GUARANTEE AND COLLATERAL AGREEMENT

EXHIBIT 10.2

GUARANTEE AND COLLATERAL AGREEMENT

made by

WENDY’S INTERNATIONAL HOLDINGS, LLC

WENDY’S INTERNATIONAL, INC.

and certain of its Subsidiaries

in favor of

JPMORGAN CHASE BANK, N.A.,

as Collateral Agent

Dated as of January 14, 2009

 

 

 

TABLE OF CONTENTS

SCHEDULES

Schedule 1                      Notice Addresses

Schedule 2                      Investment Property

Schedule 3A                   Exclusions to Perfection

Schedule 3B                    Perfection Matters

Schedule 4                      Jurisdictions of Organization and Chief Executive Offices

Schedule 5                      Inventory and Equipment Locations

Schedule 6                      Receivables

Schedule 7                      Intellectual Property

Schedule 8                      Commercial Tort Claims

Schedule 9                      Exclusions to Remedies

ANNEXES

Annex I                            Form of Acknowledgement and Consent

Annex II                          Form of Assumption Agreement

GUARANTEE AND COLLATERAL AGREEMENT

GUARANTEE AND COLLATERAL AGREEMENT, dated as of January 14, 2009, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the “ Grantors ”), in favor of JPMorgan Chase Bank, N.A., as Collateral Agent (in such capacity, the “ Collateral Agent ”) for the banks and other financial institutions or entities (the “ Lenders ”) from time to time parties to the Credit Agreement, dated as of January 14, 2009 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Wendy’s International Holdings, LLC (“ Holdings ”), Wendy’s International, Inc. (the “ Borrower ”), the Lenders and the Agent.

W I T N E S S E T H :

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrower upon the terms and subject to the conditions set forth therein;

 

WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other Grantor;

 

WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrower to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses;

 

WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Collateral Agent for the ratable benefit of the Secured Parties.

 

NOW, THEREFORE, in consideration of the premises and to induce the Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Collateral Agent, for the ratable benefit of the Secured Parties, as follows:

SECTION 1.         DEFINED TERMS

1.1            Definitions

(a)           Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC:  Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Farm Products, General Intangibles, Goods, Instruments, Inventory, Letter-of-Credit Rights and Supporting Obligations.

 

(b)           The following terms shall have the following meanings:

 

     “ Agreement ” means this Guarantee and Collateral Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

 

“ Borrower Obligations ” means the collective reference to the unpaid principal of and interest on the Loans and Reimbursement Obligations and all other obligations and liabilities of the Borrower (including, without limitation, interest accruing at the then applicable rate provided in the Credit Agreement after the maturity of the Loans and Reimbursement Obligations and interest accruing at the then applicable rate provided in the Credit Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) to the Agent or any Lender (or, in the case of any Specified Swap Agreement, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Credit Agreement, this Agreement, the other Loan Documents, any Letter of Credit, any Specified Swap Agreement or any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Agent or to the Lenders that are required to be paid by the Borrower pursuant to the terms of any of the foregoing agreements).

 

“ Collateral ” means as defined in Section 3.1.

 

“ Collateral Account ” means any collateral account established by the Collateral Agent as provided in Section 6.1 or 6.4.

 

“ Collateral Agent ” means JPMorgan Chase Bank, N.A., in its capacity as collateral agent.

 

“ Copyrights ” means (i) all copyrights and works of authorship arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished (including, without limitation, those listed in Schedule 7 ), all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, all registrations, recordings and applications in the United States Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“ Copyright Licenses ” means any written or oral agreement naming any Grantor as licensor or licensee (including, without limitation, those listed in Schedule 7 ), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

 

“ Excluded Collateral ” means as defined in Section 3.1.

 

“ Foreign Subsidiary ” means any Subsidiary organized under the laws of any jurisdiction outside the United States of America.

 

“ Foreign Subsidiary Stock ” means the Capital Stock of any Foreign Subsidiary.

 

“ Funding Office ”:  the office of the Agent specified in Section 14.1 of the Credit Agreement or such other office as may be specified from time to time by the Agent as its funding office by written notice to the Borrower and the Lenders.

 

“ Guarantor Obligations ” means with respect to any Guarantor, all obligations and liabilities of such Guarantor which may arise under or in connection with this Agreement (including,

 

without limitation, Section 2) or any other Loan Document or any Specified Swap Agreement to which such Guarantor is a party, in each case whether on account of guarantee obligations, reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including, without limitation, all fees and disbursements of counsel to the Collateral Agent or to the Lenders that are required to be paid by such Guarantor pursuant to the terms of this Agreement or any other Loan Document).

“ Guarantors ” means the collective reference to each Grantor other than the Borrower.

 

“ Indenture Threshold Amount ” means as defined in Section 3.

 

“ Infringement ” means infringement, misappropriation, dilution or other violation.

 

“ Intellectual Property ” means all intellectual property (including, without limitation, those items listed on Schedule 7 ), whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, all Copyrights, Patents, and Trademarks.

 

“ Intellectual Property Licenses ” means all Copyright Licenses, Patent Licenses and Trademark Licenses.

 

“ Intercompany Note ” means any promissory note evidencing loans made by any Grantor to Holdings or any of its Subsidiaries.

 

“ Investment Property ” means the collective reference to (i) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC and (ii) whether or not constituting “investment property” as so defined, all Pledged Notes and all Pledged Stock.

 

“ Issuers ” means the collective reference to each issuer of any Investment Property.

 

“ New York UCC ” means  the Uniform Commercial Code as from time to time in effect in the State of New York.

 

“ Obligations ” means (i) in the case of the Borrower, the Borrower Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.

 

“ Patents ” means all (i) letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, including, without limitation, any of the foregoing referred to in Schedule 7 , (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any of the foregoing referred to in Schedule 7 , and (iii) all rights to obtain any reissues or extensions of the foregoing.

 

“ Patent License ” means all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 7 .

 

“ Pledged Notes ” means all promissory notes listed on Schedule 2 , all Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or held by any Grantor (other than promissory notes issued in connection with extensions of trade credit by any Grantor in the ordinary course of business).

 

“ Pledged Stock ” means  the shares of Capital Stock listed on Schedule 2 , together with any other shares, stock certificates, options, interests or rights of any nature whatsoever in respect of the Capital Stock of any Person that may be issued or granted to, or held by, any Grantor while this Agreement is in effect, excluding any Foreign Subsidiary Stock.

 

“ Proceeds ” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include, without limitation, all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.

 

“ Receivable ” means any right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance (including, without limitation, any Account).

 

“ Restricted Entities ” means the collective reference to Scioto Insurance Company, a Vermont corporation, and Oldemark LLC, a Vermont limited liability company, each a “ Restricted Entity ,” in each case, so long as such entity is regulated as a captive insurance company pursuant to chapter 141 of the Vermont Statutes Annotated or successor statute, or other similar statute as may apply in the event such entity changes its state of domicile.

 

“ Secured Parties ” means the collective reference to the Agent, the Collateral Agent, the Lenders and any affiliate of any Lender to which Borrower Obligations or Guarantor Obligations, as applicable, are owed.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Trademarks ” means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, service marks, domain names, trade dress, logos and other source or business identifiers, and all goodwill associated therewith or symbolized thereby, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, and all common-law rights related thereto, including, without limitation, any of the foregoing referred to in Schedule 7 , and (ii) the right to obtain all renewals thereof.

 

“ Trademark License ” means any agreement, whether written or oral, providing for the grant by or to any Grantor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 7 .

 

“ Vermont Commissioner ” means the Commissioner of the Vermont Department of Banking, Insurance, Securities & Health Care Administration.

 

“ WNAP” means Wendy’s National Advertising Program, Inc., an Ohio corporation.

 

1.2            Other Definitional Provisions

 

(a)           The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.

 

(b)           The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

 

(c)      Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part thereof.

SECTION 2.           GUARANTEE

2.1            Guarantee

(a)           Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Collateral Agent, for the ratable benefit of the Secured Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations.

 

(b)           Anything herein or in any other Loan Document to the contrary notwithstanding, (i) the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be validly guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2) and (ii) the maximum liability of the Restricted Entities hereunder and under the other Loan Documents shall in no event in the aggregate exceed the lesser of (x) $200,000,000 and (y) 90% of the excess, as reflected on the Restricted Entities’ most recent audited financial statements as of the date of determination of the Restricted Entities’ liabilities hereunder, of the Restricted Entities’ total assets (including any note receivable from an affiliate, but only to the extent that a demand on such note receivable has been made and has been satisfied since the date of the Restricted Entities’ most recent audited financial statements) over the Restricted Entities’ total liabilities.

 

(c)           Each Guarantor agrees that the Borrower Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Collateral Agent or any Lender hereunder.

 

(d)           The guarantee contained in this Section 2 shall remain in full force and effect until all the Borrower Obligations (other than obligations under the Specified Swap Agreements) and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, all Letters of Credit shall cease to be outstanding (unless cash collateralized on terms reasonably acceptable to the Agent) and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrower may be free from any Borrower Obligations.

 

(e)           No payment made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Agent or any Lender from the Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of the Borrower Obligations or any payment received or collected from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations (other than obligations under the Specified Swap Agreements) are paid in full, no Letter of Credit shall be outstanding (unless cash collateralized on terms reasonably acceptable to the Agent) and the Commitments are terminated.

 

2.2        Right of Contribution

 

     Each Subsidiary Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against any other Subsidiary Guarantor hereunder which has not paid its proportionate share of such payment.  Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 2.3.  The provisions of this Section 2.2 shall in no respect limit the obligations and liabilities of any Subsidiary Guarantor to the Collateral Agent and the Lenders, and each Subsidiary Guarantor shall remain liable to the Collateral Agent and the Lenders for the full amount guaranteed by such Subsidiary Guarantor hereunder.  Notwithstanding the foregoing, each Restricted Entity has a right to require contribution from each of the other Subsidiary Guarantors in an amount equal to the full amount of the payments such Restricted Entity has made hereunder.

2.3            No Subrogation

 

Notwithstanding any payment made by any Guarantor hereunder or any set-off or application of funds of any Guarantor by the Collateral Agent or any Lender, no Guarantor shall be entitled to be subrogated to any of the rights of the Collateral Agent or any Lender against the Borrower or any other Guarantor or any collateral security or guarantee or right of offset held by the Collateral Agent or any Lender for the payment of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Agent and the Lenders by the Borrower on account of the Borrower Obligations (other than obligations under the Specified Swap Agreements) are paid in full, no Letter of Credit shall be outstanding (unless cash collateralized on terms reasonably acceptable to the Agent) and the Commitments are terminated.  If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Borrower Obligations (other than obligations under the Specified Swap Agreements) shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Collateral Agent and the Lenders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Collateral Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Collateral Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Collateral Agent may determine.

 

2.4            Amendments, etc. with respect to the Borrower Obligations

 

Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any of the Borrower Obligations made by the Collateral Agent or any Lender may be rescinded by the Collateral Agent or such Lender and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Collateral Agent or any Lender, and the Credit Agreement and the other Loan Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Collateral Agent or any Lender for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released.  Neither the Collateral Agent nor any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Section 2 or any property subject thereto.  

 

     2.5       Guarantee Absolute and Unconditional

Each Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Collateral Agent or any Lender upon the guarantee contained in this Section 2 or acceptance of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Collateral Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Section 2.  Each Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Borrower or any of the Guarantors with respect to the Borrower Obligations.  Each Guarantor understands and agrees that the guarantee contained in this Section 2 shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of the Credit Agreement or any other Loan Document, any of the Borrower Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Collateral Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by the Borrower or any other Person against the Collateral Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee contained in this Section 2, in bankruptcy or in any other instance.  When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, the Collateral Agent or any Lender may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Collateral Agent or any Lender to make any such demand, to pursue such other rights or remedies or to collect any payments from the Borrower, any other Guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Collateral Agent or any Lender against any Guarantor.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

2.6            Reinstatement

The guarantee contained in this Section 2 shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Collateral Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made.

 

2.7            Payments

 

Each Guarantor hereby guarantees that payments hereunder will be paid to the Agent without set-off or counterclaim in Dollars at the Funding Office.

 

SECTION 3.      GRANT OF SECURITY INTEREST

Each Grantor hereby assigns and transfers to the Collateral Agent, and hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in all of Grantor’s right, title and interest in, all of the following property now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Collateral”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:

(a)           all Accounts;

(b)           all cash and Cash Equivalent Investments;

(c)           all Chattel Paper;

(d)           all Deposit Accounts;

(e)           all Documents;

(f)            all Equipment;

(g)           all General Intangibles;

(h)           all Goods;

(i)            all Instruments;

(j)            all Intellectual Property and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom, and Intellectual Property Licenses;

 

(k)           all Inventory;

 

(l)            all Investment Property;

 

(m)           all Letter-of-Credit Rights;

 

(n)           all Commercial Tort Claims described on Schedule 8 ;

 

(o)           all other personal property not otherwise described above (except for any property specifically excluded from any clause in this section above, and any property specifically excluded from any defined term used in any clause of this section above);

 

(p)           all books and records pertaining to the Collateral; and

 

(q)           to the extent not otherwise included, all Proceeds, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

 

provided, however , that notwithstanding any of the other provisions set forth in this Section 3.1, this Agreement shall not constitute a grant of a security interest in, and the “Collateral” shall

 

not include, (a) any property to the extent that such grant of a security interest (i) is prohibited by any Requirements of Law of a Governmental Authority, (ii) requires a consent not obtained of any Governmental Authority pursuant to such Requirement of Law, (iii) is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property or, in the case of any Investment Property, Pledged Stock or Pledged Note, any applicable shareholder or similar agreement, including, without limitation, the Joint Venture Agreement, dated as of April 18, 1990, between the Borrower and Wyoming Realty, Inc. establishing Wendcreek Venture, or (iv) constitutes or results in the abandonment, cancellation, invalidation or unenforceability of any right, title or interest of any Grantor therein, except to the extent that such Requirement of Law or the term in such contract, license, agreement, instrument or other document or shareholder or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the New York UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law or principles of equity, provided that the Proceeds from any such property shall not be excluded from the grant of security interest to the extent that the assignment or pledge of such Proceeds is not prohibited, and provided   further that such security interest shall attach immediately at such time as the condition that would cause such breach, default, termination or violation shall have been remedied; (b) any assets identified by the Borrower in a written notice to the Collateral Agent as to which the Collateral Agent reasonably determines that the costs of providing a security interest in such asset or perfection thereof are excessive in relation to the value to the Secured Parties of the security to be afforded thereby; (c) any Foreign Subsidiary Stock; (d) aircraft or motor vehicles and other assets subject to certificates of title; (e) Equipment owned by any Grantor that is subject to (i) a purchase money Lien, (ii) a Capitalized Lease or (iii) Indebtedness secured solely by the Equipment, to the extent financed with such Indebtedness, in each case of clauses (i) through (iii) to the extent, but only to the extent, that such a grant would, under the express terms of the contract or agreement granting such purchase money Lien (or the documentation providing for such Capitalized Lease or such Indebtedness) result in a breach of the terms of, or constitute a default under, such contract, agreement or documentation, provided , that immediately upon the ineffectiveness, lapse, termination or waiver of any such provision, the Collateral shall include, and such Grantor shall be deemed to have granted a security interest in, all such Equipment as if such provision had never been in effect; (f) any application for a Trademark to the extent such Trademark would be deemed invalidated, canceled or abandoned due to the granting or enforcement of such security interest; or (g) any Capital Stock of WNAP (clauses (a) through (g) collectively referred to as “ Excluded Collateral ”).

Notwithstanding any of the other provisions set forth in this Section 3 or anything else contained in this Agreement or any other Loan Document, the aggregate amount of all Obligations secured under the Security Documents by Principal Property (as defined in each Senior Note Indenture) or any shares of capital stock or evidences of Indebtedness (as defined in each Senior Note Indenture) issued by any Domestic Subsidiary (as defined in each Senior Note Indenture) and owned by the Borrower or any Domestic Subsidiary (as defined in each Senior Note Indenture) (collectively, the “Restricted Property”) shall not, at any time, exceed the aggregate amount (such amount, the “Indenture Threshold Amount”) of Indebtedness (as defined in each Senior Note Indenture) that may be secured by Restricted Property under each Senior Note Indenture, determined in accordance with the terms of each Senior Note Indenture, without requiring holders of the applicable Senior Notes to be equally and ratably secured in accordance with the terms of such Senior Note Indenture.  It is understood that from time to time the total amount of Obligations may be in excess of the Indenture Threshold Amount, but any such Obligations in excess of the Indenture Threshold Amount shall not at any time be secured by any Restricted Property hereunder or under any other Security Document and in no event shall any Lien (as defined in each Senior Note Indenture) on any Restricted Property in favor of any Secured Party hereunder or under any other Security Document at any time secure any Obligations in excess of the Indenture Threshold Amount.  For the avoidance of doubt, the calculation of the Indenture Threshold Amount at any date of determination shall

 

take into account all outstanding Attributable Value (as defined in each Senior Note Indenture) of all Sale and Lease-Back Transactions (as defined in each Senior Note Indenture) permitted pursuant to the last paragraph of Section 1009 of each Senior Note Indenture as of such date and all Indebtedness (as defined in each Senior Note Indenture) of the Borrower and its Domestic Subsidiaries (as defined in each Senior Note Indenture) secured by Liens (as defined in each Senior Note Indenture) permitted pursuant to the last paragraph of Section 1008 of each Senior Note Indenture as of such date.

In addition, notwithstanding any of the other provisions set forth in this Section 3 or anything else contained in this Agreement or any other Loan Document, the amount of all Obligations secured by the Restricted Entities’ assets shall not at any time exceed $200,000,000.

SECTION 4.           REPRESENTATIONS AND WARRANTIES

To induce the Collateral Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby represents and warrants to the Collateral Agent and each Lender that:

 

4.1            Title; No Other Liens

 

Except for the security interest granted to the Collateral Agent for the ratable benefit of the Secured Parties pursuant to this Agreement and the other Liens permitted to exist on the Collateral by the Credit Agreement, such Grantor owns each item of the Collateral free and clear of any and all Liens.  No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement or as are permitted by the Credit Agreement.  For the avoidance of doubt, it is understood and agreed that any Grantor may, as part of its business, grant licenses in the ordinary course of business to third parties to use Intellectual Property owned by, licensed to, or developed by a Grantor.  For purposes of this Agreement and the other Loan Documents, such licensing activity shall not constitute a “Lien” on such Intellectual Property.  Each of the Collateral Agent and each Lender understands that any such licenses may be exclusive to the applicable licensees, and such exclusivity provisions may limit the ability of the Collateral Agent to utilize, sell, lease or transfer the related Intellectual Property or otherwise realize value from such Intellectual Property pursuant hereto.

 

4.2            Perfected First Priority Liens

 

The security interests granted pursuant to this Agreement (a) constitute valid, and except as provided on Schedule 3A , after the completion of the filings and the actions described on Schedule 3B , perfected security interests in all of the Collateral in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Obligations, enforceable in accordance with the terms hereof against all creditors of such Grantor and any Persons purporting to purchase any Collateral from such Grantor; provided that, with respect to Intellectual Property included in the Collateral, such Grantor makes such representation and warranty solely with respect to Trademarks, Copyrights and Patents registered in the United States, subject to the filing with the United States Patent and Trademark Office and/or the United States Copyright Office of documents evidencing such security interest as described in Section 7.1(a)(ii), and (b) are prior to all other Liens on the Collateral in existence on the date hereof except for Liens permitted by the Credit Agreement which have priority over the Liens on the Collateral by operation of law or otherwise permitted by the Credit Agreement.

 

4.3            Jurisdiction of Organization; Chief Executive Office

 

     On the date hereof, such Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization (if any), and the location of such Grantor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 4.  Such Grantor has furnished to the Agent a certified charter, certificate of incorporation or other organization document and long-form good standing certificate as of a date which is recent to the date hereof.

 

4.4            Inventory and Equipment

 

On the date hereof, the Inventory and the Equipment (other than mobile goods) are kept at the locations listed on Schedule 5 .

 

4.5            Farm Products

 

On the date hereof, none of the Collateral constitutes, or is the Proceeds of, Farm Products.

 

4.6