<PAGE>
EX 10.29
EXECUTION VERSION
SECURITY AGREEMENT
By
IONICS, INCORPORATED,
as Borrower
and
THE GUARANTORS PARTY HERETO
and
UBS AG, STAMFORD BRANCH,
as Collateral Agent
----------------------
Dated as of February 13, 2004
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S>
<C>
PREAMBLE................................................................................................
1
RECITALS................................................................................................
1
AGREEMENT...............................................................................................
2
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1.
DEFINITIONS.....................................................................
2
SECTION 1.2.
INTERPRETATION..................................................................
11
SECTION 1.3.
RESOLUTION OF DRAFTING
AMBIGUITIES..............................................
11
SECTION 1.4.
PERFECTION
CERTIFICATE..........................................................
11
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1.
GRANT OF SECURITY
INTEREST......................................................
11
SECTION 2.2.
FILINGS.........................................................................
13
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1.
DELIVERY OF CERTIFICATED SECURITIES
COLLATERAL.................................. 13
SECTION 3.2.
PERFECTION OF UNCERTIFICATED SECURITIES
COLLATERAL.............................. 14
SECTION 3.3.
FINANCING STATEMENTS AND OTHER FILINGS; MAINTENANCE OF PERFECTED
SECURITY
INTEREST.....................................................................
14
SECTION 3.4.
OTHER
ACTIONS...................................................................
15
SECTION 3.5.
JOINDER OF ADDITIONAL
GUARANTORS................................................
20
SECTION 3.6.
SUPPLEMENTS; FURTHER
ASSURANCES.................................................
20
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S>
<C>
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1.
TITLE...........................................................................
21
SECTION 4.2.
VALIDITY OF SECURITY
INTEREST...................................................
21
SECTION 4.3.
DEFENSE OF CLAIMS; TRANSFERABILITY OF PLEDGED
COLLATERAL........................ 22
SECTION 4.4.
OTHER FINANCING
STATEMENTS......................................................
22
SECTION 4.5.
CHIEF EXECUTIVE OFFICE; CHANGE OF NAME; JURISDICTION OF
ORGANIZATION............ 22
SECTION 4.6.
LOCATION OF INVENTORY AND
EQUIPMENT............................................. 22
SECTION 4.7.
DUE AUTHORIZATION AND
ISSUANCE..................................................
23
SECTION 4.8.
CONSENTS, ETC.
.................................................................
23
SECTION 4.9.
PLEDGED
COLLATERAL..............................................................
23
SECTION 4.10.
INSURANCE.......................................................................
23
SECTION 4.11.
PAYMENT OF TAXES; COMPLIANCE WITH LAWS; CONTESTING LIENS;
CLAIMS................ 23
SECTION 4.12.
ACCESS TO PLEDGED COLLATERAL, BOOKS AND RECORDS; OTHER
INFORMATION.............. 24
ARTICLE V
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 5.1.
PLEDGE OF ADDITIONAL SECURITIES
COLLATERAL...................................... 24
SECTION 5.2.
VOTING RIGHTS; DISTRIBUTIONS; ETC.
............................................. 25
SECTION 5.3.
DEFAULTS, ETC.
.................................................................
26
SECTION 5.4.
CERTAIN AGREEMENTS OF PLEDGORS AS ISSUERS AND HOLDERS OF EQUITY
INTERESTS....... 26
ARTICLE VI
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 6.1.
GRANT OF
LICENSE................................................................
27
SECTION 6.2.
PROTECTION OF COLLATERAL AGENT'S
SECURITY....................................... 27
SECTION 6.3.
AFTER-ACQUIRED
PROPERTY.........................................................
28
SECTION 6.4.
LITIGATION......................................................................
28
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S>
<C>
ARTICLE VII
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 7.1.
MAINTENANCE OF
RECORDS..........................................................
29
SECTION 7.2.
LEGEND..........................................................................
29
SECTION 7.3.
MODIFICATION OF TERMS, ETC.
.................................................... 30
SECTION 7.4.
COLLECTION......................................................................
30
ARTICLE VIII
TRANSFERS
SECTION 8.1.
TRANSFERS OF PLEDGED
COLLATERAL.................................................
30
ARTICLE IX
REMEDIES
SECTION 9.1.
REMEDIES........................................................................
30
SECTION 9.2.
NOTICE OF
SALE..................................................................
32
SECTION 9.3.
WAIVER OF NOTICE AND
CLAIMS.....................................................
33
SECTION 9.4.
CERTAIN SALES OF PLEDGED
COLLATERAL.............................................
33
SECTION 9.5.
NO WAIVER; CUMULATIVE
REMEDIES..................................................
35
SECTION 9.6.
CERTAIN ADDITIONAL ACTIONS REGARDING INTELLECTUAL
PROPERTY...................... 35
ARTICLE X
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL DISPOSITIONS;
APPLICATION OF PROCEEDS
SECTION 10.1.
PROCEEDS OF CASUALTY EVENTS AND COLLATERAL
DISPOSITIONS......................... 36
SECTION 10.2.
APPLICATION OF
PROCEEDS.........................................................
36
ARTICLE XI
MISCELLANEOUS
SECTION 11.1.
CONCERNING COLLATERAL
AGENT.....................................................
36
SECTION 11.2.
COLLATERAL AGENT MAY PERFORM; COLLATERAL AGENT APPOINTED
ATTORNEY-IN-FACT....... 37
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S>
<C>
SECTION 11.3.
CONTINUING SECURITY INTEREST;
ASSIGNMENT........................................ 38
SECTION 11.4.
TERMINATION;
RELEASE............................................................
38
SECTION 11.5.
MODIFICATION IN
WRITING.........................................................
38
SECTION 11.6.
NOTICES.........................................................................
38
SECTION 11.7.
GOVERNING LAW, CONSENT TO JURISDICTION AND SERVICE OF PROCESS;
WAIVER OF JURY
TRIAL........................................................................
39
SECTION 11.8.
SEVERABILITY OF
PROVISIONS......................................................
39
SECTION 11.9.
EXECUTION IN
COUNTERPARTS.......................................................
39
SECTION 11.10.
BUSINESS
DAYS...................................................................
39
SECTION 11.11.
WAIVER OF
STAY..................................................................
39
SECTION 11.12.
NO CREDIT FOR PAYMENT OF TAXES OR
IMPOSITION.................................... 40
SECTION 11.13.
NO CLAIMS AGAINST COLLATERAL
AGENT.............................................. 40
SECTION 11.14.
NO
RELEASE......................................................................
40
SECTION 11.15.
OBLIGATIONS
ABSOLUTE............................................................
40
SIGNATURES..............................................................................................
S-1
</TABLE>
Schedule 3.4(b) Deposit
Accounts
Schedule 3.4(i) Third
Party Agreements
EXHIBIT 1
Form of Issuer's Acknowledgment
EXHIBIT 2
Form of Securities Pledge Amendment
EXHIBIT 3
Form of Joinder Agreement
EXHIBIT 4
Form of Control Agreement Concerning Securities Accounts
EXHIBIT 5
Form of Control Agreement Concerning Deposit Accounts
EXHIBIT 6
Form of Copyright Security Agreement
EXHIBIT 7
Form of Patent Security Agreement
EXHIBIT 8
Form of Trademark Security Agreement
EXHIBIT 9
Form of Bailee's Letter
-iv-
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of February 13, 2004 (as
amended, amended and restated, supplemented
or otherwise modified from time to
time in accordance with the provisions
hereof, the "Agreement") made by IONICS,
INCORPORATED, a Massachusetts corporation
(the "Borrower") and THE GUARANTORS
LISTED ON THE SIGNATURE PAGES HERETO (the
"Original Guarantors") OR FROM TIME TO
TIME PARTY HERETO BY EXECUTION OF A JOINDER
AGREEMENT (the "Additional
Guarantors," and together with the Original
Guarantors, the "Guarantors"), as
pledgors, assignors and debtors (the
Borrower, together with the Guarantors, in
such capacities and together with any
successors in such capacities, the
"Pledgors," and each, a "Pledgor"), in
favor of UBS AG, STAMFORD BRANCH, in its
capacity as collateral agent pursuant to
the Credit Agreement (as hereinafter
defined), as pledgee, assignee and secured
party (in such capacities and
together with any successors in such
capacities, the "Collateral Agent").
R E C I T A L S :
A. The
Borrower, the Original Guarantors, the Collateral
Agent and the lending institutions listed
therein (the "Lenders") have, in
connection with the execution and delivery
of this Agreement, entered into that
certain credit agreement, dated as of
February 13, 2004 (as amended, amended and
restated, supplemented or otherwise
modified from time to time, the "Credit
Agreement").
B. Each
Original Guarantor has, pursuant to the Credit
Agreement, unconditionally guaranteed the
Obligations.
C. The
Borrower and each Original Guarantor will receive
substantial benefits from the execution,
delivery and performance of the
obligations under the Credit Agreement and
the other Loan Documents and each is,
therefore, willing to enter into this
Agreement.
D.
Each
Pledgor is or, as to Pledged Collateral (as
hereinafter defined) acquired by such
Pledgor after the date hereof will be, the
legal and/or beneficial owner of the
Pledged Collateral pledged by it hereunder.
E. This
Agreement is given by each Pledgor in favor of
the Collateral Agent for the benefit of the
Secured Parties (as hereinafter
defined) to secure the payment and
performance of all of the Obligations (as
hereinafter defined).
F. It
is a condition to the obligations of the Lenders
to make the Loans under the Credit
Agreement and a condition to the Issuing Bank
issuing Letters of Credit under the Credit
Agreement that each Pledgor execute
and deliver the applicable Loan Documents,
including this Agreement.
<PAGE>
A G R E E M E N T :
NOW THEREFORE, in consideration of the foregoing
premises and other good and valuable
consideration, the receipt and sufficiency
of which are hereby acknowledged, each
Pledgor and the Collateral Agent hereby
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions.
(a) Unless
otherwise defined herein or in the Credit
Agreement, capitalized terms used herein
that are defined in the UCC shall have
the meanings assigned to them in the
UCC.
(b) Terms used
but not otherwise defined herein that are
defined in the Credit Agreement shall have
the meanings given to them in the
Credit Agreement. Sections 1.03 and 1.05 of
the Credit Agreement shall apply
herein mutatis mutandis.
(c) The
following terms shall have the following
meanings:
"Acquisition Document Rights" shall mean, with respect to each
Pledgor, collectively, all of such
Pledgor's rights, title and interest in, to
and under the Acquisition Documents,
including (i) all rights and remedies
relating to monetary damages, including
indemnification rights and remedies, and
claims for damages or other relief pursuant
to or in respect of the Acquisition
Documents, (ii) all rights and remedies
relating to monetary damages, including
indemnification rights and remedies, and
claims for monetary damages under or in
respect of the agreements, documents and
instruments referred to in the
Acquisition Documents or related thereto
and (iii) all proceeds, collections,
recoveries and rights of subrogation with
respect to the foregoing.
"Additional Guarantors" shall have the meaning assigned to
such term in the Preamble hereof.
"Additional Pledged Interests" shall mean, collectively, with
respect to each Pledgor, (i) all options,
warrants, rights, agreements,
additional membership, partnership or other
equity interests of whatever class
of any issuer of Initial Pledged Interests
or any interest in any such issuer,
together with all rights, privileges,
authority and powers of such Pledgor
relating to such interests in each such
issuer or under any Organizational
Document of any such issuer, and the
certificates, instruments and agreements
representing such membership, partnership
or other
-2-
<PAGE>
interests and any and all interest of such
Pledgor in the entries on the books
of any financial intermediary pertaining to
such membership, partnership or
other equity interests from time to time
acquired by such Pledgor in any manner
and (ii) all membership, partnership or
other equity interests, as applicable,
of each limited liability company,
partnership or other entity (other than a
corporation) hereafter acquired or formed
by such Pledgor and all options,
warrants, rights, agreements, additional
membership, partnership or other equity
interests of whatever class of such limited
liability company, partnership or
other entity, together with all rights,
privileges, authority and powers of such
Pledgor relating to such interests or under
any Organizational Document of any
such issuer, and the certificates,
instruments and agreements representing such
membership, partnership or other equity
interests and any and all interest of
such Pledgor in the entries on the books of
any financial intermediary
pertaining to such membership, partnership
or other interests, from time to time
acquired by such Pledgor in any manner.
"Additional Pledged Shares" shall mean, collectively, with
respect to each Pledgor, (i) all options,
warrants, rights, agreements,
additional shares of capital stock of
whatever class of any issuer of the
Initial Pledged Shares or any other equity
interest in any such issuer, together
with all rights, privileges, authority and
powers of such Pledgor relating to
such interests issued by any such issuer
under any Organizational Document of
any such issuer, and the certificates,
instruments and agreements representing
such interests and any and all interest of
such Pledgor in the entries on the
books of any financial intermediary
pertaining to such interests, from time to
time acquired by such Pledgor in any manner
and (ii) all the issued and
outstanding shares of capital stock of each
corporation hereafter acquired or
formed by such Pledgor and all options,
warrants, rights, agreements or
additional shares of capital stock of
whatever class of such corporation,
together with all rights, privileges,
authority and powers of such Pledgor
relating to such shares or under any
Organizational Document of such
corporation, and the certificates,
instruments and agreements representing such
shares and any and all interest of such
Pledgor in the entries on the books of
any financial intermediary pertaining to
such shares, from time to time acquired
by such Pledgor in any manner.
"Agreement" shall have the meaning assigned to such term in
the Preamble hereof.
"Bailee Letter" shall be an agreement in form substantially
similar to Exhibit 9 annexed hereto.
"Borrower" shall have the meaning assigned to such term in the
Preamble hereof.
"Claims" shall mean any and all property and other taxes,
assessments and special assessments,
levies, fees and all governmental charges
imposed upon or assessed against, and
landlords', carriers', mechanics',
workmen's, repairmen's, laborers',
materialmen's, suppliers' and warehousemen's
Liens and other claims arising by operation
of law against, all or any portion
of the Pledged Collateral.
-3-
<PAGE>
"Collateral Account" shall mean a collateral account or
sub-account established and maintained in
accordance with the provisions of
Section 9.01 of the Credit Agreement and
all property from time to time on
deposit in the Collateral Account.
"Collateral
Agent" shall have the meaning assigned to such
term in the Preamble hereof.
"Commodity Account Control Agreement" shall mean a commodity
account control agreement in a form that is
reasonably satisfactory to the
Collateral Agent.
"Contested Liens" shall mean, collectively, any Liens incurred
in respect of any Claims to the extent that
the amounts owing in respect thereof
are not yet delinquent or are being
contested and otherwise comply with the
provisions of Section 4.11 hereof;
provided, however, that such Liens shall in
all respects be subject and subordinate in
priority to the Lien and security
interest created by this Agreement, except
if and to the extent that the law or
regulation creating, permitting or
authorizing such Lien provides that such Lien
must be superior to the Lien and security
interest created and evidenced hereby.
"Contracts" shall mean, collectively, with respect to each
Pledgor, all sale, service, performance,
equipment or property lease contracts,
licenses, agreements and grants and all
other contracts, agreements or grants
(in each case, whether written or oral, or
third party or intercompany), between
such Pledgor and third parties, and all
assignments, amendments, restatements,
supplements, extensions, renewals,
replacements or modifications thereof.
"Control" shall mean (i) in the case of each Deposit Account,
"control," as such term is defined in
Section 9-104 of the UCC, and (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.
"Control Agreements" shall mean, collectively, each Deposit
Account Control Agreement, each Securities
Account Control Agreement and each
Commodity Account Control Agreement.
"Copyrights" shall mean, collectively, all copyrights (whether
statutory or common law, whether
established or registered in the United States
or any other country or any political
subdivision thereof, whether registered or
unregistered and whether published or
unpublished) and all copyright
registrations and applications, together
with any and all (i) rights and
privileges arising under applicable law
with respect to the use of such
copyrights, (ii) renewals and extensions
thereof and reversionary interests and
terminations rights with respect thereto,
(iii) income, fees, royalties,
damages, claims and payments now or
hereafter due and/or payable with respect
thereto, including damages and payments for
past, present or future
infringements thereof, (iv) rights
corresponding thereto throughout the world
and (v) rights to sue for past, present or
future infringements thereof and
accountings with respect thereto.
-4-
<PAGE>
"Copyright Security Agreement" shall mean an agreement
substantially in the form annexed hereto as
Exhibit 6.
"Credit
Agreement" shall have the meaning assigned to such
term in Recital A hereof.
"Deposit Account Control Agreement" shall mean an agreement
substantially in the form annexed hereto as
Exhibit 5 or such other form that is
reasonably satisfactory to the Collateral
Agent.
"Deposit Accounts" shall mean, collectively, with respect to
each Pledgor, (i) all "deposit accounts" as
such term is defined in the UCC and
in any event shall include the LC
Sub-Account and the Collateral Account and all
accounts and sub-accounts relating to any
of the foregoing accounts and (ii) all
cash, funds, checks, notes and instruments
from time to time on deposit in any
of the accounts or sub-accounts described
in clause (i) of this definition.
"Distributions" shall mean, collectively, with respect to each
Pledgor, 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 Pledgor in respect of or in exchange
for any or all of the Pledged
Securities or Intercompany Notes.
"Excluded Property" shall mean:
(a) any lease,
license, contract, property right or
agreement to which any Pledgor is a party, or any license,
consent,
permit, variance, certification, authorization or approval of
any
Governmental Authority (or any person acting on behalf of a
Governmental Authority) of which any Pledgor is the owner or
beneficiary, or any of its rights or interests thereunder, if and
for
so long as the grant of such security interest shall constitute
or
result in (i) the abandonment, invalidation or unenforceability of
any
right, title or interest of any Pledgor therein or (ii) in a breach
or
termination pursuant to the terms of, or a default under, any
such
lease, license, contract, property right or agreement or such
license,
consent, permit, variance, certification, authorization or
approval
(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 (or any successor provision or provisions) of any relevant
jurisdiction or any other applicable law or principles of
equity);
(b) Equipment
owned by any Pledgor on the date hereof or
hereafter acquired that is subject to a Lien securing a Purchase
Money
Obligation or Capital Lease Obligation permitted to be incurred
pursuant to the provisions of the Credit Agreement if the contract
or
other agreement in which such Lien is granted (or the
documentation
providing for such Purchase Money Obligation or Capital Lease
Obligation) validly prohibits the creation of any other Lien on
such
Equipment;
-5-
<PAGE>
(c) any
Investment Property or Pledged Securities
consisting of Equity Interests in any Foreign Subsidiary to the
extent
that granting a security interest therein would constitute an
investment of earnings in United States property under Section 956
(or
a successor provision) of the Code, which investment would or
could
reasonably be expected to trigger a material increase in the
taxable
income of a United States shareholder of such Subsidiary pursuant
to
Section 951 (or a successor provision) of the Code, as
reasonably
determined by Borrower and the Collateral Agent; provided that
this
exception shall not apply to (A) Voting Stock of any Subsidiary
which
is a first-tier controlled foreign corporation (as defined in
Section
957(a) of the Code) representing up to 65% of the total voting
power of
all outstanding Voting Stock of such Subsidiary and (B) any portion
of
the Equity Interests not constituting Voting Stock of any such
Subsidiary, except that any such Equity Interests constituting
"stock
entitled to vote" within the meaning of Treasury Regulation
Section
1.956-2(c)(2) shall be treated as Voting Stock for purposes of
this
clause (c); and
(d) the
Escrowed Amounts;
provided, however, that the foregoing shall
cease to constitute Excluded
Property immediately at such time as the
condition causing such abandonment,
invalidation or unenforceability shall be
remedied and, to the extent severable,
any portion of such lease, license,
contract, property right, agreement,
Equipment, Investment Property or Pledged
Securities that does not result in any
of the consequences specified in clause
(a), (b) or (c) shall not constitute
Excluded Property including, without
limitation, any Proceeds of such lease,
license, contract, property right,
agreement, Equipment, Investment Property or
Pledged Securities.
"General Intangibles" shall mean, collectively, with respect
to each Pledgor, all "general intangibles,"
as such term is defined in the UCC,
of such Pledgor and, in any event, shall
include (i) all of such Pledgor's
rights, title and interest in, to and under
all insurance policies and
Contracts, (ii) all know-how and warranties
relating to any of the Pledged
Collateral or the Mortgaged Property, (iii)
any and all other rights, claims,
choses-in-action and causes of action of
such Pledgor against any other person
and the benefits of any and all collateral
or other security given by any other
person in connection therewith, (iv) all
guarantees, endorsements and
indemnifications on, or of, any of the
Pledged Collateral or any of the
Mortgaged Property, (v) all lists, books,
records, correspondence, ledgers,
printouts, files (whether in printed form
or stored electronically), tapes and
other papers or materials containing
information relating to any of the Pledged
Collateral or any of the Mortgaged
Property, including all customer or tenant
lists, identification of suppliers, data,
plans, blueprints, specifications,
designs, drawings, appraisals, recorded
knowledge, surveys, studies, engineering
reports, test reports, manuals, standards,
processing standards, performance
standards, catalogs, research data,
computer and automatic machinery software
and programs and the like, field repair
data, accounting information pertaining
to such Pledgor's operations or any of the
Pledged Collateral or any of the
Mortgaged Property and all media in which
or on which any of the information or
knowledge or data or records may be
recorded or stored and all computer programs
used for the compilation or printout of
such in-
-6-
<PAGE>
formation, knowledge, records or data, (vi)
all licenses, consents, permits,
variances, certifications, authorizations
and approvals, however characterized,
of any Governmental Authority (or any
person acting on behalf of a Governmental
Authority) now or hereafter acquired or
held by such Pledgor pertaining to
operations now or hereafter conducted by
such Pledgor or any of the Pledged
Collateral or any of the Mortgaged Property
including building permits,
certificates of occupancy, environmental
certificates, industrial permits or
licenses and certificates of operation and
(vii) all rights to reserves,
deferred payments, deposits, refunds,
indemnification of claims to the extent
the foregoing relate to any Pledged
Collateral or Mortgaged Property and claims
for tax or other refunds against any
Governmental Authority relating to any
Pledged Collateral or any of the Mortgaged
Property.
"Goodwill" shall mean, collectively, with respect to each
Pledgor, the goodwill connected with such
Pledgor's business including all
goodwill connected with the use of and
symbolized by (i) any Trademark or
Trademark License in which such Pledgor has
any interest and (ii) all product
lines of such Pledgor's business.
"Guarantors" shall have the meaning assigned to such term in
the Preamble hereof.
"Initial Pledged Interests" shall mean, with respect to each
Pledgor, all membership, partnership or
other equity interests (other than in a
corporation), as applicable, of each issuer
described in Schedule 10 annexed to
the Perfection Certificate, together with
all rights, privileges, authority and
powers of such Pledgor in and to each such
issuer or under any Organizational
Document of each such issuer, and the
certificates, instruments and agreements
representing such membership, partnership
or other interests and any and all
interest of such Pledgor in the entries on
the books of any financial
intermediary pertaining to such membership,
partnership or other interests.
"Initial Pledged Shares" shall mean, collectively, with
respect to each Pledgor, the issued and
outstanding shares of capital stock of
each issuer described in Schedule 10
annexed to the Perfection Certificate
together with all rights, privileges,
authority and powers of such Pledgor
relating to such interests in each such
issuer or under any Organizational
Document of each such issuer, and the
certificates, instruments and agreements
representing such shares of capital stock
and any and all interest of such
Pledgor in the entries on the books of any
financial intermediary pertaining to
the Initial Pledged Shares.
"Instruments" shall mean, collectively, with respect to each
Pledgor, all "instruments," as such term is
defined in Article 9, rather than
Article 3, of the UCC, and shall include
all promissory notes, drafts, bills of
exchange or acceptances.
"Intellectual Property" shall mean, collectively, all patents,
patent applications, rights and interests
in patents, trademarks, trade names,
service marks, names and likenesses,
copyrights and rights under copyright,
technology, trade secrets, proprietary
information, confi-
-7-
<PAGE>
dential information, domain names, data,
software, know-how and processes,
including, without limitation, all Patents,
Trade Secrets, Trademarks,
Copyrights, Licenses and Goodwill.
"Intellectual Property Collateral" shall mean all Intellectual
Property that constitutes Pledged
Collateral.
"Intercompany Notes" shall mean, with respect to each Pledgor,
all intercompany notes described in
Schedule 11 annexed to the Perfection
Certificate and intercompany notes
hereafter acquired by such Pledgor and all
certificates, instruments or agreements
evidencing such intercompany notes, and
all assignments, amendments, restatements,
supplements, extensions, renewals,
replacements or modifications thereof to
the extent permitted pursuant to the
terms hereof.
"Investment Property" shall mean a security, whether
certificated or uncertificated, Security
Entitlement, Securities Account,
Commodity Contract or Commodity
Account.
"Joinder Agreement" shall mean an agreement substantially in
the form annexed hereto as Exhibit 3.
"Lenders" shall have the meaning assigned to such term in
Recital A hereof.
"Licenses" shall mean, collectively, all license and
distribution agreements with, and covenants
not to sue, any other party with
respect to any Patent, Trade Secret,
Trademark or Copyright or any other patent,
trade secret, trademark or copyright,
whether a Pledgor is a licensor or
licensee, distributor or distributee under
any such license or distribution
agreement, together with any and all (i)
renewals, extensions, supplements and
continuations thereof, (ii) income, fees,
royalties, damages, claims and
payments now and hereafter due and/or
payable thereunder and with respect
thereto including damages and payments for
past, present or future infringements
or violations thereof, (iii) rights to sue
for past, present and future
infringements or violations thereof and
(iv) other rights to use, exploit or
practice any or all of the Patents, Trade
Secrets, Trademarks or Copyrights or
any other patent, trade secret, trademark
or copyright.
"Mortgaged Property" shall have the meaning assigned to such
term in the Mortgages.
"Original Guarantors" shall have the meaning assigned to such
term in the Preamble hereof.
"Patents" shall mean, collectively, all patents issued or
assigned to and all patent applications and
registrations (whether established
or registered or recorded in the United
States or any other country or any
political subdivision thereof), together
with any and all (i) rights and
privileges arising under applicable law
with respect to the use of any patents,
(ii) inventions and improvements described
and claimed therein, (iii) reissues,
divisions, continuations, renewals,
extensions and continuations-in-part
thereof, (iv) income, fees, royalties,
damages, claims and
-8-
<PAGE>
payments now or hereafter due and/or
payable thereunder and with respect thereto
including damages and payments for past,
present or future infringements
thereof, (v) rights corresponding thereto
throughout the world and (vi) rights
to sue for past, present or future
infringements thereof.
"Patent Security Agreement" shall mean an agreement
substantially in the form annexed hereto as
Exhibit 7.
"Perfection Certificate" shall mean that certain perfection
certificate dated February 13, 2004
executed and delivered by each Pledgor in
favor of the Collateral Agent for the
benefit of the Secured Parties, and each
other Perfection Certificate (which shall
be in form and substance reasonably
acceptable to the Collateral Agent)
executed and delivered by the applicable
Guarantor in favor of the Collateral Agent
for the benefit of the Secured
Parties contemporaneously with the
execution and delivery of each Joinder
Agreement executed in accordance with
Section 3.5 hereof, in each case, as the
same may be amended, amended and restated,
supplemented or otherwise modified
from time to time in accordance with the
Credit Agreement or upon the request of
the Collateral Agent.
"Pledge
Amendment" shall have the meaning assigned to such
term in Section 5.1 hereof.
"Pledged Collateral" shall have the meaning assigned to such
term in Section 2.1 hereof.
"Pledged Interests" shall mean, collectively, the Initial
Pledged Interests and the Additional
Pledged Interests; provided, however, that
to the extent applicable, Pledged Interests
shall not include any interest which
is not required to be pledged pursuant to
Section 5.11(b) of the Credit
Agreement.
"Pledged Securities" shall mean, collectively, the Pledged
Interests, the Pledged Shares and the
Successor Interests.
"Pledged Shares" shall mean, collectively, the Initial Pledged
Shares and the Additional Pledged Shares;
provided, however, that Pledged Shares
shall not include any shares which are not
required to be pledged pursuant to
Section 5.11(b) of the Credit
Agreement.
"Pledgor" shall have the meaning assigned to such term in the
Preamble hereof.
"Secured Parties" shall mean, collectively, the Administrative
Agent, the Collateral Agent, each other
Agent, the Lenders, the Issuing Bank and
each party to a Hedging Agreement relating
to the Loans if at the date of
entering into such Hedging Agreement such
person was an Agent or a Lender or an
Affiliate of an Agent or a Lender and such
person executes and delivers to the
Administrative Agent a letter agreement in
form and substance acceptable to the
Administrative Agent pursuant to which such
person (i) appoints the Collateral
Agent as its agent
-9-
<PAGE>
under the applicable Loan Documents and
(ii) agrees to be bound by the
provisions of Sections 9.03, 11.03 and
11.09 of the Credit Agreement.
"Securities Account Control Agreement" shall mean an agreement
substantially in the form annexed hereto as
Exhibit 4 or such other form that is
reasonably satisfactory to the Collateral
Agent.
"Securities Collateral" shall mean, collectively, the Pledged
Securities, the Intercompany Notes and the
Distributions.
"Successor Interests" shall mean, collectively, with respect
to each Pledgor, all shares of each class
of the capital stock of the successor
corporation or interests or certificates of
the successor limited liability
company, partnership or other entity owned
by such Pledgor (unless such
successor is such Pledgor itself) formed by
or resulting from any consolidation
or merger in which any person listed in
Schedule 1(a) annexed to the Perfection
Certificate is not the surviving entity;
provided, however, that to the extent
applicable, Successor Interest shall not
include any shares or interests which
are not required to be pledged pursuant to
Section 5.11(b) of the Credit
Agreement.
"Trade Secrets" shall mean, collectively, with respect to each
Pledgor, all know-how, trade secrets,
customer and supplier lists, proprietary
information, inventions, methods,
procedures, formulae, descriptions,
compositions, technical data, drawings,
specifications, name plates, catalogs,
confidential information and the right to
limit the use or disclosure thereof by
any person, pricing and cost information,
business and marketing plans and
proposals, consulting agreements,
engineering contracts and such other assets
which relate to the goodwill connected with
such Pledgor's business.
"Trademarks" shall mean, collectively, with respect to each
Pledgor, all trademarks (including service
marks), slogans, logos, certification
marks, trade dress, uniform resource
locations (URL's), domain names, corporate
names and trade names, whether registered
or unregistered, owned by or assigned
and all registrations and applications for
the foregoing (whether statutory or
common law and whether established or
registered in the United States or any
other country or any political subdivision
thereof), together with any and all
(i) rights and privileges arising under
applicable law with respect to the use
of any trademarks, (ii) reinstatements,
revivals, reissues, continuations,
extensions and renewals thereof and
oppositions with respect thereto, (iii)
income, fees, royalties, damages and
payments now and hereafter due and/or
payable thereunder and with respect
thereto, including damages, claims and
payments for past, present or future
infringements, misappropriation or dilution
thereof, (iv) rights corresponding thereto
throughout the world and (v) rights
to sue for past, present and future
infringements, misappropriation or dilution
thereof.
"Trademark Security Agreement" shall mean an agreement
substantially in the form annexed hereto as
Exhibit 8.
-10-
<PAGE>
"UCC" shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of New York;
provided, however, that if by reason
of mandatory provisions of law, any or all
of the attachment, perfection or
priority of the Collateral Agent's and the
Secured Parties' security interest in
any item or portion of the Pledged
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 on the date
hereof in such other jurisdiction for
purposes of the provisions hereof relating
to such attachment, perfection or priority
and for purposes of definitions
relating to such provisions.
SECTION 1.2. Interpretation. The rules of interpretation
specified in the Credit Agreement
(including Section 1.03 thereof) shall be
applicable to this Agreement.
SECTION 1.3. Resolution of Drafting Ambiguities. Each Pledgor
acknowledges and agrees that it was
represented by counsel in connection with
the execution and delivery hereof, that it
and its counsel reviewed and
participated in the preparation and
negotiation hereof and that any rule of
construction to the effect that ambiguities
are to be resolved against the
drafting party (i.e., the Collateral Agent)
shall not be employed in the
interpretation hereof.
SECTION 1.4. Perfection Certificate. The Collateral Agent and
each Secured Party agree that the
Perfection Certificate and all descriptions of
Pledged Collateral, schedules, amendments
and supplements thereto are and shall
at all times remain a part of this
Agreement.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1. Grant of Security Interest. As collateral
security for the payment and performance in
full of all the Obligations, each
Pledgor hereby pledges and grants to the
Collateral Agent for the benefit of the
Secured Parties, a lien on and security
interest in and to all of the right,
title and interest of such Pledgor in, to
and under the following property,
wherever located, whether now existing or
hereafter arising or acquired from
time to time (collectively, the "Pledged
Collateral"):
(i) all
Accounts;
(ii)
all Equipment, Goods, Inventory and Fixtures;
(iii) all
Documents, Instruments and Chattel Paper;
(iv)
all Letters of Credit and Letter-of-Credit Rights;
-11-
<PAGE>
(v) all
Securities Collateral;
(vi)
all Collateral Accounts;
(vii) all
Investment Property;
(viii) all
Intellectual Property;
(ix)
the Commercial Tort Claims described on Schedule 14
to the Perfection Certificate;
(x) all
General Intangibles;
(xi)
all Deposit Accounts;
(xii) all
Acquisition Documents and Acquisition Document
Rights;
(xiii) all
Supporting Obligations;
(xiv) all
books and records relating to the Pledged
Collateral; and
(xv)
to the extent not covered by clauses (i) through
(xiv) of this sentence, all other personal property
of such Pledgor, whether tangible or intangible, and
all Proceeds and products of each of the foregoing
and all accessions to, substitutions and replacements
for, and rents, profits and products of, each of the
foregoing, and any and all Proceeds of any insurance,
indemnity, warranty or guaranty payable to such
Pledgor from time to time with respect to any of the
foregoing.
Notwithstanding anything to the contrary contained in clauses
(i) through (xv) above, the security
interest created by this Agreement shall
not extend to, and the term "Pledged
Collateral" shall not include, any Excluded
Property and (i) the Pledgors shall from
time to time at the reasonable request
of the Collateral Agent give written notice
to the Collateral Agent identifying
in reasonable detail the Excluded Property
and shall provide to the Collateral
Agent such other information regarding the
Excluded Property as the Collateral
Agent may reasonably request and (ii) from
and after the Closing Date, no
Pledgor shall permit to become effective in
any document creating, governing or
providing for any contract, permit, lease
or license, a provision that would
prohibit the creation of a Lien on such
permit, lease or license in favor of the
Collateral Agent unless such Pledgor
believes, in its reasonable judgment, that
such prohibition is usual and customary in
transactions of such type.
SECTION 2.2. Filings. (a) Each Pledgor hereby irrevocably
authorizes the Collateral Agent at any time
and from time to time to file in any
relevant jurisdiction any initial financing
statements (including fixture
filings) and amendments thereto that
contain the informa-
-12-
<PAGE>
tion required by Article 9 of the Uniform
Commercial Code of each applicable
jurisdiction for the filing of any
financing statement or amendment relating to
the Pledged Collateral, including (i)
whether such Pledgor is an organization,
the type of organization and any
organizational identification number issued to
such Pledgor, (ii) any financing or
continuation statements or other documents
without the signature of such Pledgor where
permitted by law, including the
filing of a financing statement describing
the Pledged Collateral as "all assets
in which the Pledgor now owns or hereafter
acquires rights" and (iii) in the
case of a financing statement filed as a
fixture filing or covering Pledged
Collateral constituting minerals or the
like to be extracted or timber to be
cut, a sufficient description of the real
property to which such Pledged
Collateral relates. Each Pledgor agrees to
provide all information described in
the immediately preceding sentence to the
Collateral Agent promptly upon
request.
(b) Each
Pledgor hereby ratifies its authorization for
the Collateral Agent to file in any
relevant jurisdiction any initial financing
statements or amendments thereto relating
to the Pledged Collateral if filed
prior to the date hereof.
(c) Each
Pledgor hereby further authorizes the Collateral
Agent to file filings with the United
States Patent and Trademark Office or
United States Copyright Office (or any
successor office or any similar office in
any other country), including this
Agreement, the Copyright Security Agreement,
the Patent Security Agreement and the
Trademark Security Agreement, or other
documents for the purpose of creating,
perfecting, confirming, continuing,
enforcing, protecting or putting third
parties on notice of the security
interest granted by such Pledgor hereunder,
without the signature of such
Pledgor, and naming such Pledgor, as
debtor, and the Collateral Agent, as
secured party.
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1. Delivery of Certificated Securities Collateral.
Each Pledgor represents and warrants that
all certificates, agreements or
instruments representing or evidencing the
Securities Collateral in existence on
the date hereof have been delivered to the
Collateral Agent in suitable form for
transfer by delivery or accompanied by duly
executed instruments of transfer or
assignment in blank and that the Collateral
Agent has a perfected first priority
security interest therein. Each Pledgor
hereby agrees that all certificates,
agreements or instruments representing or
evidencing Securities Collateral
acquired by such Pledgor after the date
hereof shall immediately upon receipt
thereof by such Pledgor be delivered to and
held by or on behalf of the
Collateral 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 reasonably satisfactory to the
Collateral Agent. The
-13-
<PAGE>
Collateral 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 Collateral 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
Collateral Agent shall have the right at
any time to exchange certificates
representing or evidencing Securities
Collateral for certificates of smaller or
larger denominations.
SECTION 3.2. Perfection of Uncertificated Securities
Collateral. Each Pledgor represents and
warrants that the Collateral Agent has a
perfected first priority security interest
in all uncertificated Pledged
Securities pledged by it hereunder that are
in existence on the date hereof.
Each Pledgor hereby agrees that if any of
the Pledged Securities are at any time
not evidenced by certificates of ownership,
then each applicable Pledgor shall,
to the extent permitted by applicable law
(i) if necessary or desirable to
perfect a security interest in such Pledged
Securities, cause such pledge to be
recorded on the equityholder register or
the books of the issuer, cause the
issuer to execute and deliver to the
Collateral Agent an acknowledgment of the
pledge of such Pledged Securities
substantially in the form of Exhibit 1 annexed
hereto, execute any customary pledge forms
or other documents necessary or
appropriate to complete the pledge and give
the Collateral Agent the right to
transfer such Pledged Securities under the
terms hereof and, upon the Collateral
Agent's request, provide to the Collateral
Agent an opinion of counsel, in form
and substance reasonably satisfactory to
the Collateral Agent, confirming such
pledge and perfection thereof and (ii) use
its commercially reasonable efforts
to cause such Pledged Securities to become
certificated and delivered to the
Collateral Agent in accordance with the
provisions of Section 3.1.
SECTION 3.3. Financing Statements and Other Filings;
Maintenance of Perfected Security Interest.
Each Pledgor represents and warrants
that all filings necessary to perfect the
security interest granted by it to the
Collateral Agent in respect of the Pledged
Collateral have been delivered to the
Collateral Agent in completed and, to the
extent necessary or appropriate, duly
executed form for filing in each
governmental, municipal or other office
specified in Schedule 6 annexed to the
Perfection Certificate. Each Pledgor
agrees that at the sole cost and expense of
the Pledgors, (i) such Pledgor will
maintain the security interest created by
this Agreement in the Pledged
Collateral as a perfected first priority
security interest and shall defend such
security interest against the claims and
demands of all persons except Permitted
Collateral Liens, (ii) such Pledgor shall
furnish to the Collateral Agent from
time to time statements and schedules
further identifying and describing the
Pledged Collateral and such other reports
in connection with the Pledged
Collateral as the Collateral Agent may
reasonably request, all in reasonable
detail and (iii) at any time and from time
to time, upon the written request of
the Collateral Agent, such Pledgor shall
promptly and duly execute and deliver,
and file and have recorded, such further
instruments and documents and take such
further action as the Collateral Agent may
reasonably request for the purpose of
obtaining or preserving the full benefits
of this Agreement and the rights and
powers herein granted, including the filing
of any financing statements,
continuation statements and other documents
(including this Agreement) under the
Uni-
-14-
<PAGE>
form Commercial Code (or other similar
laws) in effect in any jurisdiction with
respect to the security interest created
hereby and the execution and delivery
of Control Agreements, all in form
reasonably satisfactory to the Collateral
Agent and in such offices (including the
United States Patent and Trademark
Office and the United States Copyright
Office and equivalent foreign offices)
wherever required by law to perfect,
continue and maintain a valid, enforceable,
first priority security interest in the
Pledged Collateral as provided herein
and to preserve the other rights and
interests granted to the Collateral Agent
hereunder, as against third parties, with
respect to the Pledged Collateral.
SECTION 3.4. Other Actions. In order to further insure the
attachment, perfection and priority of, and
the ability of the Collateral Agent
to enforce, the Collateral Agent's security
interest in the Pledged Collateral,
each Pledgor represents and warrants (as to
itself) as follows and agrees, in
each case at such Pledgor's own expense, to
take the following actions with
respect to the following Pledged
Collateral:
(a) Instruments and
Tangible Chattel Paper. (i) No
amounts payable under or in connection with any of the Pledged
Collateral are evidenced by any Instrument or Tangible Chattel
Paper
other than such Instruments and Tangible Chattel Paper listed
in
Schedule 11 annexed to the Perfection Certificate and (ii) each
Instrument and each item of Tangible Chattel Paper listed in
Schedule
11 annexed to the Perfection Certificate has been properly
endorsed,
assigned and delivered
to the Collateral Agent, accompanied by
instruments of transfer or assignment duly executed in blank. If
any
amount then payable under or in connection with any of the
Pledged
Collateral shall be evidenced by any Instrument or Tangible
Chattel
Paper, and such amount, together with all amounts payable evidenced
by
any Instrument or Tangible Chattel Paper not previously delivered
to
the Collateral Agent exceeds $500,000 in the aggregate for all
Pledgors, the Pledgor acquiring such Instrument or Tangible
Chattel
Paper shall forthwith endorse, assign and deliver the same to
the
Collateral Agent, accompanied by such instruments of transfer
or
assignment duly executed in blank as the Collateral Agent may from
time
to time specify.
(b) Deposit
Accounts. (i) Each Pledgor has neither opened
nor maintains any Deposit Accounts other than the accounts listed
in
Schedule
15 annexed to the Perfection Certificate and (ii) the
Collateral Agent has a perfected first priority security interest
in
each Deposit Account listed in Schedule 3.4(b) annexed hereto
by
Control, other than those designated therein as "Not Subject to
a
Control Agreement as of the Closing Date"; provided that the
aggregate
amount on deposit in or credited to Deposit Accounts that are
not
subject to a Control Agreement shall not exceed (A) prior to
February
28, 2004, an amount equal to $500,000 in the aggregate for all
such
Deposit Accounts at any time outstanding or (B) from and after
February
28, 2004, an amount equal to $100,000 in the aggregate for all
such
Deposit
Accounts at any time outstanding. No Pledgor shall hereafter
establish or maintain any Deposit Account unless (1) the
applicable
Pledgor shall have given the Collateral Agent 30 days' prior
written
notice of its intention to establish such new Deposit Account with
a
bank, (2) such bank shall be reasonably acceptable to the
-15-
<PAGE>
Collateral Agent and (3) such bank and such Pledgor shall have
duly
executed and delivered to the Collateral Agent a Deposit
Account
Control Agreement with respect to such Deposit Account. Each
Pledgor
agrees that at the time it establishes any additional Deposit
Accounts
it shall enter into a duly authorized, executed and delivered
Deposit
Account Control Agreement with respect to such Deposit Account.
The
Collateral Agent agrees with each Pledgor that the Collateral
Agent
shall not give any instructions directing the disposition of funds
from
time to time credited to any Deposit Account or withhold any
withdrawal
rights from such Pledgor with respect to funds from time to
time
credited to any Deposit Account unless an Event of Default has
occurred
and is continuing. No Pledgor shall grant Control of any
Deposit
Account to any person other than the Collateral Agent.
(c) Investment
Property. (i) Each Pledgor (1) has no
Securities Accounts or Commodity Accounts other than those listed
in
Schedule 3.4(b) annexed hereto and the Collateral Agent has a
perfected
first priority security interest in such Securities Accounts
and
Commodity Accounts by Control, other than those designated therein
as
"Not Subject to a Control Agreement as of the Closing Date";
provided
that the aggregate amount on deposit in or credited to such
Securities
Accounts and Commodity Accounts that are not subject to a
Control
Agreement
shall not exceed (A) prior to February 28, 2004, an amount
equal to $500,000 in the aggregate for all such Deposit Accounts at
any
time outstanding or (B) from and after February 28, 2004, an
amount
equal to $100,000 in the aggregate for all such Securities Accounts
and
Commodity Accounts at any time outstanding, (2) does not hold, own
or
have any interest in any certificated securities or
uncertificated
securities other than those constituting Pledged Securities or
securities that are expressly permitted to be excluded from the
Pledged
Collateral pursuant to Section 5.11(b) of the Credit Agreement
and
those maintained in Securities Accounts or Commodity Accounts
listed in
Schedule 15 annexed to the Perfection Certificate and (3) as of
the
date hereof, has entered into a duly authorized, executed and
delivered
Securities Account Control Agreement or a Commodity Account
Control
Agreement, except as contemplated by clause (1) above, with respect
to
each Securities Account or Commodity Account listed in Schedule
15
annexed to the Perfection Certificate, as applicable.
(ii)
If any Pledgor shall at any time hold or acquire any
certificated securities constituting Investment Property other than
any
certificated securities that are expressly permitted to be
excluded
from the Pledged Collateral pursuant to Section 5.11(b) of the
Credit
Agreement, such Pledgor shall promptly (a) endorse, assign and
deliver
the same to the Collateral Agent, accompanied by such instruments
of
transfer or assignment duly executed in blank, all in form and
substance reasonably satisfactory to the Collateral Agent or
(b)
deliver such securities into a Securities Account with respect to
which
a Control Agreement is in effect in favor of the Collateral Agent.
If
any securities now or hereafter acquired by any Pledgor
constituting
Investment Property other than any securities that that are
expressly
permitted to be excluded from the Pledged Collateral pursuant
to
Section 5.11(b) of the Credit Agreement are uncertificated and
are
issued to such
-16-
<PAGE>
Pledgor or its nominee directly by the issuer thereof, such
Pledgor
shall promptly notify the Collateral Agent thereof and pursuant to
an
agreement in
form and substance reasonably satisfactory to the
Collateral Agent, either (a) cause the issuer to agree to comply
with
instructions from the Collateral Agent as to such securities,
without
further consent of any Pledgor or such nominee, (b) cause a
Security
Entitlement with respect to such uncertificated security to be held
in
a Securities Account with respect to which the Collateral Agent
has
Control or (c) arrange for the Collateral Agent to become the
registered owner of the securities. Pledgor shall not hereafter
establish or maintain any Securities Account or Commodity Account
with
any Securities Intermediary or Commodity Intermediary unless (1)
the
applicable Pledgor
shall have given the Collateral Agent 30 days' prior
written notice of its intention to establish such new
Securities
Account or Commodity Account with such Securities Intermediary
or
Commodity Intermediary, (2) such Securities Intermediary or
Commodity
Intermediary shall be reasonably acceptable to the Collateral Agent
and
(3) such Securities Intermediary or Commodity Intermediary, as the
case
may be, and such Pledgor shall have duly executed and delivered
a
Control Agreement with respect to such Securities Account or
Commodity
Account, as the case may be. Each Pledgor shall accept any cash
and
Investment Property other than any that are expressly permitted to
be
excluded from the Pledged Collateral pursuant to Section 5.11(b) of
the
Credit Agreement in trust for the benefit of the Collateral Agent
and
within one (1) Business Day of actual receipt thereof, deposit any
cash
or such Investment Property and any new securities,
instruments,
documents or other property by reason of ownership of such
Investment
Property (other than payments of a kind described in Section
7.4
hereof) received by it into a Controlled Account. The Collateral
Agent
agrees with each Pledgor that the Collateral Agent shall not give
any
Entitlement Orders or instructions or directions to any issuer
of
uncertificated securities, Securities Intermediary or Commodity
Intermediary, and shall not withhold its consent to the exercise of
any
withdrawal or dealing rights by such Pledgor, unless an Event
of
Default has occurred and is continuing, or, after giving effect to
any
such investment and
withdrawal rights would occur. No Pledgor shall
grant control over any Investment Property to any person other than
the
Collateral Agent.
(iii) As
between the Collateral Agent and the Pledgors, the
Pledgors shall bear the investment risk with respect to the
Investment
Property and Pledged Securities, and the risk of loss of, damage
to, or
the destruction of the Investment Property and Pledged
Securities,
whether in the possession of, or maintained as a security
entitlement
or deposit by, or subject to the control of, the Collateral Agent,
a
Securities Intermediary, Commodity Intermediary, any Pledgor or
any
other person; provided, however, that nothing contained in this
Section
3.4(c) shall release or relieve any Securities Intermediary or
Commodity Intermediary of its duties and obligations to the
Pledgors or
any other person under any Control Agreement or under applicable
law.
Each Pledgor shall promptly pay all Claims and fees of whatever
kind or
nature with respect to the Investment Property and Pledged
Securities
pledged by it under this Agreement. In the event any Pledgor shall
fail
to make such payment contemplated in the immediately preceding
sentence, the Col-
-17-
<PAGE>
lateral Agent may do so for the account of such Pledgor and the
Pledgors shall promptly reimburse and indemnify the Collateral
Agent
from all costs and expenses incurred by the Collateral Agent under
this
Section 3.4(c) in accordance with Section 11.03 of the Credit
Agreement.
(d) Electronic
Chattel Paper and Transferable Records. No
amount under or in connection with any of the Pledged Collateral
is
evidenced by any Electronic Chattel Paper or any "transferable
record"
(as that term is defined in Section 201 of the Federal
Electronic
Signatures in Global and National Commerce Act, or in Section 16 of
the
Uniform Electronic Transactions Act as in effect in any
relevant
jurisdiction) other than such Electronic Chattel Paper and
transferable
records listed in Schedule 11 annexed to the Perfection
Certificate. If
any amount payable under or in connection with any of the
Pledged
Collateral shall be evidenced by any Electronic Chattel Paper or
any
transferable record, the Pledgor acquiring such Electronic
Chattel
Paper or transferable record shall promptly notify the Collateral
Agent
thereof and shall take such action as the Collateral Agent may
reasonably request to vest in the Collateral Agent control under
UCC
Section 9-105 of such Electronic Chattel Paper or control under
Section
201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction,
of
such transferable record. The requirement in the preceding
sentence
shall apply to the extent that such amount, together with all
amounts
payable evidenced by Electronic Chattel Paper or any
transferable
record in which the Collateral Agent has not been vested control
within
the meaning of the statutes described in this sentence exceeds
$500,000
in the aggregate for all Pledgors. The Collateral Agent agrees
with
such Pledgor that the Collateral Agent will arrange, pursuant
to
procedures satisfactory to the Collateral Agent and so long as
such
procedures will not result in the Collateral Agent's loss of
control,
for the Pledgor to make alterations to the Electronic Chattel Paper
or
transferable record permitted under UCC Section 9-105 or, as the
case
may be, Section 201 of the Federal Electronic Signatures in Global
and
National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to allow without loss
of
control, unless an Event of Default has occurred and is continuing
or
would occur after taking into account any action by such Pledgor
with
respect to such Electronic Chattel Paper or transferable
record.
(e)
Letter-of-Credit Rights. If any Pledgor is at any
time a beneficiary under a Letter of Credit now or hereafter issued
in
favor of such Pledgor, other than a Letter of Credit issued under
and
pursuant to the Credit Agreement, such Pledgor shall promptly
notify
the Collateral Agent thereof and such Pledgor shall, at the request
of
the Collateral Agent, pursuant to an agreement in form and
substance
reasonably satisfactory to the Collateral Agent, either (i) arrange
for
the issuer and any confirmer of such Letter of Credit to consent to
an
assignment to the Collateral Agent of the proceeds of any drawing
under
the Letter of Credit or (ii) arrange for the Collateral Agent to
become
the transferee beneficiary of such Letter of Credit, with the
Collateral Agent agreeing, in each case, that
-18-
<PAGE>
the proceeds of any drawing under the Letter of Credit are to
be
applied as provided in the Credit Agreement. The actions in the
preceding sentence shall be taken to the extent that the amount
under
such Letter of Credit, together with all amounts under Letters
of
Credit for which the actions described above in clause (i) and
(ii)
have not been taken, exceeds $500,000 in the aggregate for all
Pledgors.
(f) Commercial
Tort Claims. As of the date hereof each
Pledgor hereby represents and warrants that it holds no Commercial
Tort
Claims other than those listed in Schedule 14 annexed to the
Perfection
Certificate. If any Pledgor shall at any time hold or acquire a
Commercial Tort Claim having a value together with all other
Commercial
Tort Claims of all Pledgors in which the Collateral Agent does not
have
a security interest in excess of $500,000 in the aggregate,
such
Pledgor shall immediately notify the Collateral Agent in writing
signed
by such Pledgor of the brief details thereof and grant to the
Collateral Agent in such writing a security interest therein and in
the
Proceeds thereof, all upon the terms of this Agreement, with
such
writing to be in form and substance reasonably satisfactory to
the
Collateral Agent.
(g) Landlord's
Access Agreements/Bailee Letters. Each
Pledgor shall use its commercially reasonable efforts to obtain as
soon
as practicable after the date hereof with respect to each location
set
forth in Schedule 4.01(o)(vi) annexed to the Credit Agreement,
where
such Pledgor maintains Pledged Collateral, a Bailee Letter
and/or
Landlord Access Agreement, as applicable, and use commercially
reasonable efforts to obtain a Bailee Letter, Landlord Access
Agreement
and/or
landlord's lien waiver, as applicable, from all bailees and
landlords, as applicable, who from time to time have possession
of
Pledged Collateral in the ordinary course of such Pledgor's
business
and if reasonably requested by the Collateral Agent; provided that
the
foregoing shall not be required if the value of the Pledged
Collateral
held by such bailee or landlord is less than $50,000, provided
further
that the aggregate value of the Pledged Collateral held by all
such
bailees and landlords who have not delivered a Bailee Letter
and/or
Landlord Access Agreement, as applicable, is less than
$500,000.
(h) Motor
Vehicles. Upon the request of the Collateral
Agent, each Pledgor shall deliver to the Collateral Agent originals
of
the certificates of title or ownership for the motor vehicles (and
any
other Equipment covered by certificates of title or ownership)
owned by
it with the Collateral Agent listed as lienholder therein. Such
requirement shall apply to the Pledgors if any such individual
motor
vehicle (or any such other Equipment) is valued at over $50,000 and
if
the aggregate value of all such motor vehicles (and such Equipment)
as
to which any Pledgor has not delivered a Certificate of Title
or
ownership is over $500,000.
(i) Third
Party Agreements. Except as set forth on
Schedule 3.4(i) annexed hereto, neither the granting of the
security
interests contemplated hereby nor the exercise of remedies in
respect
thereof will constitute or result in the abandonment, invalidation
or
-19-
<PAGE>
unenforceability of any right, title or interest of any Pledgor
under,
or constitute or result in a default, breach or termination
pursuant to
the terms of, or otherwise permit the termination of, any
lease,
contract, property right or agreement as to which any Pledgor is
party,
owner or beneficiary and with respect which such Pledgor receives
or is
entitled to receive aggregate gross revenues in excess of
$1,000,000 in
any 12-month period (other than to the extent that any such
limitation
or restriction would be rendered ineffective pursuant to
Sections
9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision
or
provisions)) or provides that the collateral assignment of or
granting
of a lien on such lease, contract, property right or agreement
is
prohibited or would be null and void without the consent of the
applicable counterparty thereto. With respect to any lease,
contract,
property right or agreement set forth on Schedule 3.4(i)
annexed
hereto, Borrower and the applicable Pledgor shall use their
commercially reasonable efforts to obtain within 90 days of the
Closing
Date a letter agreement from the applicable counterparty under
such
lease, contract, property right or agreement, in form and
substance
reasonably satisfactory to the Collateral Agent, acknowledging
and
agreeing to the granting of the security interest contemplated
hereby.
SECTION 3.5. Joinder of Additional Guarantors. The Pledgors
shall cause each Subsidiary of the Borrower
which, from time to time, after the
date hereof shall be required to pledge any
assets to the Collateral Agent for
the benefit of the Secured Parties pursuant
to the provisions of the Credit
Agreement, (a) to execute and deliver to
the Collateral Agent (i) a Joinder
Agreement substantially in the form of
Exhibit 3 annexed hereto and (ii) a
Perfection Certificate, in each case,
within thirty (30) Business Days of the
date on which such Subsidiary was acquired
or created or (b) in the case of a
Subsidiary organized outside of the United
States required to pledge any assets
to the Collateral Agent in accordance with
the terms and conditions of the
Credit Agreement, to execute and deliver
such documentation as the Collateral
Agent shall reasonably request and, in each
case, upon such execution and
delivery, such Subsidiary shall constitute
a "Guarantor" and a "Pledgor" for all
purposes hereunder with the same force and
effect as if originally named as a
Guarantor and Pledgor herein. The execution
and delivery of such Joinder
Agreement shall not require the consent of
any Pledgor hereunder. The rights and
obligations of each Pledgor hereunder shall
remain in full force and effect
notwithstanding the addition of any new
Guarantor or Pledgor as a party to this
Agreement.
SECTION 3.6. Supplements; Further Assurances. Each Pledgor
shall take such further actions, and
execute and deliver to the Collateral Agent
such additional assignments, agreements,
supplements, powers and instruments, as
the Collateral Agent may in its reasonable
judgment deem necessary or
appropriate, wherever required by law, in
order to perfect, preserve and protect
the security interest in the Pledged
Collateral as provided herein and the
rights and interests granted to the
Collateral Agent hereunder, to carry into
effect the purposes hereof or better to
assure and confirm unto the Collateral
Agent the Pledged Collateral or permit the
Collateral Agent to exercise and
enforce its rights, powers and remedies
hereunder with respect to any Pledged
Collateral. Without limiting the generality
of the foregoing, each Pledgor shall
make, execute, endorse, acknowledge, file
or re-file and/or deliver to the
Collateral Agent from
-20-
<PAGE>
time to time upon reasonable request such
lists, descriptions and designations
of the Pledged Collateral, copies of
warehouse receipts, receipts in the nature
of warehouse receipts, bills of lading,
documents of title, vouchers, invoices,
schedules, confirmatory assignments,
supplements, additional security
agreements, conveyances, financing
statements, transfer endorsements, powers of
attorney, certificates, reports and other
assurances or instruments as the
Collateral Agent shall reasonably request.
If an Event of Default has occurred
and is continuing, the Collateral Agent may
institute and maintain, in its own
name or in the name of any Pledgor, such
suits and proceedings as the Collateral
Agent may be advised by counsel shall be
necessary or expedient to prevent any
impairment of the security interest in or
the perfection thereof in the Pledged
Collateral. All of the foregoing shall be
at the sole cost and expense of the
Pledgors.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants as follows:
SECTION 4.1. Title. Except for the security interest granted
to the Collateral Agent for the ratable
benefit of the Secured Parties pursuant
to this Agreement, such Pledgor owns and,
as to Pledged Collateral acquired by
it from time to time after the date hereof,
will own the rights in each item of
Pledged Collateral pledged by it hereunder
free and clear of any and all Liens
or claims of others other than Permitted
Collateral Liens. In addition, no Liens
or claims exist on the Securities
Collateral, other than as permitted by Section
6.02 of the Credit Agreement. Such Pledgor
has not filed, nor authorized any
third party to file a financing statement
or other public notice with respect to
all or any part of the Pledged Collateral
on file or of record in any public
office, except such as have been filed in
favor of the Collateral Agent pursuant
to this Agreement or as are permitted by
the Credit Agreement or financing
statements or public notices relating to
the termination statements listed on
Schedule 8 to the Perfection Certificate.
No person other than the Collateral
Agent has control or possession of all or
any part of the Pledged Collateral,
except as permitted by the Credit
Agreement.
SECTION 4.2. Validity of Security Interest. The security
interest in and Lien on the Pledged
Collateral granted to the Collateral Agent
for the benefit of the Secured Parties
hereunder constitutes (a) a legal and
valid security interest in all the Pledged
Collateral securing the payment and
performance of the Obligations, and (b)
subject to the filings and other actions
described in Schedule 6 annexed to the
Perfection Certificate, a perfected
security interest in all the Pledged
Collateral. The security interest and Lien
granted to the Collateral Agent for the
benefit of the Secured Parties pursuant
to this Agreement in and on the Pledged
Collateral will at all times constitute
a perfected, continuing security interest
therein, subject only to Permitted
Collateral Liens.
-21-
<PAGE>
SECTION 4.3. Defense of Claims; Transferability of Pledged
Collateral. Each Pledgor shall, at its own
cost and expense, defend title to the
Pledged Collateral pledged by it hereunder
and the security interest therein and
Lien thereon granted to the Collateral
Agent and the priority thereof against
all claims and demands of all persons, at
its own cost and expense, at any time
claiming any interest therein adverse to
the Collateral Agent or any other
Secured Party other than Permitted
Collateral Liens (other than Contested
Liens). There is no agreement, and no
Pledgor shall enter into any agreement or
take any other action, that would restrict
the transferability of any of the
Pledged Collateral or otherwise not permit,
impair or conflict with such
Pledgors' obligations or the rights of the
Collateral Agent hereunder or under
any other Loan Document.
SECTION 4.4. Other Financing Statements. It has not filed, nor
authorized any third party to file (nor
will there be any) valid or effective
financing statement (or similar statement
or instrument of registration under
the law of any jurisdiction) covering or
purporting to cover any interest of any
kind in the Pledged Collateral other than
financing statements and other
statements and instruments relating to
Permitted Liens. So long as any of the
Obligations remain unpaid, no Pledgor shall
execute, authorize or permit to be
filed in any public office any financing
statement (or similar statement or
instrument of registration under the law of
any jurisdiction) relating to any
Pledged Collateral, except financing
statements and other statements and
instruments filed or to be filed in respect
of and covering the security
interests granted by such Pledgor to the
holder of the Perm
