Exhibit 4.3
Notwithstanding anything herein to
the contrary, the liens and security interests granted to the Agent
pursuant to this Agreement and the exercise of any right or remedy
by the Agent hereunder, are subject to the provisions of the
Intercreditor Agreement dated as of March 10, 2009 (as
amended, restated, supplemented or otherwise modified from time to
time, the “Intercreditor Agreement”), among the Agent,
as ABL Agent, The Bank of New York Mellon Trust Company, N.A., as
Trustee, as Note Agent and the Grantors (as defined in the
Intercreditor Agreement) from time to time party thereto. In the
event of any conflict between the terms of the Intercreditor
Agreement and the terms of this Agreement, the terms of the
Intercreditor Agreement shall govern and control.
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of
March 10, 2009 (as amended, modified, supplemented or restated
from time to time, this “Agreement”), is made by and
among LOUISIANA-PACIFIC CORPORATION, a Delaware corporation (the
“Company”), GREENSTONE INDUSTRIES, INC., a Delaware
corporation, KETCHIKAN PULP COMPANY, a Washington corporation,
LOUISIANA-PACIFIC INTERNATIONAL, INC., an Oregon corporation, LPS
CORPORATION, an Oregon corporation (each a “Grantor”
and together with the Company, the “Grantors”), and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Collateral Agent
under the Indenture (together with its successors in such capacity,
“Agent”).
W I T N E S S E T
H:
WHEREAS, the Grantors have entered
into that certain Indenture, dated as of March 10, 2009 (as
amended, restated, supplemented or otherwise modified from time to
time, the “Indenture”), by and among the Grantors and
The Bank of New York Mellon Trust Company, N.A., as trustee
(together with its successors in such capacity, the
“Trustee”), on behalf of the holders (the
“Noteholders”) of the Notes (as defined below) pursuant
to which the Company is issuing $375,000,000 aggregate principal
amount at maturity of its 13% Senior Secured Notes due 2017 (the
“Notes”), which are guaranteed by each of the other
Grantors;
WHEREAS, the Trustee has been
appointed to serve as Collateral Agent under the Indenture and in
such capacity, to enter into this Agreement;
WHEREAS, following the date hereof,
the Grantors may incur Permitted Additional Pari Passu Obligations
(as defined in the Indenture) which are secured equally and ratably
with the Grantors’ obligations in respect of the Notes in
accordance with Section 8.9 of this Agreement;
WHEREAS, each Grantor will receive
substantial benefits from the execution, delivery and performance
of the obligations under the Indenture, the Notes and any
Additional Pari Passu Agreement and each is, therefore, willing to
enter into this Agreement;
WHEREAS, the Grantors are executing
and delivering this Agreement pursuant to the terms of the
Indenture to induce the Agent to enter into the Indenture and
induce the Noteholders to purchase the Notes; and
WHEREAS, this Agreement is made by
the Grantors in favor of the Agent for the benefit of the Secured
Parties to secure the payment and performance in full when due of
the Obligations;
NOW, THEREFORE, in consideration of
the foregoing premises and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, each
Grantor and the Agent hereby agree as follows:
SECTION 1.
DEFINITIONS
1.1
Definitions
Capitalized terms used and not
otherwise defined herein shall have the respective meanings
provided for in the Indenture. Additionally, the following terms
shall have the meanings set forth below:
“Additional Pari Passu
Agent” means the Person appointed to act as trustee, agent or
representative for the holders of Permitted Additional Pari Passu
Obligations pursuant to any Additional Pari Passu
Agreement.
“Additional Pari Passu
Agreement” means the indenture, credit agreement or other
agreement under which any Permitted Additional Pari Passu
Obligations (other than Additional Notes) are incurred and any
notes or other instruments representing such Permitted Additional
Pari Passu Obligations.
“Additional Pari Passu Joinder
Agreement” means an agreement substantially in the form of
Annex I .
“Discharge of
Obligations” means, both (i) in the case of the
Indenture, the discharge or defeasance of the Indenture in
accordance with Section 8.1, Section 8.2 or
Section 8.8 thereof and (ii) in the case of each
Additional Pari Passu Agreement, the repayment of the Additional
Pari Passu Obligations under such agreement which entitles the
Grantors to obtain a release of the Liens securing such Additional
Pari Passu Obligations under the Security Documents.
“Distributions” means,
collectively, with respect to each Grantor, all dividends, cash,
options, warrants, rights, instruments, distributions, returns of
capital or principal, income, interest, profits and other property,
interests (debt or equity) or proceeds, including as a result of a
split, revision, reclassification or other like change of the
Pledged Securities, from time to time received, receivable or
otherwise distributed to such Grantor in respect of or in exchange
for any or all of the Pledged Securities.
“Event of Default” means
an “event of default” under the Indenture or under any
Additional Pari Passu Agreement.
“Excluded Assets” has
the meaning assigned to it in the second paragraph of
Section 2.1.
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“Indemnitees” means
Agent (as such as in its individual capacity) and its officers,
directors, employees, stockholders, affiliates, agents and
attorneys.
“Intellectual Property”
means the collective reference to all rights, priorities and
privileges relating to all intellectual property, whether arising
under United States, multinational or foreign laws, including,
without limitation, copyrights, copyright licenses, patents, patent
licenses, trademarks and trademark licenses, 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.
“Issuer” means any
issuer of Pledged Securities.
“Mortgage” means an
agreement, including, but not limited to, a mortgage, deed of trust
or any other document creating and evidencing a Lien on a Mortgaged
Property in favor of or for the benefit of the Agent, which shall
be in form which, in the opinion of counsel to the Company, is
effective to grant a Lien in favor of or for the benefit of the
Agent enforceable against the applicable Grantor and creates rights
in favor of or for the benefit of the Agent in respect of the
applicable Mortgaged Property to substantially the same extent as
the mortgages of the Grantors in favor of or for the benefit of the
Agent provided on the Issue Date, in each case, with such schedules
and including such provisions as shall, in the opinion of such
counsel, be necessary or desirable to conform such document to
applicable local law or as shall be customary under applicable
local law.
“Mortgaged Property”
means (a) each Real Property identified as a Mortgaged
Property on Schedule 2.3 and (b) each Real Property, if
any, which shall be subject to a Mortgage delivered after the Issue
Date pursuant to Section 2.3.
“Obligations” means any
principal, premium, interest (including any interest accruing
subsequent to the filing of a petition in bankruptcy,
reorganization or similar proceeding at the rate provided for in
the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable state, federal or
foreign law), penalties, fees, indemnifications, reimbursements
(including reimbursement obligations with respect to letters of
credit and banker’s acceptances), damages and other
liabilities, and guarantees of payment of such principal, interest,
penalties, fees, indemnifications, reimbursements, damages and
other liabilities, payable under any of (i) the Indenture
(other than any Additional Notes and provisions in the Indenture
relating solely to such Additional Notes, except to the extent
constituting Permitted Additional Pari Passu Obligations),
(ii) the Notes, (iii) any Additional Pari Passu Agreement
and (iv) the documentation relating to any other Permitted
Additional Pari Passu Obligations; provided that no
obligations in respect of Permitted Additional Pari Passu
Obligations (other than obligations with respect to Additional
Notes) shall constitute “Obligations” unless the
Additional Pari Passu Agent for the holders of such Permitted
Additional Pari Passu Obligations has executed an Additional Pari
Passu Joinder Agreement in the form of Annex I
hereto.
“Organizational
Documents” means, with respect to any person, (i) in the
case of any corporation, the certificate of incorporation and
by-laws (or similar documents) of such person, (ii) in the
case of any limited liability company, the certificate of formation
and operating
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agreement (or similar documents) of such person,
(iii) in the case of any limited partnership, the certificate
of formation and limited partnership agreement (or similar
documents) of such person, (iv) in the case of any general
partnership, the partnership agreement (or similar document) of
such person and (v) in any other case, the functional
equivalent of the foregoing.
“Perfection Certificate”
means that certain perfection certificate dated as of the date
hereof, executed and delivered by each Grantor in favor of the
Agent for the benefit of the Secured Parties and in favor of Bank
of America, N.A., in its capacity as ABL Agent (as defined in the
Intercreditor Agreement), for the benefit of the ABL Lenders (as
defined in the Intercreditor Agreement).
“Pledged Securities”
means, collectively, with respect to each Grantor, (i) all
issued and outstanding Equity Interests of each issuer set forth on
Schedule 1.1 attached hereto as being owned by such Grantor
and all options, warrants, rights, agreements and additional Equity
Interests of whatever class of any such Issuer acquired by such
Grantor (including by issuance), together with all rights,
privileges, authority and powers of such Grantor relating to such
Equity Interests in each such Issuer or under any Organizational
Document of each such Issuer, and the certificates, instruments and
agreements representing such Equity Interests and any and all
interest of such Grantor in the entries on the books of any
financial intermediary pertaining to such Equity Interests,
(ii) all Equity Interests of any Person, which Equity
Interests are hereafter acquired by such Grantor (including by
issuance) and all options, warrants, rights, agreements and
additional Equity Interests of whatever class of any such Person
acquired by such Grantor (including by issuance), together with all
rights, privileges, authority and powers of such Grantor relating
to such Equity Interests or under any Organizational Document of
any such Person, and the certificates, instruments and agreements
representing such Equity Interests and any and all interest of such
Grantor in the entries on the books of any financial intermediary
pertaining to such Equity Interests, from time to time acquired by
such Grantor in any manner, and (iii) all Equity Interests
issued in respect of the Equity Interests referred to in clause
(i) or (ii) upon any consolidation or merger of any
Issuer of such Equity Interests.
“Real Property” means,
collectively, all right, title and interest (including any
leasehold, mineral or other estate) in and to any and all parcels
of or interests in real property owned, leased or operated by any
person, whether by lease, license or other means, together with, in
each case, all easements, hereditaments and appurtenances relating
thereto, all improvements and appurtenant fixtures and equipment,
all general intangibles and contract rights and other property and
rights incidental to the ownership, lease or operation
thereof.
“Required Secured
Parties” means the holders of a majority in aggregate
principal amount of (i) the Notes and (ii) any Debt
constituting Permitted Additional Pari Passu Obligations, in each
case, excluding any holder of such Debt whose vote is required to
be disregarded under the Indenture or the applicable Additional
Pari Passu Agreement.
“Secured Parties” means,
collectively, the Agent, the Trustee, each Additional Pari Passu
Agent, the Noteholders and any other holders of
Obligations.
“Securities Collateral”
means, collectively, the Pledged Securities and the
Distributions.
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“UCC” means the Uniform
Commercial Code as in effect from time to time in the State of New
York; provided , however , that, at any time, if by
reason of mandatory provisions of law, any or all of the perfection
or priority of the Agent’s and the Secured Parties’
security interest in any item or portion of the Collateral is
governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term
“UCC” shall mean the Uniform Commercial Code as in
effect, at such time, in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or priority and
for purposes of definitions relating to such provisions.
1.2 Uniform Commercial
Code
As used herein, the following terms
are defined in accordance with the UCC: “Accounts,”
“Chattel Paper,” “Commercial Tort Claim,”
“Deposit Account,” “Document,”
“Equipment,” “Fixtures,” “General
Intangibles,” “Goods,” “Instrument,”
“Inventory,” “Investment Property,”
“Letter-of-Credit Right,” “Proceeds,”
“Promissory Notes,” “Securities Account”
and “Supporting Obligation.”
1.3 Certain Matters of
Construction
This Agreement shall be subject to
the rules of construction contained in Section 1.4 of the
Indenture, mutatis mutandis .
1.4 Perfection
Certificate
The Agent and each Secured Party
agree that the Perfection Certificate and all schedules, amendments
and supplements thereto are and shall at all times remain a part of
this Agreement.
SECTION 2.
COLLATERAL
2.1 Grant of Security
Interest
To secure the prompt payment and
performance of all Obligations each Grantor hereby grants to Agent,
for the benefit of the Secured Parties, a continuing security
interest in and Lien upon all property of such Grantor, including
all of the following property, whether now owned or hereafter
acquired, and wherever located, but specifically excluding Excluded
Assets, as defined below (all being collectively referred to herein
as the “Collateral”):
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(b)
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all Chattel
Paper, including electronic chattel paper;
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(c)
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the Collateral
Account;
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(d)
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all Commercial
Tort Claims, including those set forth on Schedule 2.4.1
;
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(e)
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all Deposit
Accounts and all Trust Monies;
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(g)
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all General
Intangibles, including Intellectual Property;
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(h)
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all Goods,
Inventory and Equipment;
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(i)
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all Instruments
(including, without limitation, Promissory Notes);
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(j)
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all Investment
Property;
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(k)
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all
Letter-of-Credit Rights;
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(l)
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all Securities
Collateral;
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(m)
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all Supporting
Obligations;
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(n)
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all monies,
whether or not in the possession or under the control of
Agent;
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(o)
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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
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(p)
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all books and
records (including customer lists, files, correspondence, tapes,
computer programs, printouts and computer records) pertaining to
the foregoing.
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Notwithstanding anything to the
contrary in this Agreement, and except for so long as a security
interest in such Collateral is then in effect to secure the ABL
Obligations (as defined in the Intercreditor Agreement), the
Collateral shall not include (collectively, the “Excluded
Assets”): (i) assets (x) that on the Closing Date
are subject to a Lien permitted by clause (i) of the
definition of Permitted Liens (but only to the extent such Lien is
set forth on Schedule 2.1 hereto) and (y) that,
following the Closing Date, become subject to a Lien permitted by
clause (vii), (x), (xiii), (xv) or (xvi) of the
definition of “Permitted Liens”, in the case of each of
subclause (x) and (y) above, to the extent and only for
so long as the documentation relating to such Lien validly
prohibits the granting of a security interest to the Agent in such
assets; (ii) any of the outstanding voting Equity Interests of
a “controlled foreign corporation” (as defined in
Section 957 of the Code), in excess of 65% of the voting power
of all classes of Equity Interests of such controlled foreign
corporation entitled to vote; (iii)(x) any Equity Interests
(other than Equity Interests of a Restricted Subsidiary) to the
extent and for so long as the documents governing such Equity
Interests prohibit such Equity Interests from being Collateral and
(y) any Equity Interest in any Canadian unlimited liability
company (a “ULC Equity Interest”), (iv) any
interest of a Grantor in any contract, lease, license or other
agreement if the granting of a security interest therein
(x) is prohibited by, or would cause a termination of all or
any material rights of a Grantor under, applicable law or the terms
of such contract, lease, license or other agreement, to the extent
such prohibition or termination is not rendered unenforceable or
ineffective under sections 9-406 through 9-409 of the UCC or other
applicable law or (y) would provide any party thereto (other
than a Grantor or a Restricted Subsidiary) with any other remedy
that materially increases the costs or burden of the applicable
Grantor
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thereunder; (v) the Deposit Account
maintained by the Company at The Bank of Nova Scotia and certain
related assets that are included in the definition of
“Collateral” pursuant to the Guaranty and Security
Agreement, dated as of December 12, 2006 as in effect on the
date hereof by the Company for the benefit of ScotiaBank Sudo
Americano, S.A., (vi) any Deposit Account or Securities
Account (and cash, Investment Property and other property contained
therein) which is established for purposes of “cash
collateralizing” any other Debt of the Company (other than
the ABL Obligations) in a transaction permitted by the Indenture to
the extent the documentation relating to such Debt does not permit
the Notes Lien to extend to such property, (vii)(A) any fee
interest in real property of any Grantor, including all fixtures,
easements and appurtenances related thereto (other than the real
property, including fixtures, easements and appurtenances related
thereto (1) listed on Schedule 2.3 that is subject to a
Mortgage or (2) required to become subject to a Mortgage
pursuant to Section 2.3 of this Agreement and (B) any
leasehold interest in any real property of any Grantor, as tenant,
including all fixtures, easements and appurtenances relating
thereto and (viii) proceeds and products of any and all of the
foregoing excluded assets described in clause (i) through
(vii) above to the extent such proceeds and products would
constitute property or assets of the type described in clause
(i) through (vii) above.
2.2 Securities
Collateral
Each Grantor represents and warrants
that all certificates or instruments representing or evidencing the
Securities Collateral in existence on the date hereof have been
delivered to the Agent in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment
in blank and that the Agent has a perfected first priority security
interest therein. Each Grantor hereby agrees that all certificates
or instruments representing or evidencing Securities Collateral
acquired by such Grantor after the date hereof shall promptly (but
in any event within thirty days after receipt thereof by such
Grantor) be delivered to and held by or on behalf of the Agent
pursuant hereto. All certificated Securities Collateral 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 satisfactory to the Agent. The Agent shall
have the right, at any time upon the occurrence and during the
continuance of any Event of Default, to endorse, assign or
otherwise transfer to or to register in the name of the Agent or
any of its nominees or endorse for negotiation any or all of the
Securities Collateral, without any indication that such Securities
Collateral is subject to the security interest hereunder. In
addition, upon the occurrence and during the continuance of an
Event of Default, the Agent shall have the right at any time to
exchange certificates representing or evidencing Securities
Collateral for certificates of smaller or larger denominations.
Each Grantor that is an Issuer of the Pledged
Securities agrees to comply with instructions originated by
the Agent with respect to the Pledged Securities issued by such
Issuer without further consent of any Grantor or any
other person and acknowledges that it is the intention of this
Agreement to grant “control” to the Agent (within the
meaning of Articles 8 and 9 of the UCC) over such Pledged
Securities, to the extent the same may be applicable to such
Pledged Securities.
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2.3 Real Estate
Collateral
The Obligations shall also be
secured by (i) Mortgages and Fixtures upon all Mortgaged
Property and Fixtures owned by each Grantor and listed on
Schedule 2.3 and (ii) to the extent not excluded from
“Collateral” pursuant to clause (i) of the last
paragraph of Section 2.1, all Real Property acquired in fee
simple following the Issue Date with a book value of $10,000,000 or
more as of the date of acquisition (or, if later, upon the date of
acquisition or completion of construction of any improvements
thereon) (a “Specified Real Property”) and the Grantors
shall provide a Mortgage in favor of the Agent in any Specified
Real Property within 90 days following the date of acquisition
thereof (or, if later, upon the date such Real Property becomes a
Specified Real Property). The amount of Obligations secured by any
Real Property which becomes a Mortgaged Property following the
Issue Date may be limited to an amount equal to at least 100% of
the Fair Market Value of such Mortgaged Property in the event that
securing a greater principal amount of Obligations would require
the payment of recording or similar taxes in excess of $5,000. In
the event that any Permitted Additional Pari Passu Obligations are
incurred following the Issue Date, the Grantors shall notify the
Agent thereof in writing and take all such action as may be
reasonably required to amend each then existing Mortgage in order
to appropriately ensure that such Permitted Additional Pari Passu
Obligations are secured equally and ratably with the Note
Obligations. In connection with the provision of any new Mortgage
or any amendment to any Mortgage pursuant to this Section 2.3,
the related Grantors will provide (a) an opinion of counsel in
form and substance consistent with those provided on the Issue
Date, (b) UCC-1 fixture filings, (c) title searches in
form and substance consistent with those provided on the Issue Date
conducted by a title insurer which reflects that such Mortgaged
Property is free and clear of all defects and encumbrances except
Permitted Collateral Liens, (d) a “Life of Loan”
Federal Emergency Management Agency Standard Flood Hazard
Determination in each case in form and substance consistent with
those provided on the Issue Date and, if applicable, evidence of
flood insurance, (e) ExpressMaps issued by FirstAmerican Title
Insurance Company ExpressMap Division in form and substance
consistent with those provided on the Issue Date together with a
written certificate executed by an officer of the Company stating
that the material improvements utilized in connection with each
Mortgaged Property to such officer’s knowledge, after due
inquiry, are located within such Mortgaged Property as depicted on
the ExpressMap within the boundaries of such Mortgaged Property as
depicted on such ExpressMap and (f) such other items which the
Grantors determine in good faith are consistent with those provided
on the Issue Date.
2.4 Other
Collateral
2.4.1 Commercial Tort
Claims
Schedule 2.4.1
contains a true and correct list of
all Commercial Tort Claims held by each Grantor, including a brief
description thereof in excess of $5,000,000. Each Grantor shall
promptly notify Agent in writing if such Grantor has a Commercial
Tort Claim (other than, as long as no Event of Default exists, a
Commercial Tort Claim for less than $5,000,000) and shall promptly
take such actions as counsel to such Grantor deems appropriate to
confer upon Agent (for the benefit of Secured Parties) a duly
perfected Lien upon such claim, subject to Permitted
Liens.
-8-
2.4.2 After-Acquired Intellectual
Property
Not later than the next succeeding
December 1 following the date any Grantor (i) obtains any
rights to any additional Intellectual Property constituting
Collateral which is registered with the United States Copyright
Office or the United States Patent & Trademark Office or
(ii) becomes entitled to the benefit of any additional
Intellectual Property constituting Collateral or any renewal or
extension thereof, including any reissue, division, continuation,
or continuation-in-part of any Intellectual Property constituting
Collateral which is registered with the United States Copyright
Office or the United States Patent & Trademark Office, or
any improvement on any Intellectual Property constituting
Collateral which is registered with the United States Copyright
Office or the United States Patent & Trademark Office,
such Grantor shall notify the Agent thereof in writing and use
commercially reasonable efforts to cause a short form security
agreement in favor of the Agent to be filed in the United States
Copyright Office or the Unites States Patent & Trademark
Office, as the case may be, with respect to such Intellectual
Property; provided that this covenant shall not apply to
“off-the-shelf” license rights of any Grantor in any
Intellectual Property or any other license rights that are not
material to the Grantor.
2.5 No Assumption of
Liability
The Lien on Collateral granted
hereunder is given as security only and shall not subject Agent or
any other Secured Party to, or in any way modify, any obligation or
liability of any Grantor relating to any Collateral.
2.6 Further
Assurances
Each Grantor shall deliver such
instruments, assignments, title certificates, or other documents or
agreements, and shall take such actions, as such Grantor deems
appropriate under applicable law to evidence or perfect the
Agent’s Lien on any Collateral, or otherwise to give effect
to the intent of this Agreement; provided , that
notwithstanding, anything in this Agreement to the contrary, the
Grantors shall not be required to take any action to perfect the
security interest of the Agent, other than the filing of UCC-1
financing statements, in any of the following assets: (i) any
vehicles, aircraft or equipment subject to certificate of title
statutes, (ii) any Real Property except as provided in
Section 2.3, (iii) assets located in any country other
than the United States of America, (iv) Equity Interests of
any Foreign Subsidiary (other than any Nova Scotia unlimited
liability company), (v) any deposit account, investment
account, commodities account or securities account (other than the
Collateral Account) and (vi) Intellectual Property that is not
registered with the United States Copyright Office or the United
States Patent & Trademark Office, or any successor office
thereto. Each Grantor agrees to enter into a pledge agreement on
substantially the same terms as the ULC Pledge Agreement entered
into on the Closing Date if any such Grantor acquires any ULC
Equity Interests. Each Grantor authorizes Agent to file any
financing statement that indicates the Collateral as “all
assets” or “all personal property” of such
Grantor, or words to similar effect, and ratifies any action taken
by Agent before the Issue Date to effect or perfect the
Agent’s Lien on any Collateral. The rights and powers
conferred on the Agent hereunder are solely to protect its interest
(on behalf of the Secured Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers. Except for the
reasonable care of any Collateral in its possession and the
accounting for
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moneys actually received by it hereunder, the
Agent shall have no duty as to any Collateral or responsibility for
ascertaining or taking any necessary steps to preserve rights
against other parties or any other rights pertaining to any
Collateral (including, without limitation, the filing of UCC
financing or continuation statements).
SECTION 3. COLLATERAL
ADMINISTRATION
3.1 Administration of
Accounts
3.1.1 Records and Schedules of
Accounts
Each Grantor shall keep records of
its accounts that are accurate and complete in all material
respects.
3.1.2 Taxes
If an Account of any Grantor
includes a charge for any taxes, Agent is authorized (but shall be
under no obligation to any Secured Party or to any Grantor) to pay
the amount thereof to the proper taxing authority for the account
of such Grantor and to charge such Grantor therefor;
provided , however , that neither Agent nor Secured
Parties shall be liable for any taxes that may be due from any
Grantor or with respect to any Collateral.
3.1.3 Account
Verification
While any Event of Default exists,
Agent shall have the right at any time, in the name of Agent, any
designee of Agent or any Grantor, to verify the validity, amount or
any other matter relating to any Accounts of such Grantor by mail,
telephone or otherwise. Each Grantor shall cooperate fully with
Agent in an effort to facilitate and promptly conclude any such
verification process.
3.2 Administration of
Inventory
3.2.1 Records and Reports of
Inventory
Each Grantor shall keep records of
its Inventory that are accurate and complete in all material
respects.
3.3 Administration of
Equipment
3.3.1 Records and Schedules of
Equipment
Each Grantor shall keep records of
its Equipment that are accurate and complete in all material
respects.
3.4 General
Provisions
3.4.1 [Intentionally
Omitted]
3.4.2 Insurance of Collateral;
Condemnation Proceeds
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The Collateral is and will be
insured with financially sound and reputable insurance companies
which are not Affiliates of any of the Grantors, in such amounts,
with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning
similar properties and other assets in localities where the
Grantors operate. All proceeds under each policy in respect of
Collateral constituting Net Loss Proceeds shall, subject to the
Intercreditor Agreement, be payable to Agent as Trust Monies. From
time to time upon request (it being understood that Agent shall be
under no obligation to any Secured Party or any Grantor to make any
such request), each Grantor shall deliver to Agent the originals or
certified copies of its insurance policies and updated flood plain
searches. The Grantors shall use commercially reasonable efforts
(consistent with industry practice) to cause each such policy to
include satisfactory endorsements (i) showing Agent as loss
payee or additional insured, as appropriate and (ii) requiring
30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever (or a lesser period of time
reasonably acceptable to Agent). If any Grantor fails to provide
and pay for any insurance, Agent may, at its option (but shall not
be under any obligation to any Secured Party or any Grantor to),
procure the insurance and charge such Grantor therefor. While no
Event of Default exists, each Grantor may, but the Agent may not,
settle, adjust or compromise any insurance claim, as long as the
proceeds are delivered to Agent. If an Event of Default exists,
Agent may (but shall not be under any obligation to any Secured
Party or any Grantor to) reasonably settle, adjust and compromise
such claims.
3.4.3 Protection of
Collateral
All reasonable expenses of
protecting, storing, warehousing, insuring, handling, maintaining
and shipping any Collateral, all taxes payable with respect to any
Collateral (including any sale thereof), and all other payments
required to be made by Agent to any Person to realize upon any
Collateral, shall be borne and paid by the Grantors. Agent shall
not be liable or responsible in any way for the safekeeping of any
Collateral, for any loss or damage thereto (except for reasonable
care in its custody while Collateral is in Agent’s actual
possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or
other Person whatsoever, but the same shall be at each
Grantor’s sole risk.
3.4.4 Defense of Title to
Collateral
Each Grantor shall at all times
defend its title to Collateral and Agent’s Liens therein
against all Persons, claims and demands whatsoever, except
Permitted Liens.
3.5 Power of
Attorney
Each Grantor hereby irrevocably
constitutes and appoints Agent (and all Persons designated by
Agent) as such Grantor’s true and lawful attorney (and
agent-in-fact) for the purposes provided in this Section. Agent, or
Agent’s designee, may, without notice and in either its or
the applicable Grantor’s name, but at the cost and expense of
such Grantor, at any time after the occurrence and during the
continuance of an Event of Default:
(a) endorse such Grantor’s
name on any payment item or other proceeds of Collateral (including
proceeds of insurance) that come into Agent’s possession or
control; and
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(b) (i) settle, adjust, modify,
compromise, discharge or release any Accounts or other Collateral,
or any legal proceedings brought to collect Accounts or other
Collateral; (ii) sell or assign any Accounts and other
Collateral upon such terms, for such amounts and at such times as
Agent deems advisable; (iii) take control, in any manner, of
any proceeds of Collateral; (iv) prepare, file and sign such
Grantor’s name to any notice, assignment or satisfaction of
Lien or similar document; (v) receive, open and dispose of
mail addressed to such Grantor, and notify postal authorities to
change the address for delivery thereof to such address as Agent
may designate; (vi) endorse any Chattel Paper, Document,
Instrument, invoice, freight bill, bill of lading, or similar
document or agreement relating to any Accounts, Inventory or other
Collateral; (vii) use the information recorded on or contained
in any data processing equipment and computer hardware and software
relating to any Collateral; (viii) make and adjust claims
under policies of insurance; (ix) take any action as may be
necessary or appropriate to obtain payment under any letter of
credit or banker’s acceptance for which such Grantor is a
beneficiary; and (x) take all other actions as Agent deems
appropriate.
SECTION 4. REPRESENTATIONS AND
WARRANTIES
Each Grantor represents and warrants
that:
4.1 Organization and
Qualification
Such Grantor is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization. Such Grantor is duly qualified,
authorized to do business and in good standing as a foreign
corporation in each jurisdiction where failure to be so qualified
could reasonably be expected to have a Material Adverse Effect (as
defined in Section 4.6).
4.2 Power and
Authority
Such Grantor is duly authorized to
execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement has been duly authorized
by all necessary action, and do not (a) require any consent or
approval of any holders of Equity Interests of such Grantor, other
than those
