SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is made and entered
into as of April [24], 2002 by ALLTRISTA CORPORATION, a Delaware corporation
(the "Borrower" and a "Grantor"), EACH OF THE UNDERSIGNED SUBSIDIARIES OF THE
BORROWER AND EACH OTHER PERSON WHO SHALL BECOME A PARTY HERETO BY EXECUTION OF A
SECURITY JOINDER AGREEMENT (each a "Guarantor" and a "Grantor", and collectively
with the Borrower, the "Grantors"), BANK OF AMERICA, N. A., a national banking
association, as Administrative Agent (the "Administrative Agent") for each of
the lenders (the "Lenders" and collectively with the Administrative, the
"Secured Parties") now or hereafter party to the Credit Agreement (as defined
below). All capitalized terms used but not otherwise defined herein or pursuant
to Section 1 hereof shall have the respective meanings assigned thereto in the
Credit Agreement (as defined below).
W I T N E S S E T H:
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WHEREAS, the Secured Parties have agreed to provide to the Borrower a
certain term loan facility and revolving credit facility with a letter of credit
sublimit and swing line facility pursuant to the Credit Agreement dated as of
April __, 2002 by and among the Borrower, the Administrative Agent, Canadian
Imperial Bank of Commerce, as Syndication Agent and National City Bank of
Indiana, as Documentation Agent and the Lenders (as from time to time amended,
revised, modified, supplemented, amended and restated or replaced, renewed,
refunded or refinanced, the "Credit Agreement"); and
WHEREAS, as collateral security for payment and performance of its
Obligations, the Borrower is willing to grant to the Administrative Agent for
the benefit of the Secured Parties a security interest in all of its personal
property and assets pursuant to the terms of this Security Agreement; and
WHEREAS, each Guarantor will materially benefit from the Loans to be
made, and the Letters of Credit to be issued, under the Credit Agreement and
each Guarantor is a party (as signatory or by joinder) to a Guaranty pursuant to
which each Guarantor guarantees the Obligations of the Borrower; and
WHEREAS, as collateral security for payment and performance by each
Guarantor of its Guarantor's Obligations (as defined in the Guaranty to which
such Guarantor is a party), and the payment and performance of its obligations
and liabilities (whether now existing or hereafter arising) hereunder or under
any of the other Loan Documents to which it is now or hereafter becomes a party,
each Guarantor is willing to grant to the Administrative Agent for the benefit
of the Secured Parties a security interest in all of its personal property and
assets pursuant to the terms of this Security Agreement; and
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless the Borrower and the Guarantors enters into this Security
Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into
the Loan Documents and to make Loans and issue Letters of Credit, and in further
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) Terms used in this Security Agreement, not otherwise expressly
defined herein or in the Credit Agreement, and for which meanings are provided
in the Uniform Commercial Code of the State of New York (the "UCC"), shall have
such meanings. The term "Qualifying Control Agreement" shall have the meaning
set forth on Schedule 1 hereto.
(b) "Non-Material Accounts" means all Deposit Accounts and securities
accounts with respect to which the sum of (a) the amounts on deposit in all such
Deposit Accounts, plus (b) the value of the securities entitlements in all such
securities accounts, does not exceed $1,000,000.
2. GRANT OF SECURITY INTEREST. The Borrower hereby grants as collateral
security for the payment, performance and satisfaction of all of the Borrower's
Obligations, and each Guarantor hereby grants as collateral security for the
payment, performance and satisfaction of all of its Guarantor's Obligations (as
defined in its Guaranty) and the payment and performance of its obligations and
liabilities (whether now existing or hereafter arising) hereunder or under any
of the other Loan Documents to which it is now or hereafter becomes a party
(collectively, the "Secured Obligations"), to the Administrative Agent for the
benefit of the Secured Parties a continuing first priority security interest in
and to, and collaterally assigns to the Administrative Agent for the benefit of
the Secured Parties, all of the personal property of such Grantor or in which
such Grantor has or may have or acquire an interest or the power to transfer
rights therein, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located, including the following:
(a) All accounts, and including accounts receivable, contracts,
bills, acceptances, choses in action, and other forms of monetary
obligations at any time owing to such Grantor arising out of property
sold, leased, licensed, assigned or otherwise disposed of or for
services rendered or to be rendered by such Grantor, and all of such
Grantor's rights with respect to any property represented thereby,
whether or not delivered, property returned by customers and all rights
as an unpaid vendor or lienor, including rights of stoppage in transit
and of recovering possession by proceedings including replevin and
reclamation (collectively referred to hereinafter as "Accounts");
(b) All inventory, including all goods manufactured or acquired
for sale or lease, and any piece goods, raw materials, work in process
and finished merchandise, component materials, and all supplies, goods,
incidentals, office supplies, packaging materials and any and all items
used or consumed in the operation of the business of such Grantor or
which may contribute to the finished product or to the sale, promotion
and shipment thereof, in which such Grantor now or at any time
hereafter may have an interest, whether or not the same is in transit
or in the constructive, actual or exclusive occupancy or possession of
such Grantor or is held by such Grantor or by others for such Grantor's
account (collectively referred to hereinafter as "Inventory");
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(c) All goods, including all machinery, equipment, motor
vehicles, parts, supplies, apparatus, appliances, tools, patterns,
molds, dies, blueprints, fittings, furniture, furnishings, fixtures and
articles of tangible personal property of every description, and all
computer programs embedded in any of the foregoing and all supporting
information relating to such computer programs (collectively referred
to hereinafter as "Equipment");
(d) All general intangibles, including all rights now or
hereafter accruing to such Grantor under contracts, leases, agreements
or other instruments, including all contracts or contract rights to
perform or receive services, to purchase or sell goods, or to hold or
use land or facilities, and to enforce all rights thereunder, all
causes of action, corporate or business records, inventions, patents
and patent rights, rights in mask works, designs, trade names and
trademarks and all goodwill associated therewith, trade secrets, trade
processes, copyrights, licenses, permits, franchises, customer lists,
computer programs and software, all internet domain names and
registration rights thereto, all internet websites and the content
thereof, all payment intangibles, all claims under guaranties, tax
refund claims, all rights and claims against carriers and shippers,
leases, all claims under insurance policies, all interests in general
and limited partnerships, limited liability companies, and other
Persons not constituting Investment Property (as defined below), all
rights to indemnification and all other intangible personal property
and intellectual property of every kind and nature (collectively
referred to hereinafter as "General Intangibles");
(e) All deposit accounts, including demand, time, savings,
passbook, or other similar accounts maintained with any bank by or for
the benefit of such Grantor (collectively referred to hereinafter as
"Deposit Accounts");
(f) All chattel paper, including tangible chattel paper,
electronic chattel paper, or any hybrid thereof (collectively referred
to hereinafter as "Chattel Paper");
(g) All investment property, including all securities, security
entitlements, securities accounts, commodity contracts and commodity
accounts of or maintained for the benefit of such Grantor, but
excluding Pledged Interests subject to any Pledge Agreement
(collectively referred to hereinafter as "Investment Property");
(h) All instruments, including all promissory notes (collectively
referred to hereinafter as "Instruments");
(i) All documents, including warehouse receipts, bills of lading
and other documents of title (collectively referred to hereinafter as
"Documents");
(j) All rights to payment or performance under letters of credit
including rights to proceeds of letters of credit ("Letter-of-Credit
Rights"), and all guaranties, endorsements, Liens, other Guaranty
Obligations or supporting obligations of any Person securing or
supporting the payment, performance, value or liquidation of any of the
foregoing (collectively, with Letter-of-Credit Rights, referred to
hereinafter as "Supporting Obligations");
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(k) The commercial tort claims identified on Schedule 9(i)
hereto, as such Schedule may be supplemented from time to time in
accordance with the terms hereof (collectively referred to hereinafter
as "Commercial Tort Claims");
(l) All books and records relating to any of the forgoing
(including customer data, credit files, ledgers, computer programs,
printouts, and other computer materials and records (and all media on
which such data, files, programs, materials and records are or may be
stored)); and
(m) All proceeds, products and replacements of, accessions to,
and substitutions for, any of the foregoing, including without
limitation proceeds of insurance policies insuring any of the
foregoing;
provided that neither the grant in this Section 2 nor any definition included in
any of subsection (a) through (m) above shall include any Grantor's interest or
power to transfer rights in either of (x) that certain promissory note dated as
of January 24, 2002 by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in favor of the Borrower in the initial
principal amount of $3,282,000, or (y) that certain promissory note dated as of
January 24, 2002 by ▇▇▇ ▇▇▇▇▇▇ in favor of the Borrower in the initial principal
amount of $1,641,000 (collectively, the "Manager Notes"). All of the property
and interests in property described in subsections (a) through (m), but subject
to the immediately preceding proviso relating to the Manager Notes, are herein
collectively referred to as the "Collateral."
3. PERFECTION. As of the date of execution of this Security Agreement
or joinder to this Security Agreement by each Grantor, as applicable (with
respect to each Grantor, its "Applicable Date"), such Grantor shall have:
(a) furnished the Administrative Agent with properly executed
financing statements in form, number and substance as provided by the
Administrative Agent and suitable for filing, sufficient under
applicable law, and satisfactory to the Administrative Agent in order
that upon the filing of the same the Administrative Agent, for the
benefit of the Secured Parties, shall have a duly perfected security
interest in all Collateral in which a security interest can be
perfected by the filing of financing statements;
(b) to the extent expressly required by the terms hereof or of
the Credit Agreement, or otherwise as the Administrative Agent may
request, furnished the Administrative Agent with properly executed
Qualifying Control Agreements, issuer acknowledgments of the
Administrative Agent's interest in Letter-of-Credit Rights, and
evidence of the placement of a restrictive legend on tangible chattel
paper (and the tangible components of electronic Chattel Paper), and
taken appropriate action reasonably acceptable to the Administrative
Agent sufficient to establish the Administrative Agent's control of
electronic Chattel Paper (and the electronic components of hybrid
Chattel Paper), as appropriate, with respect to Collateral in which
either (i) a security interest can be perfected only by control or such
restrictive legending, or (ii) a security interest perfected by control
or accompanied by such restrictive legending shall have priority as
against a lien creditor, a purchaser of such Collateral from the
applicable Grantor, or a security interest perfected by Persons not
having control or not accompanied by such restrictive legending, in
each case in form and substance
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acceptable to the Administrative Agent and sufficient under applicable
law so that the Administrative Agent, for the benefit of the
Secured Parties, shall have a security interest in all such Collateral
perfected by control; and
(c) delivered to the Administrative Agent possession of all
Collateral with respect to which either a security interest can be
perfected only by possession or a security interest perfected by
possession shall have priority as against Persons not having
possession, and including in the case of Instruments, Documents, and
Investment Property in the form of certificated securities, duly
executed endorsements or stock powers in blank, as the case may be,
affixed thereto in form and substance acceptable to the Administrative
Agent and sufficient under applicable law so that the Administrative
Agent, for the benefit of the Secured Parties, shall have a security
interest in all such Collateral perfected by possession;
subject in each case only to Liens allowed to exist and have priority under
Section 7.01 of the Credit Agreement ("Permitted Liens"). All financing
statements (including all amendments thereto and continuations thereof), control
agreements, certificates, acknowledgments, stock powers and other documents,
electronic identification, restrictive legends, and instruments furnished in
connection with the creation, enforcement, protection, perfection or priority of
the Administrative Agent's security interest in Collateral, including such items
as are described above in this Section 3, are sometimes referred to herein as
"Perfection Documents". The delivery of possession of items of or evidencing
Collateral, causing other Persons to execute and deliver Perfection Documents as
appropriate, the filing or recordation of Perfection Documents, the
establishment of control over items of Collateral, and the taking of such other
actions as may be necessary in the reasonable determination of the
Administrative Agent to create, enforce, protect, perfect, or establish or
maintain the priority of, the security interest of the Administrative Agent for
the benefit of the Secured Parties in the Collateral is sometimes referred to
herein as "Perfection Action".
4. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES.
(a) Each Grantor will from time to time at its own expense,
deliver specific assignments of Collateral or such other Perfection
Documents, and take such other or additional Perfection Action, as may
be required by the terms of the Loan Documents or as the Administrative
Agent may reasonably request in connection with the administration or
enforcement of this Security Agreement or related to the Collateral or
any part thereof in order to carry out the terms of this Security
Agreement, to perfect, protect, maintain the priority of or enforce the
Administrative Agent's security interest in the Collateral, subject
only to Permitted Liens, or otherwise to better assure and confirm unto
the Administrative Agent its rights, powers and remedies for the
benefit of the Secured Parties hereunder. Without limiting the
foregoing, each Grantor hereby irrevocably authorizes the
Administrative Agent to file (with, or to the extent permitted by
applicable law, without the signature of the Grantor appearing thereon)
financing statements (including amendments thereto and initial
financing statements in lieu of continuation statements) or other
Perfection Documents (including copies thereof) showing such Grantor as
"debtor" at such time or times and in all filing offices as the
Administrative Agent may from time to time reasonably determine to be
necessary or
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advisable to perfect or protect the rights of the Administrative
Agent and the Secured Parties hereunder, or otherwise to give effect to
the transactions herein contemplated, any of which Perfection
Documents, at the Administrative Agent's election, may describe the
Collateral as or including all personal property of the Grantor (other
than those items of personal property expressly excluded from the grant
of a security interest). Each Grantor hereby irrevocably ratifies and
acknowledges the Administrative Agent's authority to have effected
filings of Perfection Documents made by the Administrative Agent prior
to its Applicable Date.
(b) With respect to any and all Collateral, each Grantor agrees
to do and cause to be done all things necessary to perfect, maintain
the priority of and keep in full force the security interest granted in
favor of the Administrative Agent for the benefit of the Secured
Parties, including, but not limited to, the prompt payment upon demand
therefor by the Administrative Agent of all fees and expenses
(including documentary stamp, excise or intangibles taxes) incurred in
connection with the preparation, delivery, or filing of any Perfection
Document or the taking of any Perfection Action to perfect, protect or
enforce a security interest in Collateral in favor of the
Administrative Agent for the benefit of the Secured Parties, subject
only to Permitted Liens. All amounts not so paid when due shall
constitute additional Secured Obligations and (in addition to other
rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.
(c) Each Grantor agrees to maintain among its books and records
appropriate notations or evidence of, and to make or cause to be made
appropriate disclosure upon its financial statements of, in accordance
with the requirements of GAAP, the security interest granted hereunder
to the Administrative Agent for the benefit of the Secured Parties.
5. RECEIPT OF PAYMENT. In the event an Event of Default shall occur and
be continuing and a Grantor (or any of its Affiliates, subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Collateral, including without limitation monies, checks, notes,
drafts or any other items of payment, each Grantor shall hold all such items of
payment in trust for the Administrative Agent for the benefit of the Secured
Parties, and as the property of the Administrative Agent for the benefit of the
Secured Parties, separate from the funds and other property of such Grantor, and
no later than the first Business Day following the receipt thereof, at the
election of the Administrative Agent, such Grantor shall cause such Collateral
to be forwarded to the Administrative Agent for its custody, possession and
disposition on behalf of the Secured Parties in accordance with the terms hereof
and of the other Loan Documents.
6. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Administrative Agent shall be under no duty or liability
with respect to the collection, protection or preservation of the
Collateral, or otherwise, except with respect to any Collateral in its
possession. Each Grantor shall be responsible for the safekeeping of
its Collateral, and in no event shall the Administrative Agent, except
with respect to any Collateral in its possession, have any
responsibility for (i) any loss or
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damage thereto or destruction thereof occurring or arising in any
manner or fashion from any cause, (ii) any diminution in the value
thereof, or (iii) any act or default of any carrier, warehouseman,
bailee or forwarding agency thereof or other Person in any way dealing
with or handling such Collateral.
(b) Each Grantor shall keep and maintain its tangible personal
property Collateral in good operating condition and repair (except
where the failure to do so could not reasonably be expected to have a
Material Adverse Effect), ordinary wear and tear excepted. To the
extent that such items are not a fixture on the date hereof, no Grantor
shall permit any such items to become a fixture to real property
(unless such Grantor has granted the Administrative Agent for the
benefit of the Secured Parties a Lien on such real property having a
priority acceptable to the Administrative Agent) or accessions to other
personal property.
(c) Each Grantor agrees (i) to pay when due all taxes, charges
and assessments against the Collateral in which it has any interest,
unless being contested in good faith by appropriate proceedings
diligently conducted and against which adequate reserves have been
established in accordance with GAAP applied on a consistent basis and
provided that all enforcement proceedings in the nature of levy or
foreclosure are effectively stayed, and (ii) to cause to be terminated
and released all Liens (other than Permitted Liens) on the Collateral.
Upon the failure of any Grantor to so pay or contest such taxes,
charges, or assessments, or cause such Liens to be terminated, the
Administrative Agent at its option may pay or contest any of them or
amounts relating thereto (the Administrative Agent having the sole
right to determine the legality or validity and the amount necessary to
discharge such taxes, charges, Liens or assessments) but shall not have
any obligation to make any such payment or contest. All sums so
disbursed by the Administrative Agent, including reasonable Attorneys'
Costs, court costs, expenses and other charges related thereto, shall
be payable on demand by the applicable Grantor to the Administrative
Agent and shall be additional Secured Obligations secured by the
Collateral, and any amounts not so paid on demand (in addition to other
rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.
7. STATUS OF GRANTORS AND COLLATERAL GENERALLY. Each Grantor represents
and warrants to, and covenants with, the Administrative Agent for the benefit of
the Secured Parties, with respect to itself and the Collateral as to which it
has or acquires any interest, that:
(a) It is at its Applicable Date (or as to Collateral acquired
after its Applicable Date will be upon the acquisition of the same)
and, except as permitted by the Credit Agreement and subsection (b) of
this Section 7, will continue to be, the owner of the Collateral, free
and clear of all Liens, other than the security interest hereunder in
favor of the Administrative Agent for the benefit of the Secured
Parties and Permitted Liens, and that it will at its own cost and
expense defend such Collateral and any products and proceeds thereof
against all claims and demands of all Persons (other than holders of
Permitted Liens) at any time claiming the same or any interest therein
adverse to the Secured Parties. Upon the failure of any Grantor to so
defend, the Administrative Agent may do so at its option but shall not
have any obligation to do so. All sums so disbursed
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by the Administrative Agent, including reasonable Attorneys'
Costs, court costs, expenses and other charges related thereto, shall
be payable on demand by the applicable Grantor to the Administrative
Agent and shall be additional Secured Obligations secured by the
Collateral, and any amounts not so paid on demand (in addition to other
rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.
(b) It shall not (i) sell, assign, transfer, lease, license or
otherwise dispose of any of, or grant any option with respect to, the
Collateral, except for dispositions permitted under the Credit
Agreement, (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral except for the security interests created by
this Security Agreement and Permitted Liens, or (iii) take any other
action in connection with any of the Collateral that would materially
impair the value of the interest or rights of such Grantor in the
Collateral taken as a whole or that would materially impair the
interest or rights of the Administrative Agent for the benefit of the
Secured Parties.
(c) It has full power, legal right and lawful authority to enter
into this Security Agreement (and any Security Joinder Agreement
applicable to it) and to perform its terms, including the grant of the
security interests in the Collateral herein provided for.
(d) No authorization, consent, approval or other action by, and
no notice to or filing with, any Governmental Authority or other
regulatory body or any other Person is required either (i) for the
grant by such Grantor of the security interests granted hereby, or the
collateral assignment hereunder, or for the execution, delivery or
performance of this Security Agreement (or any Security Joinder
Agreement applicable to it) by such Grantor, or (ii) for the perfection
of or the exercise by the Administrative Agent, on behalf of the
Secured Parties, of its rights and remedies hereunder, except (x) for
action required by the Uniform Commercial Code to perfect the security
interest conferred hereunder, and (y) to the extent that the exercise
of rights and remedies may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting
creditors rights generally or by general principles of equity.
(e) Upon and after the filing of certain UCC termination
statements and related releases obtained on or about the date hereof in
connection with (i) the closing of the Transaction (including the
payoff of Union Bank of California's credit facility with the Seller)
and (ii) the termination of the Existing Credit Agreement, and the
acceptance and filing of such UCC termination statements and related
releases by the appropriate jurisdictions and Governmental Authorities,
no effective financing statement or other Perfection Document similar
in effect, nor any other Perfection Action, covering all or any part of
the Collateral purported to be granted or taken by or on behalf of such
Grantor (or by or on behalf of any other Person and which remains
effective as against all or any part of the Collateral) will be on file
or in any recording office or will have been delivered to another
Person for filing (whether upon the occurrence of a contingency or
otherwise), or otherwise taken, as the case may be, except such as
pertain to Permitted Liens and such as may have been filed for the
benefit of, delivered to, or taken in favor of, the Administrative
Agent for the benefit of the Secured Parties in connection with the
security interests conferred hereunder.
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(f) Schedule 7(f) attached hereto contains true and complete
information as to the information required to be contained in Schedule
2A.03 of the Credit Agreement by Section 2A.03 of the Credit Agreement.
No Grantor shall change its name, change its jurisdiction of formation
(whether by reincorporation, merger or otherwise), change the location
of its chief executive office, utilize any additional location where
tangible personal property Collateral (including Account Records and
Account Documents) may be located, change or use any additional or
different material trade name or style, except in each case upon giving
not less than fifteen (15) days' prior written notice to the
Administrative Agent and taking or causing to be taken at such
Grantor's expense all such Perfection Action, including the delivery of
such Perfection Documents, as may be reasonably requested by the
Administrative Agent to perfect or protect, or maintain the perfection
and priority of, the Lien of the Administrative Agent for the benefit
of the Secured Parties in Collateral contemplated hereunder.
(g) No Grantor shall engage in any consignment transaction in
respect of any of the Collateral, whether as consignee or consignor,
without the prior written consent of the Administrative Agent in each
instance.
(h) No Grantor shall cause, suffer or permit any of the tangible
personal property Collateral (i) to be evidenced by any document of
title (except for shipping documents as necessary or customary to
effect the receipt of raw materials or components or the delivery of
inventory to customers, in each case in the ordinary course of
business) or (ii) to be in the possession, custody or control of any
warehouseman or other bailee unless such location and Person are set
forth on Schedule 7(f) or the Administrative Agent shall have received
not less than fifteen (15) days' prior written notice of each such
transaction, the Administrative Agent shall have received a duly
executed Qualifying Control Agreement from such bailee, and the Grantor
shall have caused at its expense to be prepared and executed such
additional Perfection Documents and to be taken such other Perfection
Action as the Administrative Agent may reasonably deem necessary or
advisable to carry out the transactions contemplated by this Security
Agreement.
(i) No tangible personal property Collateral is or shall be
located at any location that is leased by such Grantor from any other
Person, unless (x) such location and lessor is set forth on Schedule
7(f) attached hereto or such Grantor provides not less than fifteen
(15) days' prior written notice thereof to the Administrative Agent,
(y) unless otherwise agreed by the Administrative Agent, such lessor
acknowledges the Lien in favor of the Administrative Agent for the
benefit of the Secured Parties conferred hereunder and waives its
statutory and consensual liens and rights with respect to such
Collateral in form and substance reasonably acceptable to the
Administrative Agent and delivered in writing to the Administrative
Agent prior to any Collateral being located at any such location, and
(z) the Grantor shall have caused at its expense to be prepared and
executed such additional Perfection Documents and to be taken such
other Perfection Action as the Administrative Agent may deem necessary
to carry out the transactions contemplated by this Security Agreement.
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8. INSPECTION.
(a) The Administrative Agent (by any of its officers, employees
and agents), on behalf of the Secured Parties, shall have the right
upon reasonable prior notice to an executive officer of any Grantor,
and at any reasonable times (and for reasonable durations) during such
Grantor's usual business hours, to inspect the Collateral, all records
related thereto (and to make extracts or copies from such records), and
the premises upon which any of the Collateral is located, to discuss
such Grantor's affairs and finances with any Person (other than Persons
obligated on any Accounts ("Account Debtors") except as expressly
otherwise permitted in the Loan Documents) and to verify with any
Person other than (except as expressly otherwise permitted in the Loan
Documents) Account Debtors the amount, quality, quantity, value and
condition of, or any other matter relating to, the Collateral and, if
an Event of Default has occurred and is continuing, to discuss such
Grantor's affairs and finances with such Grantor's Account Debtors and
to verify the amount, quality, value and condition of, or any other
matter relating to, the Collateral with such Account Debtors. The
inspection provided for in this Section 8(a) shall be at the sole cost
and expense of the Secured Parties except (i) at any time an Event of
Default has occurred and is continuing, or (ii) if such inspection is
being conducted in conjunction with an inspection at the expense of the
Borrower pursuant to Section 6.10 of the Credit Agreement.
(b) Upon the occurrence and during the continuation of an Event
of Default, the Administrative Agent may at any time and from time to
time employ and maintain on such Grantor's premises a custodian
selected by the Administrative Agent who shall have full authority to
do all acts necessary to protect the Administrative Agent's (for the
benefit of the Secured Parties) interest. All expenses incurred by the
Administrative Agent, on behalf of the Secured Parties, by reason of
the employment of such custodian shall be paid by such Grantor on
demand from time to time and shall be added to the Secured Obligations
secured by the Collateral, and any amounts not so paid on demand (in
addition to other rights and remedies resulting from such nonpayment)
shall bear interest from the date of demand until paid in full at the
Default Rate.
9. SPECIFIC COLLATERAL.
(a) ACCOUNTS. With respect to its Accounts, whether now existing
or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the
benefit of the Secured Parties that:
(i) Each Grantor shall keep accurate and complete records
of its Accounts ("Account Records") and from time to time at
reasonable intervals designated by the Administrative Agent such
Grantor shall provide the Administrative Agent with a schedule of
Accounts in form and substance acceptable to the Administrative
Agent describing all Accounts created or acquired by such Grantor
("Schedule of Accounts"); provided, however, that such Grantor's
failure to execute and deliver any such Schedule of Accounts
shall not affect or limit the Administrative Agent's security
interest or other rights in and to any Accounts for the benefit
of the Secured Parties. If requested by the
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Administrative Agent, each Grantor shall furnish the
Administrative Agent with copies of proof of delivery and other
documents relating to the Accounts so scheduled, including
without limitation repayment histories and present status reports
(collectively, "Account Documents") and such other matter and
information relating to the status of then existing Accounts as
the Administrative Agent shall reasonably request.
(ii) All Account Records and Account Documents are and
shall at all times be located only at such Grantor's offices as
set forth on Schedule 7(f) attached hereto or as to which the
Grantor has complied with Section 7(f) hereof.
(iii) The Accounts are genuine, are in all respects what
they purport to be, are not evidenced by an instrument or
document or, if evidenced by an instrument or document, are only
evidenced by one original instrument or document.
(iv) The Accounts cover bona fide sales and deliveries of
Inventory usually dealt in by such Grantor, or the rendition by
such Grantor of services, to an Account Debtor in the ordinary
course of business.
(v) The amounts of the face value of any Account shown or
reflected on any Schedule of Accounts, invoice statement, or
certificate delivered to the Administrative Agent, are actually
owing to such Grantor and are not contingent for any reason other
than non-material contingencies arising in the ordinary course of
business; and there are no setoffs, discounts, allowances,
claims, counterclaims or disputes of any kind or description, in
an amount greater than the amount of reserves for doubtful
accounts net against accounts receivable as set forth on the most
recently delivered consolidated balance sheet of the Borrower and
its Subsidiaries, existing or asserted with respect to any
account and such Grantor has not made any agreement with any
Account Debtor thereunder for any deduction therefrom, except as
may be stated in the Schedule of Accounts and reflected in the
calculation of the face value of each respective invoice related
thereto.
(vi) Except for conditions generally applicable to such
Grantor's industry and markets, there are no facts, events, or
occurrences known to such Grantor pertaining particularly to any
Accounts which are reasonably expected to materially impair in
any way the validity, collectibility or enforcement of Accounts
that would reasonably be likely, in the aggregate, to be of
material economic value, or in the aggregate materially reduce
the amount payable thereunder from the amount of the invoice face
value shown on any Schedule of Accounts, or on any certificate,
contract, invoice or statement delivered to the Administrative
Agent with respect thereto.
(vii) The property or services giving rise thereto are not,
and were not at the time of the sale or performance thereof,
subject to any Lien, claim,
11
encumbrance or security interest, except those of the
Administrative Agent for the benefit of Secured Parties and
Permitted Liens.
(viii) In the event any amounts due and owing in excess of
$1,000,000 individually, or $2,500,000 in the aggregate amount,
are in dispute between any Account Debtor and a Grantor (which
shall include without limitation any dispute in which an offset
claim or counterclaim may result), such Grantor shall provide the
Administrative Agent with written notice thereof as soon as
practicable, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy.
(b) INVENTORY. With respect to its Inventory whether now existing
or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the
benefit of the Secured Parties that:
(i) Each Grantor shall keep accurate and complete records
of its Inventory in commercially reasonable detail in the
ordinary course of business, and shall furnish to the
Administrative Agent from time to time at reasonable intervals
designated by the Administrative Agent, a current schedule of
Inventory ("Schedule of Inventory") based upon its most recent
physical inventory and its periodic inventory records. Each
Grantor shall conduct a physical inventory no less frequently
than annually, and shall furnish to the Administrative Agent such
other documents and reports thereof as the Administrative Agent
shall reasonably request with respect to the Inventory.
(ii) All Inventory shall at all times be located only at
such Grantor's locations as set forth on Schedule 7(f) attached
hereto or at such other locations as to which such Grantor has
complied with Section 7(f) hereof. No Grantor shall, other than
in the ordinary course of business in connection with its sale,
lease, license or other permitted disposition, remove any
Inventory having an aggregate value in excess of $5,000,000 from
any such location except to the extent such Inventory is moved to
any other such location.
(iii) If any Account Debtor returns any Inventory to a
Grantor after shipment thereof, and such return generates a
credit in excess of $1,000,000 on any individual Account or
$5,000,000 in the aggregate on any Accounts of such Account
Debtor, such Grantor shall notify the Administrative Agent in
writing of the same as soon as practicable.
(c) EQUIPMENT. With respect to its Equipment whether now existing
or hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the
benefit of the Secured Parties that:
(i) The Grantors, as soon as practicable following a
reasonable request therefor by the Administrative Agent, shall
deliver to the Administrative Agent any and all evidence of
ownership of any of the Equipment (including without limitation
copies of certificates of title and applications for title).
12
(ii) The Grantors shall maintain accurate, itemized records
describing the kind, type, quality, quantity and value of its
Equipment and shall furnish the Administrative Agent upon request
with a current schedule containing the foregoing information,
but, other than during the continuance of an Event of Default,
not more often than once per fiscal quarter.
(iii) All Equipment is and shall at all times be located
only at such Grantor's locations as set forth on Schedule 7(f)
attached hereto or at such other locations as to which such
Grantor has complied with Section 7(f) hereof. No Grantor shall,
other than as expressly permitted under the Credit Agreement,
sell, lease, transfer, dispose of or remove any Equipment (other
than motor vehicles) from such locations.
(d) SUPPORTING OBLIGATIONS. With respect to its Supporting
Obligations whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the Administrative Agent for the benefit of the Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Administrative Agent from time to time at the
Administrative Agent's reasonable request, a current list
identifying in reasonable detail each Supporting Obligation
relating to any Collateral from a single obligor in excess of
$500,000, and (ii) upon the request of the Administrative Agent
from time to time following the occurrence and during the
continuance of any Default or Event of Default, deliver to the
Administrative Agent the originals of all documents evidencing or
constituting Supporting Obligations, together with such other
documentation (executed as appropriate by the Grantor) and
information as may be necessary to enable the Administrative
Agent to realize upon the Supporting Obligations in accordance
with their respective terms or transfer the Supporting
Obligations as may be permitted under the Loan Documents or by
applicable law.
(ii) With respect to each letter of credit giving rise to
Letter-of-Credit Rights that has an aggregate stated amount
available to be drawn in excess of $500,000, each Grantor shall,
within thirty (30) days of the issuance of each such letter of
credit, cause the issuer thereof to execute and deliver to the
Administrative Agent a Qualifying Control Agreement.
(iii) With respect to each transferable letter of credit
giving rise to Letter-of-Credit Rights that has an aggregate
stated amount available to be drawn in excess of $500,000, each
Grantor shall, within thirty (30) days of the issuance of each
such letter of credit, deliver to the Administrative Agent a duly
executed, undated transfer form in blank sufficient in form and
substance under the terms of the related letter of credit to
effect, upon completion and delivery to the letter of credit
issuer together with any required fee, the transfer of such
letter of credit to the transferee identified in such form. Each
Grantor hereby expressly authorizes the Administrative Agent
following the occurrence and during the continuance of any Event
of Default to complete and tender each such transfer form as
transferor
13
in its own name or in the name, place and stead of the
Grantor in order to effect any such transfer, either to the
Administrative Agent or to another transferee, as the case may
be, in connection with any sale or other disposition of
Collateral or for any other purpose permitted under the Loan
Documents or by applicable law.
(e) INVESTMENT PROPERTY. With respect to its Investment Property
whether now existing or hereafter created or acquired and wheresoever
located, each Grantor represents, warrants and covenants to the
Administrative Agent for the benefit of the Secured Parties that:
(i) Schedule 9(e) attached hereto contains a true and
complete description of (x) the name and address of each
securities intermediary with which such Grantor maintains a
securities account in which Investment Property is or may at any
time be credited or maintained, and (y) all other Investment
Property of such Grantor other than interests in Subsidiaries in
which such Grantor has granted a Lien to the Administrative Agent
for the benefit of the Secured Parties pursuant to a Pledge
Agreement.
(ii) Except with the express prior written consent of the
Administrative Agent in each instance, all Investment Property
other than interests in Subsidiaries in which such Grantor has
granted a Lien to the Administrative Agent for the benefit of the
Secured Parties pursuant to a Pledge Agreement shall be
maintained at all times in the form of (A) certificated
securities, which certificates shall have been delivered to the
Administrative Agent together with duly executed undated stock
powers endorsed in blank pertaining thereto, or (B) security
entitlements credited to one or more securities accounts. Except
with the express prior written consent of the Administrative
Agent, with respect to each securities account that is not a
Non-Material Account (as defined in Section 1(b)), the
Administrative Agent has received (x) copies of the account
agreement between the applicable securities intermediary and the
Grantor and the most recent statement of account pertaining to
such securities account (each certified to be true and correct by
an officer of the Grantor) and (y) a Qualifying Control Agreement
from the applicable securities intermediary which remains in full
force and effect and as to which the Administrative Agent has not
received any notice of termination.
(iii) Without limiting the generality of the foregoing, no
Grantor shall cause, suffer or permit any Investment Property to
be credited to or maintained in any securities account not listed
on Schedule 9(e) attached hereto except (x) in the case of a
securities account that is a Non-Material Account, upon giving
prompt notice to the Administrative Agent thereof, and (y) in the
case of all other securities accounts, upon giving not less than
twenty (20) days' prior written notice to the Administrative
Agent and taking or causing to be taken at such Grantor's expense
all such Perfection Action, including the delivery of such
Perfection Documents, as may be reasonably requested by the
Administrative Agent to perfect or protect, or maintain the
perfection and priority of, the Lien of the Administrative Agent
for the benefit of the Secured Parties in Collateral contemplated
hereunder.
14
(iv) All dividends and other distributions with respect to
any of the Investment Property shall be subject to the security
interest conferred hereunder, provided, however, that cash
dividends paid to a Grantor as record owner of the Investment
Property may be disbursed to and retained by such Grantor so long
as no Default or Event of Default shall have occurred and be
continuing, free from any Lien hereunder.
(v) So long as no Default or Event of Default shall have
occurred and be continuing, the registration of Investment
Property in the name of a Grantor as record and beneficial owner
shall not be changed and such Grantor shall be entitled to
exercise all voting and other rights and powers pertaining to
Investment Property for all purposes not inconsistent with the
terms hereof or of any Qualifying Control Agreement relating
thereto.
(vi) Upon the occurrence and during the continuance of any
Default or Event of Default, at the reasonable exercise of the
option of the Administrative Agent, all rights of the Grantors to
exercise the voting or consensual rights and powers which it is
authorized to exercise pursuant to clause (iv) immediately above
shall cease and the Administrative Agent may thereupon (but shall
not be obligated to), at its request, cause such Collateral to be
registered in the name of the Administrative Agent or its nominee
or agent for the benefit of the Secured Parties and/or exercise
such voting or consensual rights and powers as appertain to
ownership of such Collateral, and to that end each Grantor hereby
appoints the Administrative Agent as its proxy, with full power
of substitution, to vote and exercise all other rights as a
shareholder with respect to such Investment Property upon the
occurrence and during the continuance of any Default or Event of
Default, which proxy is coupled with an interest and is
irrevocable until the Facility Termination Date, and each Grantor
hereby agrees to provide such further proxies as the
Administrative Agent may request; provided, however, that the
Administrative Agent in its discretion may from time to time
refrain from exercising, and shall not be obligated to exercise,
any such voting or consensual rights or such proxy. For purposes
of this Security Agreement, "Facility Termination Date" means the
date as of which all of the following shall have occurred: (a)
the Borrower shall have permanently terminated the credit
facilities under the Loan Documents by final payment in full of
all Outstanding Amounts, together with all accrued and unpaid
interest and fees thereon, other than (i) the undrawn portion of
Letters of Credit and (ii) all letter of credit fees relating
thereto accruing after such date (which fees shall be payable
solely for the account of the Issuing Bank and shall be computed
(based on interest rates then in effect) on such undrawn amounts
to the respective expiry dates of the Letters of Credit), in each
case as have been fully Cash Collateralized or as to which other
arrangements with respect thereto satisfactory to the
Administrative Agent and the L/C Issuer shall have been made; (b)
all Related Swap Contracts shall have been terminated, expired or
Cash Collateralized; (c) all Commitments shall have terminated or
expired; and (d) the Borrower shall have fully, finally and
irrevocably paid and satisfied in full all other Obligations
(except for Obligations consisting of continuing indemnities and
other contingent Obligations of the
15
Borrower or any Loan Party that may be owing to any
Agent-Related Person or any Lender pursuant to the Loan Documents
and expressly survive termination of this Security Agreement).
(vii) Upon the occurrence and during the continuance of any
Default or Event of Default, all rights of the Grantors to
receive and retain cash dividends and other distributions upon or
in respect to Investment Property pursuant to clause (iii) above
shall cease and shall thereupon be vested in the Administrative
Agent for the benefit of the Secured Parties, and each Grantor
shall, or shall cause, all such cash dividends and other
distributions with respect to the Investment Property to be
promptly delivered to the Administrative Agent (together, if the
Administrative Agent shall request, with any documents related
thereto) to be held, released or disposed of by it hereunder or,
at the option of the Administrative Agent, to be applied to the
Secured Obligations.
(f) DEPOSIT ACCOUNTS. With respect to its Deposit Accounts
whether now existing or hereafter created or acquired and wheresoever
located, each Grantor represents, warrants and covenants to the
Administrative Agent for the benefit of the Secured Parties that:
(i) Schedule 9(f) attached hereto contains a true and
complete description of the name and address of each depositary
institution with which such Grantor maintains a Deposit Account.
(ii) The Administrative Agent shall have received a
Qualifying Control Agreement with respect to each Deposit Account
of each Grantor except with respect to (x) Deposit Accounts that
are Non-Material Accounts, and (y) such other Deposit Accounts as
the Administrative Agent shall from time to time give its express
prior written consent waiving such requirement (collectively, the
Deposit Accounts described in (x) and (y) are referred to as the
"Excluded Deposit Accounts"). The parties agree, however, that
notwithstanding anything to the contrary in any Qualifying
Control Agreement or any Loan Document, the Administrative Agent
(A) will only deliver a notice to any depositary institution
asserting its right of control of any Deposit Account under any
Qualifying Control Agreement so long as an Event of Default
pursuant to Section 8.01(f) of the Credit Agreement has occurred
and is continuing, and (B) to the extent necessary or provided
for under any Qualifying Control Agreement, will deliver to the
relevant depositary institution a rescission of the notice
provided in (A) in the event that the Event of Default under
Section 8.01(f) of the Credit Agreement giving rise to such
notice is waived in accordance with the terms of the Credit
Agreement.
(iii) Without limiting the generality of the foregoing, no
Grantor shall cause, suffer or permit (x) any deposit in excess
of $100,000 to be evidenced by a certificate of deposit unless
such certificate of deposit is a negotiable instrument and
immediately upon receipt thereof such certificate shall have been
delivered to the Administrative Agent, together with a duly
executed undated assignment in
16
blank affixed thereto, (y) any Deposit Account that is a
Non-Material Account and is not listed on Schedule 9(f)
attached hereto to be opened or maintained except in each case
upon giving notice of the opening or maintenance thereof to the
Administrative Agent promptly after such opening or
maintenance, or (z) any Deposit Account that is not a
Non-Material Account and is not listed on Schedule 9(f)
attached hereto to be opened or maintained except in each case
upon giving not less than twenty (20) days' prior written
notice to the Administrative Agent and taking or causing to be
taken at such Grantor's expense all such Perfection Action,
including the delivery of such Perfection Documents, as may be
reasonably requested by the Administrative Agent to perfect or
protect, or maintain the perfection and priority of, the Lien
of the Administrative Agent for the benefit of the Secured
Parties in Collateral contemplated hereunder.
(g) CHATTEL PAPER. With respect to its Chattel Paper whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Administrative Agent
for the benefit of the Secured Parties that:
(i) Each Grantor shall at all times retain sole physical
possession of the originals of all Chattel Paper (other than
electronic Chattel Paper and the electronic components of hybrid
Chattel Paper); provided, however, that (x) upon the request of
the Administrative Agent upon the occurrence and during the
continuance of any Default or Event of Default, such Grantor
shall immediately deliver physical possession of such Chattel
Paper to the Administrative Agent or its designee, and (y) in the
event that there shall be created more than one original
counterpart of any physical document that alone or in conjunction
with any other physical or electronic document constitutes
Chattel Paper, then such counterparts shall be numbered
consecutively starting with "1" and such Grantor shall retain the
counterpart numbered "1".
(ii) All counterparts of all tangible Chattel Paper (and
the tangible components of hybrid Chattel Paper) shall
immediately upon the creation or acquisition thereof by any
Grantor be conspicuously legended as follows: "A FIRST PRIORITY
SECURITY INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO BANK
OF AMERICA, N.A., FOR ITSELF AND AS ADMINISTRATIVE AGENT FOR
CERTAIN LENDERS PURSUANT TO A SECURITY AGREEMENT DATED AS OF
APRIL ___, 2002, AS AMENDED FROM TIME TO TIME. NO SECURITY
INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER PERSON MAY BE
CREATED BY THE TRANSFER OF PHYSICAL POSSESSION OF THIS CHATTEL
PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY OR WITH THE CONSENT
OF THE AFORESAID ADMINISTRATIVE AGENT AS PROVIDED IN SUCH
SECURITY AGREEMENT." In the case of electronic Chattel Paper
(including the electronic components of hybrid Chattel Paper), no
Grantor shall create or acquire any such Chattel Paper unless,
prior to such acquisition or creation, it shall have taken such
Perfection Action as the Administrative Agent may require to
perfect by control the security interest of the Administrative
Agent for the benefit of the Secured Parties in such Collateral.
17
(iii) Other than in the ordinary course of business and in
keeping with reasonable and customary practice, no Grantor shall
amend, modify, waive or terminate any provision of, or fail to
exercise promptly and diligently each material right or remedy
conferred under or in connection with, any Chattel Paper, in any
case in such a manner as could reasonably be expected to
materially adversely affect the value of affected Chattel Paper
as collateral.
(h) INSTRUMENTS. With respect to its Instruments whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Administrative Agent
for the benefit of the Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Administrative Agent from time to time at the
Administrative Agent's request, a current list identifying in
reasonable detail Instruments of which such Grantor is the payee
or holder and having a face amount payable in excess of $500,000,
and (ii) upon the request of the Administrative Agent from time
to time following the occurrence and during the continuance of
any Default or Event of Default, deliver to the Administrative
Agent the originals of all such Instruments, together with duly
executed undated endorsements in blank affixed thereto and such
other documentation and information as may be necessary to enable
the Administrative Agent to realize upon the Instruments in
accordance with their respective terms or transfer the
Instruments as may be permitted under the Loan Documents or by
applicable law.
(ii) Other than in the ordinary course of business and in
keeping with reasonable and customary practice, no Grantor shall
amend, modify, waive or terminate any provision of, or fail to
exercise promptly and diligently each material right or remedy
conferred under or in connection with, any Instrument, in any
case in such a manner as could reasonably be expected to
materially adversely affect the value of affected Instrument as
collateral.
(i) COMMERCIAL TORT CLAIMS. With respect to its Commercial Tort
Claims whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the Administrative Agent for the benefit of the Secured Parties that:
(i) Schedule 9(i) attached hereto contains a true and
complete list of all Commercial Tort Claims in which any Grantor
has an interest and which have been identified by a Grantor as of
its Applicable Date, and as to which the Pledgor believes in good
faith there exists the possibility of recovery (including by way
of settlement) of monetary relief in excess of $500,000 ("Grantor
Claims"). Each Grantor shall furnish to the Administrative Agent
(x) quarterly, and in any event not later than the respective
dates established in Sections 6.01(a) and 6.01(b) of the Credit
Agreement for the delivery of financial statements for such
quarter, a certificate of an officer of such Grantor referring to
this Section 9(i) and identifying all Grantor Claims that are not
then described on Schedule 9(i) attached hereto and stating that
each of such additional Grantor Claims shall be
18
deemed added to such Schedule 9(i) and shall constitute a
Commercial Tort Claim, a Grantor Claim, and additional Collateral
hereunder, and (y) annually, and in any event not later than the
date established in Section 6.01(a) of the Credit Agreement for
the delivery of financial statements for such fiscal year,
summarizing the status or disposition of any Grantor Claims that
have been settled, or have been made the subject of any binding
mediation, judicial or arbitral proceeding, or any judicial or
arbitral order on the merits, or that have been abandoned. With
respect to each such additional Grantor Claim, such Grantor Claim
shall be and become part of the Collateral hereunder from the
date such claim is identified to the Administrative Agent as
provided above without further action, and (ii) the
Administrative Agent is hereby authorized at the expense of the
applicable Grantor to execute and file such additional financing
statements or amendments to previously filed financing
statements, and take such other action as it may deem necessary
or advisable, to perfect the Lien on such additional Grantor
Claims conferred hereunder, and the Grantor shall, if required by
applicable law or otherwise at the request of the Administrative
Agent, execute and deliver such Perfection Documents and take
such other Perfection Action as the Administrative Agent may
determine to be necessary or advisable to perfect or protect the
Lien of the Administrative Agent for the benefit of the Secured
Parties in such additional Grantor Claims conferred hereunder.
(j) INTERNET PROPERTY RIGHTS. With respect to its right, title
and interest in and to any internet domain names or registration rights
relating thereto, and any internet websites or the content thereof
(collectively, "Internet Property Rights") whether now existing or
hereafter created or acquired and wheresoever located, each Grantor
represents, warrants and covenants to the Administrative Agent for the
benefit of the Secured Parties that:
(i) Schedule 9(j) attached hereto contains a true and
complete description of (t) each material internet domain name
registered to such Grantor or in which such Grantor has
ownership, operating or registration rights, (u) the name and
address of the registrar for such internet domain name, (v) the
registration identification information for such internet domain
name, (w) the name of each internet website operated (whether
individually or jointly with others) by such Grantor, (x) the
name and address of each internet service provider through whom
each such website is operated, (y) the name and address of each
operator of each other internet site, internet search engine,
internet directory or Web browser with whom such Grantor
maintains any advertising or linking relationship which is
material to the operation of or flow of internet traffic to such
Grantor's website, and (z) each technology licensing and other
agreement that is material to the operation of or flow of
internet traffic to such Grantor's website, and the name and
address of each other party to such agreement.
(ii) Such Grantor shall cause to be delivered to the
Administrative Agent at or prior to the Closing Date with respect
to each material internet domain name registered to such Grantor
an undated transfer document, duly executed in blank by such
Grantor and in the form required by the applicable internet
domain
19
name registrar, sufficient to effect the transfer of each
internet domain name to the transferee thereof named in such
transfer form upon delivery to such registrar. Without limiting
the generality of the foregoing, no Grantor shall acquire any
rights to any material internet domain name not listed on
Schedule 9(j) attached hereto except in each case upon giving not
less than thirty (30) days' prior written notice thereof to the
Administrative Agent, which notice shall be accompanied by an
appropriate supplement to Schedule 9(j) reflecting such
additional name, the delivery of additional executed internet
domain name transfer documents executed in blank with respect
thereto, and taking or causing to be taken at such Grantor's
expense all such Perfection Action, including the delivery of
such Perfection Documents, as may be reasonably requested by the
Administrative Agent to perfect or protect, or maintain the
perfection and priority of, the Lien of the Administrative Agent
for the benefit of the Secured Parties in Collateral contemplated
hereunder. Without limiting the foregoing, each Grantor shall
furnish to the Administrative Agent and the Lenders such
supplements to Schedule 9(j) from time to time as shall be
necessary to keep such Schedule true and complete at all times.
(iii) So long as no Event of Default shall have occurred
and be continuing, the registration of Internet Property Rights
in the name of a Grantor shall not be changed and such Grantor
shall be entitled to exercise all rights and powers with respect
thereto not inconsistent with the terms hereof.
(iv) Each Grantor hereby expressly authorizes the
Administrative Agent following the occurrence and during the
continuance of any Event of Default to (i) complete and tender
each internet domain name transfer document in its own name or in
the name, place and stead of the Grantor in order to effect the
transfer of any internet domain name registration, either to the
Administrative Agent or to another transferee, as the case may
be, and (ii) maintain, obtain access to, and continue to operate,
in its own name or in the name, place and stead of such Grantor,
such Grantor's internet website and the contents thereof, and all
related advertising, linking and technology licensing and other
contractual relationships, in each case in connection with the
maintenance, preservation, operation, sale or other disposition
of Collateral or for any other purpose permitted under the Loan
Documents or by applicable law.
10. CASUALTY AND LIABILITY INSURANCE REQUIRED.
(a) Each Grantor will keep the Collateral continuously insured
against such risks as are customarily insured against by businesses of
like size and type engaged in the same or similar operations including:
(i) casualty insurance on the Inventory and the Equipment
in an amount not less than is customarily carried on such assets
by companies engaged in similar businesses and owning similar
properties in localities where the Borrower or its Subsidiaries
operate, against loss or damage by theft, fire, lightning and
other hazards ordinarily included under uniform broad form
20
standard extended coverage policies, limited only as may be
provided in the standard broad form of extended coverage
endorsement at the time in use in the states in which the
Collateral is located;
(ii) comprehensive general liability insurance against
claims for bodily injury, death or property damage occurring with
or about such Collateral (such coverage to include provisions
waiving subrogation against the Secured Parties), with the
Administrative Agent and the Lenders as additional insureds
thereunder, in amounts as shall be reasonably satisfactory to
Administrative Agent;
(iii) liability insurance with respect to the operation of
its facilities under the workers' compensation laws of the states
in which such Collateral is located, in amounts as shall be
reasonably satisfactory to Administrative Agent; and
(iv) business interruption insurance in an amount not less
than is customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the
Borrower or its Subsidiaries operate.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 10(a):
(i) may be provided by blanket policies now or hereafter
maintained by each or any Grantor or by the Borrower;
(ii) shall be issued by such insurer (or insurers) as shall
be financially responsible, of recognized standing and reasonably
acceptable to the Administrative Agent;
(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the waiver
of subrogation clause, the deductible amount, if any, and the
standard mortgagee endorsement clause) as are generally
considered standard provisions for the type of insurance involved
and are reasonably acceptable in all respects to the
Administrative Agent;
(iv) shall prohibit cancellation by the insurer without at
least 30 days' prior written notice to the Administrative Agent,
except for non-payment of premium, as to which such policies
shall provide for at least ten (10) days' prior written notice to
the Administrative Agent;
(v) without limiting the generality of the foregoing, all
insurance policies where applicable under Section 10(a)(i)
carried on the Collateral shall name the Administrative Agent,
for the benefit of the Secured Parties, as loss payee and the
Administrative Agent and Lenders as parties insured thereunder in
respect of any claim for payment.
(c) Prior to expiration of any such policy, such Grantor shall
furnish the Administrative Agent with evidence satisfactory to the
Administrative Agent that the
21
policy or certificate has been renewed or replaced or is no longer
required by this Security Agreement.
(d) Each Grantor hereby makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated
by the Administrative Agent), for the benefit of the Secured Parties,
as such Grantor's true and lawful attorney (and agent-in-fact) for the
purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item or payment for the proceeds of such policies
of insurance and for making all determinations and decisions with
respect to such policies of insurance, which appointment is coupled
with an interest and is irrevocable; provided, however, that the powers
pursuant to such appointment shall be exercisable only upon the
occurrence and during the continuation of an Event of Default.
(e) In the event such Grantor shall fail to maintain, or fail to
cause to be maintained, the full insurance coverage required hereunder
or shall fail to keep any of its Collateral in good repair and good
operating condition, the Administrative Agent may (but shall be under
no obligation to), without waiving or releasing any Secured Obligation
or Default or Event of Default by such Grantor hereunder, contract for
the required policies of insurance and pay the premiums on the same or
make any required repairs, renewals and replacements; and all sums so
disbursed by Administrative Agent, including reasonable Attorneys'
Costs, court costs, expenses and other charges related thereto, shall
be payable on demand by such Grantor to the Administrative Agent, shall
be additional Secured Obligations secured by the Collateral, and (in
addition to other rights and remedies resulting from such nonpayment)
shall bear interest from the date of demand until paid in full at the
Default Rate.
(f) Each Grantor agrees that to the extent that it shall fail to
maintain, or fail to cause to be maintained, the full insurance
coverage required by Section 10(a), it shall in the event of any loss
or casualty pay promptly to the Administrative Agent, for the benefit
of the Secured Parties, to be held in a separate account for
application in accordance with the provisions of Section 10(h), such
amount as would have been received as Net Proceeds (as hereinafter
defined) by the Administrative Agent, for the benefit of the Secured
Parties, under the provisions of Section 10(h) had such insurance been
carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 10(a)(ii) and 10(a)(iii) shall be applied by
such Grantor toward satisfaction of the claim or liability with respect
to which such insurance proceeds may be paid.
(h) The Net Proceeds of the insurance carried with respect to the
Collateral pursuant to the provisions of Section 10(a)(i) hereof shall
be paid to such Grantor and held by such Grantor in a separate account
and applied, as long as no Event of Default shall have occurred and be
continuing, as follows: after any loss under any such insurance and
payment of the proceeds of such insurance, each Grantor shall have a
period of 90 days after payment of the insurance proceeds with respect
to such loss to elect to either (x) repair or replace the Collateral so
damaged, (y) apply such Net
22
Proceeds to the acquisition of tangible assets constituting
Collateral used or useful in the conduct of the business of such
Grantor, subject to the provisions of this Security Agreement, or (z)
deliver such Net Proceeds to the Administrative Agent, for the benefit
of the Secured Parties, for application as provided in the Credit
Agreement. If such Grantor elects to repair or replace the Collateral
so damaged, such Grantor agrees the Collateral shall be repaired to a
condition substantially similar to or of better quality or higher value
than its condition prior to damage or replaced with Collateral in a
condition substantially similar to or of better quality or higher value
than the condition of the Collateral so replaced prior to damage. At
all times during which an Event of Default shall have occurred and be
continuing, the Administrative Agent shall be entitled to receive
direct and immediate payment of the proceeds of such insurance and such
Grantor shall take all action as the Administrative Agent may
reasonably request to accomplish such payment. Notwithstanding the
foregoing, in the event such Grantor shall receive any such proceeds,
such Grantor shall immediately deliver such proceeds to such
Administrative Agent for the benefit of the Secured Parties as
additional Collateral, and pending such delivery shall hold such
proceeds in trust for the benefit of the Secured Parties and keep the
same segregated from its other funds.
(i) "Net Proceeds" when used with respect to any insurance
proceeds shall mean the gross proceeds from such proceeds, award or
other amount, less all taxes, fees and expenses (including Attorneys'
Costs) incurred in the realization thereof.
(j) In case of any material damage to, destruction or loss of, or
claim or proceeding against, all or any material part of the Collateral
pledged hereunder by a Grantor, such Grantor shall give prompt notice
thereof to the Administrative Agent. Each such notice shall describe
generally the nature and extent of such damage, destruction, loss,
claim or proceeding. Subject to Section 10(d), each Grantor is hereby
authorized and empowered to adjust or compromise any loss under any
such insurance other than losses relating to claims made directly
against any Secured Party as to which the insurance described in
Section 10(a)(ii) or (iii) is applicable.
(k) The provisions contained in this Security Agreement
pertaining to insurance shall be cumulative with any additional
provisions imposing additional insurance requirements with respect to
the Collateral or any other property on which a Lien is conferred under
any Security Instrument.
11. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, the Administrative Agent shall
have the following rights and remedies on behalf of the Secured Parties in
addition to any rights and remedies set forth elsewhere in this Security
Agreement or the other Loan Documents, all of which may be exercised with or, if
allowed by law, without notice to a Grantor:
(a) All of the rights and remedies of a secured party under the
UCC or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the
extent permitted by law, in addition to any other rights and remedies
contained in this Security Agreement or any other Loan Document;
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(b) The right to foreclose the Liens and security interests
created under this Security Agreement by any available judicial
procedure or without judicial process;
(c) To the extent not prohibited by law, the right to (i) enter
upon the premises of a Grantor through self-help and without judicial
process, without first obtaining a final judgment or giving such
Grantor notice or opportunity for a hearing on the validity of the
Administrative Agent's claim and without any obligation to pay rent to
such Grantor, or any other place or places where any Collateral is
located and kept, and remove the Collateral therefrom to the premises
of the Administrative Agent or any agent of the Administrative Agent,
for such time as the Administrative Agent may desire, in order
effectively to collect or liquidate the Collateral, (ii) require such
Grantor or any bailee or other agent of such Grantor to assemble the
Collateral and make it available to the Administrative Agent at a place
to be designated by the Administrative Agent that is reasonably
convenient to both parties, and (iii) notify any or all Persons party
to a Qualifying Control Agreement or who otherwise have possession of
or control over any Collateral of the occurrence of an Event of Default
and other appropriate circumstances, and exercise control over and take
possession or custody of any or all Collateral in the possession,
custody or control of such other Persons;
(d) The right to (i) exercise all of a Grantor's rights and
remedies with respect to the collection of Accounts, Chattel Paper,
Instruments, Supporting Obligations and General Intangibles
(collectively, "Payment Collateral"), including the right to demand
payment thereof and enforce payment, by legal proceedings or otherwise;
(ii) settle, adjust, compromise, extend or renew all or any Payment
Collateral or any legal proceedings pertaining thereto; (iii) discharge
and release all or any Payment Collateral; (iv) take control, in any
manner, of any item of payment or proceeds referred to in Section 5
above; (v) prepare, file and sign a Grantor's name on any Proof of
Claim in bankruptcy, notice of Lien, assignment or satisfaction of Lien
or similar document in any action or proceeding adverse to any obligor
under any Payment Collateral or otherwise in connection with any
Payment Collateral; (vi) endorse the name of a Grantor upon any chattel
paper, document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or
similar document or agreement relating to any Collateral; (vii) use the
information recorded on or contained on a Grantor's internet website or
otherwise in any data processing equipment and computer hardware and
software relating to any Collateral to which a Grantor has access;
(viii) open such Grantor's mail and collect any and all amounts due to
such Grantor from any Account Debtors or other obligor in respect of
Payment Collateral; (ix) take over such Grantor's post office boxes or
make other arrangements as the Administrative Agent, on behalf of the
Secured Parties, deems necessary to receive such Grantor's mail,
including notifying the post office authorities to change the address
for delivery of such Grantor's mail to such address as the
Administrative Agent, on behalf of the Secured Parties, may designate;
(x) notify any or all Account Debtors or other obligor on any Payment
Collateral that such Payment Collateral has been assigned to the
Administrative Agent for the benefit of the Secured Parties and that
Administrative Agent has a security interest therein for the benefit of
the Secured Parties (provided that the Administrative Agent may at any
time give such notice to an Account Debtor that is a department, agency
or authority of the United States government); each Grantor hereby
agrees that any such notice, in the Administrative Agent's sole
discretion, may (but need
24
not) be sent on such Grantor's stationery, in which event such
Grantor shall co-sign such notice with the Administrative Agent if
requested to do so by the Administrative Agent; and (xi) to the
extent not prohibited by applicable Laws, do all acts and things and
execute all documents necessary, in Administrative Agent's sole
discretion, to collect the Payment Collateral; and
(e) The right to sell all or any Collateral in its then existing
condition, or after any further manufacturing or processing thereof, at
such time or times, at public or private sale or sales, with such
notice as may be required by law, in lots or in bulk, for cash or on
credit, with or without representations and warranties, all as the
Administrative Agent, in its sole discretion, may deem advisable. The
Administrative Agent shall have the right to conduct such sales on a
Grantor's premises or elsewhere and shall have the right to use a
Grantor's premises without charge for such sales for such time or times
as the Administrative Agent may reasonably see fit. The Administrative
Agent may, if it deems it reasonable, postpone or adjourn any sale of
the Collateral from time to time by an announcement at the time and
place of such postponed or adjourned sale, and such sale may, without
further notice, be made at the time and place to which it was so
adjourned. Each Grantor agrees that the Administrative Agent has no
obligation to preserve rights to the Collateral against prior parties
or to marshal any Collateral for the benefit of any Person. The
Administrative Agent for the benefit of the Secured Parties is hereby
granted an irrevocable fully paid license or other right (including
each Grantor's rights under any license or any franchise agreement to
the extent permitted by such agreement), each of which shall remain in
full force and effect until the Facility Termination Date, to use,
without charge, each Grantor's labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks and advertising
matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale and
selling any Collateral. If any of the Collateral shall require repairs,
maintenance, preparation or the like, or is in process or other
unfinished state, the Administrative Agent shall have the right, but
shall not be obligated, to perform such repairs, maintenance,
preparation, processing or completion of manufacturing for the purpose
of putting the same in such saleable form as the Administrative Agent
shall deem appropriate, but the Administrative Agent shall have the
right to sell or dispose of the Collateral without such processing and
no Grantor shall have any claim against the Administrative Agent for
the value that may have been added to such Collateral with such
processing. In addition, each Grantor agrees that in the event notice
is necessary under applicable law, written notice mailed to such
Grantor in the manner specified herein ten (10) days prior to the date
of public sale of any of the Collateral or prior to the date after
which any private sale or other disposition of any of the Collateral
will be made shall constitute commercially reasonable notice to such
Grantor. All notice is hereby waived with respect to any of the
Collateral which threatens to decline speedily in value or is of a type
customarily sold on a recognized market. The Administrative Agent may
purchase all or any part of the Collateral at public or, if permitted
by law, private sale, free from any right of redemption which is hereby
expressly waived by such Grantor and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the
Secured Obligations. Each Grantor recognizes that the Administrative
Agent may be unable to effect a public sale of certain of the
Collateral by reason of certain prohibitions contained in the
Securities Act of 1933,
25
as amended (the "Securities Act"), and applicable state law, and
may be otherwise delayed or adversely affected in effecting any sale by
reason of present or future restrictions thereon imposed by
governmental authorities ("Affected Collateral"), and that as a
consequence of such prohibitions and restrictions the Administrative
Agent may be compelled (i) to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among
other things, to acquire Affected Collateral for their own account, for
investment and not with a view to the distribution or resale thereof,
or (ii) to seek regulatory approval of any proposed sale or sales, or
(iii) to limit the amount of Affected Collateral sold to any Person or
group. Each Grantor agrees and acknowledges that private sales so made
may be at prices and upon terms less favorable to such Grantor than if
such Affected Collateral was sold either at public sales or at private
sales not subject to other regulatory restrictions, and that the
Administrative Agent has no obligation to delay the sale of any
Affected Collateral for the period of time necessary to permit the
Grantor or any other Person to register or otherwise qualify them under
or exempt them from any applicable restriction, even if such Grantor or
other Person would agree to register or otherwise qualify or exempt
such Affected Collateral so as to permit a public sale under the
Securities Act or applicable state law. Each Grantor further agrees, to
the extent permitted by applicable law, that the use of private sales
made under the foregoing circumstances to dispose of Affected
Collateral shall be deemed to be dispositions in a commercially
reasonable manner. Each Grantor hereby acknowledges that a ready market
may not exist for Affected Collateral that is not traded on a national
securities exchange or quoted on an automated quotation system.
The net cash proceeds resulting from the collection, liquidation, sale,
or other disposition of the Collateral shall be applied first to the expenses
(including all Attorneys' Costs) of retaking, holding, storing, processing and
preparing for sale, selling, collecting, liquidating and the like, and then to
the satisfaction of all Secured Obligations in accordance with the terms of
Section 2.13, and as applicable, Section 2.06(e)(iii) of the Credit Agreement.
Each Grantor shall be liable to the Administrative Agent, for the benefit of the
Secured Parties, and shall pay to the Administrative Agent, for the benefit of
the Secured Parties, on demand any deficiency which may remain after such sale,
disposition, collection or liquidation of the Collateral.
12. ATTORNEY-IN-FACT. Each Grantor hereby appoints the Administrative
Agent as the Grantor's attorney-in-fact for the purposes of carrying out the
provisions of this Security Agreement and taking any action and executing any
instrument which the Administrative Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest; provided, that the Administrative Agent shall have and may
exercise rights under this power of attorney only upon the occurrence and during
the continuance of an Event of Default. Without limiting the generality of the
foregoing, upon the occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the right and power
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
26
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
(c) to endorse such Grantor's name on any checks, notes, drafts
or any other payment relating to or constituting proceeds of the
Collateral which comes into the Administrative Agent's possession or
the Administrative Agent's control, and deposit the same to the account
of the Administrative Agent, for the benefit of the Secured Parties, on
account and for payment of the Secured Obligations.
(d) to file any claims or take any action or institute any
proceedings that the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Administrative Agent, for the benefit of the
Secured Parties, with respect to any of the Collateral; and
(e) to execute, in connection with any sale or other disposition
of Collateral provided for herein, any endorsement, assignments, or
other instruments of conveyance or transfer with respect thereto.
13. REINSTATEMENT. The granting of a security interest in the
Collateral and the other provisions hereof shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Secured
Obligations is rescinded or must otherwise be returned by any Secured Party or
is repaid by any Secured Party in whole or in part in good faith settlement of a
pending or threatened avoidance claim, whether upon the insolvency, bankruptcy
or reorganization of any Grantor or any other Loan Party or otherwise, all as
though such payment had not been made. The provisions of this Section 13 shall
survive repayment of all of the Secured Obligations and the termination or
expiration of this Security Agreement in any manner, including but not limited
to termination upon occurrence of the Facility Termination Date.
14. CERTAIN WAIVERS BY THE GRANTORS. Each Grantor waives to the extent
permitted by applicable law (a) any right to require any Secured Party or any
other obligee of the Secured Obligations to (x) proceed against any Person or
entity, including without limitation any Loan Party, (y) proceed against or
exhaust any Collateral or other collateral for the Secured Obligations, or (z)
pursue any other remedy in its power; (b) any defense arising by reason of any
disability or other defense of any other Person, or by reason of the cessation
from any cause whatsoever of the liability of any other Person or entity, (c)
any right of subrogation, (d) any right to enforce any remedy which any Secured
Party or any other obligee of the Secured Obligations now has or may hereafter
have against any other Person and any benefit of and any right to participate in
any collateral or security whatsoever now or hereafter held by the
Administrative Agent for the benefit of the Secured Parties. Each Grantor
authorizes each Secured Party and each other obligee of the Secured Obligations
without notice (except notice required by applicable law) or demand and without
affecting its liability hereunder or under the Loan Documents from time to time
to: (i) take and hold security, other than the Collateral herein described, for
the payment of such Secured Obligations or any part thereof, and exchange,
enforce, waive and release the Collateral herein described or any part thereof
or any such other security; and (ii) apply such Collateral or other security and
direct the order or manner of sale thereof as such Secured Party or obligee in
its discretion may determine.
27
The Administrative Agent may at any time deliver (without
representation, recourse or warranty) the Collateral or any part thereof to a
Grantor and the receipt thereof by such Grantor shall be a complete and full
acquittance for the Collateral so delivered, and the Administrative Agent shall
thereafter be discharged from any liability or responsibility therefor.
15. CONTINUED POWERS. Until the Facility Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to the
Administrative Agent for the benefit of the Secured Parties hereunder shall
continue to exist and may be exercised by the Administrative Agent at any time
and from time to time irrespective of the fact that any of the Secured
Obligations or any part thereof may have become barred by any statute of
limitations or that any part of the liability of any Grantor may have ceased.
16. OTHER RIGHTS. The rights, powers and remedies given to the
Administrative Agent for the benefit of the Secured Parties by this Security
Agreement shall be in addition to all rights, powers and remedies given to the
Administrative Agent or any Secured Party under any other Loan Document or by
virtue of any statute or rule of law. Any forbearance or failure or delay by the
Administrative Agent in exercising any right, power or remedy hereunder shall
not be deemed to be a waiver of such right, power or remedy, and any single or
partial exercise of any right, power or remedy hereunder shall not preclude the
further exercise thereof; and every right, power and remedy of the Secured
Parties shall continue in full force and effect until such right, power or
remedy is specifically waived in accordance with the terms of the Credit
Agreement.
17. ANTI-MARSHALING PROVISIONS. The right is hereby given by each
Grantor to the Administrative Agent, for the benefit of the Secured Parties, to
make releases (whether in whole or in part) of all or any part of the Collateral
agreeable to the Administrative Agent without notice to, or the consent,
approval or agreement of other parties and interests, including junior lienors,
which releases shall not impair in any manner the validity of or priority of the
Liens and security interests in the remaining Collateral conferred hereunder,
nor release any Grantor from personal liability for the Secured Obligations.
Notwithstanding the existence of any other security interest in the Collateral
held by the Administrative Agent, for the benefit of the Secured Parties, the
Administrative Agent shall have the right to determine the order in which any or
all of the Collateral shall be subjected to the remedies provided in this
Security Agreement. Each Grantor hereby waives any and all right to require the
marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or in any other Loan Document.
18. ENTIRE AGREEMENT. This Security Agreement and each Security Joinder
Agreement, together with the Credit Agreement and other Loan Documents,
constitutes and expresses the entire understanding between the parties hereto
with respect to the subject matter hereof, and supersedes all prior
negotiations, agreements and understandings, inducements, commitments or
conditions, express or implied, oral or written, except as contained in the Loan
Documents. The express terms hereof and of the Security Joinder Agreements
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof or thereof. Neither this Security
Agreement nor any Security Joinder Agreement nor any portion or provision hereof
or thereof may be changed, altered, modified, supplemented,
28
discharged, canceled, terminated, or amended orally or in any manner
other than as provided in the Credit Agreement.
19. THIRD PARTY RELIANCE. Each Grantor hereby consents and agrees that
all issuers of or obligors in respect of any Collateral, and all securities
intermediaries, warehousemen, bailees, public officials and other Persons having
any interest in, possession of, control over or right, privilege, duty or
discretion in respect of, any Collateral shall be entitled to accept the
provisions hereof and of the Security Joinder Agreements as conclusive evidence
of the right of the Administrative Agent, on behalf of the Secured Parties, to
exercise its rights hereunder or thereunder with respect to the Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by any Grantor or any other Person to any of such Persons.
20. BINDING AGREEMENT; ASSIGNMENT. This Security Agreement and each
Security Joinder Agreement, and the terms, covenants and conditions hereof and
thereof, shall be binding upon and inure to the benefit of the parties hereto,
and to their respective successors and assigns, except that no Grantor shall be
permitted to assign this Security Agreement, any Security Joinder Agreement or
any interest herein or therein or, except as expressly permitted herein or in
the Credit Agreement, in the Collateral or any part thereof or interest therein.
Without limiting the generality of the foregoing sentence of this Section 20,
any Lender may assign to one or more Persons, or grant to one or more Persons
participations in or to, all or any part of its rights and obligations under the
Credit Agreement (to the extent permitted by the Credit Agreement); and to the
extent of any such assignment or participation such other Person shall, to the
fullest extent permitted by law, thereupon become vested with all the benefits
in respect thereof granted to such Lender herein or otherwise, subject however,
to the provisions of the Credit Agreement, including Article IX thereof
(concerning the Administrative Agent) and Section 10.07 thereof (concerning
assignments and participations). All references herein to the Administrative
Agent and to the Secured Parties shall include any successor thereof or
permitted assignee, and any other obligees from time to time of the Secured
Obligations.
21. RELATED SWAP CONTRACTS. All obligations of each Grantor under or in
respect of Related Swap Contracts (which are not prohibited under the terms of
the Credit Agreement) to which any Lender or any Affiliate of any Lender is a
party, shall be deemed to be Secured Obligations secured hereby, and each Lender
or Affiliate of a Lender party to any such Related Swap Contract shall be deemed
to be a Secured Party hereunder with respect to such Secured Obligations;
provided, however, that such obligations shall cease to be Secured Obligations
at such time as such Person (or Affiliate of such Person) shall cease to be a
"Lender" under the Credit Agreement.
No Person who obtains the benefit of any Lien by virtue of the
provisions of this Section 21 shall have any right to notice of any action or to
consent to, direct or object to any action hereunder or under any other Loan
Document or otherwise in respect of the Collateral (including the release or
impairment of any Collateral) other than in its capacity as a Lender and only to
the extent expressly provided in the Loan Documents.
22. SEVERABILITY. The provisions of this Security Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of
29
any other provision hereof, but this Security Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
23. COUNTERPARTS. This Security Agreement may be executed in any number
of counterparts each of which when so executed and delivered shall be deemed an
original, and all of which together shall constitute one and the same
instrument, and it shall not be necessary in making proof of this Security
Agreement to produce or account for more than one such counterpart executed by
the Grantor against whom enforcement is sought. Without limiting the foregoing
provisions of this Section 23, the provisions of Section 10.02(b) of the Credit
Agreement shall be applicable to this Security Agreement.
24. TERMINATION. Subject to the provisions of Section 13, this Security
Agreement and each Security Joinder Agreement, and all obligations of the
Grantors hereunder (excluding those obligations and liabilities that expressly
survive such termination) shall terminate without delivery of any instrument or
performance of any act by any party on the Facility Termination Date. Upon such
termination of this Security Agreement, the Administrative Agent shall, at the
request and sole expense of the Grantors, promptly deliver to the Grantors such
termination statements and take such further actions as the Grantors may
reasonably request to terminate of record, or otherwise to give appropriate
notice of the termination of, any Lien conferred hereunder.
25. NOTICES. Any notice required or permitted hereunder shall be given
(a) with respect to the Borrower, at the address for the giving of notice then
in effect under the Credit Agreement, (b) with respect to any Grantor, at the
address then in effect for the giving of notices to such Grantor under the
Guaranty to which it is a party, and (c) with respect to the Administrative
Agent or a Lender, at the Administrative Agent's address indicated in Section
10.02 of the Credit Agreement. All such addresses may be modified, and all such
notices shall be given and shall be effective, as provided in Section 10.02 of
the Credit Agreement for the giving and effectiveness of notices and
modifications of addresses thereunder.
26. JOINDER. Each Person who shall at any time execute and deliver to
the Administrative Agent a Security Joinder Agreement substantially in the form
attached as Exhibit A hereto shall thereupon irrevocably, absolutely and
unconditionally become a party hereto and obligated hereunder as a Grantor and
shall have thereupon pursuant to Section 2 hereof granted a security interest in
and collaterally assigned to the Administrative Agent for the benefit of the
Secured Parties all Collateral in which it has at its Applicable Date or
thereafter acquires any interest or the power to transfer, and all references
herein and in the other Loan Documents to the Grantors or to the parties to this
Security Agreement shall be deemed to include such Person as a Grantor
hereunder. Each Security Joinder Agreement shall be accompanied by the
Supplemental Schedules referred to therein, appropriately completed with
information relating to the Grantor executing such Security Joinder Agreement
and its property. Each of the applicable Schedules attached hereto shall be
deemed amended and supplemented without further action by such information
reflected on the Supplemental Schedules.
27. RULES OF INTERPRETATION. The rules of interpretation contained in
Sections 1.02 and 1.05 of the Credit Agreement shall be applicable to this
Security Agreement and each Security Joinder Agreement and are hereby
incorporated by reference. All representations and
30
warranties contained herein shall survive the delivery of documents and
any Credit Extensions referred to herein or secured hereby.
28. RELEASE. Upon the Disposition of any item of Collateral, so long as
such Disposition is permitted under Section 7.05 of the Credit Agreement and all
conditions to such Disposition contained therein have been satisfied:
(a) the Lien of the Administrative Agent for the benefit of
the Secured Parties in such disposed Collateral shall, subject to the
provision at the end of this subsection (a), be deemed to be released
without any further action on the part of the Administrative Agent or
the relevant Grantor, provided that in the event following any such
Disposition any Grantor shall thereafter acquire any interest in (or
the power to transfer rights in) any asset that constituted Collateral
hereunder prior to its Disposition and release from the security
interests hereunder, the pledge, assignment and security interest
granted hereunder shall be deemed to automatically apply and attach to
such asset and it shall from such time forward continue to constitute
Collateral hereunder notwithstanding any prior release; and
(b) the Administrative Agent will (other than in connection
with sales of Inventory in the ordinary course of business), at the
Grantors' expense, execute and deliver to each Grantor such documents
as such Grantor shall reasonably request on reasonable advance notice
to evidence the release of such item of Collateral from the pledge,
assignment and security interest granted hereunder, provided that such
Grantor shall have delivered to the Collateral Agent a written request
for release describing the item of Collateral and the terms of the
Disposition thereof in reasonable detail, including the price thereof
and any expenses in connection therewith.
29. GOVERNING LAW; WAIVERS.
(A) THIS SECURITY AGREEMENT AND EACH SECURITY JOINDER
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE FULLY PERFORMED, IN SUCH STATE; PROVIDED THAT (I) WITH RESPECT TO
THOSE INSTANCES IN WHICH THE APPLICABLE CHOICE OF LAWS RULES OF SUCH
STATE, INCLUDING SECTION 9-301 OF THE UCC, REQUIRE THAT THE MANNER OF
CREATION OF A SECURITY INTEREST IN SPECIFIC COLLATERAL OR THE MANNER OR
EFFECT OF PERFECTION OR NONPERFECTION OR THE RULES GOVERNING PRIORITY
OF SECURITY INTERESTS ARE TO BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION, THEN THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN
SUCH MATTERS, (II) EACH CONTROL AGREEMENT (INCLUDING EACH QUALIFYING
CONTROL AGREEMENT) APPLICABLE TO ANY SECURITIES ACCOUNT OR DEPOSIT
ACCOUNT SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION SPECIFIED IN
SUCH CONTROL AGREEMENT, OR OTHERWISE BY THE LAWS OF THE JURISDICTION
THAT GOVERN THE SECURITIES ACCOUNT OR DEPOSIT
31
ACCOUNT TO WHICH SUCH CONTROL AGREEMENT RELATES, AND (III) IN
THOSE INSTANCES IN WHICH THE LAWS OF THE JURISDICTION IN WHICH
COLLATERAL IS LOCATED GOVERN MATTERS PERTAINING TO THE METHODS AND
EFFECT OF REALIZING ON COLLATERAL, SUCH LAWS SHALL BE GIVEN EFFECT WITH
RESPECT TO SUCH MATTERS.
(B) EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF
THIS SECURITY AGREEMENT OR A SECURITY JOINDER AGREEMENT, EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF
THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
(C) EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED
IN SECTION 25 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.
(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL
PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY
SECURITY JOINDER AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE COURTS OF
ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY'S PROPERTY OR
ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH GRANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE
JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY
REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE UNDER APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS SECURITY AGREEMENT OR ANY
SECURITY JOINDER AGREEMENT OR ANY
32
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT
MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH
PARTY HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY EXPRESSLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION, SUIT OR PROCEEDING.
(F) EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY
HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO
THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[SIGNATURE PAGES FOLLOW.]
33
IN WITNESS WHEREOF, the parties have duly executed this Security
Agreement on the day and year first written above.
GRANTORS:
ALLTRISTA CORPORATION, a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
HEARTHMARK, INC., an Indiana corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ALLTRISTA PLASTICS CORPORATION, an Indiana
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ALLTRISTA ZINC PRODUCTS, L.P., an Indiana limited
partnership
By: Alltrista Newco Corporation, a Indiana
corporation, its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Security Agreement
Signature Page 1
QUOIN CORPORATION, a Delaware corporation
By: /s/ Ian ▇. ▇. ▇▇▇▇▇
---------------------------------
Name: Ian ▇. ▇. ▇▇▇▇▇
Title: Treasurer
ALLTRISTA NEWCO CORPORATION, an Indiana corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
PENN VIDEO, INC., an Indiana corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
LAFAYETTE STEEL & ALUMINUM CORPORATION, an Illinois
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ TIN PLATE COMPANY, an Illinois corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Security Agreement
Signature Page 2
UNIMARK PLASTICS, INC., a Pennsylvania corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
LUMENX CORPORATION, an Ohio corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ALLTRISTA UNIMARK, INC., an Indiana corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
TRIENDA CORPORATION (F/K/A TRIENDA NEWCO, INC.),
a Indiana corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ALLTRISTA ACQUISITION I, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Security Agreement
Signature Page 3
ALLTRISTA ACQUISITION II, INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ALLTRISTA ACQUISITION III, INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
Security Agreement
Signature Page 4
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N. A., as Administrative Agent
for the Lenders
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Security Agreement
Signature Page 5
SCHEDULE 1
For purposes of this Security Agreement, a "Qualifying Control
Agreement" shall mean each of the following, as applicable to the respective
items or types of property in which the Grantor now has or may hereafter acquire
an interest:
(a) With respect to Investment Property credited to any
securities account, an agreement executed by the applicable securities
intermediary substantially in the form of Schedule 1-A hereto or in
such other form as may be consented to by the Administrative Agent in
its reasonable discretion;
(b) With respect to Deposit Accounts or tangible personal
property Collateral in the possession, custody or control of any
warehouseman or other bailee, an acknowledgment and agreement executed
by the depositary institution or bailee (each, a "Custodian"), as the
case may be, and (as to Deposit Accounts) the applicable Grantor, in
form and substance acceptable to the Administrative Agent and in which
the Custodian (i) acknowledges the Lien created hereunder (and, in the
case of any Custodian of tangible personal property, that such
Custodian holds such Collateral for the Administrative Agent for the
benefit of the Secured Parties), (ii) agrees to discontinue accepting
requests or demands from or on behalf of the applicable Grantor for
access to or possession of any Collateral of which it is Custodian upon
receipt of notice from the Administrative Agent that a Default or Event
of Default has occurred and is continuing (a "Default Notice"), until
such time as the Administrative Agent may furnish it with a subsequent
notice that such Default or Event of Default has been cured or waived,
(iii) agrees that it will comply with instructions from the
Administrative Agent directing the disposition of the Collateral of
which it is Custodian, without requiring further consent from the
Grantor, following receipt of any Default Notice from the
Administrative Agent, (iv) agrees that it will not consent to or
acknowledge any Lien on Collateral of which it is Custodian in favor of
any other Person and, as to Deposit Accounts only, agrees that it will
not permit any withdrawals from such deposit accounts, until it
receives notice from the Administrative Agent that all Liens on such
Collateral in favor of the Secured Parties have been released or
terminated, (v) agrees to waive or subordinate to the Lien conferred
hereunder, on terms acceptable to the Administrative Agent, any lien,
claim, or right of setoff or recoupment (whether statutory or
consensual) in favor of the Custodian on any of the Collateral;
provided, however, Deposit Account Custodians may retain a prior Lien
solely for the payment of routine deposit account maintenance and
activity charges, and (vi) in the case of any warehouseman or other
bailee of tangible personal property collateral, agrees to deliver (and
accompanies such agreement with any then existing) warehouse receipts
or other Documents pertaining to such Collateral;
(c) With respect to Letter-of-Credit Rights, an acknowledgment
and agreement of the issuer or other applicable person nominated to
accept drafts and or effect payment thereunder (the "Issuer") of the
related letter of credit in form and substance acceptable to the
Administrative Agent and in which the Issuer (i) consents to and
acknowledges the Lien in favor of the Administrative Agent conferred
hereunder in proceeds of drawings under the related letter of credit,
(ii) agrees that it will not
acknowledge any Lien in favor of any other Person on
Letter-of-Credit Rights until it receives notice from the
Administrative Agent that all Liens on such Collateral in favor of the
Secured Parties have been released or terminated, and (iii) to the
extent not inconsistent with the express terms of the related letter of
credit, agrees that upon receipt of notice from the Administrative
Agent that an Event of Default has occurred and is continuing, it will
make all payments of drawings honored by it under the related letter of
credit to the Administrative Agent, notwithstanding any contrary
instruction received from the Grantor; and
(d) With respect to any Investment Property in the form of
uncertificated securities, an agreement of the issuer of such
Investment Property in form and substance acceptable to the
Administrative Agent sufficient to confer control (within the meaning
of Section 9-106 of the UCC) over such property and containing such
other terms and provisions as the Administrative Agent may reasonably
request.
