COLLATERAL AGREEMENT

Exhibit 4.4

EXECUTION COPY

 

COLLATERAL AGREEMENT

dated as of

August 13, 2009

among

AFFINIA GROUP INTERMEDIATE HOLDINGS INC.,

AFFINIA GROUP INC.,

CERTAIN OTHER SUBSIDIARIES OF

AFFINIA GROUP INTERMEDIATE HOLDINGS INC.

FROM TIME TO TIME PARTY HERETO,

and

WILMINGTON TRUST FSB,

as Noteholder Collateral Agent

Reference is made to the Lien Subordination and Intercreditor Agreement dated as of August 13, 2009, among Bank of America, N.A., as Bank Collateral Agent for the Revolving Facility Secured Parties referred to therein; Wilmington Trust FSB, as Trustee and as Noteholder Collateral Agent; Affinia Group Inc.; Affinia Group Intermediate Holdings Inc.; and the subsidiaries of Affinia Group Inc. named therein (the “Intercreditor Agreement”). Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Senior Secured Obligations Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and those of the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

 

TABLE OF CONTENTS

 

COLLATERAL AGREEMENT

COLLATERAL AGREEMENT, dated as of August 13, 2009, among AFFINIA GROUP INTERMEDIATE HOLDINGS INC., a Delaware corporation (“ Holdings ”), AFFINIA GROUP INC., a Delaware corporation (the “ Company ”), each Domestic Subsidiary of Holdings set forth on the signature pages hereto as a Grantor (together with Holdings, the Company and each other Domestic Subsidiary that becomes a party hereto pursuant to Section 19(b) hereof, collectively, the “ Grantors ”), and WILMINGTON TRUST FSB (in its individual capacity, and any successor corporation thereto by merger, consolidation or otherwise, “ Wilmington Trust FSB ”), as noteholder collateral agent (in such capacity, together with any successor collateral agent, the “ Noteholder Collateral Agent ”) for the benefit of the Secured Parties (as defined below).

PRELIMINARY STATEMENTS

(1) Holdings, the Company and the other Grantors party thereto have entered into (a) an Indenture dated as of the date hereof (said Indenture, as it may hereafter be amended, restated, modified, supplemented or otherwise modified from time to time, being the “ Indenture ”) with Wilmington Trust FSB, as trustee (in such capacity, the “ Trustee ”) and as Noteholder Collateral Agent and (b) a Purchase Agreement, dated as of August 6, 2009 (the “ Purchase Agreement ”), among Holdings, the Company, the Grantors and the Initial Purchasers named therein (the “ Initial Purchasers ”).

(2) Pursuant to the Indenture, the Grantors are entering into this Agreement in order to grant to the Noteholder Collateral Agent for the ratable benefit of the Secured Parties a security interest in the Collateral (as hereinafter defined) to secure the Obligations (as hereinafter defined).

(3) The Intercreditor Agreement governs the relative rights and priorities of the Secured Parties and the Noteholder Secured Parties in respect of all Collateral.

(4) It is a condition precedent to the purchasing of the Notes by the Initial Purchasers that the Grantors shall have granted the security interests and made the pledges and assignments contemplated by this Agreement.

(5) Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Indenture and the Purchase Agreement.

(6) Unless otherwise defined in this Agreement, terms defined in Article 8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9 (including Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Account, Commodity Contract, Commodity Intermediary, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financial Assets, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter of Credit Rights, Securities Accounts, Securities Intermediary, Security, Security Entitlements, Supporting Obligations and Tangible Chattel Paper). Additionally, the following terms shall have the following meanings:

“ Account Debtor ” shall mean each Person who is obligated under an Account.

“ Additional Grantor ” shall have the meaning specified in Section 19(b) .

“ Administrative Agent ” shall mean Bank of America, N.A., as administrative agent in such capacity, together with any successor administrative agent.

“ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by or under direct or indirect common Control with, such Person.

“ After-Acquired Intellectual Property ” shall have the meaning specified in Section 10(g) .

“ Agreement ” shall mean this Collateral Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.

“ Agreement Collateral ” shall have the meaning specified in Section 1(a)(xvi).

“ Assigned Agreements ” shall have the meaning specified in Section 1(a)(xvi).

“ Bank Collateral Agent ” shall have the meaning given to the term “Collateral Agent” in the Intercreditor Agreement.

“ Business Day ” shall have the meaning specified in the Indenture.

“ Cash Collateral ” shall mean cash, and any interest or other income earned thereon, that is delivered to the Noteholder Collateral Agent as security for the payment of the Obligations.

“ Cash Equivalents ” shall mean, as to any Person, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof ( provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or territory or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then equivalent ratings from another nationally recognized service), (c) U.S. Dollar-denominated time deposits, certificates of deposit and bankers acceptances maturing within 180 days from the date of acquisition thereof and issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any commercial bank organized under the laws of the United States of America or any state, province or territory thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000 (or the relevant foreign currency equivalent thereof) and whose long-term debt, or whose parent holding company’s long-term debt, is rated A (or such similar equivalent rating or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act), (d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (c) above, (e) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P 1 or the equivalent thereof by Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations,

 

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then equivalent ratings from another nationally recognized service) and in each case maturing not more than 270 days after the date of acquisition by such Person, and (f) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (e) above.

“ Class ” shall mean each class of Secured Parties with outstanding Obligations secured hereby at such time.

“ Collateral ” shall have the meaning specified in Section 1(a).

“ Collateral Agreement Supplement ” shall mean a Collateral Agreement Supplement substantially in the form of Exhibit B (appropriately completed).

“ Collateral Access Agreement ” shall mean an agreement setting forth the rights of the Noteholder Collateral Agent with respect to Collateral located on any leased Real Property or Collateral held, handled or processed by a warehouseman, processor, shipper, customs broker or freight forwarder, repairman, mechanic, consignee or bailee, in each case, in form and substance reasonably satisfactory to the Administrative Agent.

“ Commodity Account Control Agreement ” shall mean an agreement in form reasonably satisfactory to the Controlling Agent sufficient to grant the Controlling Agent Control over a specified Commodity Account.

“ Company ” shall have the meaning specified in the first paragraph of this Agreement.

“ Computer Software ” shall mean all computer software, programs and databases (including, without limitation, source code, object code and all related applications and data files), firmware and documentation and materials relating thereto, together with any and all maintenance rights, service rights, programming rights, hosting rights, test rights, improvement rights, renewal rights and indemnification rights and any substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing.

“ Control ” shall mean (i) in the case of each Deposit Account, “ control, ” as such term is defined in Section 9-104 of the UCC, (ii) in the case of any Security Entitlement, “ control, ” as such term is defined in Section 8-106 of the UCC and (iii) in the case of any Commodity Contract, “ control, ” as such term is defined in Section 9-106 of the UCC and (iv) in the case of any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, contract or otherwise, and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

“ Control Agreements ” shall mean, collectively, the Deposit Account Control Agreements, the Securities Account Control Agreements and the Commodity Account Control Agreements.

“ Controlling Agent ” shall mean (i) following the Revolving Facility First Lien Collateral Transition Date, the Noteholder Collateral Agent and (ii) in all other cases, the Bank Collateral Agent.

 

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“ Copyrights ” shall mean all copyright rights 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, all registrations thereof, and all applications in connection therewith, including all registrations and applications in the United States Copyright Office, and the right to obtain all renewals thereof.

“ Default Rate ” shall mean 200 basis points in excess of the otherwise applicable rate of interest.

“ Deposit Account Control Agreement ” shall mean a “ control agreement ” in form and substance reasonably acceptable to the Controlling Agent and containing terms regarding the treatment of all cash and other amounts on deposit in (or credited to) the respective Deposit Account (other than Excluded Accounts) governed by such Deposit Control Agreement.

“ Domestic Subsidiary ” shall have the meaning specified in the Intercreditor Agreement.

“ Equity Interests ” shall mean “ Capital Stock ” as defined in the Intercreditor Agreement.

“ Event of Default ” shall have the meaning specified in the Indenture.

“ Excluded Account ” shall mean all of the following Deposit Accounts: (w) disbursement accounts established solely for the payment of medical and dental expenses in connection with health insurance programs for employees of Holdings and its Subsidiaries, (x) petty cash accounts established (or otherwise maintained) by any Grantor that do not have cash balances at any time exceeding $1,000,000 in the aggregate for all such petty cash accounts of the Grantors, (y) payroll tax accounts established at Toronto-Dominion Bank at which no balances in excess of Cdn. $100,000 are maintained other than immediately prior to payroll tax disbursements to be funded therefrom, and (z) any accounts maintained at banks or other financial institutions located outside of the United States or Canada that do not have cash balances, in the aggregate, in excess of €500,000.

“ Excluded Assets ” shall mean the collective reference to (a) any motor vehicle or other asset covered by a certificate of title or ownership to the extent that a security interest in such asset cannot be perfected by the filing of a financing statement under the UCC, (b) any asset of a Grantor (including Equity Interests and any lease, license, contract, property right or agreement to which a Grantor is a party, and any of its rights or interest thereunder) owned on the Issue Date to the extent that, and for so long as, such grant of a security interest in such asset would violate any applicable law, rule or regulation, or would violate, breach, terminate, constitute a default under or require any consent not obtained under or give rise to any right of acceleration, modification or cancellation under, the organizational documents of any Subsidiary that is not a Wholly Owned Subsidiary (as defined in the Indenture) or any contractual obligation (including Liens, leases and licenses permitted under the Indenture) binding on such Grantor or on such asset and in effect on the Issue Date (in each case, only to the extent that such contractual obligations are effective under applicable law), (c) any asset of a Grantor (including Equity Interests and any lease, license, contract, property right or agreement to which a Grantor is a party, and any of its rights or interest thereunder) acquired by a Grantor after the Issue Date, to the extent that, and for so long as, (A) the grant of a security interest in such assets would violate

 

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any applicable law, rule or regulation, or would violate, breach, terminate, constitute a default under or require any consent not obtained (following commercially reasonable efforts by the applicable Grantor) under or give rise to any right of acceleration, modification or cancellation under, the organizational documents of any Subsidiary that is not a Wholly Owned Subsidiary (as defined in the Indenture) or any contractual obligation (including Liens, leases and licenses permitted under the Indenture) binding on such Grantor or on such asset and (B) such law, regulation, organizational document or contractual obligation existed at the time of the acquisition thereof and was not (except in the case of customary restrictions and conditions contained in agreements and other documents (including organizational documents) governing any Permitted Joint Venture (as defined in the Indenture)) created or made binding upon such asset in contemplation of or in connection with the acquisition of such asset, (d) any of the outstanding Voting Equity Interests of a Foreign Subsidiary in excess of 65% of the Voting Equity Interests of such Foreign Subsidiary, (e) any and all leasehold interests in Real Property, (f) any Letter of Credit Rights to the extent a Grantor is required by applicable law to apply the proceeds of a drawing of such letter of credit for a specified purpose, (g) any trademark application filed on an “intent-to-use” basis prior to the filing under Section 1(c) or Section 1(d) of the Lanham Act of a “Statement of Use” or an “Amendment to Allege Use” with respect thereto, to the extent that, and for so long as, the grant of a security interest therein would impair the validity or enforceability of such “intent-to-use” trademark application under applicable federal law, or (h) Commercial Tort Claims with a value of less than $500,000; provided , however , that Excluded Assets will not include any asset of a Grantor which secures any Noteholder Obligation.

“ First Priority ” shall mean, with respect to any Lien purported to be created on any Collateral pursuant to any Noteholder Security Document, that such Lien is prior in right to any other Lien thereon, other than any Permitted Collateral Lien (as defined in the Indenture) and any Permitted Lien (as defined in the Indenture, excluding Permitted Liens as described in clause (2) of Section 4.08 of the Indenture) applicable to such Collateral which as a matter of law have priority over the respective Liens on such Collateral created pursuant to the relevant Noteholder Security Document.

“ Foreign Subsidiary ” shall mean, as to any Person, any Subsidiary of such Person that is not a Domestic Subsidiary of such Person.

“ Grantor Obligations ” shall mean all Obligations of the Grantors and any guarantees of such Obligations of the Grantors pursuant to any Guaranty or pursuant to any other Noteholder Document.

“ Grantors ” shall have the meaning specified in the first paragraph of this Agreement.

“ Hedge Obligations ” shall mean all Obligations that are owing by any Grantor under the Qualified Secured Hedging Agreements.

“ Holdings ” shall have the meaning specified in the first paragraph of this Agreement.

“ Indemnified Party ” shall have the meaning specified in Section 18 .

“ Indenture ” shall have the meaning specified in the recitals of this Agreement.

 

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“ Intellectual Property ” shall mean the property described in Section 1(a)(xvii ).

“ Intellectual Property Collateral ” shall have the meaning specified in Section 1(a)(xvii).

“ Intellectual Property Security Agreement ” shall have the meaning specified in Section 10(f).

“ Intercompany Note ” shall mean a promissory note evidencing intercompany loans, duly executed and delivered substantially in the form of Exhibit A (or such other form as shall be reasonably satisfactory to the Noteholder Collateral Agent), with blanks completed in conformity herewith.

“ Intercreditor Agreement ” shall have the meaning specified on the cover page hereof.

“ IP Agreements ” shall mean all written agreements, permits, consents and orders relating to the license, development, use or disclosure of any Intellectual Property Collateral to which a Grantor, now or hereafter, is a party or with respect to which such Grantor has any rights.

“ Issue Date ” shall have the meaning specified in the Indenture.

“ Leasehold ” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

“ Lien ” shall have the meaning specified in the Intercreditor Agreement.

“ Material Adverse Effect ” shall mean a material adverse effect on (a) the property, assets, business results of operations, liabilities or condition (financial or otherwise) of Holdings and its Subsidiaries taken as a whole, (b) the rights or remedies of the Noteholders, the Trustee and the Noteholder Collateral Agent under the Indenture or any other Noteholder Document, (c) the ability of the Grantors (taken as a whole) to perform their respective payment obligations to the Noteholders, the Trustee or the Noteholder Collateral Agent under the Indenture or any other Noteholder Document or (d) a material portion of the Collateral.

“ Material Leasehold ” shall mean any facility or location in which a Grantor has a Leasehold interest and at which (i) with respect to any single location, the value of Inventory and Equipment exceeds $500,000, (ii) with respect to any single location, the value of Inventory and Equipment is less than or equal to $500,000 and, when such value is aggregated with the value of Inventory and Equipment at all other locations in which a Grantor has a Leasehold interest at which the value of Inventory and Equipment is less than or equal to $500,000 for which no Collateral Access Agreement is in place, exceeds $2,000,000 or (iii) any centralized location where books and records relating to the Accounts are located.

“ Majority Noteholders ” shall mean the Holders of 25% or more of the outstanding principal amount of the Notes issued under the Indenture.

“ Noteholder Documents ” shall mean the Indenture, the Guarantees set forth therein, the Notes, this Agreement, the other Noteholder Security Documents, the Intercreditor Agreement and the other documents and instruments executed and delivered pursuant to the foregoing, as such documents and instruments may be amended, amended and restated, supplemented or otherwise modified from time to time.

 

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“ Noteholder Collateral Agent ” shall have the meaning specified in the first paragraph of this Agreement.

“ Noteholder First Lien Collateral ” shall have the meaning specified in the Intercreditor Agreement.

“ Noteholder Secured Parties ” shall have the meaning specified in the Intercreditor Agreement.

“ Noteholder Security Documents ” shall have the meaning specified in the Intercreditor Agreement.

“ Noteholder ” shall have the meaning given to the term “Holder” in the Indenture.

“ Notes ” shall mean the 10.75% Senior Secured Notes due 2016.

“ Obligations ” shall have the meaning given to the term “ Noteholder Obligations ” in the Intercreditor Agreement.

“ Other Hedging Agreements ” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar agreements or arrangements designed to protect against fluctuations in currency values or commodity prices.

“ Patents ” shall mean (a) all letters patent of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof and all goodwill associated therewith, (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof and (c) all rights to obtain all renewals, reissues and reexaminations thereof.

“ Payment in Full ” shall have the meaning specified in the Intercreditor Agreement.

“ Payment Item ” shall mean each check, draft or other item of payment payable to a Grantor, including those constituting proceeds of any Collateral.

“ Perfection Certificate ” shall have the meaning specified in the Indenture.

“ Person ” shall have the meaning specified in the Intercreditor Agreement.

“ Pledged Account Bank ” shall have the meaning specified in Section 5(a) .

“ Pledged Debt ” shall have the meaning specified in Section 1(a)(xv)(A).

“ Pledged Deposit Account ” shall have the meaning specified in Section 5(a).

“ Pledged Equity ” shall have the meaning specified in Section 1(a)(xv)(B).

 

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“ Pro Rata Share ” shall mean, when calculating a Secured Party’s portion of any distribution or amount, that amount (expressed as a percentage) equal to a fraction, the numerator of which is the then unpaid amount of such Secured Party’s Grantor Obligations and the denominator of which is the then outstanding amount of all Grantor Obligations.

“ Real Property ” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including as Leaseholds.

“ Receivables ” shall have the meaning specified in Section 1(a)(xiv).

“ Related Contracts ” shall have the meaning specified in Section 1(a)(xiv) .

“ Release Date ” shall have the meaning specified in Section 21 .

“ Revolving Facility Documents ” shall have the meaning specified in the Intercreditor Agreement.

“ Revolving Facility First Lien Collateral ” shall have the meaning specified in the Intercreditor Agreement.

“ Revolving Facility First Lien Transition Date ” shall have the meaning specified in the Intercreditor Agreement

“ Second Priority ” shall mean, with respect to any Lien purported to be created on any Collateral pursuant to the Noteholder Security Documents, that such Lien is First Priority other than with respect to Liens permitted pursuant to clause (2) of Section 4.08 of the Indenture.

“ Secured Parties ” shall have the meaning given to “ Noteholder Secured Parties ” in the Intercreditor Agreement.

“ Securities Account Control Agreement ” shall mean an agreement in form and substance reasonably satisfactory to the Controlling Agent sufficient to grant the Controlling Agent Control with respect to a specified Securities Account.

“ Security Collateral ” shall have the meaning specified in Section 1(a)(xv) .

“ Subagent ” shall have the meaning specified in Section 15(c) .

“ Taxes ” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholdings), assessments, fees or other charges, including any interest, additions to tax or penalties applicable thereto, imposed by the government of the United States, Canada, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

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“ Trademarks ” shall mean (a) all trademarks, trade names, corporate names, the Grantors’ names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations 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 and (b) the right to obtain all renewals thereof.

“ Trade Secrets ” shall mean all confidential and proprietary information of any Grantor, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, databases and data, including, without limitation, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information.

“ UCC ” shall mean the Uniform Commercial Code as in effect from time to time in the relevant jurisdiction.

“ U.S. Security Agreement ” shall mean that certain agreement, dated as of August 13, 2009, among Holdings, the Company, certain other subsidiaries of Holdings from time to time party thereto and Bank of America, N.A., as Collateral Agent.

“ Voting Equity Interests ” of any Person shall mean all classes of Equity Interests of such Person entitled to vote.

NOW, THEREFORE, in consideration of the premises and in order to induce the Initial Purchasers to purchase the Notes and the Trustee and Noteholder Collateral Agent to enter into the Indenture, each Grantor hereby agrees with the Noteholder Collateral Agent for the ratable benefit of the Secured Parties as follows:

Section 1. Grant of Security, Etc .

(a) Each Grantor hereby grants to the Noteholder Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in such Grantor’s right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising (collectively, the “ Collateral ”):

(i) all Accounts;

(ii) all cash, Cash Equivalents and all Cash Collateral, whether such Cash Collateral is held in a Deposit Account or elsewhere;

(iii) all Chattel Paper (including, without limitation, all Tangible Chattel Paper and all Electronic Chattel Paper);

(iv) all Commercial Tort Claims (including, without limitation, the Commercial Tort Claims set forth on Schedule 14 to the Perfection Certificate);

 

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(v) all Deposit Accounts, Securities Accounts, Commodities Accounts and all assets on deposit therein;

(vi) all Documents;

(vii) all Equipment;

(viii) all Farm Products;

(ix) all Fixtures;

(x) all General Intangibles;

(xi) all Goods;

(xii) all Instruments;

(xiii) all Inventory;

(xiv) all Letter-of-Credit Rights, whether or not the respective letter of credit is evidenced by a writing (together with all Accounts, Chattel Paper, Instruments, Deposit Accounts, General Intangibles and other obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, the “ Receivables ”; and all rights now or hereafter existing in and to all supporting obligations and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating to the Receivables, being the “ Related Contracts ”);

(xv) the following (the “ Security Collateral ”):

 

(A)

all indebtedness from time to time owed to such Grantor, including, without limitation, all promissory notes or instruments, if any, evidencing such indebtedness, all indebtedness owed to such Grantor pursuant to each Intercompany Note and the instruments set forth on Schedule 8 to the Perfection Certificate (the “ Pledged Debt ”), and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Debt;

 

(B)

subject to the proviso below in this Section 1(a) , all Equity Interests from time to time acquired, owned or held by such Grantor in any manner, including, without limitation, the Equity Interests owned by each Grantor set forth opposite such Grantor’s name on and otherwise described on Schedule 7A to the Perfection Certificate, and the certificates, if any, representing such shares or units or other Equity Interests (collectively, the “ Pledged Equity ”), and all dividends, distributions, return of capital, cash, instruments

 

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and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares or other Equity Interests and all subscription warrants, rights or options issued thereon or with respect thereto; and

 

(C)

without limiting the foregoing, all Investment Property and all Financial Assets (including, without limitation, all securities, security entitlements and securities accounts), the certificates or instruments, if any, representing or evidencing such Investment Property or Financial Assets and all dividends, distributions, return of capital, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect thereof or in exchange therefor and all subscription warrants, rights or options issued thereon or with respect thereto;

(xvi) all contracts and agreements between any Grantor and one or more additional parties, including, without limitation, any Interest Rate Agreements (as defined in the Indenture), any Other Hedging Agreements, licensing agreements and any partnership agreements, joint venture agreements, limited liability company agreements, the Related Contracts and the IP Agreements, in each case, as such agreements may be amended, amended and restated, supplemented or otherwise modified from time to time (collectively, the “ Assigned Agreements ”), including, without limitation, (A) all rights of such Grantor to receive moneys due and to become due under or pursuant to the Assigned Agreements, (B) all rights of such Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (C) claims of such Grantor for damages arising out of or for breach of or default under the Assigned Agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder (all such Collateral being the “ Agreement Collateral ”);

(xvii) the following (collectively, the “ Intellectual Property Collateral ”):

 

(A)

all Patents, Trademarks, Copyrights and Computer Software;

 

(B)

all Trade Secrets and all other intellectual, industrial and intangible property of any type, including, without limitation, industrial designs and mask works;

 

(C)

all tangible embodiments of the foregoing, all rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto; and

 

(D)

any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages;

 

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(xviii) all books and records (including, without limitation, customer lists, credit files, printouts and other computer output materials and records) of such Grantor pertaining to any of the Collateral;

(xix) all other tangible and intangible personal property of whatever nature, whether or not covered by Article 9 of the UCC;

(xx) all accessions to, substitutions for, and all replacements, products and cash and non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to insurance policies, and claims against any Person for loss, damage or destruction of any Collateral; and

(xxi) all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and Supporting Obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (i) through (xx) of this Section 1 ) and, to the extent not otherwise included, all payments under insurance (whether or not the Noteholder Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss of or damage to or otherwise with respect to any of the foregoing Collateral;

provided that, notwithstanding anything to the contrary in this Agreement, this Agreement shall not constitute a grant of a security interest in any Excluded Asset.

(b) The security interest of the Noteholder Collateral Agent under this Agreement extends to all Collateral which any Grantor may acquire, or with respect to which any Grantor may obtain rights, at any time during the term of this Agreement.

(c) Notwithstanding anything to the contrary contained in this Section 1 or elsewhere in this Agreement, each Grantor and the Noteholder Collateral Agent (on behalf of the Secured Parties) acknowledge and agree that:

(i) the security interest granted pursuant to this Agreement (including pursuant to this Section 1 ) to the Noteholder Collateral Agent for the benefit of the Secured Parties (A) in the Noteholder First Lien Collateral, shall be a First Priority Lien and (B) in the Revolving Facility First Lien Collateral, shall be a Second Priority Lien subordinated and subject to the security interest granted to the Bank Collateral Agent for the benefit of the Revolving Facility Secured Parties in the Revolving Facility First Lien Collateral on the terms and conditions set forth in the Revolving Facility Documents; and

(ii) the Revolving Facility Secured Parties’ security interests in the Collateral constitute security interests separate and apart (and of a different class and claim) from the Secured Parties’ security interests in the Collateral.

 

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Section 2. Security for Obligations . This Agreement secures the payment of all Obligations of each Grantor now or hereafter existing.

Section 3. Grantors Remain Liable . Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform all of its duties and obligations thereunder, all in accordance with the terms of any such contracts or agreements, (b) the exercise by the Noteholder Collateral Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Noteholder Document, nor shall any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

Section 4. Delivery and Control of Security Collateral . (a) (i) All certificates representing or evidencing the Pledged Equity and (ii) all instruments representing or evidencing the Pledged Debt (excluding, unless an Event of Default has occurred and is continuing, Pledged Debt in an aggregate principal amount not in excess of $1,000,000) , shall be delivered to and held by or on behalf of the Noteholder Collateral Agent pursuant hereto (unless the Bank Collateral Agent is granted a prior security interest in such certificates or instruments and the same are required to be delivered to the Bank Collateral Agent pursuant to the Intercreditor Agreement) and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Noteholder Collateral Agent. During the continuation of an Event of Default and after the Revolving Facility First Lien Collateral Transition Date with respect to all Pledged Debt that constitutes Revolving Facility First Lien Collateral, the Noteholder Collateral Agent shall have the right, at any time in its discretion and without notice to any Grantor, to (i) transfer to or to register in the name of the Noteholder Collateral Agent or any of its nominees any or all of the Security Collateral, subject only to the revocable rights specified in Section 11(a) , (ii) exchange certificates or instruments representing or evidencing Security Collateral for certificates or instruments of smaller or larger denominations, and (iii) convert Security Collateral consisting of financial assets credited to any Securities Account to Security Collateral consisting of financial assets held directly by the Noteholder Collateral Agent, and to convert Security Collateral consisting of financial assets held directly by the Noteholder Collateral Agent to Security Collateral consisting of financial assets credited to any Securities Account.

(b) Each Grantor acknowledges and agrees that (i) to the extent each interest in any limited liability company or limited partnership controlled now or in the future by such Grantor and pledged hereunder is a “ security ” within the meaning of Article 8 of the UCC and is governed by Article 8 of the UCC, such interest shall be certificated and (ii) each such interest shall at all times hereafter continue to be such a security and represented by such certificate. Each Grantor further acknowledges and agrees that with respect to any interest in any limited liability company or limited partnership controlled now or in the future by such Grantor and pledged hereunder that is not a “ security ” within the meaning of Article 8 of the UCC, such Grantor shall at no time elect to treat any such interest as a “ security ” within the meaning of Article 8 of the UCC, nor shall such interest be represented by a certificate, unless

 

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such Grantor provides prior written notification to the Noteholder Collateral Agent of such election and such interest is thereafter represented by a certificate that is promptly delivered to the Noteholder Collateral Agent pursuant to the terms hereof.

(c) With respect to any Security Collateral that constitutes an uncertificated security that has an individual par value equal to or exceeding $1,000,000 in which any Grantor has any right, title or interest, such Grantor will promptly notify the Noteholder Collateral Agent thereof. During the continuation of an Event of Default, with respect to any Security Collateral in which any Grantor has any right, title or interest, such Grantor will notify each such issuer of Security Collateral that such Security Collateral is subject to the security interest granted hereunder.

(d) Except for checks payable to a Grantor constituting an Instrument and deposited in accordance with the terms of the Indenture and as otherwise set forth herein, if any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, certificated security or Chattel Paper (other than Electronic Chattel Paper), such Instrument, certificated security or Chattel Paper shall be promptly delivered to the Noteholder Collateral Agent (unless the Bank Collateral Agent is granted a prior security interest in such Collateral and the same is required to be delivered to the Bank Collateral Agent for the benefit of the Secured Parties pursuant to the Intercreditor Agreement because the same constitutes Revolving Facility First Lien Collateral), duly endorsed in a manner reasonably satisfactory to the Noteholder Collateral Agent, to be held as Collateral pursuant to this Agreement; provided that, unless an Event of Default has occurred and is continuing, the Grantors shall not be required to deliver the same pursuant to this clause (d) to the extent that the aggregate value of the Collateral referred to in this clause (d) not so delivered does not exceed $1,000,000.

Section 5. Deposit Accounts, Maintaining Electronic Chattel Paper, Transferable Records and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims .

(a) To further secure the prompt payment and performance of all Obligations, each Grantor hereby grants to the Noteholder Collateral Agent, for the benefit of the Secured Parties, a continuing security interest in and Lien upon all amounts credited to any Deposit Account of such Grantor, including any sums in any blocked or lockbox accounts or in any accounts into which such sums are swept. Except as otherwise provided in the Indenture, each Grantor will maintain Deposit Accounts only with a bank (which may include the Bank Collateral Agent) (a “ Pledged Account Bank ”) that has entered into a Deposit Account Control Agreement (each such Deposit Account, a “ Pledged Deposit Account ”); provided , however , that no Excluded Account shall be required to be subject to a Deposit Account Control Agreement. Each Grantor shall be the sole account holder of each Pledged Deposit Account and shall not allow any other Person (other than any Person having a Lien on such Pledged Deposit Account that is permitted pursuant to the Revolving Facility Documents and the Indenture) to have Control over a Pledged Deposit Account or any property deposited therein. Such Pledged Deposit Accounts shall be maintained pursuant to lockbox or other arrangements reasonably acceptable to the Controlling Agent. The Noteholder Collateral Agent hereby agrees that it will not deliver a notice indicating that the Noteholder Collateral Agent, acting as

 

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Controlling Agent, will take Control over a Deposit Account or a Securities Account under any Control Agreement unless an Event of Default has occurred and is continuing.

(b) Grantors shall request in writing and otherwise take all necessary steps to ensure that all payments on Accounts or otherwise relating to Collateral are made directly to a Pledged Deposit Account (or a lockbox relating to a Pledged Deposit Account). If any Grantor or Subsidiary receives cash or payment items with respect to any Collateral, it shall hold same in trust for the Noteholder Collateral Agent and promptly (not later than the next Business Day) deposit same into a Pledged Deposit Account.

(c) The Noteholder Collateral Agent may, at any time and without notice to, or consent from, any Grantor, transfer, or direct the transfer of, funds from the Pledged Deposit Accounts to satisfy such Grantor’s obligations under the Noteholder Documents if an Event of Default shall have occurred and be continuing.

(d) Upon any termination by a Grantor of any Pledged Deposit Account, such Grantor will immediately (i) transfer all funds and property held in such terminated Pledged Deposit Account to another Pledged Deposit Account and (ii) notify all Account Debtors and any other obligors that were making payments to such Pledged Deposit Account to make all future payments to another Pledged Deposit Account, in each case so that the Noteholder Collateral Agent shall have a continuously perfected security interest in such Account Collateral, funds and property.

(e) Any Cash Collateral may be invested, at the Noteholder Collateral Agent’s discretion, in Cash Equivalents, but the Noteholder Collateral Agent shall have no duty to do so, regardless of any agreement or course of dealing with any Grantor, and shall have no responsibility for any investment or loss. The Noteholder Collateral Agent may apply Cash Collateral to the payment of any Obligations, in such order as the Noteholder Collateral Agent may elect, as they become due and payable. Each Deposit Account in which Cash Collateral is held and all Cash Collateral shall be under the sole dominion and Control of the Controlling Agent. No Grantor or other Person claiming through or on behalf of any Grantor shall have any right to any Cash Collateral, until Payment in Full of all Obligations.

(f) Upon the occurrence of and during the continuation of an Event of Default, each Grantor will maintain (i) all Electronic Chattel Paper so that the Noteholder Collateral Agent (or, pursuant to the Intercreditor Agreement, the Bank Collateral Agent) has control of the Electronic Chattel Paper in the manner specified in Section 9-105 of the UCC and (ii) all transferable records so that the Noteholder Collateral Agent (or, pursuant to the Intercreditor Agreement, the Bank Collateral Agent) has control of the transferable records in the manner specified in Section 16 of the Uniform Electronic Transactions Act, as in effect in the jurisdiction governing such transferable record.

(g) Each Grantor, by granting a security interest in its Receivables consisting of Letter-of-Credit Rights to the Noteholder Collateral Agent, intends to (and hereby does) assign to the Noteholder Collateral Agent its rights (including its contingent rights) to the proceeds of all Related Contracts consisting of letters of credit of which it is or hereafter becomes a beneficiary or an assignee (except to the extent that the applicable Grantor is

 

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required by applicable law to apply such proceeds to a specified purpose). If any Grantor is at any time a beneficiary under a letter of credit that is not a Supporting Obligation with respect to any Collateral and that is now or hereafter issued in favor of such Grantor, and (i) the face amount of such letter of credit is in excess of $2,000,000 individually or (ii) the face amount of such letter of credit, together with the face amount of all other letters of credit issued in favor of any Grantor in which the Noteholder Collateral Agent does not have a perfected security interest, exceeds $5,000,000 in the aggregate, such Grantor shall promptly notify the Noteholder Collateral Agent thereof and such Grantor shall use commercially reasonable efforts to either (A) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Noteholder Collateral Agent of the proceeds of any drawing under such letter of credit or (B) arrange for the Noteholder Collateral Agent to become the transferee beneficiary of such letter of credit, with the Noteholder Collateral Agent agreeing, in each case, that the proceeds of any drawing under such letter of credit are to be applied as provided in the Indenture.

(h) Upon the occurrence of an Event of Default, each Grantor shall (i) notify (and such Grantor hereby authorizes the Noteholder Collateral Agent to notify) the issuer and each nominated person with respect to each of the Related Contracts consisting of letters of credit that the proceeds thereof have been assigned to the Noteholder Collateral Agent hereunder, and any payments due or to become due in respect thereof are to be made directly to the Noteholder Collateral Agent or its designee and (ii) arrange for the Noteholder Collateral Agent to become the transferee beneficiary of the letter of credit.

(i) Each Grantor will give prompt notice in writing (which notice shall reference this Section 5(i) ) to the Noteholder Collateral Agent of any Commercial Tort Claim individually valued in excess of $500,000 that may arise in the future, and will promptly execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary action, to subject such Commercial Tort Claim to the first priority security interest created under this Agreement.

Section 6. Representations and Warranties . Each Grantor represents and warrants as follows:

(a) All Pledged Equity consisting of certificated securities and all Pledged Debt has been delivered to the Noteholder Collateral Agent (unless the Bank Collateral Agent is granted a prior security interest therein and the same is required to be delivered to the Bank Collateral Agent pursuant to the Intercreditor Agreement) in accordance herewith. If such Grantor is an issuer of Security Collateral, such Grantor confirms that it has received notice of the security interest granted hereunder.

(b) Such Grantor is the legal and beneficial owner of the Collateral granted or purported to be granted by such Grantor free and clear of any Lien, claim, option or right of others, except for the security interest created under this Agreement, subject to Liens permitted under the Indenture. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral or listing such Grantor as debtor is on file in any recording office, except such as may have been filed in favor of the Noteholder Collateral Agent, the Bank Collateral Agent or as otherwise permitted under the Indenture.

 

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(c) All of the Equipment and Inventory of such Grantor is located at the places specified therefor in Section 2 to the Perfection Certificate or at another location as to which such Grantor has complied with the requirements of Sections 8 and 9(b) . Such Grantor has obtained and maintains insurance with respect to its Equipment and Inventory in compliance with Section 8(k) .

(d) The Pledged Equity issued by such Grantor hereunder has been duly authorized and validly issued and is fully paid and non-assessable. The Pledged Debt issued by such Grantor has been duly authorized, authenticated or issued and delivered and is the legal, valid and binding obligation of the issuers thereof, and such Pledged Debt is evidenced by one or more promissory notes (which promissory notes have been delivered to the Noteholder Collateral Agent unless required to be delivered to the Bank Collateral Agent pursuant to the terms of the Intercreditor Agreement, in which case, such promissory notes have been delivered to the Bank Collateral Agent) and the issuers thereof are not in default in any material respect under such Pledged Debt.

(e) As of the Issue Date, the Pledged Equity pledged by such Grantor constitutes the percentage of the issued and outstanding Equity Interests of the issuers thereof indicated on Schedule 7 to the Perfection Certificate. As of the Issue Date, no Grantor has any Investment Property or Financial Assets other than the Investment Property and Financial Assets listed on Schedules 7, 8 and 9 to the Perfection Certificate.

(f) Each Grantor has good and valid rights in and title to the Collateral with respect to which it has purported to grant a security interest hereunder and has full power and authority to grant to the Noteholder Collateral Agent the security interest in such Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other Person, other than any consent or approval that has been obtained and is in full force and effect or the need for which has been specifically disclosed herein or in the Indenture.

(g) The Perfection Certificate has been duly prepared, completed and executed by Holdings and the Company and the information set forth therein, including the exact legal name of each Grantor, its jurisdiction of organization and its organizational number, is true, accurate and complete as of the Issue Date and, solely with respect to information required to be updated pursuant to Section 4.17(b) of the Indenture, as of the date of each subsequent delivery required pursuant to Section 4.17(b) or the Indenture.

(h) This Agreement creates in favor of the Noteholder Collateral Agent for the benefit of the Secured Parties a valid security interest in the Collateral, securing the payment of the Obligations; and (i) when effective UCC-1 financing statements are filed or recorded with the appropriate governmental authority referred to therein with respect to the Collateral described therein in which a security interest may be perfected by filing or recordation and (ii) upon the taking of possession or Control by the Senior Representative (as defined in the Intercreditor Agreement) pursuant to Article III of the Intercreditor Agreement of the Collateral described in Schedules 7, 8 and 9 of the Perfection Certificate with respect to which a security interest may be perfected only by possession or Control, all filings and other actions necessary to perfect the security interest in the Collateral granted by such Grantor have

 

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been duly made or taken and are in full force and effect; and such security interest is, in the case of Noteholder First Lien Collateral, First Priority and, in the case of all other Collateral other than Noteholder First Lien Collateral, Second Priority.

(i) None of the Grantors has filed or consented to the filing of (i) any financing statement or analogous document under the UCC or any other applicable laws covering any Collateral, (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with the United States Patent and Trademark Office, the United States Copyright Office or the Canadian Intellectual Property Office or (iii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to the Indenture.

(j) The Inventory that has been produced or distributed by such Grantor has been produced in compliance with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act, except such non-compliance as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(k) No amount payable to such Grantor under or in connection with any Receivable is evidenced by any Instrument or Chattel Paper in excess of $1,000,000 which has not been delivered to the Noteholder Collateral Agent (or, pursuant to the Intercreditor Agreement, to the Bank Collateral Agent) to the extent otherwise required to be delivered hereunder (other than purchase orders, supply agreements and invoices).

(l) As to itself and its Intellectual Property Collateral:

(i) To such Grantor’s knowledge, the operation of such Grantor’s business as currently conducted and the use of its Intellectual Property Collateral in connection therewith do not materially infringe, misappropriate or otherwise violate the intellectual property rights of any third party.

(ii) Such Grantor is the exclusive owner of all right, title and interest in and to the Intellectual Property Collateral owned by such Grantor and material to the operations of such Grantor and is entitled to use all such Intellectual Property Collateral subject only to the terms of the IP Agreements.

(iii) The Intellectual Property Collateral set forth on Schedule 13 to the Perfection Certificate constitutes all Intellectual Property Collateral registered or applied for by such Grantor in the United States.

(iv) Such Grantor has not received notice that any Intellectual Property Collateral of such Grantor has been adjudged invalid or unenforceable in whole or in part.

 

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Section 7. Further Assurances . (a) Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action that may be reasonably necessary or desirable, or that the Noteholder Collateral Agent may reasonably request, in order to perfect and protect any pledge or security interest granted or purported to be granted by such Grantor hereunder or to enable the Noteholder Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor. Without limiting the generality of the foregoing, each Grantor will promptly, with respect to Collateral of such Grantor:

(i) [Reserved.]

(ii) execute or authenticate and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be reasonably necessary or desirable, or as the Noteholder Collateral Agent may reasonably request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder;

(iii) execute and deliver to the Noteholder Collateral Agent, prior to the opening of any Deposit Account (other than any Excluded Account) after the Issue Date, an executed Deposit Account Control Agreement with respect to each such Deposit Account;

(iv) if any Grantor shall, following the Issue Date, establish and maintain any Securities Account or Commodity Account with any Securities Intermediary or Commodity Intermediary, such Grantor shall, prior to opening such Securities Account or Commodity Account, notify the Noteholder Collateral Agent thereof and deliver to the Noteholder Collateral Agent an executed Securities Ac