Exhibit 99.2
EXECUTION VERSION
SECURITY AGREEMENT
This SECURITY AGREEMENT (this
“Agreement” ) is dated as of May 21, 2009
and entered into by and among HEXCEL CORPORATION , a
Delaware corporation ( “Company” ), each of
THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of Company
(each of such undersigned Subsidiaries being a “Subsidiary
Grantor” and collectively “Subsidiary
Grantors” ), and each ADDITIONAL GRANTOR that may
become a party hereto after the date hereof in accordance with
Section 21 hereof (each of Company, each Subsidiary Grantor,
and each Additional Grantor being a “ Grantor ”
and collectively the “Grantors” ) and
DEUTSCHE BANK TRUST COMPANY AMERICAS , as Administrative
Agent for and representative of (in such capacity herein called
“ Secured Party ”) the Beneficiaries (as
hereinafter defined).
PRELIMINARY
STATEMENTS
A.
Pursuant to the Credit Agreement
dated as of May 21, 2009 (said Credit Agreement, as it may
hereafter be amended, restated, supplemented or otherwise modified
from time to time, being the “ Credit Agreement
”; all capitalized terms used herein (including the preamble
and preliminary statements hereto) and not otherwise defined in
Section 31 or elsewhere herein shall have the meanings
ascribed thereto in the Credit Agreement or, if not defined
therein, in the UCC), by and among Company, the financial
institutions from time to time party thereto as Lenders, Banc of
America Securities LLC, as syndication agent for Lenders, as a
joint book manager and as a joint lead arranger, Deutsche Bank
Securities Inc., as a joint book manager and as a joint lead
arranger, HSBC Bank USA, National Association, as a documentation
agent, RBS Citizens, N.A., as a documentation agent, Toronto
Dominion (New York) LLC, as a documentation agent, and Deutsche
Bank Trust Company Americas, as administrative agent for Lenders
(in such capacity, “ Administrative Agent ”),
Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain
credit facilities to Company.
B.
Company or a Subsidiary of Company
may from time to time enter, or may from time to time have entered,
into one or more Lender Swap Agreements with one or more Swap
Counterparties in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of Company or
such Subsidiary of Company under the Lender Swap Agreements,
including, without limitation, the obligation of Company or such
Subsidiary of Company to make payments thereunder in the event of
early termination thereof, together with all obligations of Company
under the Credit Agreement and the other Loan Documents, be secured
hereunder.
C.
Subsidiary Grantors have executed
and delivered the Subsidiary Guaranty, in favor of Secured Party
for the benefit of Lenders and any Swap Counterparties, pursuant to
which each Subsidiary Grantor has guarantied the prompt payment and
performance when due of
all obligations of Company under the Credit
Agreement and all obligations of Company and the applicable
Subsidiaries of Company under the Lender Swap
Agreements.
D.
It is a condition precedent to the
initial extensions of credit by Lenders under the Credit Agreement
that Grantors listed on the signature pages hereof shall have
granted the security interests and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE
, in consideration of the agreements
set forth herein and in the Credit Agreement and in order to induce
Lenders to make Loans and other extensions of credit under the
Credit Agreement and to induce Swap Counterparties to enter into
the Lender Swap Agreements, each Grantor hereby agrees with Secured
Party as follows:
SECTION 1.
Grant of
Security.
Each Grantor hereby grants to
Secured Party a continuing security interest and continuing lien on
all of such Grantor’s right, title and interest in, to and
under all of personal property of such Grantor, in each case
whether now owned or hereafter acquired or arising and wherever
located, including the following (all of which being hereinafter
collectively referred to as the “Collateral”
):
(a)
all Accounts;
(b)
all Chattel Paper;
(c)
all Money and all Deposit Accounts,
together with all amounts on deposit from time to time in such
Deposit Accounts;
(d)
all Documents;
(e)
all General Intangibles, including
all Intellectual Property Collateral, Payment Intangibles and
Software;
(f)
all Goods, including Inventory,
Equipment and Fixtures;
(g)
all Instruments;
(h)
all Investment Property;
(i)
all Letter-of-Credit Rights and
other Supporting Obligations;
(j)
all Records;
(k)
all Commercial Tort Claims,
including those set forth on Schedule 1 annexed hereto;
and
(l)
all Proceeds and Accessions with
respect to any of the foregoing Collateral.
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Each category of Collateral set
forth above shall have the meaning set forth in the UCC (to the
extent such term is defined in the UCC).
Notwithstanding the foregoing, the
Collateral shall not include and no Grantor shall be deemed to have
granted a security interest in: (i) any Equity Interest in a
Foreign Subsidiary that is not a first-tier Material Foreign
Subsidiary, (ii) more than 65% of the Capital Stock of
any Domestic Foreign Holding Company or first-tier Foreign
Corporation, (iii) any applications for trademarks or service
marks filed in the United States Patent and Trademark Office
pursuant to 15 U.S.C. § 1051 Section 1(b) unless and
until evidence of use of the mark in interstate commerce is
submitted to and accepted by the United States Patent and Trademark
Office pursuant to 15 U.S.C. §1051 Section 1(c) or
Section 1(d), at which point such trademark or service mark
application shall be considered automatically included in the
Collateral (and in the Intellectual Property Collateral), or
(iv) any of such Grantor’s rights or interests in or
under, any Restricted Patent or any lease, license, contract,
permit, Instrument, Security, agreement or franchise to which such
Grantor is a party or any of its rights or interests thereunder if
and for so long as, and to the extent that, the grant of such
security interest would constitute or result in (A) the
abandonment, invalidation or unenforceability of any right, title
or interest of any Grantor therein or (B) a breach or
termination pursuant to the terms of, or a default under, such
lease, license, contract, permit, Instrument, Security, agreement
or franchise (including, without limitation, relating to any of the
Restricted Patents) (other than to the extent that any such term
would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC of any relevant jurisdiction or under any
other applicable law (including the Bankruptcy Code) or principles
of equity); provided however, that, with respect to the
foregoing clause (iv), the security interest shall attach
immediately (and such Restricted Patent shall constitute Collateral
and Intellectual Property Collateral hereunder) at such time as the
condition causing such abandonment, invalidation, or
unenforceability shall be remedied or shall cease to exist and, to
the extent severable, shall attach immediately to any portion of
any such lease, license, contract, permit, Instrument, Security,
agreement or franchise that does not result in any of the
consequences set forth in subsection (A) or
(B) above.
SECTION 2.
Security for
Obligations.
This Agreement secures, and the
Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by
required prepayment, declaration, acceleration, demand or
otherwise, of all Secured Obligations of each Grantor.
“Secured Obligations” means:
(a)
with respect to Company, all
obligations of every nature of Company now or hereafter existing
under or arising out of or in connection with the Credit Agreement
and the other Loan Documents and any Lender Swap Agreement;
and
(b)
with respect to each Subsidiary
Grantor and Additional Grantor, all obligations of every nature of
such Subsidiary Grantor now or hereafter existing under or arising
out of or in connection with the Subsidiary Guaranty;
in each case together with all extensions or
renewals thereof, whether for principal, interest, reimbursement of
amounts drawn under Letters of Credit, payments for early
termination of
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Lender Swap Agreements, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct
or indirect, absolute or contingent, liquidated or unliquidated,
whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from Secured
Party or any Lender or Swap Counterparty as a preference,
fraudulent transfer or otherwise, and all obligations of every
nature of Grantors now or hereafter existing under this Agreement
(including, without limitation, interest and other amounts that,
but for the filing of a petition in bankruptcy with respect to
Company or any other Grantor, would have accrued on any such
obligations, whether or not a claim is allowed against Company or
such Grantor for such amounts in the related bankruptcy
proceeding).
SECTION 3.
Grantors Remain
Liable.
Anything contained herein to the
contrary notwithstanding, (a) the exercise by Secured Party of
any of its rights hereunder shall not release any Grantor from any
of its duties or obligations under the contracts, licenses and
agreements included in the Collateral, and (b) Secured Party
shall not have any obligation or liability under any contracts,
licenses, and agreements included in the Collateral by reason of or
arising out of this Agreement, nor shall 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.
Representations and
Warranties.
Each Grantor represents and warrants
as follows:
(a)
Ownership of
Collateral . Except
as expressly permitted by the Credit Agreement, such Grantor owns
its interests in the Collateral free and clear of any Lien and no
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing
or recording office, including any IP Filing Office.
(b)
Perfection
. The security interests in
the Collateral granted to Secured Party for the ratable benefit of
Lenders and Swap Counterparties hereunder constitute valid security
interests in the Collateral, securing the payment of the Secured
Obligations. Upon (i) the filing of UCC financing
statements naming each Grantor as “debtor”, naming
Secured Party as “secured party” and describing the
Collateral in the filing offices with respect to such Grantor set
forth on Schedule 2 annexed hereto, (ii) in the case of
the Securities Collateral consisting of certificated Securities or
evidenced by Instruments, in addition to filing of such UCC
financing statements, delivery of the certificates representing
such certificated Securities and delivery of such Instruments to
Secured Party (and in the case of Securities Collateral issued by a
foreign issuer, any actions required under foreign law to perfect a
security interest in such Securities Collateral), in each case duly
endorsed or accompanied by duly executed instruments of assignment
or transfer in blank, (iii) in the case of the Intellectual
Property Collateral, in addition to the filing of such UCC
financing statements, the recordation of a Grant with the
applicable IP Filing Office (and the taking of any actions required
to perfect or make effective the security interest of the Secured
Party in Intellectual Property Collateral created under the laws of
jurisdictions outside the United States and the making of
subsequent recordations in the
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IP Filing Offices with respect to Intellectual
Property Collateral acquired after the date hereof and with respect
to the Restricted Patents, if and when such Patents are no longer
Restricted Patents), (iv) in the case of Equipment that is
covered by a certificate of title, the filing with the registrar of
motor vehicles or other appropriate authority in the applicable
jurisdiction of an application requesting the notation of the
security interest created hereunder on such certificate of title,
and (v), in the case of any Deposit Account and any Investment
Property constituting a Security Entitlement, Securities Account,
Commodity Contract or Commodity Account, the execution and delivery
to Secured Party of an agreement providing for control by Secured
Party thereof, the security interests in the Collateral (other than
Collateral subject to the Mortgages or receivables subject to the
Federal Assignment of Claims Act) granted to Secured Party for the
ratable benefit of Lenders and Swap Counterparties will constitute
perfected security interests therein prior to all other Liens
(except for Permitted Encumbrances and Liens permitted by
subsection 7.2A of the Credit Agreement), and, subject to the
filings and other actions set forth in subsection (iii) above,
all filings and other actions necessary to perfect such security
interests have been duly made or taken.
(c)
Office Locations; Type and
Jurisdiction of Organization; Locations of Equipment and
Inventory. Such
Grantor’s name as it appears in official filings in the
jurisdiction of its organization, type of organization (i.e.
corporation, limited partnership, etc.), jurisdiction of
organization, principal place of business, chief executive office,
office where such Grantor keeps its Records regarding the Accounts,
Intellectual Property and originals of Chattel Paper, and
organization number provided by the applicable Government Authority
of the jurisdiction of organization are set forth on Schedule
3 annexed hereto. All of the Equipment and Inventory of
such Grantor located in the United States is located at the places
set forth on Schedule 4 annexed hereto, except for
(x) Inventory which, in the ordinary course of business, is in
transit either (i) from a supplier to a Grantor,
(ii) between the locations set forth on Schedule 4
annexed hereto, or (iii) to customers of a Grantor or
(y) Equipment and Inventory located elsewhere which has an
aggregate value at any one time not in excess of
$2,000,000.
(d)
Names . No Grantor (or predecessor by merger or
otherwise of such Grantor) has, within the five year period
preceding the date hereof, or, in the case of an Additional
Grantor, the date of the applicable Counterpart, had a different
name from the name of such Grantor listed on the signature
pages hereof, except the names set forth on Schedule 5
annexed hereto.
(e)
Delivery of Certain
Collateral . All
certificates or Instruments (excluding checks) evidencing,
comprising or representing the Collateral and required to be
delivered to the Secured Party pursuant to the terms hereof, the
Credit Agreement or any other Collateral Document have been
delivered to Secured Party duly endorsed or accompanied by duly
executed instruments of transfer or assignment in blank.
(f)
Securities Collateral
. Schedule 6 annexed
hereto sets forth all of the Pledged Equity owned by each Grantor,
and the percentage ownership in each issuer thereof; and
Schedule 7 annexed hereto sets forth all of the Pledged Debt
owned by such Grantor.
(g)
Intellectual Property
Collateral . A true
and complete list of all U.S. Trademark Registrations and
applications for any U.S. Trademark owned by such Grantor,
in
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whole or in part, is set forth on Schedule
8 annexed hereto; a true and complete list of all U.S. Patents
owned by such Grantor, in whole or in part, is set forth on
Schedule 9 annexed hereto; a true and complete list of all
U.S. Copyright Registrations and applications for U.S. Copyright
Registrations owned by such Grantor, in whole or in part, is set
forth on Schedule 10 annexed hereto; and such Grantor is not
aware of any pending or threatened claim by any third party that
any of the Intellectual Property Collateral owned, held or used by
such Grantor is invalid or unenforceable.
(h)
Deposit Accounts, Securities
Accounts, Commodity Accounts . Schedule 11 annexed hereto
lists all Deposit Accounts, Securities Accounts and Commodity
Accounts owned by each Grantor, and indicates the institution or
intermediary at which the account is held and the account
number.
(i)
Chattel Paper
. Such Grantor has no interest
in any item of Chattel Paper having a face value in excess of
$500,000, except as set forth in Schedule 12 annexed
hereto.
(j)
Letter-of-Credit
Rights . Such
Grantor has no interest in any Letter-of-Credit Rights having a
face value in excess of $1,000,000 in any case, except as set forth
on Schedule 13 annexed hereto.
The representations and warranties
as to the information set forth in Schedules referred to herein are
made as to each Grantor (other than Additional Grantors) as of the
date hereof and as to each Additional Grantor as of the date of the
applicable Counterpart, except that, in the case of a Pledge
Supplement, IP Supplement or notice delivered pursuant to
Section 5(d) hereof, such representations and warranties
are made as of the date of such supplement or notice.
SECTION 5.
Further
Assurances.
(a)
Generally . Each Grantor agrees that from time to
time, at the expense of Grantors, such Grantor will promptly
execute and deliver all further instruments and documents, and take
all further action, that may be necessary, or that Secured Party
may reasonably request, in order to perfect any security interest
granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) upon the
occurrence and during the continuation of a Potential Event of
Default or an Event of Default, notify Secured Party in writing of
receipt by such Grantor of any interest in Chattel Paper having in
any individual case a face value in excess of $500,000 and, at the
request of Secured Party, mark conspicuously each item of Chattel
Paper and each of its records pertaining to the Collateral, with a
legend, in form and substance reasonably satisfactory to Secured
Party, indicating that such Collateral is subject to the security
interest granted hereby, (ii) deliver to Secured Party all
promissory notes and other Instruments having in any individual
case a face value in excess of $500,000 and all original
counterparts of Chattel Paper having in any individual case a face
value in excess of $500,000, each duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to Secured Party,
(iii) (A) execute (if necessary) and file such financing
or continuation statements, or amendments thereto, (B) execute
and deliver, and cause to be executed and delivered, agreements
establishing that Secured Party has control of Deposit Accounts
and
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Securities Accounts of such Grantor (to the
extent required to comply with subsection 6.11 of the Credit
Agreement), and (C) upon the occurrence and during the
continuation of a Potential Event of Default or an Event of
Default, deliver such documents, instruments, notices, records
and consents, and take such other actions, in each case requested
by the Secured Party, necessary to establish that Secured Party has
control over electronic Chattel Paper and Letter-of-Credit Rights
of such Grantor having in any individual case a face value in
excess of $500,000 with respect to Chattel Paper and $1,000,000
with respect to Letter-of-Credit Rights, (iv) furnish to
Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral, in each case as Secured Party may
reasonably request, all in reasonable detail, and (v) at
Secured Party’s request, appear in and defend any action or
proceeding that may affect such Grantor’s title to or Secured
Party’s security interest in all or any material part of the
Collateral. Each Grantor hereby authorizes Secured Party to
file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral
(including any financing statement indicating that it covers
“all assets” or “all personal property” or
“all personal property of the debtor now owned or hereafter
acquired” of such Grantor) without the signature of any
Grantor.
(b)
Securities Collateral
. Without limiting the
generality of the foregoing Section 5(a), each Grantor agrees
that (i) all certificates or Instruments representing or
evidencing the Securities Collateral shall be delivered to and held
by or on behalf of Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor’s endorsement, where necessary,
or duly executed instruments of transfer or assignments in blank,
all in form and substance reasonably satisfactory to Secured Party
and (ii) it will, within thirty (30) days after the end of
each calendar quarter, deliver to Secured Party a Pledge
Supplement, duly executed by such Grantor, in respect of any
additional Equity Interests or Indebtedness constituting Securities
Collateral that were acquired during such calendar quarter;
provided , that the failure of any Grantor to execute a
Pledge Supplement with respect to any additional Securities
Collateral shall not impair the security interest of Secured Party
therein or otherwise adversely affect the rights and remedies of
Secured Party hereunder with respect thereto. Upon each such
acquisition, the representations and warranties contained in
Section 4(f) hereof shall be deemed to have been made by
such Grantor as to such Securities Collateral, whether or not such
Pledge Supplement is delivered.
(c)
Intellectual Property
Collateral . Within
thirty (30) days after the end of each calendar quarter, each
Grantor shall notify Secured Party in writing of any applications
or registrations for Patents, Trademarks or Copyrights filed in or
issued by the United States Patent and Trademark Office or the
United States Copyright Office, respectively, since the last
notification to Secured Party, and each Grantor owning such
application or registration of Intellectual Property Collateral
shall execute and deliver to Secured Party an IP Supplement with
respect thereto for recordation in the applicable IP Filing Office;
provided , the failure of any Grantor to execute an IP
Supplement for recordation with respect to any additional
Intellectual Property Collateral shall not impair the security
interest of Secured Party therein or otherwise adversely affect the
rights and remedies of Secured Party hereunder with respect
thereto. Upon delivery to Secured Party of an IP Supplement,
Schedules 8 , 9 and 10 annexed hereto and
Schedule A to each Grant, as applicable, shall be deemed
modified to include a reference to any right, title or interest in
any existing Intellectual Property Collateral or any Intellectual
Property Collateral set forth on Schedule A to such IP
Supplement. Upon each such acquisition, the
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representations and warranties contained in
Section 4(g) hereof shall be deemed to have been made by
such Grantor as to such Intellectual Property Collateral, whether
or not such IP Supplement is delivered, subject to any exceptions
made in the related IP Supplement actually delivered.
(d)
Commercial Tort Claims
. Grantors have no Commercial
Tort Claims as of the date hereof, except as set forth on
Schedule 1 annexed hereto. In the event that a Grantor
shall at any time after the date hereof have any material
Commercial Tort Claims, such Grantor shall promptly notify Secured
Party thereof in writing, which notice shall (i) set forth in
reasonable detail the basis for and nature of such Commercial Tort
Claim and (ii) constitute an amendment to this Agreement by
which such Commercial Tort Claim shall constitute part of the
Collateral.
SECTION 6.
Certain Covenants of
Grantors.
Each Grantor shall give Secured
Party at least 20 days’ prior written notice of (i) any
change in such Grantor’s name, type of organization,
principal place of business or chief executive office or
organizational number and (ii) any reincorporation,
reorganization or other action that results in a change of the
jurisdiction of organization of such Grantor.
SECTION 7.
Special Covenants With Respect
to Equipment and Inventory.
Each Grantor shall:
(a)
upon the occurrence and during the
continuation of an Event of Default, if any Inventory located in
the United States is in possession or control of any of such
Grantor’s agents or processors and the aggregate book value
of all such Inventory exceeds $1,000,000, instruct such agent or
processor to hold all such Inventory for the account of Secured
Party and subject to the instructions of Secured Party;
and
(b)
if any Inventory located in the
United States is located on premises leased by such Grantor and the
Inventory at such location has an aggregate book value in excess of
$1,000,000, use its commercially reasonable efforts to deliver to
Secured Party a fully executed landlord waiver or access agreement,
in form and substance reasonably satisfactory to Secured Party;
and
(c)
upon the occurrence and during the
continuation of an Event of Default, deliver to Secured Party any
negotiable Document issued to such Grantor in respect of Inventory
or Equipment located in the United States.
SECTION 8.
Special Covenants with respect
to Accounts.
(a)
Each Grantor shall maintain Records
of its Accounts and all documentation relating thereto in
accordance with sound business practices.
(b)
Each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at
Secured Party’s direction, shall take) such action as such
Grantor or Secured Party may deem necessary or advisable to enforce
collection of amounts due
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or to become due under the Accounts;
provided , however, that Secured Party shall have the right,
upon the occurrence and during the continuation of an Event of
Default and upon written notice to such Grantor of its intention to
do so, to (i) notify the account debtors or obligors under any
Accounts of the assignment of such Accounts to Secured Party and to
direct such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to
Secured Party, (ii) notify each Person maintaining a lockbox
or similar arrangement to which account debtors or obligors under
any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other
arrangement directly to Secured Party, (iii) enforce
collection of any such Accounts at the expense of Grantors, and
(iv) adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor
might have done. After receipt by such Grantor of the notice
from Secured Party referred to in the proviso to the preceding
sentence, (A) all amounts and proceeds (including checks and
other Instruments) received by such Grantor in respect of the
Accounts shall be received in trust for the benefit of Secured
Party hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over or delivered to Secured
Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided
by Section 17 hereof, and (B) such Grantor shall not,
without the written consent of Secured Party, adjust, settle or
compromise the amount or payment of any Account, or release wholly
or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 9.
Special Covenants With Respect
to the Securities Collateral.
(a)
Form of Securities
Collateral . Upon
the occurrence and during the continuance of an Event of Default,
the Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Securities
Collateral for certificates or instruments of smaller or larger
denominations. If any Securities Collateral is not a Security
pursuant to Section 8-103 of the UCC, no Grantor shall take
any action that, under such Section, converts such Securities
Collateral into a Security without causing the issuer thereof to
issue to it certificates or instruments evidencing such Securities
Collateral, which it shall promptly deliver to Secured Party as
provided in this Section 9(a).
(b)
Covenants . Each Grantor shall (i) upon the
occurrence and during the continuance of an Event of Default,
promptly deliver to Secured Party all written notices received by
it with respect to the Securities Collateral; (ii) at its
expense (A) perform and comply in all material respects with
all terms and provisions of any material agreement related to the
Securities Collateral required to be performed or complied with by
it, (B) maintain all such material agreements in full force
and effect and (C) enforce all such material agreements in
accordance with their terms except to the extent that the failure
to do so could not reasonably be expected to adversely affect
Secured Party’s right in or the value of such Securities
Collateral taken as a whole; and (iii) promptly execute and
deliver to Secured Party an agreement providing for control by
Secured Party of all Deposit Accounts and Securities Accounts of
such Grantor, in each case to the extent required to comply with
subsection 6.11 of the Credit Agreement.
(c)
Voting and
Distributions . So
long as no Event of Default shall have occurred and be continuing,
(i) each Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose
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not prohibited by the terms of this Agreement or
the Credit Agreement; and (ii) each Grantor shall be entitled
to receive and retain any and all dividends, other distributions,
principal and interest paid in respect of the Securities
Collateral.
Upon the occurrence and during the
continuation of an Event of Default, (x) upon written notice
from Secured Party to any Grantor, all rights of such Grantor to
exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant hereto shall cease, and
all such rights shall thereupon become vested in Secured Party who
shall thereupon have the sole right to exercise such voting and
other consensual rights, (y) except as otherwise specified in
the Credit Agreement, all rights of such Grantor to receive the
dividends, other distributions, principal and interest payments
which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon
become vested in Secured Party who shall thereupon have the sole
right to receive and hold as Collateral such dividends, other
distributions, principal and interest payments, and (z) all
dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of
clause (y) above shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of such Grantor
and shall forthwith be paid over to Secured Party as Collateral in
the same form as so received (with any necessary
endorsements).
In order to permit Secured Party to
exercise the voting and other consensual rights which it may be
entitled to exercise pursuant hereto and to receive all dividends
and other distributions which it may be entitled to receive
hereunder, (I) each Grantor shall promptly execute and deliver
(or cause to be executed and delivered) to Secured Party all such
proxies, dividend payment orders and other instruments as Secured
Party may from time to time reasonably request, and
(II) without limiting the effect of clause (I) above,
each Grantor hereby grants to Secured Party an irrevocable proxy to
vote the Pledged Equity and to exercise all other rights, powers,
privileges and remedies to which such Grantor would be entitled
(including giving or withholding written consents, calling special
meetings and voting at such meetings), which proxy shall be
effective, automatically and without the necessity of any action
(including any transfer of any Pledged Equity on the record books
of the issuer thereof) by any other Person (including the issuer of
the Pledged Equity or any officer or agent thereof), upon the
occurrence and during the continuance of an Event of Default and
which proxy shall only terminate upon the payment in full of the
Secured Obligations (other than Unasserted Obligations), the cure
of such Event of Default or the waiver thereof as evidenced by a
writing executed by Secured Party.
SECTION 10.
Special Covenants With Respect
to the Intellectual Property Collateral.
(a)
Each Grantor shall:
(i)
take any and all reasonable steps to
protect the secrecy of all material trade secrets relating to the
products and services sold or delivered under or in connection with
the Intellectual Property Collateral, including, without
limitation, where appropriate entering into confidentiality
agreements with employees and labeling and restricting access to
secret information and documents;
10
(ii)
use proper statutory notice in
connection with its use of any of the material Intellectual
Property Collateral to prevent loss of legal protection for such
Intellectual Property Collateral; and
(iii)
use a commercially appropriate
standard of quality (which may be consistent with such
Grantor’s past practices) in the manufacture, sale and
delivery of products and services sold or delivered under or in
connection with the Trademarks.
(b)
Each Grantor shall have the duty to
diligently prosecute, file and/or make, unless and until such
Grantor, in its commercially reasonable judgment, decides
otherwise, (i) any application for registration relating to
any of the Intellectual Property Collateral owned by such Grantor
and set forth on Schedules 8 , 9 or 10 annexed
hereto, as applicable, that is pen
