maturing within one year from the date of
acquisition thereof;
(b) commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, one of the two highest credit
ratings obtainable from S&P or from Moody's;
(c) certificates of deposit, banker's acceptances and time or demand
deposits maturing within 180 days from the date of acquisition thereof issued or
8
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States or any State thereof which has a combined capital and
surplus and undivided profits of at least $500,000,000; and
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above.
"PERMITTED LIENS" means (i) the Transaction Liens and (ii) any other Liens
on the Collateral permitted to be created or assumed or to exist pursuant to
Section 6.01 of the Credit Agreement.
"PLEDGED", when used in conjunction with any type of asset, means at any
time an asset of such type that is included (or that creates rights that are
included) in the Collateral at such time. For example, "Pledged Equity Interest"
means an Equity Interest that is included in the Collateral at such time and
"Pledged letter of credit" means a letter of credit that creates rights to
payment or performance that are included in the Collateral at such time.
"POST-PETITION INTEREST" means any interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of any Borrower (or would accrue but for the
operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
"PROCEEDS" means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or other realization upon, any
Collateral, including all claims of the relevant Lien Grantor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.
"PURCHASER INTEREST" means the undivided ownership interest of the
Purchasers in the Receivables Assets, as calculated in accordance with the terms
of the RPA.
"PURCHASERS" means Corporate Asset Funding Company, Inc. and Corporate
Receivables Corporation, as "CONDUIT Purchasers" under the RPA, and Citibank
N.A. as the "COMMITTED PURCHASER" under the RPA, and any other "CONDUIT
PURCHASER" or "COMMITTED PURCHASER" from time to time party to the RPA.
9
"RATE PROTECTION AGREEMENT" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest rate, currency exchange rate or commodity price hedging
arrangement entered into with a Lender or an Affiliate thereof and shall for the
avoidance of doubt include any Swap Agreement not prohibited under the Credit
Agreement.
"RECEIVABLES AGENT" means Citicorp North America, Inc.
"RECEIVABLES ASSET" has the meaning specified in the RPA.
"RECEIVABLES SELLER" means Cummins Receivables Corp., a special purpose
corporation formed under the laws of Delaware, and a wholly-owned subsidiary of
the Company.
"RECORDABLE INTELLECTUAL PROPERTY" means (i) Patents, (ii) Patent Licenses,
(iii) Trademarks, (iv) Trademark Licenses, (v) Copyrights and (vi) Copyright
Licenses, and all rights in or under any of the foregoing.
"RELEASE CONDITIONS" means the following conditions for releasing all the
Secured Guarantees and terminating all the Transaction Liens:
(i) all Commitments under the Credit Agreement shall have expired
or been terminated;
(ii) all Non-Contingent Secured Obligations shall have been paid in
full; and
(iii) no Contingent Secured Obligation shall remain outstanding;
PROVIDED that the condition in clause (iii) shall not apply to outstanding
Letters of Credit if (x) no Event of Default has occurred and is continuing and
(y) the applicable Borrower has granted to the Collateral Agent, for the benefit
of the Lenders, a security interest in Liquid Investments (or causes a bank
acceptable to the Required Lenders to issue a letter of credit naming the
Collateral Agent as beneficiary) in an amount exceeding 105% of the LC Exposure
(plus any accrued and unpaid interest thereon) as of the date of such
termination, on terms and conditions and pursuant to documentation reasonably
satisfactory to the Collateral Agent.
"RESTRICTED SUBSIDIARY" has the meaning specified in the Indenture.
"RPA" means that certain Receivables Purchase Agreement dated as of
December 15, 2000 (as amended, restated, supplemented or otherwise modified from
time to time) among the Receivables Seller, the Company, Corporate Asset
10
Funding Company, Inc. and Corporate Receivables Corporation as "Conduit
Purchasers", the financial institutions party thereto as "Committed Purchasers"
and the Receivables Agent.
"SECURED AGREEMENT", when used with respect to any Secured Obligation,
refers collectively to each instrument, agreement or other document that sets
forth obligations of the Borrowers, obligations of a guarantor and/or rights of
the holder with respect to such Secured Obligation.
"SECURED GUARANTEE" means, (i) with respect to the Company, its guarantee
contained in Article 11 of the Credit Agreement and (ii) with respect to each
Subsidiary Guarantor, its guarantee of the Secured Obligations under Section 2
hereof or Section 1 of a Security Agreement Supplement.
"SECURED OBLIGATIONS" means (i) all principal of all Loans and obligations
to reimburse LC Disbursements outstanding from time to time under the Credit
Agreement, all interest (including Post-Petition Interest) on such Loans and
reimbursement obligations and all other amounts now or hereafter payable by the
Borrowers pursuant to the Loan Documents and (ii) all obligations (if any)
designated by the Company as additional Secured Obligations pursuant to Section
25.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURED PARTY REQUESTING NOTICE" means, at any time, a Secured Party that
has, at least five Business Days prior thereto, delivered to the Collateral
Agent a written notice (i) stating that it holds one or more Secured Obligations
and wishes to receive copies of the notices referred to in Section 22(h) and
(ii) setting forth its address, facsimile number and e-mail address to which
copies of such notices should be sent.
"SECURITIES ACCOUNT CONTROL AGREEMENT" means, when used with respect to a
Securities Account, a Securities Account Control Agreement substantially in the
form of Exhibit G (with any changes that the Collateral Agent shall have
approved, such approval not to be unreasonably withheld) among the relevant
Securities Intermediary, the relevant Lien Grantor and the Collateral Agent to
the effect that such Securities Intermediary will comply with Entitlement Orders
originated by the Collateral Agent with respect to such Securities Account
without further consent by the relevant Lien Grantor.
"SECURITIZATION COLLATERAL" means the Company's ownership interest in (i)
the Receivables Seller and the Transferring Subsidiary and (ii) that certain
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Subordinated Revolving Note dated as of December 15, 2000 from the Receivables
Seller in favor of the Company.
"SECURITIZATION DOCUMENTS" means the "FACILITY DOCUMENTS" as defined in the
RPA.
"SECURITY AGREEMENT SUPPLEMENT" means a Security Agreement Supplement,
substantially in the form of Exhibit A, signed and delivered to the Collateral
Agent for the purpose of adding a Subsidiary as a party hereto pursuant to
Section 24 and/or adding additional property to the Collateral.
"SECURITY DOCUMENTS" means this Agreement, the Security Agreement
Supplements, the Commodity Account Control Agreements, the Deposit Account
Control Agreements, the Issuer Control Agreements, the Securities Account
Control Agreements, the Intellectual Property Security Agreements and all other
supplemental or additional security agreements, control agreements or similar
instruments delivered pursuant to the Loan Documents.
"SUBSIDIARY GUARANTOR" means each Subsidiary listed on the signature pages
hereof under the caption "Subsidiary Guarantors" and each Subsidiary that shall,
at any time after the date hereof, become a "Subsidiary Guarantor" pursuant to
Section 24.
"SUPPORTING LETTER OF CREDIT" means a letter of credit that supports the
payment or performance of one or more items included in the Collateral.
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use any Trademark, including any agreement
identified in Schedule 1 to any Trademark Security Agreement.
"TRADEMARKS" means: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of the
foregoing have appeared or appear, package and other designs, and all other
source or business identifiers, and all general intangibles of like nature, and
the rights in any of the foregoing which arise under applicable law, (ii) the
goodwill of the business symbolized thereby or associated with each of them,
(iii) all registrations and applications in connection therewith, including
registrations and applications 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, including those
described in Schedule 1 to any Trademark Security Agreement, (iv) all renewals
of any of the foregoing, (v) all claims for, and rights to ▇▇▇ for, past or
future infringements of any of the
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foregoing and (vi) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including damages and
payments for past or future infringements thereof.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement,
substantially in the form of Exhibit D, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"TRANSACTION LIENS" means the Liens granted by the Lien Grantors under the
Security Documents.
"TRANSFERRED ACCOUNTS" means any Accounts and related rights which have
been sold, contributed or otherwise transferred in connection with a receivables
financing not prohibited by the Credit Agreement.
"TRANSFERRING SUBSIDIARY" means Onan Corporation.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of
New York; PROVIDED that, if perfection or the effect of perfection
or non-perfection or the priority of any Transaction Lien on any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than
New York, "UCC" means the Uniform Commercial Code as in effect from time to
time in such other jurisdiction for purposes of the provisions hereof relating
to such perfection, effect of perfection or non-perfection or priority.
(d) TERMS GENERALLY. The definitions of terms herein (including those
incorporated by reference to the UCC or to another document) apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words "INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to be
followed by the phrase "WITHOUT LIMITATION". The word "WILL" shall be construed
to have the same meaning and effect as the word "SHALL". Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "HEREIN", "HEREOF" and "HEREUNDER", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Sections, Exhibits and Schedules shall be construed to refer to Sections of, and
Exhibits and Schedules to, this
13
Agreement and (v) the word "PROPERTY" shall be construed to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.
Section 2. GUARANTEES BY SUBSIDIARY GUARANTORS.
(a) SECURED GUARANTEES. Each Subsidiary Guarantor unconditionally
guarantees the full and punctual payment of each Secured Obligation when due
(whether at stated maturity, upon acceleration or otherwise). If any Borrower
fails to pay any Secured Obligation punctually when due, each Subsidiary
Guarantor agrees that it will forthwith on demand pay the amount not so paid at
the place and in the manner specified in the relevant Secured Agreement.
(b) SECURED GUARANTEES UNCONDITIONAL. The obligations of each Subsidiary
Guarantor under its Secured Guarantee shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Borrower, any other Subsidiary
Guarantor or any other Person under any Secured Agreement, by operation of
law or otherwise;
(ii) any modification or amendment of or supplement to any
Secured Agreement;
(iii) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of any Borrower, any other
Subsidiary Guarantor or any other Person under any Secured Agreement;
(iv) any change in the corporate existence, structure or ownership
of any Borrower, any other Subsidiary Guarantor or any other Person or any
of their respective subsidiaries, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Borrower, any
other Subsidiary Guarantor or any other Person or any of their assets or
any resulting release or discharge of any obligation of any Borrower, any
other Subsidiary Guarantor or any other Person under any Secured Agreement;
(v) the existence of any claim, set-off or other right that such
Subsidiary Guarantor may have at any time against any Borrower, any other
Subsidiary Guarantor, any Secured Party or any other Person, whether in
connection with the Loan Documents or any unrelated
14
transactions; PROVIDED that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against any
Borrower, any other Subsidiary Guarantor or any other Person for any reason
of any Secured Agreement, or any provision of applicable law or regulation
purporting to prohibit the payment of any Secured Obligation by any
Borrower, any other Subsidiary Guarantor or any other Person; or
(vii) any other act or omission to act or delay of any kind by any
Borrower, any other Subsidiary Guarantor, any other party to any Secured
Agreement, any Secured Party or any other Person, or any other circumstance
whatsoever that might, but for the provisions of this clause (vii),
constitute a legal or equitable discharge of or defense to any obligation
of any Subsidiary Guarantor hereunder (in each case other than payment in
full of the Secured Obligations).
(c) RELEASE OF SECURED GUARANTEES. (i) All the Subsidiary Guarantors'
Secured Guarantees will be released upon the first date on which all the Release
Conditions are satisfied. If at any time any payment of a Secured Obligation is
rescinded or must be otherwise restored or returned upon the insolvency or
receivership of any Borrower or otherwise, the Subsidiary Guarantors' Secured
Guarantees shall be reinstated with respect thereto as though such payment had
been due but not made at such time.
(ii) If all the capital stock of a Subsidiary Guarantor or all the
assets of a Subsidiary Guarantor are sold to a Person other than the
Company or one of its Subsidiaries in a transaction not prohibited by the
Credit Agreement (any such sale, a "SALE OF GUARANTOR"), such Subsidiary
Guarantor will automatically without any further action by any Person be
released from its Secured Guarantee. Such release shall not require the
consent of any Secured Party, and the Collateral Agent shall be fully
protected in relying on a certificate of the Company as to whether any
particular sale constitutes a Sale of Guarantor.
(iii) In addition to any release permitted by subsection (i) or (ii),
the Collateral Agent may release any Subsidiary Guarantor's Secured
Guarantee with the prior written consent of the Required Lenders; PROVIDED
that any release of any Subsidiary Guarantor's Secured Guarantees which
results in the release of any substantial portion of the Collateral shall
require the consent of all the Lenders.
(d) WAIVER BY SUBSIDIARY GUARANTORS. Each Subsidiary Guarantor irrevocably
waives acceptance hereof, presentment, demand, protest and any
15
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against any Borrower, any other Subsidiary
Guarantor or any other Person.
(e) SUBROGATION. A Subsidiary Guarantor that makes a payment with respect
to a Secured Obligation hereunder shall be subrogated to the rights of the payee
against the relevant Borrower with respect to such payment; PROVIDED that no
Subsidiary Guarantor shall enforce any payment by way of subrogation against any
Borrower, or by reason of contribution against any other guarantor of such
Secured Obligation, until all the Release Conditions have been satisfied.
(f) STAY OF ACCELERATION. If acceleration of the time for payment of any
Secured Obligation by any Borrower is stayed by reason of the insolvency or
receivership of any Borrower or otherwise, all Secured Obligations otherwise
subject to acceleration under the terms of any Secured Agreement shall
nonetheless be payable by the Subsidiary Guarantors hereunder forthwith on
demand by the Collateral Agent.
(g) RIGHT OF SET-OFF. If any Secured Obligation is not paid promptly when
due, each of the Secured Parties and their respective Affiliates is authorized,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Secured Party or Affiliate
to or for the credit or the account of any Subsidiary Guarantor against the
obligations of such Subsidiary Guarantor under its Secured Guarantee of such
Secured Obligation, irrespective of whether or not such Secured Party shall have
made any demand thereunder and although such obligations may be unmatured. The
rights of each Secured Party under this subsection are in addition to all other
rights and remedies (including other rights of set-off) that such Secured Party
may have.
(h) CONTINUING GUARANTEE. Each Subsidiary Guarantor's Secured Guarantee is
a continuing guarantee, shall be binding on the relevant Subsidiary Guarantor
and its successors and assigns, and shall be enforceable by the Collateral Agent
or the Secured Parties. If all or part of any Secured Party's interest in any
Secured Obligation is assigned or otherwise transferred, the transferor's rights
under each Subsidiary Guarantor's Secured Guarantee, to the extent applicable to
the obligation so transferred, shall automatically be transferred with such
obligation.
(i) LIMITATION ON OBLIGATIONS OF SUBSIDIARY GUARANTOR. (i) The obligations
of each Subsidiary Guarantor under its Secured Guarantee shall be limited to an
aggregate amount equal to the largest amount that would not render such Secured
Guarantee subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of applicable law; PROVIDED
16
that to the extent such obligations may be satisfied by recourse solely to the
Collateral pledged by such Subsidiary Guarantor under the Security Documents,
and not as a general obligation of such Subsidiary Guarantor, the limitation
contemplated by this Section 2(i)(i) shall be determined without regard to the
obligations of such Subsidiary Guarantor as guarantor of bonds and notes
hereafter issued by the Company.
(ii) It is the intention of the parties that the Secured Guarantees
given by Restricted Subsidiaries shall not contravene the limitations on
Funded Debt (as defined in the Indenture) of Restricted Subsidiaries set
forth in the Indenture, and the amount of such Subsidiary Guarantors'
obligations under their Secured Guarantees shall be limited to an aggregate
amount equal to the maximum amount that may be guaranteed by them without
contravention of such restrictions contained in the Indenture (the "MAXIMUM
GUARANTEED AMOUNT"), in each case to the extent that such restriction is in
effect under the Indenture or any New Indenture containing a restriction on
"Funded Debt" on the same terms as the restriction set forth in the
Indenture. The Maximum Guaranteed Amount shall, to the extent permitted by
the Indenture, be determined as of the date which results in the greatest
amount.
(iii) The Company represents and warrants that, as of the Effective
Date, the Maximum Guaranteed Amount shall be an amount not less than
$125,000,000. Without limiting the effect of paragraph (i)(ii) above,
unless and until the contrary is established to their satisfaction, the
Lenders, the Administrative Agent and the Collateral Agent may assume for
purposes of the Loan Documents that the Maximum Guaranteed Amount is
$125,000,000, and shall incur no liability for any action or inaction taken
in reliance on such assumption. Without limiting the effect of paragraph
(i)(ii), the Lenders, the Administrative Agent and the Collateral Agent may
in any case rely upon the advice of counsel as to the Maximum Guaranteed
Amount, and shall incur no liability for any action or inaction taken in
reliance on such advice.
(iv) In the event of any inconsistency between the provisions of any
Loan Document and this Section 2(i), the provisions of this Section 2(i)
shall prevail.
Section 3. GRANT OF TRANSACTION LIENS.
(a) The Company, in order to secure its Secured Obligations and its
Secured Guarantee, and each Subsidiary Guarantor listed on the signature pages
hereof, in order to secure its Secured Guarantee, grants to the Collateral Agent
for the benefit of the Secured Parties a continuing security interest in all the
following
17
property of the Company or such Subsidiary Guarantor, as the case may be,
whether now owned or existing or hereafter acquired or arising and regardless of
where located:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles (including any Equity Interests in
other Persons that do not constitute Investment Property);
(vii) all Instruments (including all Intercompany Notes);
(viii) all Inventory;
(ix) all Investment Property;
(x) all Letter-of-Credit Rights;
(xi) all books and records (including customer lists, credit files,
computer programs, printouts and other computer materials and records) of
such Original Lien Grantor pertaining to any of its Collateral;
(xii) such Original Lien Grantor's ownership interest in (1) its
Collateral Accounts, (2) all Financial Assets credited to its Collateral
Accounts from time to time and all Security Entitlements in respect
thereof, (3) all cash held in its Collateral Accounts from time to time and
(4) all other money in the possession of the Collateral Agent; and
(xiii) all Proceeds of the Collateral described in the foregoing
clauses (i) through (xii);
PROVIDED that the following property is excluded from the foregoing security
interests: (A) motor vehicles the perfection of a security interest in which is
excluded from the Uniform Commercial Code in the relevant jurisdiction, (B)
voting Equity Interests in any Foreign Subsidiary, to the extent (but only to
the extent) required to prevent the Collateral from including more than 65% of
all voting Equity Interests in such Foreign Subsidiary, (C) any shares of stock
in or indebtedness of any Restricted Subsidiary (as such terms are used in the
18
Indenture, to the extent that the Indenture or any New Indenture containing a
restriction on "Secured Debt" on the same terms as the Indenture is effective),
(D) any Principal Property (as defined in the Indenture, to the extent that the
Indenture or any New Indenture containing a restriction on "Secured Debt" on the
same terms as the Indenture is effective), (E) any Fixture and (F) any general
intangibles or other rights arising under any contract, instrument, license or
other document or under any law, regulation, permit, order or decree of any
government authority if (but only to the extent that) the grant of a security
interest therein would constitute a material violation of a valid and
enforceable restriction in favor of a third party, unless and until all required
consents shall have been obtained. Each Original Lien Grantor shall, if
requested to do so by the Collateral Agent, use all commercially reasonable
efforts to obtain any such required consent that is reasonably obtainable with
respect to Collateral which the Collateral Agent reasonably determines to be
material.
(b) With respect to each right to payment or performance included in the
Collateral from time to time, the Transaction Lien granted therein includes a
continuing security interest in (i) any Supporting Obligation that supports such
payment or performance and (ii) any Lien that (x) secures such right to payment
or performance or (y) secures any such Supporting Obligation.
(c) The Transaction Liens are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of any Lien Grantor with
respect to any of the Collateral or any transaction in connection therewith.
Section 4. GENERAL REPRESENTATIONS AND WARRANTIES AND COVENANTS. Each
Original Lien Grantor represents, warrants and covenants that:
(a) Such Lien Grantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction identified as its
jurisdiction of organization in its Perfection Certificate.
(b) Schedule 1 lists all Equity Interests in Material Subsidiaries which
are Unrestricted Subsidiaries owned by such Lien Grantor as of the Effective
Date. Such Lien Grantor holds all such Equity Interests directly (I.E., not
through a Subsidiary, a Securities Intermediary or any other Person).
(c) Schedule 2 lists, as of the Effective Date, (i) all Securities owned
by such Lien Grantor (except Securities evidencing Equity Interests in
Subsidiaries), (ii) all Securities Accounts to which Financial Assets are
credited in respect of which such Lien Grantor owns Security Entitlements and
(iii) all Commodity Accounts in respect of which such Lien Grantor is the
Commodity Customer; PROVIDED that this representation shall be deemed to be true
as of such date if the
19
aggregate fair market value of Securities not listed on Schedule 2, Financial
Assets credited to Securities Accounts not listed on Schedule 2 and Commodity
Contracts credited to Commodity Accounts not listed on Schedule 2 does not
exceed $1,000,000 at such time.
(d) All Pledged Equity Interests owned by such Lien Grantor are owned by
it free and clear of any Lien other than (i) the Transaction Liens and (ii) any
Liens referred to in Section 6.01(b) or Section 6.01(g) of the Credit Agreement.
All shares of capital stock included in such Pledged Equity Interests (including
shares of capital stock in respect of which such Lien Grantor owns a Security
Entitlement) have been duly authorized and validly issued and are fully paid and
non-assessable. None of such Pledged Equity Interests is subject to any option
to purchase or similar right of any Person. Such Lien Grantor is not and will
not become a party to or otherwise bound by any agreement (except the Loan
Documents) which restricts in any manner the rights of any present or future
holder of any Pledged Equity Interest with respect thereto.
(e) Such Lien Grantor has good and marketable title to all its Collateral
(subject to exceptions set forth in the Security Documents or that are, in the
aggregate, not material), free and clear of any Lien other than Permitted Liens.
(f) Such Lien Grantor has not performed any acts that could reasonably be
expected to prevent the Collateral Agent from enforcing any of the provisions of
the Security Documents or that could reasonably be expected to limit the
Collateral Agent in any such enforcement. No financing statement, security
agreement or similar or equivalent document or instrument covering all or part
of the Collateral owned by such Lien Grantor is on file or of record in any
jurisdiction in which such filing or recording would be effective to perfect or
record a Lien on such Collateral, except financing statements or other similar
or equivalent documents (a) with respect to Permitted Liens or (b) the filing or
recording of which was not authorized by the Lien Grantor in accordance with
Section 9-509 of the UCC. After the Effective Date, no Collateral owned by such
Lien Grantor will be in the possession or under the Control of any other Person
having a claim thereto or security interest therein, other than a Permitted
Lien.
(g) To the extent attachment and creation of Transaction Liens are
governed by the laws of a jurisdiction in the United States (including the UCC),
the Transaction Liens on all Collateral owned by such Lien Grantor (i) have been
validly created, (ii) will attach to each item of such Collateral on the
Effective Date (or, if such Lien Grantor first obtains rights thereto on a later
date, on such later date) and (iii) when so attached, will secure all the
Secured Obligations or such Lien Grantor's Secured Guarantee, as the case may
be.
20
(h) Such Lien Grantor has delivered a Perfection Certificate to the
Collateral Agent. The information set forth therein is correct and complete as
of the Effective Date.
(i) When UCC financing statements describing the Collateral as set forth
in Schedule A to such Lien Grantor's Perfection Certificate have been filed in
the offices specified in such Perfection Certificate, the Transaction Liens will
constitute perfected security interests in the Collateral owned by such Lien
Grantor to the extent that a security interest therein may be perfected by
filing pursuant to the UCC, prior to all Liens and rights of others therein
except Permitted Liens. When, in addition to the filing of such UCC financing
statements, the applicable Intellectual Property Filings have been made with
respect to such Lien Grantor's Material Recordable Intellectual Property
(including any future filings required pursuant to Sections 5(a) and 8(a)), the
Transaction Liens will constitute perfected security interests in all right,
title and interest of such Lien Grantor in its Material Recordable Intellectual
Property to the extent that security interests therein may be perfected by such
filings, prior to all Liens and rights of others therein except Permitted Liens.
Except for (i) the filing of such UCC financing statements, (ii) such
Intellectual Property Filings and (iii) actions required under applicable
foreign law with respect to any Intellectual Property, no registration,
recordation or filing with any governmental body, agency or official is required
in connection with the execution or delivery of the Security Documents or is
necessary for the validity or enforceability thereof or for the perfection or
due recordation of the Transaction Liens created by this Agreement or, except
for customary motion or court proceedings, for the enforcement of the
Transaction Liens.
(j) Such Lien Grantor has taken, and will continue to take, within a
reasonable period after such acquisition or purchase, all actions necessary
under the UCC to perfect its interest in (i) any Accounts or Chattel Paper
purchased or otherwise acquired by it, as against its assignors and creditors of
its assignors and (ii) any Payment Intangibles or promissory notes purchased or
otherwise acquired by it, as against its assignors and creditors of its
assignors; PROVIDED that no Lien Grantor shall be required to take any such
action with respect to (a) Payment Intangibles or promissory notes evidencing
indebtedness of any Subsidiary other than a Material Subsidiary which is a
Unrestricted Subsidiary or (b) Collateral reasonably determined not to be
material by the Company.
(k) Such Lien Grantor's Collateral is insured as required by the Credit
Agreement.
(l) All of such Lien Grantor's Inventory has or will have been produced in
material compliance with the applicable requirements of the Fair Labor Standards
Act, as amended.
21
(m) As of the Effective Date, no Lien Grantor is the claimant with respect
to any Material Commercial Tort Claim. If any Lien Grantor acquires a Material
Commercial Tort Claim after the Effective Date, such Lien Grantor will within 30
days of becoming aware of its acquisition of such Material Commercial Tort Claim
sign and deliver a Security Agreement Supplement granting a Security Interest in
such Material Commercial Tort Claim (which shall be described therein in
specificity required to satisfy Official Comment 5 to UCC Section 9-108) to the
Collateral Agent for the benefit of the Secured Parties.
(n) As of the Effective Date, no Lien Grantor is the beneficiary under any
letter of credit other than (x) a Supporting Letter Credit and (y) letters of
credit with a maximum face amount of less than or equal to $5,000,000. If the
Lien Grantor becomes a beneficiary under a Letter of Credit which is not a
Supporting Letter of Credit and which has a maximum face amount exceeding
$5,000,000, such Lien Grantor will promptly (i) use commercially reasonable
efforts to cause the issuer of such letter of credit and each Nominated Person
(if any) with respect thereto to consent to an assignment of the proceeds of
such letter of credit to the Collateral Agent and (ii) deliver written evidence
of such consent to the Collateral Agent.
(o) No Lien Grantor is a party to any Material Government Contract that
has not been notified in writing to the Collateral Agent and made subject to the
Transaction Liens. Each Lien Grantor covenants that, if an Event of Default
shall have occurred and be continuing, such Lien Grantor will, promptly at the
request of the Collateral Agent, execute and deliver to the Collateral Agent all
assignments, notices of assignment and other documents required to be filed with
(x) any state or local government or agency or (y) the federal government of the
United States or any agency or instrumentality thereof in accordance with the
Assignment of Claims Act of 1940, as amended, 31 U.S.C. Section 3727 and 41
U.S.C. Section 15 (the "ASSIGNMENT OF CLAIMS ACT"), in either case to insure
compliance with the Assignment of Claims Act.
Section 5. FURTHER ASSURANCES; GENERAL COVENANTS. Each Lien Grantor
covenants as follows:
(a) Such Lien Grantor will, from time to time, at the Company's expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including any
Intellectual Property Filing and any filing of financing or continuation
statements under the UCC) that from time to time may be necessary or desirable,
or that the Collateral Agent may reasonably request, in order to:
(i) create, preserve, perfect, confirm or validate the Transaction
Liens on such Lien Grantor's Collateral;
22
(ii) in the case of Pledged Deposit Accounts (other than Deposit
Accounts which are not controlled Deposit Accounts due to the operation of
Section 11(d)) and Pledged Letter-of-Credit Rights with respect to letters
of credit which are not Supporting Letters of Credit and have a maximum
face amount of more than $5,000,000, cause the Collateral Agent to have
Control thereof;
(iii) enable the Collateral Agent and the other Secured Parties to
obtain the full benefits of the Security Documents; or
(iv) enable the Collateral Agent to exercise and enforce any of its
rights, powers and remedies with respect to any of such Lien Grantor's
Collateral.
To the extent permitted by applicable law, such Lien Grantor authorizes the
Collateral Agent to execute and file such financing statements or continuation
statements without such Lien Grantor's signature appearing thereon. Such Lien
Grantor agrees that a carbon, photographic, photostatic or other reproduction of
this Agreement or of a financing statement is, to the extent permitted by
applicable law, sufficient as a financing statement. Such Lien Grantor
constitutes the Collateral Agent its attorney-in-fact to execute and file all
Intellectual Property Filings and other filings required or so requested 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 all the Transaction Liens granted by such Lien Grantor terminate pursuant
to Section 23. The Company will pay the costs of, or incidental to, any
Intellectual Property Filings and any recording or filing of any financing or
continuation statements or other documents recorded or filed pursuant hereto.
(b) Such Lien Grantor will not (i) change its name or corporate structure,
(ii) change its location (determined as provided in UCC Section 9-307) or (iii)
except with respect to a Permitted Lien, become bound, as provided in UCC
Section 9-203(d) or otherwise, by a security agreement entered into by another
Person, unless it shall have given the Collateral Agent prior notice thereof and
delivered an Opinion of Counsel with respect thereto in accordance with Section
5(c).
(c) At least 15 days before it takes any action contemplated by Section
5(b), such Lien Grantor will, at the Company's expense, cause to be delivered to
the Collateral Agent an (i) Opinion of Counsel, in form and substance reasonably
satisfactory to the Collateral Agent, to the effect that all financing
statements and amendments or supplements thereto, continuation statements and
other documents required to be filed or recorded in order to perfect and protect
the Transaction Liens against all creditors of and purchasers from such Lien
Grantor after it takes
23
such action (except any continuation statements specified in such Opinion of
Counsel that are to be filed more than six months after the date thereof) have
been filed or recorded in each office necessary for such purpose and (ii) a
certificate of a Financial Officer of the relevant Lien Grantor to the effect
that (A) all fees and taxes, if any, payable in connection with such filings or
recordations have been paid in full and (B) except as otherwise agreed by the
Required Lenders, such action will not adversely affect the perfection or
priority of the Transaction Lien on any Collateral to be owned by such Lien
Grantor after it takes such action or the accuracy of such Lien Grantor's
representations and warranties herein relating to such Collateral.
(d) If any Collateral which the Collateral Agent, acting reasonably,
determines to be material is in the possession or control of a warehouseman,
bailee or agent at any time, such Lien Grantor will if requested to do so by the
Collateral Agent, (i) notify such warehouseman, bailee or agent of the relevant
Transaction Liens, (ii) instruct such warehouseman, bailee or agent to hold all
such Collateral for the Collateral Agent's account subject to the Collateral
Agent's instructions (which shall permit such Collateral to be removed by such
Lien Grantor in the ordinary course of business until the Collateral Agent
notifies such warehouseman, bailee or agent that an Event of Default has
occurred and is continuing), (iii) use commercially reasonable efforts to cause
such warehouseman, bailee or agent to Authenticate a Record acknowledging that
it holds possession of such Collateral for the Collateral Agent's benefit and
(iv) make such Authenticated Record available to the Collateral Agent.
(e) Such Lien Grantor will not sell, lease, exchange, assign or otherwise
dispose of, or grant any option with respect to, any of its Collateral; PROVIDED
that such Lien Grantor may do any of the foregoing unless (i) doing so would
violate a covenant in the Credit Agreement or (ii) an Event of Default shall
have occurred and be continuing and the Collateral Agent shall have notified
such Lien Grantor that its right to do so is terminated, suspended or otherwise
limited. Concurrently with any sale, lease or other disposition (except a sale
or disposition to another Lien Grantor or a lease) permitted by the foregoing
PROVISO, the Transaction Liens on the assets sold or disposed of (but not in any
Proceeds arising from such sale or disposition) will cease immediately without
any action by the Collateral Agent or any other Secured Party. The Collateral
Agent will, at the Company's expense, execute and deliver to the relevant Lien
Grantor all reasonably requested documents necessary to evidence a release of
the Transaction Liens, including if necessary to effect such sale the delivery
of any security certificates or Instruments held by the Collateral Agent and any
related stock or note powers or other instruments of transfer.
(f) Such Lien Grantor will, promptly upon request, provide to the
Collateral Agent all information and evidence concerning such Lien Grantor's
24
Collateral that the Collateral Agent may reasonably request from time to time to
enable it to enforce the provisions of the Security Documents. The obligations
of the Lien Grantor under this Section are subject to, and the Collateral Agent
shall comply with, all applicable confidentiality restrictions.
Section 6. ACCOUNTS. Each Lien Grantor represents, warrants and covenants
as follows:
(a) Such Lien Grantor will use commercially reasonable efforts to cause to
be collected from its account debtors, when due (subject to the immediately
succeeding sentence), all amounts owing under its Accounts (including delinquent
Accounts, which will be collected in accordance with lawful collection
procedures) and will apply all amounts collected thereon, forthwith upon receipt
thereof, to the outstanding balances of such Accounts. Subject to the rights of
the Collateral Agent and the other Secured Parties hereunder if an Event of
Default shall have occurred and be continuing, such Lien Grantor may allow in
the ordinary course of business as adjustments to amounts owing under its
Accounts (i) any extension or renewal of the time or times for payment, or
settlement for less than the total unpaid balance, that such Lien Grantor finds
appropriate in accordance with sound business judgment and (ii) refunds or
credits, all in the ordinary course of business and consistent with such Lien
Grantor's historical collection practices. The costs and expenses (including
attorney's fees) of collection, whether incurred by such Lien Grantor or the
Collateral Agent, shall be paid by such Lien Grantor.
(b) If payments with respect to any of such Lien Grantor's Accounts are
received in a lockbox or similar account, such Lien Grantor will, commencing on
the date that is 60 days after the Effective Date, (i) at all times cause such
account to be a Controlled Deposit Account and (ii) cause the relevant
depositary bank to subordinate to the relevant Transaction Lien all its claims
to such account (except its right to deduct its normal operating charges and any
uncollected funds previously credited thereto and other similar exceptions
reasonably acceptable to the Collateral Agent). The Collateral Agent will
instruct the relevant depositary bank to transfer funds credited to any such
account, as promptly as practicable after receipt thereof, to a Controlled
Deposit Account designated by such Lien Grantor; PROVIDED that, if an Event of
Default shall have occurred and be continuing, the Collateral Agent may
designate the Controlled Deposit Account to which such funds are transferred.
(c) If an Event of Default shall have occurred and be continuing, such
Lien Grantor will, if requested to do so by the Collateral Agent, promptly
notify (and such Lien Grantor authorizes the Collateral Agent so to notify) each
account debtor in respect of any of its Accounts that such Accounts have been
assigned to the Collateral Agent hereunder, and that any payments due or to
become due in
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respect of such Accounts are to be made directly to the Collateral Agent or its
designee.
Section 7. INSTRUMENTS. Except as to actions to be taken by the Collateral
Agent, each Lien Grantor represents, warrants and covenants as follows:
(a) On the Effective Date (in the case of an Original Lien Grantor) or the
date on which it signs and delivers its first Security Agreement Supplement (in
the case of any other Lien Grantor), such Lien Grantor will deliver to the
Collateral Agent as Collateral hereunder all Pledged Instruments individually in
an amount in excess of $1,000,000 then owned by such Lien Grantor. Thereafter,
whenever such Lien Grantor acquires any other Pledged Instrument individually in
an amount in excess of $1,000,000, such Lien Grantor will promptly deliver such
Pledged Instrument to the Collateral Agent as Collateral hereunder.
(b) So long as no Event of Default shall have occurred and be continuing,
the Collateral Agent will, promptly upon request by the relevant Lien Grantor,
make appropriate arrangements for making any Pledged Instrument available to it
for purposes of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Collateral Agent, against
trust receipt or like document).
(c) All Pledged Instruments owned by such Lien Grantor, when delivered to
the Collateral Agent, will be indorsed to the order of the Collateral Agent, or
accompanied by duly executed instruments of assignment, with signatures
appropriately guaranteed (if required for effective assignment), all in form and
substance reasonably satisfactory to the Collateral Agent.
(d) Upon the delivery of any Pledged Instrument owned by such Lien Grantor
to the Collateral Agent, the Transaction Lien on such Collateral will be
perfected, subject to no prior Liens or rights of others other than Permitted
Liens.
Section 8. RECORDABLE INTELLECTUAL PROPERTY. Each Lien Grantor covenants
as follows:
(a) On or prior to the Effective Date (in the case of an Original Lien
Grantor) or the date on which it signs and delivers its first Security Agreement
Supplement (in the case of any other Lien Grantor), such Lien Grantor will sign
and deliver to the Collateral Agent Intellectual Property Security Agreements
with respect to all Material Recordable Intellectual Property then owned by it,
except with respect to any Material Recordable Intellectual Property that is a
Patent or Patent License. On or prior to the day which is 30 days after the
Effective Date (in the case of an Original Lien Grantor) or the date on which it
signs and delivers its first Security Agreement Supplement (in the case of any
other Lien Grantor),
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such Lien Grantor will sign and deliver to the Collateral Agent Intellectual
Property Security Agreements with respect to any Material Recordable
Intellectual Property that is a Patent or Patent License and is then owned by
such Lien Grantor and identified by such Lien Grantor after using commercially
reasonable efforts. Within 30 days after each March 31 and September 30
thereafter, it will sign and deliver to the Collateral Agent any Intellectual
Property Security Agreement necessary to grant Transaction Liens on all Material
Recordable Intellectual Property owned by it on such March 31 or September 30
that is not covered by any previous Intellectual Property Security Agreement so
signed and delivered by it. In each case, it will promptly make all Intellectual
Property Filings necessary to record the Transaction Liens on such Material
Recordable Intellectual Property.
(b) Such Lien Grantor will notify the Collateral Agent promptly if it
knows that any application or registration relating to any Material Recordable
Intellectual Property owned or licensed by it may become abandoned or dedicated
to the public, or of any material adverse determination or development
(including the institution of, or any material adverse determination or
development in, any proceeding in the United States Copyright Office, the United
States Patent and Trademark Office or any court) regarding such Lien Grantor's
ownership of such Material Recordable Intellectual Property, its right to
register or patent the same, or its right to keep and maintain the same. If any
of such Lien Grantor's rights to any Material Recordable Intellectual Property
are infringed, misappropriated or diluted by a third party, such Lien Grantor
will notify the Collateral Agent within 30 days after it learns thereof and will
take such commercially reasonable steps consistent with its past practices, to
▇▇▇ for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, or take such other
actions as such Lien Grantor shall reasonably deem appropriate under the
circumstances to protect such Material Recordable Intellectual Property.
Section 9. INVESTMENT PROPERTY. Each Lien Grantor represents, warrants and
covenants as follows:
(a) CERTIFICATED SECURITIES. On (i) the Effective Date (in the case of an
Original Lien Grantor) or (ii) the date on which it signs and delivers its first
Security Agreement Supplement (in the case of any other Lien Grantor), such Lien
Grantor will deliver to the Collateral Agent as Collateral hereunder all
certificates representing Pledged Certificated Securities issued by any Material
Subsidiary which is an Unrestricted Subsidiary then owned by such Lien Grantor.
Thereafter, whenever such Lien Grantor acquires any other certificate
representing such a Pledged Certificated Security, such Lien Grantor will
promptly deliver such certificate to the Collateral Agent as Collateral
hereunder.
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The provisions of this subsection are subject to the limitation in Section 9(l)
in the case of voting Equity Interests in a Foreign Subsidiary.
(b) UNCERTIFICATED SECURITIES. On or prior to the day which is 60 (30 if
the applicable issuer is a Subsidiary) days after (i) the Effective Date (in the
case of an Original Lien Grantor) or (ii) the date on which it signs and
delivers its first Security Agreement Supplement (in the case of any other Lien
Grantor), such Lien Grantor will enter into (and use commercially reasonable
efforts to cause the relevant issuer to enter into) an Issuer Control Agreement
in respect of each such Pledged Uncertificated Security issued by any Material
Subsidiary which is an Unrestricted Subsidiary then owned by such Lien Grantor
and deliver such Issuer Control Agreement to the Collateral Agent (which shall
enter into the same). Thereafter, within 60 days after such Lien Grantor
acquires any other Pledged Uncertificated Security, such Lien Grantor will enter
into (and use commercially reasonable efforts to cause the relevant issuer to
enter into) an Issuer Control Agreement in respect of such Pledged
Uncertificated Security and deliver such Issuer Control Agreement to the
Collateral Agent (which shall enter into the same). The provisions of this
subsection are subject to (iii) the limitation in Section 9(l) in the case of
voting Equity Interests in a Foreign Subsidiary and (iv) Sections 9(m) and
14(c).
(c) SECURITY ENTITLEMENTS. On or prior to the day which is 60 days after
(i) the Effective Date (in the case of an Original Lien Grantor) or (ii) the
date on which it signs and delivers its first Security Agreement Supplement (in
the case of any other Lien Grantor), such Lien Grantor will, with respect to
each Security Entitlement then owned by it, enter into (and cause the relevant
Securities Intermediary to enter into) a Securities Account Control Agreement in
respect of such Security Entitlement and the Securities Account to which the
underlying Financial Asset is credited and will deliver such Securities Account
Control Agreement to the Collateral Agent (which shall enter into the same).
Thereafter, whenever such Lien Grantor acquires any other Security Entitlement,
such Lien Grantor will, as promptly as practicable, cause the underlying
Financial Asset to be credited to a Controlled Securities Account. The
provisions of this subsection are subject to Section 14(c).
(d) COMMODITY ACCOUNTS. On or prior to the day which is 60 days after (i)
the Effective Date (in the case of an Original Lien Grantor) or (ii) the date on
which it signs and delivers its first Security Agreement Supplement (in the case
of any other Lien Grantor), such Lien Grantor will enter into (and cause the
relevant Commodity Intermediary to enter into) a Commodity Account Control
Agreement in respect of each Commodity Account then owned by it and will deliver
such Commodity Account Control Agreement to the Collateral Agent (which shall
enter into the same). Thereafter, such Lien Grantor will, as promptly as
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practicable, cause each Commodity Contract owned by it to be carried at all
times in a Controlled Commodity Account.
(e) PERFECTION AS TO CERTIFICATED SECURITIES. When such Lien Grantor
delivers the certificate representing any Pledged Certificated Security owned by
it to the Collateral Agent and complies with Section 9(j) in connection with
such delivery, (i) the Transaction Lien on such Pledged Certificated Security
will be perfected, subject to no prior Liens or rights of others (other than
Liens permitted by Section 6.01(b) or Section 6.01(g) of the Credit Agreement),
(ii) the Collateral Agent will have Control of such Pledged Certificated
Security and (iii) the Collateral Agent will be a protected purchaser (within
the meaning of UCC Section 8-303) thereof.
(f) PERFECTION AS TO UNCERTIFICATED SECURITIES. When such Lien Grantor,
the Collateral Agent and the issuer of any Pledged Uncertificated Security owned
by such Lien Grantor enter into an Issuer Control Agreement with respect
thereto, (i) the Transaction Lien on such Pledged Uncertificated Security will
be perfected, subject to no prior Liens or rights of others (other than Liens
permitted by Section 6.01(b) or Section 6.01(g) of the Credit Agreement), (ii)
the Collateral Agent will have Control of such Pledged Uncertificated Security
and (iii) the Collateral Agent will be a protected purchaser (within the meaning
of UCC Section 8-303) thereof.
(g) PERFECTION AS TO SECURITY ENTITLEMENTS. So long as the Financial Asset
underlying any Security Entitlement owned by such Lien Grantor is credited to a
Controlled Securities Account or to its Investment Property Collateral Account,
(i) the Transaction Lien on such Security Entitlement will be perfected, subject
to no prior Liens or rights of others (except Liens and rights of the relevant
Securities Intermediary that are Permitted Liens and any other Liens Permitted
by Section 6.01(b) or Section 6.01(g) of the Credit Agreement), (ii) the
Collateral Agent will have Control of such Security Entitlement and (iii) no
action based on an adverse claim to such Security Entitlement or such Financial
Asset, whether framed in conversion, replevin, constructive trust, equitable
lien or other theory (except Liens and rights of the relevant Securities
Intermediary that are Permitted Liens and any other Liens Permitted by Section
6.01(b) or Section 6.01(g) of the Credit Agreement), may be asserted against the
Collateral Agent or any other Secured Party.
(h) PERFECTION AS TO COMMODITY ACCOUNTS. So long as any Commodity Account
is subject to a Commodity Account Control Agreement, (i) the Transaction Liens
on such Commodity Account and all Commodity Contracts carried therein will be
perfected, subject to no prior Liens or rights of others (except Liens and
rights of the relevant Commodity Intermediary permitted by such Commodity
Account Control Agreement and Liens permitted by Section
29
6.01(b) or Section 6.01(g) of the Credit Agreement) and (ii) the Collateral
Agent will have Control of such Commodity Account and all Commodity Contracts
carried therein from time to time.
(i) AGREEMENT AS TO APPLICABLE JURISDICTION. In respect of all Security
Entitlements owned by such Lien Grantor, and all Securities Accounts to which
the related Financial Assets are credited, the Securities Intermediary's
jurisdiction (determined as provided in UCC Section 8-110(e)) will at all times
be located in the United States. In respect of all Commodity Contracts owned by
such Lien Grantor and all Commodity Accounts in which such Commodity Contracts
are carried, the Commodity Intermediary's jurisdiction (determined as provided
in UCC Section 9-305(b)) will at all times be located in the United States.
(j) DELIVERY OF PLEDGED CERTIFICATES. All Pledged Certificates, when
delivered to the Collateral Agent, will be in suitable form for transfer by
delivery, or accompanied by duly executed instruments of transfer or assignment
in blank, with signatures appropriately guaranteed (if required for effective
transfer), all in form and substance reasonably satisfactory to the Collateral
Agent.
(k) COMMUNICATIONS. Each Lien Grantor will promptly upon request by the
Collateral Agent give to the Collateral Agent copies of any notices and other
communications received by it with respect to (i) Pledged Securities registered
in the name of such Lien Grantor or its nominee and (ii) Pledged Security
Entitlements as to which such Lien Grantor is the Entitlement Holder.
(l) FOREIGN SUBSIDIARIES. A Lien Grantor will not be obligated to comply
with the provisions of this Section at any time with respect to any voting
Equity Interest in a Foreign Subsidiary if and to the extent (but only to the
extent) that such voting Equity Interest is excluded from the Transaction Liens
at such time pursuant to clause (B) of the proviso at the end of Section 3(a)
and/or the comparable provisions of one or more Security Agreement Supplements.
A Lien Grantor will not be obligated to deliver certificates representing
Pledged Certificated Securities issued by Foreign Subsidiaries in accordance
with Section 9(a) until the day that is 21 days after the Effective Date.
(m) COMPLIANCE WITH APPLICABLE FOREIGN LAWS. If and so long as the
Collateral includes (i) any Equity Interest in, or other Investment Property
issued by, a legal entity organized under the laws of a jurisdiction outside the
United States or (ii) any Security Entitlement in respect of a Financial Asset
issued by such a foreign legal entity, the relevant Lien Grantor will take all
such action as may be required under the laws of such foreign jurisdiction to
ensure that the Transaction Lien on such Collateral ranks prior to all Liens and
rights of others therein. If and so long as the Collateral includes any Pledged
Uncertificated Security issued by such a foreign legal entity, the relevant Lien
Grantor will
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comply with this subsection, and will not be required to comply with Section
9(b), with respect thereto.
Section 10. INVESTMENT PROPERTY COLLATERAL ACCOUNTS. (a) At any time when
an Event of Default has occurred and is continuing, the Collateral Agent will
establish, at an office located in the United States, a Securities Account with
respect to each Lien Grantor (such Lien Grantor's "INVESTMENT PROPERTY
COLLATERAL ACCOUNT"), in the name and under the exclusive control of the
Collateral Agent, to which there shall be credited from time to time (i) all
Securities that are to be credited thereto pursuant to Section 14(a) or any
other provision of any Security Document, (ii) any other Financial Assets that
underlie Security Entitlements included in such Lien Grantor's Collateral and
(iii) the cash proceeds thereof. Each Investment Property Collateral Account
will be operated as provided in Section 13.
(b) The Collateral Agent and each Lien Grantor agree (and will cause the
relevant Securities Intermediary, if other than the Collateral Agent, to agree)
that (i) such Lien Grantor's Investment Property Collateral Account will be a
Securities Account, (ii) the Collateral Agent will be the Entitlement Holder
with respect thereto and (iii) all property (whether Investment Property,
financial asset, security, instrument, cash or other property) credited to such
account will be treated as Financial Assets.
Section 11. CONTROLLED DEPOSIT ACCOUNTS. Each Lien Grantor represents,
warrants and covenants as follows:
(a) On and after the day which is 60 days after the Effective Date, all
cash owned by such Lien Grantor will be deposited, upon or promptly after the
receipt thereof, in one or more Controlled Deposit Accounts. Each Controlled
Deposit Account will be operated as provided in Section 13. The provisions of
this subsection are subject to Section 11(d).
(b) In respect of each Controlled Deposit Account, the Depositary Bank's
jurisdiction (determined as provided in UCC Section 9-304) will at all times be
a jurisdiction in which Article 9 is in effect.
(c) So long as the Collateral Agent has Control of a Controlled Deposit
Account, the Transaction Lien on such Controlled Deposit Account will be
perfected, subject to no prior Liens or rights of others (except the Depositary
Bank's right to deduct its normal operating charges and any uncollected funds
previously credited thereto and other similar exceptions reasonably acceptable
to the Collateral Agent).
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(d) MATERIALITY EXCEPTION. The Lien Grantors have the right not to comply
with the foregoing provisions of this Section with respect to Deposit Accounts
having collected balances that do not at any time exceed $10,000,000 in the
aggregate for all Lien Grantors. However, if an Event of Default occurs and is
continuing, the Administrative Agent may terminate the foregoing right not to
comply, or reduce the amount thereof, by giving at least ten Business Days'
notice of such termination or reduction to the relevant Lien Grantors.
Section 12. CASH COLLATERAL ACCOUNTS. (a) If and when required for purposes
hereof, the Collateral Agent will establish with respect to each Lien Grantor an
account (its "CASH COLLATERAL ACCOUNT"), in the name and under the exclusive
control of the Collateral Agent, into which all amounts owned by such Lien
Grantor that are to be deposited therein pursuant to the Loan Documents shall be
deposited from time to time. Each Cash Collateral Account will be operated as
provided in this Section and Section 13.
(b) The Collateral Agent shall deposit the following amounts, as and when
received by it, in the applicable Lien Grantor's Cash Collateral Account:
(i) each amount required by Section 2.05(k) of the Credit Agreement
to be deposited therein to cover LC Disbursements which have not been
reimbursed by the Company;
(ii) each Cash Distribution required by Section 16 to be deposited
therein; and
(iii) each amount realized or otherwise received by the Collateral
Agent with respect to assets of the relevant Lien Grantor upon any exercise
of remedies pursuant to any Security Document.
(c) The Collateral Agent shall maintain such records and/or establish such
sub-accounts as shall be required to enable it to identify the amounts held in
each Cash Collateral Account from time to time pursuant to each clause of
subsection (b) of this Section.
(d) Unless (x) an Event of Default shall have occurred and be continuing
and the Required Lenders shall have instructed the Collateral Agent to stop
withdrawing amounts from the Cash Collateral Accounts pursuant to this
subsection or (y) the maturity of the Loans shall have been accelerated pursuant
to Article 8 of the Credit Agreement, the Collateral Agent shall withdraw
amounts from the Cash Collateral Accounts and apply them for the following
purposes:
(i) any amount deposited pursuant to Section 2.05(k) of the Credit
Agreement Obligations shall be withdrawn and applied to
32
reimburse LC Disbursements as they become due; PROVIDED that such amount
(to the extent not theretofore applied) shall be withdrawn and returned to
the Company if and when permitted by said Section 2.05(k).
(ii) any Cash Distribution deposited pursuant to Section 16 shall,
at the relevant Lien Grantor's request, (x) be withdrawn and applied to pay
Secured Obligations that are then due and payable or (y) if no Event of
Default has occurred and is continuing, be withdrawn and returned to such
Lien Grantor.
Section 13. OPERATION OF COLLATERAL ACCOUNTS. (a) All Cash Distributions
received with respect to assets held in any Collateral Account shall be
deposited therein promptly upon receipt thereof.
(b) Funds held in any Controlled Securities Account or Investment Property
Collateral Account may, until withdrawn, be invested and reinvested in such
investments as the relevant Lien Grantor shall request from time to time;
PROVIDED that, if an Event of Default shall have occurred and be continuing, the
Collateral Agent may select such investments.
(c) Funds held in any Controlled Deposit Account or Cash Collateral
Account may, until withdrawn, be invested and reinvested in such Permitted
Investments as the relevant Lien Grantor shall request from time to time;
PROVIDED that (i) if an Event of Default shall have occurred and be continuing,
Collateral Agent may select such Permitted Investments and (ii) if such
Permitted Investments are to be held in a Securities Account, either (x) the
Collateral Agent is the Entitlement Holder with respect to such Permitted
Investments or (y) the relevant Entitlement Holder and the relevant Securities
Intermediary shall have theretofore entered into a Securities Account Control
Agreement with respect to such Securities Account and delivered it to the
Collateral Agent (which shall enter into the same).
(d) With respect to each Collateral Account (except a Cash Collateral
Account, as to which Section 12 applies), the Collateral Agent will instruct the
relevant Securities Intermediary or Depositary Bank that the relevant Lien
Grantor may withdraw, or direct the disposition of, funds held therein unless
and until the Collateral Agent rescinds such instruction. The Collateral Agent
will not rescind such instructions unless an Event of Default shall have
occurred and be continuing.
(e) If an Event of Default shall have occurred and be continuing, the
Collateral Agent may (i) retain, or instruct the relevant Securities
Intermediary or Depositary Bank to retain, all cash and investments then held in
any Collateral Account, (ii) liquidate, or instruct the relevant Securities
Intermediary or
33
Depositary Bank to liquidate, any or all investments held therein and/or (iii)
withdraw any amounts held therein and apply such amounts as provided in Section
18.
(f) If at any time after the occurrence and during the continuance of an
Event of Default immediately available cash on deposit in any Collateral Account
is not sufficient to make any distribution or withdrawal required to be made
pursuant hereto, the Collateral Agent will cause to be liquidated, as promptly
as practicable, such investments held in or credited to such Collateral Account
as shall be required to obtain sufficient cash to make such distribution or
withdrawal and, notwithstanding any other provision hereof, such distribution or
withdrawal shall not be made until such liquidation has taken place.
Section 14. TRANSFER OF RECORD OWNERSHIP. (a) At any time when an Event of
Default shall have occurred and be continuing, the Collateral Agent may (and to
the extent that action by it is required, the relevant Lien Grantor, if directed
to do so by the Collateral Agent, will as promptly as practicable):
(i) cause each of the Pledged Securities (or any portion thereof
specified in such direction) to be (x) transferred of record into the name
of the Collateral Agent or its nominee or (y) credited to the relevant Lien
Grantor's Investment Property Collateral Account; and
(ii) cause the Financial Asset underlying each Pledged Security
Entitlement to be credited to the relevant Lien Grantor's Investment
Property Collateral Account;
(b) PERFECTION UPON TRANSFER OF RECORD OWNERSHIP. If and when any Pledged
Security (whether certificated or uncertificated) owned by such Lien Grantor is
transferred of record into the name of the Collateral Agent or its nominee
pursuant to Section 14(a), (i) the Transaction Lien on such Pledged Security
will be perfected, subject to no prior Liens or rights of others (other than
Liens which are permitted by Section 6.01(b) or Section 6.01(g) of the Credit
Agreement) , (ii) the Collateral Agent will have Control of such Pledged
Security and (iii) the Collateral Agent will be a protected purchaser (within
the meaning of UCC Section 8-303) thereof. If and when any Pledged Security
owned by such Lien Grantor is credited to its Investment Property Collateral
Account pursuant to Section 14(a), Section 9(g) will apply to the resulting
Security Entitlement.
(c) PROVISIONS INAPPLICABLE AFTER TRANSFER OF RECORD OWNERSHIP. If the
provisions of Section 14(a) are implemented, Sections 9(b) and 9(c) shall not
thereafter apply to (i) any Pledged Security that is registered in the name of
the Collateral Agent or its nominee or (ii) any Security Entitlement in respect
of which the Collateral Agent or its nominee is the Entitlement Holder.
34
(d) COMMUNICATIONS AFTER TRANSFER OF RECORD OWNERSHIP. The Collateral
Agent will promptly give to the relevant Lien Grantor copies of any notices and
other communications received by the Collateral Agent with respect to (i)
Pledged Securities registered in the name of the Collateral Agent or its nominee
and (ii) Pledged Security Entitlements as to which the Collateral Agent or its
nominee is the Entitlement Holder.
Section 15. RIGHT TO VOTE SECURITIES. (a) Unless an Event of Default shall
have occurred and be continuing, each Lien Grantor will have the right, from
time to time, to vote and to give consents, ratifications and waivers with
respect to any Pledged Security owned by it and the Financial Asset underlying
any Pledged Security Entitlement owned by it, and the Collateral Agent will,
upon receiving a written request from such Lien Grantor, deliver to such Lien
Grantor or as specified in such request such proxies, powers of attorney,
consents, ratifications and waivers in respect of any such Pledged Security that
is registered in the name of the Collateral Agent or its nominee or any such
Pledged Security Entitlement as to which the Collateral Agent or its nominee is
the Entitlement Holder, in each case as shall be specified in such request and
be in form and substance reasonably satisfactory to the Collateral Agent. Unless
an Event of Default shall have occurred and be continuing, the Collateral Agent
will have no right to take any action which the owner of a Pledged Partnership
Interest or Pledged LLC Interest is entitled to take with respect thereto,
except the right to receive payments and other distributions to the extent
provided herein.
(b) If an Event of Default shall have occurred and be continuing, the
Collateral Agent will have the right to the extent permitted by law (and, in the
case of a Pledged Partnership Interest or Pledged LLC Interest, by the relevant
partnership agreement, limited liability company agreement, operating agreement
or other governing document) to vote, to give consents, ratifications and
waivers and to take any other action with respect to the Pledged Investment
Property, the other Pledged Equity Interests (if any) and the Financial Assets
underlying the Pledged Security Entitlements, with the same force and effect as
if the Collateral Agent were the absolute and sole owner thereof, and each Lien
Grantor will take all such action as the Collateral Agent may reasonably request
from time to time to give effect to such right.
Section 16. CERTAIN CASH DISTRIBUTIONS. Cash Distributions with respect to
assets held in a Collateral Account shall be deposited and held therein, or
withdrawn therefrom, as provided in Section 13. Cash Distributions received
after the date which is 60 days after the Effective Date with respect to any
Pledged Equity Interest or Pledged Indebtedness that is not held in a Collateral
Account (whether held in the name of a Lien Grantor or in the name of the
Collateral Agent or its nominee) shall be deposited, promptly upon receipt
thereof, in a Controlled Deposit Account of the relevant Lien Grantor; PROVIDED
35
that, if an Event of Default shall have occurred and be continuing, the
Collateral Agent may deposit, or direct the recipient thereof to deposit, each
such Cash Distribution in the relevant Lien Grantor's Cash Collateral Account.
Section 17. REMEDIES UPON EVENT OF DEFAULT. (a) If an Event of Default
shall have occurred and be continuing, the Collateral Agent may exercise (or
cause its sub-agents to exercise) any or all of the remedies available to it (or
to such sub-agents) under the Security Documents.
(b) Without limiting the generality of the foregoing, if an Event of
Default shall have occurred and be continuing, the Collateral Agent may exercise
on behalf of the Secured Parties all the rights of a secured party under the UCC
(whether or not in effect in the jurisdiction where such rights are exercised)
with respect to any Collateral and, in addition, the Collateral Agent may,
without being required to give any notice, except as herein provided or as may
be required by mandatory provisions of law, withdraw all cash held in the
Collateral Accounts and apply such cash as provided in Section 18 and, if there
shall be no such cash or if such cash shall be insufficient to pay all the
Secured Obligations in full, sell, lease, license or otherwise dispose of the
Collateral or any part thereof. Notice of any such sale or other disposition
shall be given to the relevant Lien Grantor(s) as required by Section 20.
(c) Without limiting the generality of the foregoing, if an Event of
Default shall have occurred and be continuing:
(i) the Collateral Agent may license or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any Pledged intellectual property (including any Pledged Recordable
Intellectual Property) throughout the world for such term or terms, on such
conditions and in such manner as the Collateral Agent shall in its sole
discretion determine; PROVIDED that such licenses or sublicenses do not
conflict with any existing license of which the Collateral Agent shall have
received a copy;
(ii) the Collateral Agent may (without assuming any obligation or
liability thereunder), at any time and from time to time, in its sole and
reasonable discretion, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and remedies of any
Lien Grantor in, to and under any of its Pledged intellectual property and
take or refrain from taking any action under any thereof, and each Lien
Grantor releases the Collateral Agent and each other Secured Party from
liability for, and agrees to hold the Collateral Agent and each other
Secured Party free and harmless from and against any claims and expenses
arising out of, any lawful action so taken or omitted to be taken with
36
respect thereto, except for claims and expenses arising from the Collateral
Agent's or such Secured Party's gross negligence or willful misconduct; and
(iii) upon request by the Collateral Agent (which shall not be
construed as implying any limitation on its rights or powers), each Lien
Grantor will execute and deliver to the Collateral Agent a power of
attorney, in form and substance reasonably satisfactory to the Collateral
Agent, for the implementation of any sale, lease, license or other
disposition of any of such Lien Grantor's Pledged intellectual property or
any action related thereto. In connection with any such disposition, but
subject to any confidentiality restrictions imposed on such Lien Grantor in
any license or similar agreement, such Lien Grantor will supply to the
Collateral Agent its know-how and expertise relating to the relevant
intellectual property or the products or services made or rendered in
connection with such intellectual property, and its customer lists and
other records relating to such intellectual property and to the
distribution of said products or services.
Section 18. APPLICATION OF PROCEEDS. (a) If an Event of Default shall have
occurred and be continuing, the Collateral Agent may apply (i) any cash held in
the Collateral Accounts and (ii) the proceeds of any sale or other disposition
of all or any part of the Collateral, in the following order of priorities:
FIRST, to pay the expenses of such sale or other disposition,
including reasonable compensation to agents of and counsel for the
Collateral Agent, and all expenses, liabilities and advances incurred or
made by the Collateral Agent in connection with the Security Documents, and
any other amounts then due and payable to the Collateral Agent pursuant to
Section 19 or pursuant to Section 12.03 of the Credit Agreement;
SECOND, to pay the unpaid principal of the Secured Obligations
ratably (or provide for the payment thereof pursuant to Section 18(b)),
until payment in full of the principal of all Secured Obligations shall
have been made (or so provided for);
THIRD, to pay ratably (i) all interest (including Post-Petition
Interest) on the Secured Obligations and (ii) all commitment fees and
participation fees payable under the Credit Agreement, until payment in
full of all such interest and fees shall have been made;
FOURTH, to pay all other Secured Obligations ratably (or provide for
the payment thereof pursuant to Section 18(b)), until payment in full of
all
37
such other Secured Obligations shall have been made (or so provided for);
and
FINALLY, to pay to the relevant Lien Grantor, or as a court of
competent jurisdiction may direct, any surplus then remaining from the
proceeds of the Collateral owned by it;
PROVIDED that Collateral owned by a Subsidiary Guarantor and any proceeds
thereof shall be applied pursuant to the foregoing clauses FIRST, SECOND, THIRD
and FOURTH only to the extent permitted by the limitation in Section 2(i). The
Collateral Agent may make such distributions hereunder in cash or in kind or, on
a ratable basis, in any combination thereof.
(b) If at any time any portion of any monies collected or received by the
Collateral Agent would, but for the provisions of this Section 18(b), be payable
pursuant to Section 18(a) in respect of a Contingent Secured Obligation, the
Collateral Agent shall not apply any monies to pay such Contingent Secured
Obligation but instead shall request the holder thereof, at least 10 days before
each proposed distribution hereunder, to notify the Collateral Agent as to the
maximum amount of such Contingent Secured Obligation if then ascertainable
(E.G., in the case of a letter of credit, the maximum amount available for
subsequent drawings thereunder). If the holder of such Contingent Secured
Obligation does not notify the Collateral Agent of the maximum ascertainable
amount thereof at least two Business Days before such distribution, such holder
will not be entitled to share in such distribution. If such holder does so
notify the Collateral Agent as to the maximum ascertainable amount thereof, the
Collateral Agent will allocate to such holder a portion of the monies to be
distributed in such distribution, calculated as if such Contingent Secured
Obligation were outstanding in such maximum ascertainable amount. However, the
Collateral Agent will not apply such portion of such monies to pay such
Contingent Secured Obligation, but instead will hold such monies or invest such
monies in Liquid Investments. All such monies and Liquid Investments and all
proceeds thereof will constitute Collateral hereunder, but will be subject to
distribution in accordance with this Section 18(b) rather than Section 18(a).
The Collateral Agent will hold all such monies and Liquid Investments and the
net proceeds thereof in trust until all or part of such Contingent Secured
Obligation becomes a Non-Contingent Secured Obligation, whereupon the Collateral
Agent at the request of the relevant Secured Party will apply the amount so held
in trust to pay such Non-Contingent Secured Obligation; PROVIDED that, if the
other Secured Obligations theretofore paid pursuant to the same clause of
Section 18(a) (I.E., clause SECOND or FOURTH) were not paid in full, the
Collateral Agent will apply the amount so held in trust to pay the same
percentage of such Non-Contingent Secured Obligation as the percentage of such
other Secured Obligations theretofore paid pursuant to the same clause of
Section 18(a). If (i) the holder of such Contingent Secured
38
Obligation shall advise the Collateral Agent that no portion thereof remains in
the category of a Contingent Secured Obligation and (ii) the Collateral Agent
still holds any amount held in trust pursuant to this Section 18(b) in respect
of such Contingent Secured Obligation (after paying all amounts payable pursuant
to the preceding sentence with respect to any portions thereof that became
Non-Contingent Secured Obligations), such remaining amount will be applied by
the Collateral Agent in the order of priorities set forth in Section 18(a).
(c) In making the payments and allocations required by this Section, the
Collateral Agent may rely upon information supplied to it pursuant to Section
22(f). All distributions made by the Collateral Agent pursuant to this Section
shall be final (except in the event of manifest error) and the Collateral Agent
shall have no duty to inquire as to the application by any Secured Party of any
amount distributed to it.
Section 19. FEES AND EXPENSES; INDEMNIFICATION. (a) The Company will
forthwith upon demand pay to the Collateral Agent:
(i) the amount of any taxes that the Collateral Agent may have
been required to pay by reason of the Transaction Liens or to free any
Collateral from any other Lien thereon;
(ii) the amount of any and all reasonable out-of-pocket expenses,
including transfer taxes and reasonable fees and expenses of counsel and
other experts, that the Collateral Agent may incur in connection with (x)
the administration or enforcement of the Security Documents, including such
expenses as are incurred to preserve the value of the Collateral or the
validity, perfection, rank or value of any Transaction Lien, (y) the
collection, sale or other disposition of any Collateral or (z) the exercise
by the Collateral Agent of any of its rights or powers under the Security
Documents;
(iii) the amount of any fees that the Company shall have agreed in
writing to pay to the Collateral Agent and that shall have become due and
payable in accordance with such written agreement; and
(iv) the amount required to indemnify the Collateral Agent for, or
hold it harmless and defend it against, any loss, liability or expense
(including the reasonable fees and expenses of its counsel and any experts
or sub-agents appointed by it hereunder) incurred or suffered by the
Collateral Agent in connection with the Security Documents, except to the
extent that such loss, liability or expense arises from the Collateral
Agent's gross negligence or willful misconduct or a breach of any duty
39
that the Collateral Agent has under this Agreement (after giving effect to
Sections 21 and 22).
Any such amount not paid to the Collateral Agent on demand will bear interest
for each day thereafter until paid at a rate per annum equal to the sum of 2%
plus the rate applicable to ABR Loans for such day.
(b) If any transfer tax, documentary stamp tax or other tax is payable in
connection with any transfer or other transaction provided for in the Security
Documents, the Company will pay such tax and provide any required tax stamps to
the Collateral Agent or as otherwise required by law.
(c) The Company shall indemnify each of the Secured Parties, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "INDEMNITEE") against, and hold each
Indemnitee harmless from, any and all liabilities, losses, damages, costs and
expenses of any kind (including reasonable expenses of investigation by
engineers, environmental consultants and similar technical personnel and
reasonable fees and disbursements of counsel) arising out of, or in connection
with any and all Environmental Liabilities. Without limiting the generality of
the foregoing, each Lien Grantor waives all rights for contribution and all
other rights of recovery with respect to liabilities, losses, damages, costs and
expenses arising under or related to Environmental Laws that it might have by
statute or otherwise against any Indemnitee.
Section 20. AUTHORITY TO ADMINISTER COLLATERAL. Each Lien Grantor
irrevocably appoints the Collateral Agent its true and lawful attorney, with
full power of substitution, in the name of such Lien Grantor, any Secured Party
or otherwise, for the sole use and benefit of the Secured Parties, but at the
Company's expense, to the extent permitted by law to exercise, at any time and
from time to time while an Event of Default shall have occurred and be
continuing, all or any of the following powers with respect to all or any of
such Lien Grantor's Collateral:
(a) to demand, ▇▇▇ for, collect, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof,
(b) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(c) to sell, lease, license or otherwise dispose of the same or the
proceeds or avails thereof, as fully and effectually as if the Collateral
Agent were the absolute owner thereof, and
40
(d) to extend the time of payment of any or all thereof and to make
any allowance or other adjustment with reference thereto;
PROVIDED that, except in the case of Collateral that is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Collateral Agent will give the relevant Lien Grantor at least ten
days' prior written notice of the time and place of any public sale thereof or
the time after which any private sale or other intended disposition thereof will
be made. Any such notice shall (i) contain the information specified in UCC
Section 9-613, (ii) be Authenticated and (iii) be sent to the parties required
to be notified pursuant to UCC Section 9-611(c); PROVIDED that, if the
Collateral Agent fails to comply with this sentence in any respect, its
liability for such failure shall be limited to the liability (if any) imposed on
it as a matter of law under the UCC.
Section 21. LIMITATION ON DUTY IN RESPECT OF COLLATERAL. Beyond the
exercise of reasonable care in the custody and preservation thereof, the
Collateral Agent will have no duty as to any Collateral in its possession or
control or in the possession or control of any sub-agent or bailee or any income
therefrom or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Collateral Agent will be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession or control if such Collateral is accorded treatment substantially
equal to that which it accords its own property, and will not be liable or
responsible for any loss or damage to any Collateral, or for any diminution in
the value thereof, by reason of any act or omission of any sub-agent or bailee
selected by the Collateral Agent in good faith, except to the extent that such
liability arises from the Collateral Agent's gross negligence or willful
misconduct.
Section 22. GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT. (a)
AUTHORITY. The Collateral Agent is authorized to take such actions and to
exercise such powers as are delegated to the Collateral Agent by the terms of
the Security Documents, together with such actions and powers as are reasonably
incidental thereto.
(b) RIGHTS AND POWERS AS A SECURED PARTY. The bank serving as the
Collateral Agent shall, in its capacity as a Secured Party, have the same rights
and powers as any other Secured Party and may exercise the same as though it
were not the Collateral Agent. Such bank and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the
Company or any Subsidiary or Affiliate thereof as if it were not the Collateral
Agent hereunder.
(c) LIMITED DUTIES AND RESPONSIBILITIES. The Collateral Agent shall not
have any duties or obligations under the Security Documents except those
41
expressly set forth therein. Without limiting the generality of the foregoing,
(i) the Collateral Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether an Event of Default has occurred and is
continuing, (ii) the Collateral Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Security Documents that the
Collateral Agent is required in writing to exercise by the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 12.02 of the Credit Agreement) and (iii)
except as expressly set forth in the Loan Documents, the Collateral Agent shall
not have any duty to disclose, and shall not be liable for any failure to
disclose, any information relating to the Company or any Subsidiary that is
communicated to or obtained by the bank serving as Collateral Agent or any of
its Affiliates in any capacity. The Collateral Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02 of the Credit
Agreement) or in the absence of its own gross negligence or wilful misconduct.
The Collateral Agent shall not be responsible for the existence, genuineness or
value of any Collateral or for the validity, perfection, priority or
enforceability of any Transaction Lien, whether impaired by operation of law or
by reason of any action or omission to act on its part under the Security
Documents. The Collateral Agent shall be deemed not to have knowledge of any
Event of Default unless and until written notice thereof is given to the
Collateral Agent by the Company or a Secured Party, and the Collateral Agent
shall not be responsible for or have any duty to ascertain or inquire into (A)
any statement, warranty or representation made in or in connection with any
Security Document, (B) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (C) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth in any Security Document, (D) the validity, enforceability, effectiveness
or genuineness of any Security Document or any other agreement, instrument or
document or (E) the satisfaction of any condition set forth in any Security
Document.
(d) AUTHORITY TO RELY ON CERTAIN WRITINGS, STATEMENTS AND ADVICE. The
Collateral Agent shall be entitled to rely on, and shall not incur any liability
for relying on, any notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to be genuine and to have
been signed or sent by the proper Person. The Collateral Agent also may rely on
any statement made to it orally or by telephone and believed by it to be made by
the proper Person, and shall not incur any liability for relying thereon. The
Collateral Agent may consult with legal counsel (who may be counsel for the
Company), independent accountants and other experts selected by it, and shall
not be liable
42
for any action taken or not taken by it in accordance with the advice of any
such counsel, accountant or expert.
(e) SUB-AGENTS AND RELATED PARTIES. The Collateral Agent may perform any
of its duties and exercise any of its rights and powers through one or more
sub-agents appointed by it. The Collateral Agent and any such sub-agent may
perform any of its duties and exercise any of its rights and powers through its
Related Parties. The exculpatory provisions of Section 21 and this Section shall
apply to any such sub-agent and to the Related Parties of the Collateral Agent
and any such sub-agent.
(f) INFORMATION AS TO SECURED OBLIGATIONS AND ACTIONS BY SECURED PARTIES.
For all purposes of the Security Documents, including determining the amounts of
the Secured Obligations and whether a Secured Obligation is a Contingent Secured
Obligation or not, or whether any action has been taken under any Secured
Agreement, the Collateral Agent will be entitled to rely on information from (i)
its own records for information as to the Secured Parties, their Secured
Obligations and actions taken by them, (ii) any Secured Party for information as
to its Secured Obligations and actions taken by it, to the extent that the
Collateral Agent has not obtained such information from the foregoing sources,
and (iii) the Company, to the extent that the Collateral Agent has not obtained
information from the foregoing sources.
(g) Within two Business Days after it receives or sends any notice
referred to in this subsection, the Collateral Agent shall send to the Lenders
and each Secured Party Requesting Notice, copies of any certificate designating
additional obligations as Secured Obligations received by the Collateral Agent
pursuant to Section 25 and any notice given by the Collateral Agent to any Lien
Grantor, or received by it from any Lien Grantor, pursuant to Section 17, 18,
20, 22(i) or 23.
(h) The Collateral Agent may refuse to act on any notice, consent,
direction or instruction from any Secured Parties or any agent, trustee or
similar representative thereof that, in the Collateral Agent's opinion, (i) is
contrary to law or the provisions of any Security Document, (ii) may expose the
Collateral Agent to liability (unless the Collateral Agent shall have been
indemnified, to its reasonable satisfaction, for such liability by the Secured
Parties that gave such notice, consent, direction or instruction) or (iii) is
unduly prejudicial to Secured Parties not joining in such notice, consent,
direction or instruction.
(i) RESIGNATION; SUCCESSOR COLLATERAL AGENT. Subject to the appointment
and acceptance of a successor Collateral Agent as provided in this subsection,
the Collateral Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Company. Upon any such resignation, the Required
43
Lenders shall have the right, in consultation with the Company, to appoint a
successor Collateral Agent. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Collateral Agent gives notice of its resignation, then the retiring
Collateral Agent may, on behalf of the Secured Parties, appoint a successor
Collateral Agent which shall be a bank with an office in
New York,
New York, or
an Affiliate of any such bank. Upon acceptance of its appointment as Collateral
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent hereunder, and the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Company to a successor Collateral Agent shall be the same as those payable to
its predecessor unless otherwise agreed by the Company and such successor. After
the Collateral Agent's resignation hereunder, the provisions of this Section and
Section 21 shall continue in effect for the benefit of such retiring Collateral
Agent, its sub-agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while the retiring
Collateral Agent was acting as Collateral Agent.
Section 23. TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL. (a)
The Transaction Liens granted by each Subsidiary Guarantor shall terminate when
its Secured Guarantee is released pursuant to Section 2(c).
(b) The Transaction Liens granted by the Company shall terminate on the
first date on which all the Release Conditions are satisfied.
(c) The Transaction Liens granted by the relevant Lien Grantor (x) with
respect to any Pledged Accounts shall automatically terminate when such Accounts
have become Transferred Accounts and (y) with respect to any other Collateral
shall automatically terminate upon the sale of such Collateral to a Person other
than the Company or a Subsidiary Guarantor in a transaction not prohibited by
the Credit Agreement. In each case, such termination shall not require the
consent of any Secured Party, and the Collateral Agent and any third party shall
be fully protected in relying on a certificate of any Lien Grantor as to whether
any Pledged Accounts qualify as Transferred Accounts (including without
limitation whether the transfer thereof is permitted under the Credit Agreement
and this Agreement) and as to whether any sale of Collateral is not prohibited
by the Credit Agreement.
(d) At any time before the Transaction Liens granted by the Company
terminate, the Collateral Agent may, at the written request of the Company, (i)
release any Collateral (but not any substantial portion of the Collateral) with
the prior written consent of the Required Lenders or (ii) release any
substantial portion of the Collateral with the prior written consent of all
Lenders.
44
(e) Upon any termination of a Transaction Lien or release of Collateral,
the Collateral Agent will, at the expense of the relevant Lien Grantor, execute
and deliver to such Lien Grantor such documents as such Lien Grantor shall
reasonably request to evidence the termination of such Transaction Lien or the
release of such Collateral, as the case may be, and return to the Company any
such Collateral held by the Collateral Agent including if necessary to effect
any sale or release of the Transaction Liens the delivery of any security
certificates or instruments held by the Collateral Agent and any related stock
or note powers or other instruments of transfer.
Section 24. ADDITIONAL SUBSIDIARY GUARANTORS AND LIEN GRANTORS. Any
Subsidiary may become a party hereto by signing and delivering to the Collateral
Agent a Security Agreement Supplement, whereupon such Subsidiary shall become a
"Subsidiary Guarantor" and a "Lien Grantor" as defined herein.
Section 25. ADDITIONAL SECURED OBLIGATIONS. The Company may from time to
time designate its obligations under any Rate Protection Agreement as an
additional Secured Obligation for purposes hereof by delivering to the
Collateral Agent a certificate signed by a Financial Officer of the Company that
(i) identifies such Rate Protection Agreement, specifying the name and address
of the other party thereto, the notional principal amount thereof and the
expiration date thereof and (ii) states that the Company's obligations
thereunder are designated as Secured Obligations for purposes hereof.
Section 26. SECURITIZATION COLLATERAL. Notwithstanding anything contained
herein to the contrary, the Collateral Agent hereby agrees as follows:
(a) (i) Until the date on which amounts owed under the Securitization
Documents have been paid in full in cash in accordance with the terms thereof
and the Securitization Documents have terminated in accordance with their terms,
the Collateral Agent agrees that, upon exercising its rights with respect to the
Securitization Collateral, it will not take any action adverse to the interests
of the Purchasers or the Receivables Agent, including, without limitation, (A)
causing the Receivables Seller or the Transferring Subsidiary to violate or
breach any term or provision in any Securitization Document, (B) making any
dividends or distributions on such Securitization Collateral, (C) amending or
altering any of the Receivables Seller's or Transferring Subsidiary's
organizational documents or (D) causing the Receivables Seller to incur any
debt, other than in each case, as may be allowed in the Securitization
Documents; provided that any prepayment or termination of the RPA in accordance
with the terms of the Securitization Documents shall not be deemed adverse to
the interests of the Purchasers or the Receivables Agent;
45
(ii) In the event that the Collateral Agent receives any payments or
funds relating to the Receivables Assets (other than proceeds of
Receivables Assets which are permitted to be paid to the Company or
Transferring Subsidiary in accordance with the terms of the Securitization
Documents) prior to the date on which all amounts owed under the
Securitization Documents have been paid in full in cash in accordance with
the terms thereof and the Securitization Documents have terminated in
accordance with their terms, the Collateral Agent shall hold such payments
or funds in trust for the benefit of the Receivables Agent, and shall
promptly transfer such payments or funds to the Receivables Agent;
(iii) The provisions of this Section 26 shall continue to be
effective or be reinstated, as the case may be, if at any time any payment
of the amounts owed under the Securitization Documents is rescinded or must
otherwise be returned by the Receivables Agent or the Purchasers upon the
insolvency, bankruptcy or reorganization of the Receivables Seller, the
Company, the Transferring Subsidiary or otherwise, all as though such
payment had not been made; and
(iv) Prior to the date on which all amounts owed under the
Securitization Documents have been paid in full in cash in accordance with
the terms thereof and the Securitization Documents have terminated in
accordance with their terms, the Collateral Agent shall not object to or
contest in any administrative, legal or equitable action or proceeding
(including, without limitation, any insolvency, bankruptcy, receivership,
liquidation, reorganization, winding up, readjustment, composition or other
similar proceeding relating to the Company or the Receivables Seller or
their respective property) or object to or contest in any other manner (A)
the interests of the Receivable Seller and its successors and assigns in
any of the Receivable Assets transferred by the Company or its affiliates
to the Receivables Seller pursuant to the Securitization Documents or (B)
the interests of the Receivables Agent or the Purchasers in the Receivable
Assets. The Collateral Agent shall not object to or contest in any manner
the receipt of any payment by the Receivables Agent or the Purchasers with
respect to the Receivables Assets for the satisfaction of the Purchaser
Interests.
(b) The Receivables Agent shall be a third-party beneficiary with respect
to this Section 26.
(c) So long as all amounts under the Securitization Documents have not
been paid in full in cash in accordance with the terms thereof and the
Securitization Documents have not terminated in accordance with their terms,
this Section 26 shall not be amended, modified or supplemented without the prior
46
written consent of the Receivables Agent, which consent shall be at the sole
discretion of the Receivables Agent, and the provisions of this Section 26 shall
be contained in any agreement that amends and restates this Agreement. The
Collateral Agent agrees that it shall not enter into any additional agreement
that would adversely affect the rights of the Receivables Agent as provided
hereunder.
Section 27. NOTICES. Each notice, request or other communication given to
any party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:
(a) in the case of any Lien Grantor listed on the signature pages
hereof:
c/o
Cummins Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: Vice President - Treasurer
Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
(b) in the case of any other Lien Grantor, its address, facsimile
number or e-mail address set forth in its first Security Agreement
Supplement;
(c) in the case of the Collateral Agent:
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇ ▇▇▇-▇▇▇▇
(d) in the case of any Secured Party or Agent, to the Collateral
Agent to be forwarded to such Secured Party or Agent at its address or
facsimile number specified in or pursuant to Section 12.01 of the Credit
Agreement; or
47
(e) in the case of any Secured Party Requesting Notice, such
address, facsimile number or e-mail address as such party may hereafter
specify for the purpose by notice to the Collateral Agent.
Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the Collateral Agent
and the Lien Grantors in the manner specified above.
Section 28. NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE. No failure by the
Collateral Agent or any Secured Party to exercise, and no delay in exercising
and no course of dealing with respect to, any right or remedy under any Security
Document shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent or any Secured Party of any right or remedy
under any Loan Document preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies specified in the
Loan Documents are cumulative and are not exclusive of any other rights or
remedies provided by law.
Section 29. SUCCESSORS AND ASSIGNS. This Agreement is for the benefit of
the Collateral Agent and the Secured Parties. If all or any part of any Secured
Party's interest in any Secured Obligation is assigned or otherwise transferred,
the transferor's rights hereunder, to the extent applicable to the obligation so
transferred, shall be automatically transferred with such obligation. This
Agreement shall be binding on the Lien Grantors and their respective successors
and assigns.
Section 30. AMENDMENTS AND WAIVERS. Neither this Agreement nor any
provision hereof may be waived, amended, modified or terminated except pursuant
to an agreement or agreements in writing entered into by the parties hereto,
with the consent of such Lenders as are required to consent thereto under
Section 12.02 of the Credit Agreement. No such waiver, amendment or modification
shall affect the rights of a Secured Party (other than a Lender) hereunder more
adversely than it affects the comparable rights of the Lenders hereunder,
without the consent of such Secured Party.
Section 31. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
This Agreement shall be construed in accordance with and governed by the law of
the State of
New York.
(a) Each Lien Grantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of
New York sitting in
New York County and of the United States
District Court of the Southern District of
New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan
48
Document, or for recognition or enforcement of any judgment arising out of or
relating to any Loan Document, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such
New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in any Loan Document shall affect any right that the
Collateral Agent or any other Secured Party or Agent may otherwise have to bring
any action or proceeding relating to any Loan Document against any Lien Grantor
or its properties in the courts of any jurisdiction.
(b) Each Lien Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to any Loan Document in any court referred
to in paragraph (a) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 27. Nothing in any Loan
Document will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
Section 32. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 33. JUDGMENT CURRENCY. If, under any applicable law and whether
pursuant to a judgment being made or registered against any Lien Grantor or for
any other reason, any payment under or in connection with any Loan Document is
made or satisfied in a currency (the "OTHER CURRENCY") other
49
than that in which the relevant payment is due (the "REQUIRED CURRENCY") then,
to the extent that the payment (when converted into the Required Currency at the
rate of exchange on the date of payment or, if it is not practicable for the
party entitled thereto (the "PAYEE") to purchase the Required Currency with the
Other Currency on the date of payment, at the rate of exchange as soon
thereafter as it is practicable for it to do so) actually received by the Payee
falls short of the amount due under the terms of any Loan Document, such Lien
Grantor shall, to the extent permitted by law, as a separate and independent
obligation, indemnify and hold harmless the Payee against the amount of such
short-fall. For the purpose of this Section, "rate of exchange" means the rate
at which the Payee is able on the relevant date to purchase the Required
Currency with the Other Currency and shall take into account any premium and
other costs of exchange.
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CUMMINS INC.
By:
------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
FLEETGUARD, INC.
By:
------------------------------------
Name:
Title:
ONAN CORPORATION
By:
------------------------------------
Name:
Title:
UNIVERSAL SILENCER, INC.
By:
------------------------------------
Name:
Title:
CUMMINS ENGINE IP, INC.
By:
------------------------------------
Name:
Title:
CUMMINS FILTRATION IP, INC.
By:
------------------------------------
Name:
Title:
CUMMINS POWERGEN IP, INC.
By:
------------------------------------
Name:
Title:
CUMMINS INTELLECTUAL
PROPERTY, INC.
By:
------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, as Collateral
Agent
By:
------------------------------------
Name:
Title:
SCHEDULE 1
EQUITY INTERESTS IN MATERIAL SUBSIDIARIES
WHICH ARE UNRESTRICTED
SUBSIDIARIES AND AFFILIATES
OWNED BY ORIGINAL LIEN GRANTORS
(AS OF THE EFFECTIVE DATE)
JURISDICTION NUMBER OF
OF OWNER OF PERCENTAGE SHARES OR
ISSUER ORGANIZATION EQUITY INTEREST OWNED UNITS
--------------------------- ------------ --------------- ---------- ---------
Universal Silencer, Inc. Indiana Cummins Inc. 100%
Cummins Engine (China) China Cummins Inc. 100%
Investment Co. Ltd.
Cummins Engine Company Pty. Australia Cummins Inc. 100%
Limited
Cummins Receivables Corp. Delaware Cummins Inc. 100%
S-1-1
SCHEDULE 2
INVESTMENT PROPERTY
(OTHER THAN EQUITY INTERESTS IN SUBSIDIARIES)
OWNED BY ORIGINAL LIEN GRANTORS
(AS OF THE EFFECTIVE DATE)
PART 1 -- SECURITIES
JURISDICTION
OF AMOUNT TYPE OF
ISSUER ORGANIZATION OWNER OF SECURITIES OWNED SECURITY
---------------------------- -------------------------- ------------------- ------ ---------------------
Consolidated Diesel, Inc. Delaware Corporation 50% Common Stock
Consolidated Diesel Company North Carolina Partnership 50% Partnership Interest
Cummins Komatsu Engine Company Indiana Partnership 50% Partnership Interest
Cummins Mercury Marine Diesel, LLC Delaware LLC 50% Equity Interest
Emerachem LLC Delaware LLC 15% Equity Interest
Enceratec, Inc. Maryland Corporation 50% Common Stock
Innovative Computing Corp. Oklahoma Corporation 19% Preferred Stock
Pacific World Trade, Inc. Indiana Corporation 43% Common Stock
PBB Transit Corp. Delaware Corporation 19% Preferred Stock
Wabco Compressor Delaware 30% Common Stock
Manufacturing, Inc. Corporation
INTERNATIONAL INVESTMENTS
CD Power Rent, S. de ▇.▇. de C.V. Mexico 50% Equity Interest
C.G. Newage electrical Ltd. India 50% Equity Interest
Chongqing Cummins Engine China 50% Equity Interest
Co., Ltd.
S-2-1
Dongfeng Cummins Engine Co. Ltd. China 50% Equity Interest
European Engine Alliance SRL Italy 33.3% Equity Interest
Fleetguard Filtration India 37% Equity Interest
Systems India Pte. Ltd.
Industrial Power Alliance, Ltd. Japan 50% Equity Interest
KamDizel ▇.▇. Russia 50% Equity Interest
Komatsu Cummins Chile, Ltda. Chile 20% Equity Interest
Komatsu Cummins Engine Co. Ltd. Japan 50% Equity Interest
Markon Sawafuji Ltd. U.K. 40% Equity Interest
NAP Holdings, Ltd. Singapore 18.8% Equity Interest
Powertrain Industria e Comercio Ltda. Brazil 50% Equity Interest
Shanghai Fleetguard Filter Co., Ltd. China 50% Equity Interest
Tata Cummins Ltd. India 50% Equity Interest
Tata Holset Private Ltd. India 50% Equity Interest
VC Lubricating Oil Co. Ltd. China 50% Equity Interest
PART 2 -- SECURITIES ACCOUNTS
The Original Lien Grantors own Security Entitlements with respect to Financial
Assets credited to the following Securities Accounts:
SECURITIES
OWNER INTERMEDIARY ACCOUNT NUMBER
-------------- -------------- ----------------
None
S-2-2
S-2-3
PART 3 -- COMMODITY ACCOUNTS
The Original Lien Grantors are Commodity Customers with respect to the following
Commodity Accounts:
COMMODITY
OWNER INTERMEDIARY ACCOUNT NUMBER
-------------- -------------- ----------------
None
S-2-4
SCHEDULE 3
INTELLECTUAL PROPERTY
CUMMINS ENGINE IP INC.
U.S. TRADEMARK REGISTRATIONS
TRADEMARK REG. NO. REG. DATE
-------------------------------------- --------------- -------------
POWERING PEOPLE S/N 75878264
SMARTPOWER 2484469
1-800-DIESELS 2576927
CEALASTIC 2052227
SMARTPOWER 2048808
TRITECH 1963278
CENTRY 1907115
PREMIUM BLUE 1543190
NOW 1514858
GEN-PAC 1353721
BIG CAM 1377888
BIG CAM 1378014
UPRATE 1340575
UPRATE 1353715
UP RATE 1309696
UP RATE 1349171
C CUMMINS 1124765
C CUMMINS 1090272
VMS 1093447
RECON 800956
▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇
CUMMINS 579346
CUMMINS FILTRATION IP INC.
U.S. TRADEMARK REGISTRATIONS
TRADEMARK REG. NO. REG. DATE
-------------------------------------- --------------- -------------
CP 779454
▇▇▇▇▇▇ LOGO 1139392
▇▇▇▇▇▇ LOGO 1715271
ACOUSTI TUBE 2237580
S-3-1
ACCOUSTI RING 2259861
▇▇▇▇▇▇▇ (Stylized W) 949798
▇▇▇▇▇▇▇ (Word) 588694
ECO-CLEAN 2041808
ECO CLEAN LOGO 2152096
WE'RE LEADING A QUIET REVOLUTION 1900351
FLEETGUARD 0786012
ST LOGO S/N 78179162
SEPARATION TECHNOLOGIES 2100565
CUMMINS POWERGEN IP, INC.
U.S. TRADEMARK REGISTRATIONS
TRADEMARK REG. NO. REG. DATE
-------------------------------------- --------------- -------------
POWERSENTRY 2245620
GENVERTER 2173492
ROADIES 1924280
POWERCOMMAND 1973250
EMERALD 1984390
QUIET SITE 1723287
ONAN 1091393
ONAN 1087197
AQUALIFT 1177857
ONAN 1175828
HYDRA-GEN 0977183
IDLE-MATIC 0749343
READI-PULL 0698522
ONAN 0649254
VACU-FLO 0665953
S-2-2
EXHIBIT A
TO SECURITY AGREEMENT
SECURITY AGREEMENT SUPPLEMENT
SECURITY AGREEMENT SUPPLEMENT dated as of _______, ____, between [NAME OF
LIEN GRANTOR] (the "LIEN GRANTOR") and JPMorgan Chase Bank, as Collateral Agent.
WHEREAS,
Cummins Inc., the Subsidiary Guarantors party thereto and JPMorgan
Chase Bank, as Collateral Agent, are parties to a
Guarantee and Security
Agreement dated as of November 5, 2002 (as heretofore amended and/or
supplemented, the "SECURITY AGREEMENT") under which Cummins Inc. secures certain
of its obligations (the "SECURED OBLIGATIONS") and the Subsidiary Guarantors
guarantee the Secured Obligations and secure their respective guarantees
thereof;
WHEREAS, [name of Lien Grantor] desires to become [is] a party to the
Security Agreement as a Guarantor and Lien Grantor thereunder;(1) and
WHEREAS, terms defined in the Security Agreement (or whose definitions are
incorporated by reference in Section 1 of the Security Agreement) and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SECURED GUARANTEE.(2) The Lien Grantor unconditionally guarantees the
full and punctual payment of each Secured Obligation when due (whether at stated
maturity, upon acceleration or otherwise). The Lien Grantor acknowledges that,
by signing this Security Agreement Supplement and delivering it to the
Collateral Agent, the Lien Grantor becomes a "Subsidiary Guarantor" and "Lien
Grantor" for all purposes of the Security Agreement and that its obligations
under the foregoing Secured Guarantee are subject to all the provisions of the
Security Agreement (including those set forth in Section 2 thereof) applicable
to the obligations of a Guarantor thereunder.
----------
(1) If the Lien Grantor is the Company, delete this recital and Section 1
hereof.
(2) Delete this Section if the Lien Grantor is the Company or a Subsidiary
Guarantor that is already a party to the Security Agreement.
A-1
2. GRANT OF TRANSACTION LIENS. (a) In order to secure [its Secured
Guarantee](3) [the Secured Obligations](4), the Lien Grantor grants to the
Collateral Agent for the benefit of the Secured Parties a continuing security
interest in all the following property of the Lien Grantor, whether now owned or
existing or hereafter acquired or arising and regardless of where located (the
"NEW COLLATERAL"):
[describe property being added to the Collateral](5)
(b) With respect to each right to payment or performance
included in the Collateral from time to time, the Transaction Lien granted
therein includes a continuing security interest in (i) any Supporting
Obligation that supports such payment or performance and (ii) any Lien that
(x) secures such right to payment or performance or (y) secures any such
Supporting Obligation.
(c) The foregoing Transaction Liens are granted as security only
and shall not subject the Collateral Agent or any other Secured Party to,
or transfer or in any way affect or modify, any obligation or liability of
the Lien Grantor with respect to any of the New Collateral or any
transaction in connection therewith.
3. DELIVERY OF COLLATERAL. Concurrently with delivering this Security
Agreement Supplement to the Collateral Agent, the Lien Grantor is complying with
the provisions of Section 7 of the Security Agreement with respect to
Instruments and either Section 9 or Section 14(a) (whichever is applicable) of
the Security Agreement with respect to Investment Property, in each case if and
to the extent included in the New Collateral at such time.
4. PARTY TO SECURITY AGREEMENT. Upon delivering this Security Agreement
Supplement to the Collateral Agent, the Lien Grantor will become a party to the
Security Agreement and will thereafter have all the rights and obligations of a
Subsidiary Guarantor and a Lien Grantor thereunder and be
----------
(3) Delete bracketed words if the Lien Grantor is the Company.
(4) Delete bracketed words if the Lien Grantor is a Guarantor.
(5) If the Lien Grantor is not already a party to the Security Agreement,
clauses (i) through (xi) of, and the proviso to, Section 3(a) of the Security
Agreement may be appropriate.
A-2
bound by all the provisions thereof as fully as if the Lien Grantor were one of
the original parties thereto.(6)
5. ADDRESS OF LIEN GRANTOR. The address, facsimile number and e-mail
address of the Lien Grantor for purposes of Section 27(b) of the Security
Agreement are:
[address, facsimile number and e-mail address of Lien Grantor]
6. REPRESENTATIONS AND WARRANTIES.(7) (a) The Lien Grantor is a
corporation duly organized, validly existing and in good standing under the laws
of [jurisdiction of organization].
(b) The Lien Grantor has delivered a Perfection Certificate to
the Collateral Agent. The information set forth therein is correct and
complete as of the date hereof.
(c) The execution and delivery of this Security Agreement
Supplement by the Lien Grantor and the performance by it of its obligations
under the Security Agreement as supplemented hereby are within its
corporate or other powers, have been duly authorized by all necessary
corporate or other action, require no action by or in respect of, or filing
with, any governmental body, agency or official and do not contravene, or
constitute a default under, any provision of applicable law or regulation
or of its organizational documents, or of any agreement, judgment,
injunction, order, decree or other instrument binding upon it or result in
the creation or imposition of any Lien (except a Transaction Lien or a
Permitted Lien) on any of its assets other than (i) the filing of UCC
financing statements, (ii) Intellectual Property Filings or (iii) actions
required under applicable foreign law with respect to Intellectual
Property.
(d) The Security Agreement as supplemented hereby constitutes a
valid and binding agreement of the Lien Grantor, enforceable in accordance
with its terms, except as limited by (i) applicable bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting creditors' rights
generally and (ii) general principles of equity.
(e) Each of the representations and warranties set forth in
Sections 4 through 14 of the Security Agreement is true as applied to the
----------
(6) Delete Sections 4 and 5 if the Lien Grantor is already a party to the
Security Agreement.
(7) Modify as needed if the Lien Grantor is not a corporation.
A-3
Lien Grantor and the New Collateral. For purposes of the foregoing
sentence, references in said Sections to a "Lien Grantor" shall be deemed
to refer to the Lien Grantor, references to Schedules to the Security
Agreement shall be deemed to refer to the corresponding Schedules to this
Security Agreement Supplement, references to "Collateral" shall be deemed
to refer to the New Collateral, and references to the "Effective Date"
shall be deemed to refer to the date on which the Lien Grantor signs and
delivers this Security Agreement Supplement.
7. [COMPLIANCE WITH FOREIGN LAW. The Lien Grantor represents that it has
taken, and agrees that it will continue to take, all actions required under the
laws (including the conflict of laws rules) of its jurisdiction of organization
to ensure that the Transaction Liens on the New Collateral rank prior to all
Liens and rights of others therein other than Permitted Liens.(8)]
8. GOVERNING LAW. This Security Agreement Supplement shall be construed
in accordance with and governed by the laws of the State of
New York.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
Supplement to be duly executed by their respective authorized officers as of the
day and year first above written.
[NAME OF LIEN GRANTOR]
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK, as Collateral
Agent
By:
---------------------------------
Name:
Title:
----------
(8) Include Section 7 if the Lien Grantor is organized under the laws of a
jurisdiction outside the United States.
A-4
SCHEDULE 1
TO SECURITY AGREEMENT
SUPPLEMENT
EQUITY INTERESTS IN
MATERIAL SUBSIDIARIES WHICH ARE
UNRESTRICTED SUBSIDIARIES
OWNED BY LIEN GRANTOR
JURISDICTION
OF PERCENTAGE NUMBER OF
ISSUER ORGANIZATION OWNED SHARES OR UNITS
---------------------- ---------------- -------------- -------------------
A-5
SCHEDULE 2
TO SECURITY AGREEMENT
SUPPLEMENT
INVESTMENT PROPERTY
(OTHER THAN EQUITY INTERESTS IN SUBSIDIARIES)
OWNED BY LIEN GRANTOR
PART 1 -- SECURITIES
JURISDICTION
OF AMOUNT TYPE OF
ISSUER ORGANIZATION OWNED SECURITY
---------------------- ---------------- -------------- -------------------
PART 2 -- SECURITIES ACCOUNTS
The Lien Grantor owns Security Entitlements with respect to Financial Assets
credited to the following Securities Accounts:(9)
SECURITIES INTERMEDIARY ACCOUNT NUMBER
------------------------------- --------------------
----------
(9) If any such Securities Account holds material long-term investments
and is not a trading account, more detailed information as to such investments
could appropriately be required to be disclosed in this Schedule.
A-6
PART 3 -- COMMODITY ACCOUNTS
The Lien Grantor is the Commodity Customer with respect to the following
Commodity Accounts:
COMMODITY INTERMEDIARY ACCOUNT NUMBER
------------------------------- --------------------
A-7
SCHEDULE 2
TO SECURITY AGREEMENT
SUPPLEMENT
INTELLECTUAL PROPERTY
A-8
EXHIBIT B
TO SECURITY AGREEMENT
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS, COPYRIGHT REGISTRATIONS, COPYRIGHT
APPLICATIONS AND COPYRIGHT LICENSES)
WHEREAS, [name of Lien Grantor], a _____________ corporation(1) (herein
referred to as the "LIEN GRANTOR") owns, or in the case of licenses is a party
to, the Copyright Collateral (as defined below);
WHEREAS, Cummins Inc. (the "COMPANY"), certain other Borrowers party
thereto (together with the Company, the "BORROWERS"), the Lenders party thereto,
and JPMorgan Chase Bank, as Administrative Agent, Collateral Agent, Issuing Bank
and Swingline Lender, are parties to a Credit Agreement dated as of November 5,
2002 (as amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, pursuant to (i) a
Guarantee and Security Agreement dated as of
November 5, 2002 (as amended and/or supplemented from time to time, the
"SECURITY AGREEMENT") among the Company, the Subsidiary Guarantors party thereto
and JPMorgan Chase Bank, as Collateral Agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity, the
"GRANTEE"), and (ii) certain other Security Documents (including this Copyright
Security Agreement), the Lien Grantor has [secured certain of its obligations
(the "SECURED OBLIGATIONS")](2) [guaranteed certain obligations of the Borrowers
and secured such guarantee (the "LIEN GRANTOR'S SECURED GUARANTEE")](3) by
granting to the Grantee for the benefit of such Secured Parties a continuing
security interest in personal property of the Lien Grantor, including all right,
title and interest of the Lien Grantor in, to and under the Copyright Collateral
(as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor grants to the
Grantee, to secure the [Secured Obligations] [Lien Grantor's Secured Guarantee],
a continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being
----------
(1) Modify as needed if the Lien Grantor is not a corporation.
(2) Delete these bracketed words if the Lien Grantor is a Subsidiary
Guarantor.
(3) Delete these bracketed words if the Lien Grantor is the Company.
B-1
herein collectively referred to as the "COPYRIGHT COLLATERAL"), whether now
owned or existing or hereafter acquired or arising:
(i) each Copyright (as defined in the Security Agreement) owned
by the Lien Grantor, including, without limitation, each Copyright
registration or application therefor referred to in Schedule 1 hereto;
(ii) each Copyright License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Copyright License identified in Schedule 1 hereto; and
(iii) all proceeds of, revenues from, and accounts and general
intangibles arising out of, the foregoing, including, without limitation,
all proceeds of and revenues from any claim by the Lien Grantor against
third parties for past, present or future infringement of any Copyright
(including, without limitation, any Copyright owned by the Lien Grantor and
identified in Schedule 1), and all rights and benefits of the Lien Grantor
under any Copyright License (including, without limitation, any Copyright
License identified in Schedule 1);
PROVIDED that the following property is excluded from the foregoing
security interest: any general intangibles or other rights arising under
any contract, instrument, license or other document or under any law,
regulation, permit, order or decree of any government authority if (but
only to the extent that) the grant of a security interest therein would
constitute a material violation of a valid and enforceable restriction in
favor of a third party, unless and until all required consents shall have
been obtained. The Lien Grantor shall, if requested to do so by the
Grantee, use all commercially reasonable efforts to obtain any such
required consent that is reasonably obtainable with respect to Collateral
which the Grantee reasonably determines to be material.
The Lien Grantor irrevocably constitutes and appoints the Grantee
and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in the Grantee's name, from time to time, in the
Grantee's discretion, so long as any Event of Default shall have occurred
and be continuing, to take with respect to the Copyright Collateral any and
all appropriate action which the Lien Grantor might take with respect to
the Copyright Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of
this Copyright Security Agreement and to accomplish the purposes hereof.
B-2
Except to the extent not prohibited by the Security Agreement or the Credit
Agreement, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Copyright Collateral.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Copyright
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
___ day of __________, ____.
[NAME OF LIEN GRANTOR]
By:
-------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
--------------------------------
Name:
Title:
B-3
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "COMPANY"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
____.
[Seal]
--------------------------------
Signature of notary public
My Commission expires __________
B-4
SCHEDULE 1
TO COPYRIGHT
SECURITY AGREEMENT
[NAME OF LIEN GRANTOR]
COPYRIGHT REGISTRATIONS
EXPIRATION
REGISTRATION NO. REGISTRATION DATE TITLE DATE
------------------- --------------------- ------------- ---------------
COPYRIGHT APPLICATIONS
CASE NO. SERIAL NO. COUNTRY DATE FILING TITLE
-------------- ------------- ----------- -------- ----------------
COPYRIGHT LICENSES
NAME OF PARTIES DATE OF SUBJECT
AGREEMENT LICENSOR/LICENSEE AGREEMENT MATTER
-------------- --------------------- -------------- ----------
B-5
EXHIBIT C
TO SECURITY AGREEMENT
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)
WHEREAS, [name of Lien Grantor], a _____________ corporation(1) (herein
referred to as the "LIEN GRANTOR") owns, or in the case of licenses is a party
to, the Patent Collateral (as defined below);
WHEREAS, Cummins Inc. (the "COMPANY"), certain other Borrowers party
thereto (together with the Company, the "BORROWERS"), the Lenders party thereto,
and JPMorgan Chase Bank, as Administrative Agent, Collateral Agent, Issuing Bank
and Swingline Lender, are parties to a Credit Agreement dated as of November 5,
2002 (as amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, pursuant to (i) a
Guarantee and Security Agreement dated as of
November 5, 2002 (as amended and/or supplemented from time to time, the
"SECURITY AGREEMENT") among the Company, the Subsidiary Guarantors party thereto
and JPMorgan Chase Bank, as Collateral Agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity, the
"GRANTEE"), and (ii) certain other Security Documents (including this Patent
Security Agreement), the Lien Grantor has [secured certain of its obligations
(the "SECURED OBLIGATIONS")](2) [guaranteed certain obligations of the Borrowers
and secured such guarantee (the "LIEN GRANTOR'S SECURED GUARANTEE")](3) by
granting to the Grantee for the benefit of such Secured Parties a continuing
security interest in personal property of the Lien Grantor, including all right,
title and interest of the Lien Grantor in, to and under the Patent Collateral
(as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor grants to the
Grantee, to secure the [Secured Obligations] [Lien Grantor's Secured Guarantee],
a continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being
----------
(1) Modify as needed if the Lien Grantor is not a corporation.
(2) Delete these bracketed words if the Lien Grantor is a Subsidiary
Guarantor.
(3) Delete these bracketed words if the Lien Grantor is the Company.
C-1
herein collectively referred to as the "PATENT COLLATERAL"), whether now owned
or existing or hereafter acquired or arising:
(i) each Patent (as defined in the Security Agreement) owned by
the Lien Grantor, including, without limitation, each Patent referred to in
Schedule 1 hereto;
(ii) each Patent License (as defined in the Security Agreement)
to which the Lien Grantor is a party, including, without limitation, each
Patent License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future infringement of
any Patent owned by the Lien Grantor (including, without limitation, any
Patent identified in Schedule 1 hereto) and all rights and benefits of the
Lien Grantor under any Patent License (including, without limitation, any
Patent License identified in Schedule 1 hereto).
PROVIDED that the following property is excluded from the foregoing
security interest: any general intangibles or other rights arising under
any contract, instrument, license or other document or under any law,
regulation, permit, order or decree of any government authority if (but
only to the extent that) the grant of a security interest therein would
constitute a material violation of a valid and enforceable restriction in
favor of a third party, unless and until all required consents shall have
been obtained. The Lien Grantor shall, if requested to do so by the
Grantee, use all commercially reasonable efforts to obtain any such
required consent that is reasonably obtainable with respect to Collateral
which the Grantee reasonably determines to be material.
The Lien Grantor irrevocably constitutes and appoints the Grantee
and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in the Grantee's name, from time to time, in the
Grantee's discretion, so long as any Event of Default shall have occurred
and be continuing, to take with respect to the Patent Collateral any and
all appropriate action which the Lien Grantor might take with respect to
the Patent Collateral and to execute any and all documents and instruments
which may be necessary or desirable to carry out the terms of this Patent
Security Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited by the Security Agreement or the Credit
Agreement, the Lien Grantor agrees not to sell, license, exchange, assign or
C-2
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Patent Collateral.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Patent
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of ____________, ____.
[NAME OF LIEN GRANTOR]
By:
-------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
---------------------------------
Name:
Title:
C-3
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "COMPANY"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
____.
[Seal]
--------------------------------
Signature of notary public
My Commission expires __________
C-4
SCHEDULE 1
TO PATENT
SECURITY AGREEMENT
[NAME OF LIEN GRANTOR]
PATENTS AND DESIGN PATENTS
PATENT NO. ISSUED EXPIRATION COUNTRY TITLE
-------------- ---------- -------------- ----------- ---------
PATENT APPLICATIONS
CASE NO. SERIAL NO. COUNTRY DATE FILING TITLE
----------- -------------- ----------- -------- ---------------
PATENT LICENSES
NAME OF PARTIES DATE OF SUBJECT
AGREEMENT LICENSOR/LICENSEE AGREEMENT MATTER
------------- --------------------- ------------- -----------
C-5
EXHIBIT D
TO SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, [name of Lien Grantor], a _____________ corporation(1) (herein
referred to as the "LIEN GRANTOR") owns, or in the case of licenses is a party
to, the Trademark Collateral (as defined below);
WHEREAS, Cummins Inc. (the "COMPANY"), certain other Borrowers party
thereto (together with the Company, the "BORROWERS"), the Lenders party thereto,
and JPMorgan Chase Bank, as Administrative Agent, Collateral Agent, Issuing Bank
and Swingline Lender, are parties to a Credit Agreement dated as of November 5,
2002 (as amended from time to time, the "CREDIT AGREEMENT"); and
WHEREAS, pursuant to (i) a
Guarantee and Security Agreement dated as of
November 5, 2002 (as amended and/or supplemented from time to time, the
"SECURITY AGREEMENT") among the Company, the Subsidiary Guarantors party thereto
and JPMorgan Chase Bank, as Collateral Agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity, the
"GRANTEE"), and (ii) certain other Security Documents (including this Trademark
Security Agreement), the Lien Grantor has [secured certain of its obligations
(the "SECURED OBLIGATIONS")](2) [guaranteed certain obligations of the Borrowers
and secured such guarantee (the "LIEN GRANTOR'S SECURED GUARANTEE")](3) by
granting to the Grantee for the benefit of such Secured Parties a continuing
security interest in personal property of the Lien Grantor, including all right,
title and interest of the Lien Grantor in, to and under the Trademark Collateral
(as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor grants to the
Grantee, to secure the [Secured Obligations] [Lien Grantor's Secured Guarantee],
a continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being
----------
(1) Modify as needed if the Lien Grantor is not a corporation.
(2) Delete these bracketed words if the Lien Grantor is a Subsidiary
Guarantor.
(3) Delete these bracketed words if the Lien Grantor is the Company.
D-1
herein collectively referred to as the "TRADEMARK COLLATERAL"), whether now
owned or existing or hereafter acquired or arising:
(i) each Trademark (as defined in the Security Agreement) owned
by the Lien Grantor, including, without limitation, each Trademark
registration and application referred to in Schedule 1 hereto, and all of
the goodwill of the business connected with the use of, or symbolized by,
each Trademark;
(ii) each Trademark License (as defined in the Security
Agreement) to which the Lien Grantor is a party, including, without
limitation, each Trademark License identified in Schedule 1 hereto, and all
of the goodwill of the business connected with the use of, or symbolized
by, each Trademark licensed pursuant thereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future unfair
competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any Trademark
owned by the Lien Grantor (including, without limitation, any Trademark
identified in Schedule 1 hereto), and all rights and benefits of the Lien
Grantor under any Trademark License (including, without limitation, any
Trademark License identified in Schedule 1 hereto), or for injury to the
goodwill associated with any of the foregoing.
PROVIDED that the following property is excluded from the foregoing
security interest: any general intangibles or other rights arising under
any contract, instrument, license or other document or under any law,
regulation, permit, order or decree of any government authority if (but
only to the extent that) the grant of a security interest therein would
constitute a material violation of a valid and enforceable restriction in
favor of a third party, unless and until all required consents shall have
been obtained. The Lien Grantor shall, if requested to do so by the
Grantee, use all commercially reasonable efforts to obtain any such
required consent that is reasonably obtainable with respect to Collateral
which the Grantee reasonably determines to be material.
The Lien Grantor irrevocably constitutes and appoints the Grantee
and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in the Grantee's name, from time to time, in the
Grantee's discretion, so long as any Event of Default shall have occurred
and be continuing, to take with respect to the Trademark Collateral any
D-2
and all appropriate action which the Lien Grantor might take with respect
to the Trademark Collateral and to execute any and all documents and
instruments which may be necessary or desirable to carry out the terms of
this Trademark Security Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited by the Security Agreement or the Credit
Agreement, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Trademark Collateral.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor acknowledges and affirms that the rights and
remedies of the Grantee with respect to the security interest in the Trademark
Collateral granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of __________, ____.
[NAME OF LIEN GRANTOR]
By:
-------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
--------------------------------
Name:
Title:
D-3
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "COMPANY"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
____.
[Seal]
--------------------------------
Signature of notary public
My Commission expires __________
D-4
SCHEDULE 1
TO TRADEMARK
SECURITY AGREEMENT
[NAME OF LIEN GRANTOR]
U.S. TRADEMARK REGISTRATIONS
TRADEMARK REG. NO. REG. DATE
------------- ------------------ -------------
U.S. TRADEMARK APPLICATIONS
TRADEMARK REG. NO. REG. DATE
------------- ------------------ -------------
D-5
TRADEMARK LICENSES
NAME OF PARTIES DATE OF SUBJECT
AGREEMENT LICENSOR/LICENSEE AGREEMENT MATTER
------------ --------------------- ------------- -----------
D-6
EXHIBIT E
TO SECURITY AGREEMENT
PERFECTION CERTIFICATE(1)
The undersigned is a duly authorized officer of [NAME OF LIEN GRANTOR] (the
"LIEN GRANTOR"). With reference to the
Guarantee and Security Agreement dated as
of November 5, 2002 among Cummins Inc., the Guarantors party thereto and
JPMorgan Chase Bank, as Collateral Agent (terms defined therein being used
herein as therein defined), the undersigned certifies to the Collateral Agent
and each other Secured Party as follows:
A. Information Required for Filings and Searches for Prior Filings.
1. JURISDICTION OF ORGANIZATION. The Lien Grantor is a
corporation(2) organized under the laws of _____________.
2. NAME. The exact [corporate] name of the Lien Grantor as it
appears in its [certificate of incorporation] is as follows:
3. PRIOR NAMES. (a) Set forth below is each other [corporate]
name that the Lien Grantor has had since its organization, together with
the date of the relevant change:
(b) Except as set forth in Schedule __ hereto, the Lien Grantor
has not changed its corporate structure(3) in any way within the past five
years.
----------
(1) This certificate may require substantial modifications, E.G., if the
Lien Grantor is newly formed or if filings and file searches are to occur after
the closing.
(2) Modify as needed if the Lien Grantor is not a corporation.
(3) Changes in corporate structure would include mergers and
consolidations, as well as any change in the Lien Grantor's form of
organization. If any such change has occurred, include in Schedule __ the
information required by Part A of this certificate as to each constituent party
to a merger or consolidation and any other predecessor organization.
E-1
4. FILING OFFICE. In order to perfect the Transaction Liens
granted by the Lien Grantor, to the extent such Transaction Liens can be
perfected by filing under the UCC, a duly signed financing statement on
Form UCC-1, with the collateral described as set forth on Schedule __
hereto, should be on file in the office of ____________ in _________.
B. Additional Information Required for Searches for Prior Filings Under
Old Article 9.
1. CURRENT LOCATIONS. (a) The chief executive office of the
Lien Grantor is located at the following address:
MAILING ADDRESS COUNTY STATE
----------------------------- -------------- --------------
The Lien Grantor [does] [does not] have a place of business in another county of
the State listed above.
(b) The following are all places of business of the Lien Grantor
not identified above:
MAILING ADDRESS COUNTY STATE
----------------------------- -------------- --------------
(c) The following are all locations not identified above where
the Lien Grantor maintains any Inventory:
MAILING ADDRESS COUNTY STATE
----------------------------- -------------- --------------
(d) The following are the names and addresses of all Persons (other
than the Lien Grantor) that have possession of any of the Lien Grantor's
Inventory:
MAILING ADDRESS COUNTY STATE
----------------------------- -------------- --------------
2. PRIOR LOCATIONS. (a) Set forth below is the information
required by paragraphs (a) and (b) of Part B-1 above with respect to each
F-2
other location or place of business maintained by the Lien Grantor at any
time during the past five years:
(b) Set forth below is the information required by paragraphs
(c) and (d) of Part B-1 above with respect to each other location or bailee
where or with whom any of the Lien Grantor's Inventory has been lodged at
any time during the past four months:
IN WITNESS WHEREOF, I have hereunto set my hand this __ day of __________,
____.
---------------------------------------
Name:
Title:
E-3
SCHEDULE __
TO PERFECTION CERTIFICATE
COLLATERAL DESCRIPTION
The collateral shall include each of the following, whether now owned or
existing or hereafter acquired or arising and regardless of where located: all
Accounts, all Chattel Paper, all Deposit Accounts, all Documents, all Equipment,
all General Intangibles (including any Equity Interests in other Persons that do
not constitute Investment Property), all Instruments (including all Intercompany
Notes), all Inventory, all Investment Property, all Letter-of-Credit Rights; all
books and records (including customer lists, credit files, computer programs,
printouts and other computer materials and records) of such Original Lien
Grantor pertaining to any of its Collateral, such Original Lien Grantor's
ownership interest in its Collateral Accounts, all Financial Assets credited to
its Collateral Accounts from time to time and all Security Entitlements in
respect thereof, all cash held in its Collateral Accounts from time to time and
all other money in the possession of the Collateral Agent; and all Proceeds of
the Collateral described in the foregoing.
The following property is excluded from the foregoing security interests:
(A) motor vehicles the perfection of a security interest in which is excluded
from the Uniform Commercial Code in the relevant jurisdiction, (B) voting Equity
Interests in any Foreign Subsidiary, to the extent (but only to the extent)
required to prevent the Collateral from including more than 65% of all voting
Equity Interests in such Foreign Subsidiary, (C) any shares of stock in or
indebtedness of any Restricted Subsidiary (as such terms are used in the
Indenture, to the extent that the Indenture or any New Indenture containing a
restriction on "Secured Debt" on the same terms as the Indenture is effective),
(D) any Principal Property (as defined in the Indenture, to the extent that the
Indenture or any New Indenture containing a restriction on "Secured Debt" on the
same terms as the Indenture is effective), (E) any Fixture and (F) any general
intangibles or other rights arising under any contract, instrument, license or
other document or under any law, regulation, permit, order or decree of any
government authority if (but only to the extent that) the grant of a security
interest therein would constitute a material violation of a valid and
enforceable restriction in favor of a third party, unless and until all required
consents shall have been obtained. Each Original Lien Grantor shall, if
requested to do so by the Collateral Agent, use all commercially reasonable
efforts to obtain any such required consent that is reasonably obtainable with
respect to Collateral which the Collateral Agent reasonably determines to be
material.
E-4
TERMS DEFINED IN UCC. As used herein, each of the following terms has the
meaning specified in the UCC:
TERM UCC
---- ---
Account 9-102
Authenticate 9-102
Certificated Security 8-102
Chattel Paper 9-102
Commercial Tort Claim 9-102
Commodity Account 9-102
Commodity Contract 9-102
Commodity Customer 9-102
Commodity Intermediary 9-102
Deposit Account 9-102
Document 9-102
Entitlement Holder 8-102
Entitlement Order 8-102
EQUIPMENT 9-102
Financial Asset 8-102 & 103
FIXTURE 9-102
General Intangibles 9-102
Instrument ▇-▇▇▇
▇▇▇▇▇▇▇▇▇ 9-102
Investment Property 9-102
Letter-of-Credit Right 9-102
Payment Intangible 9-102
Record 9-102
Securities Account 8-501
Securities Intermediary 8-102
Security 8-102 & 103
Security Entitlement 8-102
Supporting Obligations 9-102
Uncertificated Security 8-102
ADDITIONAL DEFINITIONS. The following terms, as used herein, have the
following respective meanings:
"CASH COLLATERAL ACCOUNT" has the meaning specified in Section 12 to the
Guarantee and Security Agreement.
"COLLATERAL" means all property, whether now owned or hereafter acquired,
on which a Lien is granted or purports to be granted to the Collateral Agent
pursuant to the Security Documents. When used with respect to a specific
E-5
Lien Grantor, the term "Collateral" means all its property on which such a Lien
is granted or purports to be granted.
"COLLATERAL ACCOUNTS" means the Cash Collateral Accounts, the Controlled
Deposit Accounts, the Controlled Securities Accounts and the Investment Property
Collateral Accounts.
"COLLATERAL AGENT" means JPMorgan Chase Bank, in its capacity as collateral
agent under the Loan Documents.
"COMPANY" means Cummins Inc., an Indiana corporation.
"CONTROLLED DEPOSIT ACCOUNT" means a Deposit Account (i) that is subject to
a Deposit Account Control Agreement or (ii) as to which the Collateral Agent is
the Depositary Bank's "customer" (as defined in UCC Section 4-104).
"CONTROLLED SECURITIES ACCOUNT" means a Securities Account that (i) is
maintained in the name of a Lien Grantor at an office of a Securities
Intermediary located in the United States and (ii) together with all Financial
Assets credited thereto and all related Security Entitlements, is subject to a
Securities Account Control Agreement among such Lien Grantor, the Collateral
Agent and such Securities Intermediary.
"CREDIT AGREEMENT" means the Credit Agreement dated as of November __, 2002
among the Company, Cummins Engine Co. Ltd., Cummins Power Generation Ltd.,
Newage International Limited, the Lenders party thereto and JPMorgan Chase Bank,
as Administrative Agent, Collateral Agent, LC Issuing Bank and Swingline Lender.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means, with respect to any Deposit
Account of any Lien Grantor, an agreement among such Lien Grantor, the
Collateral Agent and the relevant Depositary Bank, set forth in an Authenticated
Record, (i) that such Depositary Bank will comply with instructions originated
by the Collateral Agent directing disposition of the funds in such Deposit
Account without further consent by such Lien Grantor and (ii) subordinating to
the relevant Transaction Lien all claims of the Depositary Bank to such Deposit
Account (except its right to deduct its normal operating charges and any
uncollected funds previously credited thereto and other similar exceptions
reasonably acceptable to the Collateral Agent).
"DEPOSITARY BANK" means a bank at which a Controlled Deposit Account is
maintained.
"EQUITY INTEREST" means (i) in the case of a corporation, any shares of its
capital stock, (ii) in the case of a limited liability company, any membership
E-6
interest therein, (iii) in the case of a partnership, any partnership interest
(whether general or limited) therein, (iv) in the case of any other business
entity, any participation or other interest in the equity or profits thereof,
(v) any warrant, option or other right to acquire any Equity Interest described
in this definition or (vi) any Security Entitlement in respect of any Equity
Interest described in this definition.
"FOREIGN SUBSIDIARY" means any Subsidiary which is a "controlled foreign
corporation" within the meaning of the Code.
"
GUARANTEE AND SECURITY AGREEMENT" means the
Guarantee and Security
Agreement dated as of November __, 2002 among the Company, the Subsidiary
Guarantors, and the Collateral Agent
"INDENTURE" means the indenture dated as of March 1, 1986 between the
Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank,
formerly known as Chemical Bank, successor by merger to The Chase Manhattan Bank
(National Association)), as trustee, as amended and supplemented prior to the
Effective Date.
"INTERCOMPANY NOTE" means a promissory note evidencing loans or advances
made by the Company or any Subsidiary Guarantor to any Material Subsidiary that
is an Unrestricted Subsidiary.
"INVESTMENT PROPERTY COLLATERAL ACCOUNT" has the meaning specified in
Section 10 to the Guarantee and Security Agreement.
"LIEN GRANTORS" means the Company and the Subsidiary Guarantors.
"LOAN DOCUMENTS" means the Credit Agreement and the Security Documents.
"MATERIAL SUBSIDIARY" means each Subsidiary listed on Schedule 3.07 to the
Credit Agreement and identified on such Schedule as a Material Subsidiary, and
any other (a) Unrestricted Subsidiary with total assets of more than $25,000,000
or (b) Restricted Subsidiary with total assets of more than $100,000,000, in
each case calculated as of the last day of the most recent fiscal quarter of the
Company for which financial statements were delivered under Section 5.04. to the
Credit Agreement.
"ORIGINAL LIEN GRANTOR" means any Lien Grantor that grants a Lien on any of
its assets hereunder on the Effective Date.
"PROCEEDS" means all proceeds of, and all other profits, products, rents or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
E-7
assignment, licensing or other disposition of, or other realization upon, any
Collateral, including all claims of the relevant Lien Grantor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.
"SECURED OBLIGATIONS" means (i) all principal of all Loans and obligations
to reimburse LC Disbursements outstanding from time to time under the Credit
Agreement, all interest (including Post-Petition Interest) on such Loans and
reimbursement obligations and all other amounts now or hereafter payable by the
Borrowers pursuant to the Loan Documents and (ii) all obligations (if any)
designated by the Company as additional Secured Obligations pursuant to Section
25 to the Guarantee and Security Agreement.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURITY DOCUMENTS" means this Agreement, the Security Agreement
Supplements, the Commodity Account Control Agreements, the Deposit Account
Control Agreements, the Issuer Control Agreements, the Securities Account
Control Agreements, the Intellectual Property Security Agreements and all other
supplemental or additional security agreements, control agreements or similar
instruments delivered pursuant to the Loan Documents.
"SUBSIDIARY GUARANTOR" means each Subsidiary listed on the signature pages
to the Guarantee and Security Agreement under the caption "Subsidiary
Guarantors" and each Subsidiary that shall, at any time after the date hereof,
become a "Subsidiary Guarantor" pursuant to Section 24 to the Guarantee and
Security Agreement.
"TRANSACTION LIENS" means the Liens granted by the Lien Grantors under the
Security Documents.
"UNRESTRICTED SUBSIDIARY" has the meaning set forth in the Indenture.
E-8
EXHIBIT F
TO SECURITY AGREEMENT
ISSUER CONTROL AGREEMENT
ISSUER CONTROL AGREEMENT dated as of ______, _____ among _____________ (the
"LIEN GRANTOR"), JPMorgan Chase Bank, as Collateral Agent (the "SECURED PARTY"),
and _________ (the "ISSUER"). All references herein to the "UCC" refer to the
Uniform Commercial Code as in effect from time to time in [Issuer's jurisdiction
of incorporation].
W I T N E S S E T H :
WHEREAS, the Lien Grantor is the registered holder of [specify Pledged
Uncertificated Securities issued by the Issuer] issued by the Issuer (the
"SECURITIES");
WHEREAS, pursuant to a Guarantee and Security Agreement dated as of
November 5, 2002 (as such agreement may be amended and/or supplemented from time
to time, the "SECURITY AGREEMENT"), the Lien Grantor has granted to the Secured
Party a continuing security interest (the "TRANSACTION LIEN") in all right,
title and interest of the Lien Grantor in, to and under the Securities, whether
now existing or hereafter arising; and
WHEREAS, the parties hereto are entering into this Agreement in order to
perfect the Transaction Lien on the Securities;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. NATURE OF SECURITIES. The Issuer confirms that (i) the
Securities are "uncertificated securities" (as defined in Section 8-102 of the
UCC) and (ii) the Lien Grantor is registered on the books of the Issuer as the
registered holder of the Securities.
Section 2. INSTRUCTIONS. The Issuer agrees to comply with any "instruction"
(as defined in Section 8-102 of the UCC) originated by the Secured Party and
relating to the Securities without further consent by the Lien Grantor or any
other person. The Lien Grantor consents to the foregoing agreement by the
Issuer.
Section 3. WAIVER OF LIEN; WAIVER OF SET-OFF. The Issuer waives any
security interest, lien or right of set-off that it may now have or hereafter
acquire in or with respect to the Securities. The Issuer's obligations in
respect of the
F-1
Securities will not be subject to deduction, set-off or any other
right in favor of any person other than the Secured Party.
Section 4. CHOICE OF LAW. This Agreement shall be governed by the laws of
[Issuer's jurisdiction of incorporation].(1)
Section 5. CONFLICT WITH OTHER AGREEMENTS. There is no agreement (except
this Agreement) between the Issuer and the Lien Grantor with respect to the
Securities [except for [identify any existing other agreements] (the "EXISTING
OTHER AGREEMENTS")]. In the event of any conflict between this Agreement (or any
portion hereof) and any other agreement [(including any Existing Other
Agreement)] between the Issuer and the Lien Grantor with respect to the
Securities, whether now existing or hereafter entered into, the terms of this
Agreement shall prevail.
Section 6. AMENDMENTS. No amendment or modification of this Agreement or
waiver of any right hereunder shall be binding on any party hereto unless it is
in writing and is signed by all the parties hereto.
Section 7. NOTICE OF ADVERSE CLAIMS. Except for the claims and interests of
the Secured Party and the Lien Grantor in the Securities, the Issuer does not
know of any claim to, or interest in, the Securities. If any person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
attachment, execution or similar process) against the Securities, the Issuer
will promptly notify the Secured Party and the Lien Grantor thereof.
Section 8. MAINTENANCE OF SECURITIES. In addition to, and not in lieu of,
the obligation of the Issuer to honor instructions as agreed in Section 2
hereof, the Issuer agrees as follows:
(i) LIEN GRANTOR INSTRUCTIONS; NOTICE OF EXCLUSIVE CONTROL. So
long as the Issuer has not received a Notice of Exclusive Control (as
defined below), the Issuer may comply with instructions of the Lien Grantor
or any duly authorized agent of the Lien Grantor in respect of the
Securities. After the Issuer receives a written notice from the Secured
Party that it is exercising exclusive control over the Securities (a
"NOTICE OF EXCLUSIVE CONTROL"), the Issuer will cease complying with
instructions of the Lien Grantor or any of its agents.
----------
(1) If the Issuer's jurisdiction of incorporation is not a State in the
United States that has adopted the revisions to Articles 8 and 9 of the UCC
promulgated in 1994, this form of Issuer Control Agreement will not be
appropriate. It may be necessary to transfer the relevant securities into the
Collateral Agent's name to obtain comparable results under the laws of such
jurisdiction.
F-2
(ii) NON-CASH DIVIDENDS AND DISTRIBUTIONS. After the Issuer
receives a Notice of Exclusive Control, the Issuer shall deliver to the
Secured Party all dividends, interest and other distributions paid or made
upon or with respect to the Securities.
(iii) VOTING RIGHTS. Until the Issuer receives a Notice of
Exclusive Control, the Lien Grantor shall be entitled to direct the Issuer
with respect to voting the Securities.
(iv) STATEMENTS AND CONFIRMATIONS. The Issuer will promptly send
copies of all statements and other correspondence concerning the Securities
simultaneously to each of the Lien Grantor and the Secured Party at their
respective addresses specified in Section 11 hereof.
(v) TAX REPORTING. All items of income, gain, expense and loss
recognized in respect of the Securities shall be reported to the Internal
Revenue Service and all state and local taxing authorities under the name
and taxpayer identification number of the Lien Grantor.
Section 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ISSUER. The
Issuer makes the following representations, warranties and covenants:
(i) This Agreement is a valid and binding agreement of the
Issuer enforceable in accordance with its terms.
(ii) The Issuer has not entered into, and until the termination
of this Agreement will not enter into, any agreement with any other person
relating to the Securities pursuant to which it has agreed, or will agree,
to comply with instructions (as defined in Section 8-102 of the UCC) of
such person. The Issuer has not entered into any other agreement with the
Lien Grantor or the Secured Party purporting to limit or condition the
obligation of the Issuer to comply with instructions as agreed in Section 2
hereof.
Section 10. SUCCESSORS. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
Section 11. NOTICES. Each notice, request or other communication given to
any party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of
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receipt or (iii) ten days after being sent to such party by certified or
registered United States mail, addressed to it at its address specified below,
with first class or airmail postage prepaid:
Lien Grantor:
Secured Party:
Issuer:
Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the other parties in
the manner specified above.
Section 12. TERMINATION. The rights and powers granted herein to the
Secured Party (i) have been granted in order to perfect the Transaction Lien,
(ii) are powers coupled with an interest and (iii) will not, except as required
by law, be affected by any bankruptcy of the Lien Grantor or any lapse of time.
The obligations of the Issuer hereunder shall continue in effect until the
Secured Party has notified the Issuer in writing that the Transaction Lien has
been terminated pursuant to the Security Agreement.
Section 13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts.
[NAME OF LIEN GRANTOR]
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
---------------------------------
Name:
Title:
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[NAME OF ISSUER]
By:
---------------------------------
Name:
Title:
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EXHIBIT A
[Letterhead of Secured Party]
[Date]
[Name and Address of Issuer]
Attention: ________________________
Re: NOTICE OF EXCLUSIVE CONTROL
Ladies and Gentlemen:
As referenced in the Issuer Control Agreement dated as of ______, ____
among [name of Lien Grantor], us and you (a copy of which is attached), we
notify you that we will hereafter exercise exclusive control over [specify
Pledged Uncertificated Securities] registered in the name of [name of Lien
Grantor] (the "SECURITIES"). You are instructed not to accept any directions or
instructions with respect to the Securities from any person other than the
undersigned unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [name of Lien Grantor].
Very truly yours,
JPMORGAN CHASE BANK,
as Collateral Agent
By:
---------------------------------
Name:
Title:
cc: [name of Lien Grantor]
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EXHIBIT G
TO SECURITY AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT dated as of ______, ____ among
_____________ (the "LIEN GRANTOR"), JPMorgan Chase Bank, as Collateral Agent
(the "SECURED PARTY"), and _________ (the "SECURITIES INTERMEDIARY"). All
references herein to the "UCC" refer to the Uniform Commercial Code as in effect
from time to time in [the State of New York].(1) Terms defined in the UCC have
the same meanings when used herein.
W I T N E S S E T H :
WHEREAS, the Lien Grantor is the entitlement holder with respect to the
Account (as defined below);
WHEREAS, pursuant to a Guarantee and Security Agreement dated as of
November 5, 2002 (as such agreement may be amended and/or supplemented from time
to time, the "SECURITY AGREEMENT"), the Lien Grantor has granted to the Secured
Party a continuing security interest (the "TRANSACTION LIEN") in all right,
title and interest of the Lien Grantor in, to and under the Account, all
financial assets credited thereto and all security entitlements in respect
thereof, whether now owned or existing or hereafter acquired or arising; and
WHEREAS, the parties hereto are entering into this Agreement in order to
perfect the Transaction Lien on the Account, all financial assets from time to
time credited thereto and all security entitlements in respect thereof;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. ESTABLISHMENT OF ACCOUNT. The Securities Intermediary confirms
that:
(i) the Securities Intermediary has established account number
[identify account number] in the name of "[name of Lien Grantor]" (such
account and any successor account, the "ACCOUNT"),
(ii) the Account is a "securities account" as defined in Section
8-501 of the UCC,
----------
(1) See Section 5 below and the footnote thereto.
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(iii) the Securities Intermediary is acting as a "securities
intermediary" (as defined in Section 8-102 of the UCC) in respect of the
Account,
(iv) the Securities Intermediary shall, subject to the terms of
this Agreement, treat the Lien Grantor as entitled to exercise the rights
that comprise all financial assets from time to time credited to the
Account,
(v) all property delivered to the Securities Intermediary by or
on behalf of the Lien Grantor will be promptly credited to the Account, and
(vi) all financial assets (except cash) credited to the Account
will be registered in the name of the Securities Intermediary, indorsed to
the Securities Intermediary or in blank or credited to another securities
account maintained in the name of the Securities Intermediary and in no
case will any financial asset credited to the Account be registered in the
name of the Lien Grantor, payable to the order of the Lien Grantor or
specially indorsed to the Lien Grantor unless such financial asset has been
further indorsed to the Securities Intermediary or in blank.
Section 2. "FINANCIAL ASSETS" ELECTION. The parties hereto agree that each
item of property (whether investment property, financial asset, security,
instrument, cash or other property) credited to the Account shall be treated as
a "financial asset" within the meaning of Sections 8-102(a)(9) and 8-103 of the
UCC.
Section 3. ENTITLEMENT ORDERS. The Securities Intermediary agrees to comply
with any "entitlement order" (as defined in Section 8-102 of the UCC) originated
by the Secured Party and relating to the Account or any financial asset credited
thereto without further consent by the Lien Grantor or any other person. The
Lien Grantor consents to the foregoing agreement by the Securities Intermediary.
Section 4. WAIVER OF LIEN; WAIVER OF SET-OFF. The Securities Intermediary
waives any security interest, lien or right to make deductions or setoffs that
it may now have or hereafter acquire in or with respect to the Account, any
financial asset credited thereto or any security entitlement in respect thereof.
Neither the financial assets credited to the Account nor the security
entitlements in respect thereof will be subject to deduction, set-off, banker's
lien, or any other right in favor of any person other than the Secured Party
(except that the Securities Intermediary may set off (i) all amounts due to it
in respect of its customary fees and expenses for the routine maintenance and
operation of the Account and (ii)
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the face amount of any checks that have been credited to the Account but are
subsequently returned unpaid because of uncollected or insufficient funds).
Section 5. CHOICE OF LAW. This Agreement shall be construed in accordance
with and governed by the laws of [the State of New York]. [The State of New
York] shall be deemed to be the Securities Intermediary's jurisdiction for
purposes of the UCC (including, without limitation, Section 8-110 thereof).
Section 6. CONFLICT WITH OTHER AGREEMENTS. There is no agreement (except
this Agreement) between the Securities Intermediary and the Lien Grantor with
respect to the Account [except for [identify any existing other agreements] (the
"EXISTING OTHER AGREEMENTS")]. In the event of any conflict between this
Agreement (or any portion hereof) and any other agreement [(including any
Existing Other Agreement)] between the Securities Intermediary and the Lien
Grantor with respect to the Account, whether now existing or hereafter entered
into, the terms of this Agreement shall prevail. [If any Existing Other
Agreement does not specify that it is governed by the laws of [the jurisdiction
specified in Section 5], such Existing Other Agreement is hereby amended to
specify that it is governed by the laws of [the jurisdiction specified in
Section 5].
Section 7. AMENDMENTS. No amendment or modification of this Agreement or
waiver of any right hereunder shall be binding on any party hereto unless it is
in writing and is signed by all the parties hereto.
Section 8. NOTICE OF ADVERSE CLAIMS. Except for the claims and interests of
the Secured Party and the Lien Grantor, the Securities Intermediary does not
know of any claim to, or interest in, the Account, any financial asset credited
thereto or any security entitlement in respect thereof. If any person asserts
any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, attachment, execution or similar process) against the Account, any
financial asset credited thereto or any security entitlement in respect thereof,
the Securities Intermediary will promptly notify the Secured Party and the Lien
Grantor thereof.
Section 9. MAINTENANCE OF ACCOUNT. In addition to, and not in lieu of, the
obligation of the Securities Intermediary to honor entitlement orders as agreed
in Section 3 hereof, the Securities Intermediary agrees to maintain the Account
as follows:
(i) LIEN GRANTOR ENTITLEMENT ORDERS; NOTICE OF EXCLUSIVE
CONTROL. So long as the Securities Intermediary has not received a Notice
of Exclusive Control (as defined below), the Securities Intermediary may,
subject to paragraph (iii) below, comply with entitlement orders of the
Lien Grantor or any duly authorized agent of the Lien Grantor in respect of
the Account and any or all financial assets credited thereto. After the
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Securities Intermediary receives a written notice from the Secured Party
that is exercising exclusive control over the Account (a "NOTICE OF
EXCLUSIVE CONTROL"), the Securities Intermediary will cease complying with
entitlement orders of the Lien Grantor or any of its agents.
(ii) VOTING RIGHTS. Until the Securities Intermediary receives a
Notice of Exclusive Control, the Lien Grantor shall be entitled to direct
the Securities Intermediary with respect to the voting of any financial
assets credited to the Account.
(iii) PERMITTED INVESTMENTS. Until the Securities Intermediary
receives a Notice of Exclusive Control, the Lien Grantor shall be entitled
to direct the Securities Intermediary with respect to the selection of
investments to be made and credited to the Account; PROVIDED that the
Securities Intermediary shall not honor any instruction or entitlement
order to purchase any investment except investments of a type described in
Exhibit B hereto.(3)
(iv) STATEMENTS AND CONFIRMATIONS. The Securities Intermediary
will promptly send copies of all statements, confirmations and other
correspondence concerning the Account and/or any financial assets credited
thereto simultaneously to each of the Lien Grantor and the Secured Party at
their respective addresses specified in Section 12 hereof.
(v) TAX REPORTING. All items of income, gain, expense and loss
recognized in the Account or in respect of any financial assets credited
thereto shall be reported to the Internal Revenue Service and all state and
local taxing authorities under the name and taxpayer identification number
of the Lien Grantor.
Section 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SECURITIES
INTERMEDIARY. The Securities Intermediary makes the following representations,
warranties and covenants:
(i) The Account has been established as set forth in Section 1
above and will be maintained in the manner set forth herein until this
Agreement is terminated. The Securities Intermediary will not change the
name or account number of the Account without the prior written consent of
the Secured Party.
----------
(3) This Schedule should list the types of investments that are Permitted
Investments.
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(ii) No financial asset credited to the Account is or will be
registered in the name of the Lien Grantor, payable to the order of the
Lien Grantor, or specially indorsed to the Lien Grantor, unless such
financial asset has been further indorsed by the Lien Grantor to the
Securities Intermediary or in blank.
(iii) This Agreement is a valid and binding agreement of the
Securities Intermediary enforceable in accordance with its terms.
(iv) The Securities Intermediary has not entered into, and until
the termination of this Agreement will not enter into, any agreement with
any person (other than the Secured Party) relating to the Account and/or
any financial asset credited thereto pursuant to which it has agreed, or
will agree, to comply with entitlement orders of such person. The
Securities Intermediary has not entered into any other agreement with the
Lien Grantor or the Secured Party purporting to limit or condition the
obligation of the Securities Intermediary to comply with entitlement orders
as agreed in Section 3 hereof.
Section 11. SUCCESSORS. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
Section 12. NOTICES. Each notice, request or other communication given to
any party hereunder shall be in writing (which term includes facsimile or other
electronic transmission) and shall be effective (i) when delivered to such party
at its address specified below, (ii) when sent to such party by facsimile or
other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:
Lien Grantor:
Secured Party:
Securities Intermediary:
Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the other parties in
the manner specified above.
Section 13. TERMINATION. The rights and powers granted herein to the
Secured Party (i) have been granted in order to perfect the Transaction Lien,
(ii)
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are powers coupled with an interest and (iii) will not, except as required
by law, be affected by any bankruptcy of the Lien Grantor or any lapse of time.
The obligations of the Securities Intermediary hereunder shall continue in
effect until the Secured Party has notified the Securities Intermediary in
writing that the Transaction Lien has been terminated pursuant to the terms of
the Security Agreement.
[NAME OF LIEN GRANTOR]
By:
---------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
---------------------------------
Name:
Title:
[NAME OF SECURITIES INTERMEDIARY]
By:
---------------------------------
Name:
Title:
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EXHIBIT A
[Letterhead of Secured Party]
[Date]
[Name and Address of Securities Intermediary]
Attention: ________________________
Re: NOTICE OF EXCLUSIVE CONTROL
Ladies and Gentlemen:
As referenced in the Securities Account Control Agreement dated as of
______, ____ among [name of Lien Grantor], us and you (a copy of which is
attached), we notify you that we will hereafter exercise exclusive control over
securities account number __________ (the "ACCOUNT"), all financial assets from
time to time credited thereto and all security entitlements in respect thereof.
You are instructed not to accept any directions, instructions or entitlement
orders with respect to the Account or the financial assets credited thereto from
any person other than the undersigned unless otherwise ordered by a court of
competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [name of Lien Grantor].
Very truly yours,
JPMORGAN CHASE BANK,
as Collateral Agent
By:
---------------------------------
Name:
Title:
cc: [name of Lien Grantor]
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EXHIBIT B
PERMITTED INVESTMENTS
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