EXHIBIT 10.62
EXECUTION VERSION
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FIRST LIEN GUARANTEE AND COLLATERAL AGREEMENT
dated as of August 24, 2007,
among
PACIFIC ENERGY ALASKA OPERATING LLC,
as the Borrower,
PACIFIC ENERGY ALASKA HOLDINGS, LLC,
as Holdings,
the Subsidiaries of the Borrower from time to time party hereto
and
SILVER POINT FINANCE, LLC,
as Collateral Agent
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01 CREDIT AGREEMENT...........................................................................1
SECTION 1.02 OTHER DEFINED TERMS........................................................................2
ARTICLE II
GUARANTEE
SECTION 2.01 GUARANTEE..................................................................................6
SECTION 2.02 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE.................................................6
SECTION 2.03 NO LIMITATIONS, ETC........................................................................6
SECTION 2.04 REINSTATEMENT..............................................................................7
SECTION 2.05 AGREEMENT TO PAY; SUBROGATION..............................................................7
SECTION 2.06 INFORMATION................................................................................8
SECTION 2.07 TAXES......................................................................................8
ARTICLE III
PLEDGE OF SECURITIES
SECTION 3.01 PLEDGE.....................................................................................8
SECTION 3.02 DELIVERY OF THE PLEDGED COLLATERAL.........................................................9
SECTION 3.03 REPRESENTATIONS, WARRANTIES AND COVENANTS..................................................9
SECTION 3.04 CERTIFICATION OF LIMITED LIABILITY COMPANY INTERESTS AND LIMITED PARTNERSHIP
INTERESTS.................................................................................10
SECTION 3.05 REGISTRATION IN NOMINEE NAME; DENOMINATIONS...............................................11
SECTION 3.06 VOTING RIGHTS; DIVIDENDS AND INTEREST, ETC................................................11
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 4.01 SECURITY INTEREST.........................................................................13
SECTION 4.02 REPRESENTATIONS AND WARRANTIES............................................................15
SECTION 4.03 COVENANTS.................................................................................17
SECTION 4.04 OTHER ACTIONS.............................................................................20
SECTION 4.05 COVENANTS REGARDING PATENT, TRADEMARK AND COPYRIGHT COLLATERAL............................22
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ARTICLE V
REMEDIES
SECTION 5.01 REMEDIES UPON DEFAULT.....................................................................24
SECTION 5.02 APPLICATION OF PROCEEDS...................................................................26
SECTION 5.03 GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.............................................26
SECTION 5.04 SECURITIES ACT, ETC.......................................................................27
ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 6.01 INDEMNITY AND SUBROGATION.................................................................28
SECTION 6.02 CONTRIBUTION AND SUBROGATION..............................................................28
SECTION 6.03 SUBORDINATION.............................................................................28
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 NOTICES...................................................................................29
SECTION 7.02 SECURITY INTEREST ABSOLUTE................................................................29
SECTION 7.03 SURVIVAL OF AGREEMENT.....................................................................29
SECTION 7.04 BINDING EFFECT; SEVERAL AGREEMENT.........................................................29
SECTION 7.05 SUCCESSORS AND ASSIGNS....................................................................30
SECTION 7.06 COLLATERAL AGENT'S FEES AND EXPENSES; INDEMNIFICATION.....................................30
SECTION 7.07 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT...............................................31
SECTION 7.08 APPLICABLE LAW............................................................................31
SECTION 7.09 WAIVERS; AMENDMENT........................................................................32
SECTION 7.10 WAIVER OF JURY TRIAL......................................................................32
SECTION 7.11 SEVERABILITY..............................................................................32
SECTION 7.12 COUNTERPARTS..............................................................................33
SECTION 7.13 HEADINGS..................................................................................33
SECTION 7.14 JURISDICTION; CONSENT TO SERVICE OF PROCESS...............................................33
SECTION 7.15 TERMINATION OR RELEASE....................................................................33
SECTION 7.16 ADDITIONAL SUBSIDIARIES...................................................................34
SECTION 7.17 RIGHT OF SETOFF...........................................................................34
SECTION 7.18 SUBSIDIARY LOAN PARTY ACKNOWLEDGMENT......................................................34
SECTION 7.19 INTERCREDITOR AGREEMENT...................................................................34
Schedules
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Schedule I Subsidiary Guarantors
Schedule II Equity Interests; Pledged Debt Securities
Schedule III Intellectual Property
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Exhibits
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Exhibit A Form of Supplement
Exhibit B Form of Perfection Certificate
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FIRST LIEN GUARANTEE AND COLLATERAL
AGREEMENT dated as of August 24, 2007 (this
"AGREEMENT"), among PACIFIC ENERGY ALASKA
OPERATING LLC, a limited liability company
organized under the laws of the State of
Delaware (the "BORROWER"), PACIFIC ENERGY
ALASKA HOLDINGS, LLC, a limited liability
company organized under the laws of the
State of Delaware ("HOLDINGS"), the
Subsidiaries of the Borrower from time to
time party hereto and SILVER POINT FINANCE,
LLC ("SILVER POINT"), as collateral agent
for the Secured Parties (in such capacity,
the "COLLATERAL AGENT").
PRELIMINARY STATEMENT
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Reference is made to the First Lien Credit Agreement dated as
of August 24, 2007 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, Holdings, the lenders from
time to time party thereto (the "LENDERS") and Silver Point, as administrative
agent for the Lenders and collateral agent for the Secured Parties (such term
and each other capitalized term used but not defined in this preliminary
statement being defined as provided in Article I).
The Lenders have agreed to extend credit to the Borrower
pursuant to, and upon the terms and conditions specified in, the Credit
Agreement. The obligations of the Lenders to extend credit to the Borrower are
conditioned upon, among other things, the execution and delivery of this
Agreement by the Borrower and each Guarantor. Each Guarantor is an affiliate of
the Borrower, will derive substantial benefits from the extension of credit to
the Borrower pursuant to the Credit Agreement and is willing to execute and
deliver this Agreement in order to induce the Lenders to extend such credit.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CREDIT AGREEMENT. (a) Each capitalized term used
but not defined herein shall have the meaning assigned to it in the Credit
Agreement. Each capitalized term defined in the New York UCC (as such term is
defined herein) and not defined in this Agreement shall have the meaning
assigned to it in the New York UCC. All references to the Uniform Commercial
Code shall mean the New York UCC.
(b) The rules of construction specified in Section 1.02 of the
Credit Agreement also apply to this Agreement.
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SECTION 1.02 OTHER DEFINED TERMS. As used in this Agreement,
the following terms have the meanings specified below:
"ACCOUNTS RECEIVABLE" shall mean all Accounts and all right,
title and interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to stoppage
in transit, replevin, reclamation and resales, and all related security
interests, liens and pledges, whether voluntary or involuntary, in each case
whether now existing or owned or hereafter arising or acquired.
"AGREEMENT" shall have the meaning assigned to such term in
the introductory paragraph.
"ARTICLE 9 COLLATERAL" shall have the meaning assigned to such
term in Section 4.01.
"BORROWER" shall have the meaning assigned to such term in
introductory paragraph to this Agreement.
"CLAIMING PARTY" has the meaning assigned to such term in
Section 6.02.
"COLLATERAL" shall mean the Article 9 Collateral and the
Pledged Collateral.
"COLLATERAL AGENT" shall have the meaning assigned to such
term in the introductory paragraph to this Agreement.
"CONTRIBUTING PARTY" has the meaning assigned to such term in
Section 6.02.
"COPYRIGHT LICENSE" shall mean any written agreement, now or
hereafter in effect, granting any right to any third person under any copyright
now or hereafter owned by any Grantor or that such Grantor otherwise has the
right to license, or granting any right to any Grantor under any copyright now
or hereafter owned by any third person, and all rights of such Grantor under any
such agreement.
"COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in any work subject
to the copyright laws of the United States or any other country, whether as
author, assignee, transferee or otherwise and (b) all registrations and
applications for registration of any such copyright in the United States or any
other country, including registrations, recordings, supplemental registrations
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and pending applications for registration in the United States Copyright Office
(or any successor office or any similar office in any other country), including
those listed on SCHEDULE III.
"CREDIT AGREEMENT" shall have the meaning assigned to such
term in the preliminary statement to this Agreement.
"FEDERAL SECURITIES LAWS" shall have the meaning assigned to
such term in Section 5.04.
"GENERAL INTANGIBLES" shall mean all choses in action and
causes of action and all other intangible personal property of every kind and
nature (other than Accounts) and other general intangibles now owned or
hereafter acquired by any Grantor, including all rights and interests in
partnerships, limited partnerships, limited liability companies and other
unincorporated entities, corporate or other business records, indemnification
claims, contract rights (including rights under Oil and Gas Properties, Leases,
other leases, Hedging Agreements, the Intercompany Services Agreement, the Tax
Sharing Agreements, the Master Conveyance and other agreements), Intellectual
Property, goodwill, registrations, franchises, tax refund claims and any letter
of credit, guarantee, claim, security interest or other security held by or
granted to any Grantor to secure payment by an Account Debtor of any of the
Accounts.
"GRANTORS" shall mean Holdings, the Borrower and the
Subsidiary Loan Parties.
"GUARANTORS" shall mean Holdings and the Subsidiary Loan
Parties.
"HOLDINGS" shall have the meaning assigned to such term in the
introductory paragraph to this Agreement.
"INTELLECTUAL PROPERTY" shall mean all intellectual and
similar property of every kind and nature now owned or hereafter acquired by any
Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"LENDERS" shall have the meaning assigned to such term in the
preliminary statements to this Agreement.
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"LICENSE" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense agreement relating to
Intellectual Property to which any Grantor is a party, including those listed on
Schedule III.
"NEW YORK UCC' shall mean the Uniform Commercial Code as from
time to time in effect in the State of New York.
"PATENT LICENSE" shall mean any written agreement, now or
hereafter in effect, granting to any third person any right to make, use or sell
any invention on which a patent, now or hereafter owned by any Grantor or that
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a patent, now
or hereafter owned by any third person, is in existence, and all rights of any
Grantor under any such agreement.
"PATENTS" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all letters patent of the United States
or the equivalent thereof in any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or the
equivalent thereof in any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark Office (or any
successor or any similar offices in any other country), including those listed
on Schedule III and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"PERFECTION CERTIFICATE" shall mean a certificate
substantially in the form of Exhibit B, completed and supplemented with the
schedules and attachments contemplated thereby.
"PLEDGED COLLATERAL" shall have the meaning assigned to such
term in Section 3.01.
"PLEDGED DEBT SECURITIES" shall have the meaning assigned to
such term in Section 3.01.
"PLEDGED EQUITY INTERESTS" shall have the meaning assigned to
such term in Section 3.01.
"PLEDGED SECURITIES" shall mean any promissory notes, unit
certificates, stock certificates or other securities (as defined in Article 8 of
the New York UCC) now or hereafter included in the Pledged Collateral, including
all certificates, instruments or other documents representing or evidencing any
Pledged Collateral.
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"SECOND LIEN COLLATERAL AGENT" shall mean the "Collateral
Agent" as defined in the Second Lien Collateral Agreement.
"SECOND LIEN COLLATERAL AGREEMENT" shall mean the "Collateral
Agreement" as defined in the Second Lien Credit Agreement.
"SECOND LIEN CREDIT AGREEMENT" shall mean the Second Lien
Credit Agreement dated as of August 24, 2007, among the Borrower, Holdings, the
lenders from time to time party thereto and Silver Point, as administrative
agent and collateral agent thereunder.
"SECOND LIEN LOAN DOCUMENTS" shall mean the "Loan Documents"
as defined in the Second Lien Credit Agreement.
"SECOND LIEN SECURED PARTIES" shall mean the "Secured Parties"
as defined in the Second Lien Credit Agreement.
"SECURITY INTEREST" shall have the meaning assigned to such
term in Section 4.01.
"SILVER POINT" shall have the meaning assigned to such term in
introductory paragraph to this Agreement.
"SUBSIDIARY LOAN PARTIES" shall mean (a) the Subsidiaries
identified on Schedule I hereto as Subsidiary Loan Parties and (b) each other
Subsidiary that becomes a party to this Agreement pursuant to Section 7.16 after
the Closing Date.
"TRADEMARK LICENSE" shall mean any written agreement, now or
hereafter in effect, granting to any third person any right to use any trademark
now or hereafter owned by any Grantor or that any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any trademark now
or hereafter owned by any third person, and all rights of any Grantor under any
such agreement.
"TRADEMARKS" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith, including
registrations and registration applications in the United States Patent and
Trademark Office (or any successor office) or any similar offices in any State
of the United States or any other country or any political subdivision thereof,
and all extensions or renewals thereof, including those listed on Schedule III,
(b) all goodwill associated therewith or symbolized thereby and (c) all other
assets, rights and interests that uniquely reflect or embody such goodwill.
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"UNFUNDED ADVANCES/PARTICIPATIONS" shall mean the aggregate
amount, if any, made available to the Borrower on the assumption that each
Lender has made its portion of the applicable Borrowing available to the
Collateral Agent as contemplated by Section 2.02(d) of the Credit Agreement and
with respect to which a corresponding amount shall not in fact have been
returned to the Collateral Agent by the Borrower or made available to the
Collateral Agent by the applicable Lender.
ARTICLE II
GUARANTEE
SECTION 2.01 GUARANTEE. Each Guarantor irrevocably and
unconditionally guarantees, jointly with the other Guarantors and severally, as
a primary obligor and not merely as a surety, the due and punctual payment and
performance of the Obligations. Each Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
hereunder notwithstanding any such extension or renewal of any Obligation. Each
Guarantor waives presentment to, demand of payment from and protest to the
Borrower or any other Loan Party of any Obligation, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment.
SECTION 2.02 GUARANTEE OF PAYMENT; CONTINUING GUARANTEE. Each
Guarantor further agrees that its guarantee hereunder constitutes a guarantee of
payment when due (whether or not any bankruptcy or similar proceeding shall have
stayed the accrual or collection of any of the Obligations or operated as a
discharge thereof) and not of collection, and waives any right to require that
any resort be had by the Collateral Agent or any other Secured Party to any
security held for the payment of the Obligations or to any balance of any
Deposit Account or credit on the books of the Collateral Agent or any other
Secured Party in favor of the Borrower, any other Loan Party or any other
person. Each Guarantor agrees that its guarantee hereunder is continuing in
nature and applies to all Obligations, whether currently existing or hereafter
incurred.
SECTION 2.03 NO LIMITATIONS, ETC. (a) Except for termination
of a Guarantor's obligations hereunder as expressly provided in Section 7.15,
the obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations, any impossibility in the performance of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged, impaired or otherwise affected
by (i) the failure of the Collateral Agent or any other Secured Party to assert
any claim or demand or to enforce or exercise any right or remedy under the
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provisions of any Loan Document or otherwise, (ii) any extension or renewal of
any of the Obligations, (iii) any rescission, waiver, amendment or modification
of, or any release from any of the terms or provisions of, any Loan Document or
any other agreement, including with respect to any other Guarantor under this
Agreement, (iv) the release of, or any impairment of or failure to perfect any
Lien on or security interest in, any security held by the Collateral Agent or
any other Secured Party for the Obligations or any of them, (v) any default,
failure or delay, wilful or otherwise, in the performance of the Obligations or
(vi) any other act, omission or delay to do any other act that may or might in
any manner or to any extent vary the risk of any Guarantor or otherwise operate
as a discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations) or which would
impair or eliminate the right of any Guarantor to subrogation. Each Guarantor
expressly authorizes the Collateral Agent and the other Secured Parties to take
and hold security for the payment and performance of the Obligations, to
exchange, waive or release any or all such security (with or without
consideration), to enforce or apply such security and direct the order and
manner of any sale thereof in their sole discretion or to release or substitute
any one or more other guarantors or obligors upon or in respect of the
Obligations, all without affecting the obligations of any Guarantor hereunder.
Each Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents.
(b) To the fullest extent permitted by applicable law, each
Guarantor waives any defense based on or arising out of any defense of
the Borrower or any other Loan Party or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrower or any other Loan Party,
other than the indefeasible payment in full in cash of all the
Obligations. The Collateral Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them
by one or more judicial or nonjudicial sales, accept an assignment of
any such security in lieu of foreclosure, compromise or adjust any part
of the Obligations, make any other accommodation with the Borrower or
any other Loan Party or exercise any other right or remedy available to
them against the Borrower or any other Loan Party, without affecting or
impairing in any way the liability of any Guarantor hereunder except to
the extent the Obligations have been fully and indefeasibly paid in
full in cash. To the fullest extent permitted by applicable law, each
Guarantor waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or
to extinguish any right of reimbursement or subrogation or other right
or remedy of such Guarantor against the Borrower or any other Loan
Party, as the case may be, or any security.
SECTION 2.04 REINSTATEMENT. Each Guarantor agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other
Loan Party or otherwise.
SECTION 2.05 AGREEMENT TO PAY; SUBROGATION. In furtherance of
the foregoing and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against any Guarantor by
virtue hereof, upon the failure of the Borrower or any other Loan Party to pay
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any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral Agent
for distribution to the applicable Secured Parties in cash the amount of such
unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral
Agent as provided above, all rights of such Guarantor against the Borrower or
any other Loan Party arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subject to Article VI. If any amount shall erroneously be paid to any Guarantor
on account of any such Indebtedness of the Borrower or any other Loan Party,
such amount shall be held in trust for the benefit of the Secured Parties and
shall forthwith be paid to the Collateral Agent to be credited against the
payment of the Obligations, whether matured or unmatured, in accordance with the
terms of the Credit Agreement and any other Loan Document.
SECTION 2.06 INFORMATION. Each Guarantor assumes all
responsibility for being and keeping itself informed of the Borrower's and each
other Loan Party's financial condition and assets and of all other circumstances
bearing upon the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that such Guarantor assumes and incurs hereunder, and agrees
that neither the Collateral Agent nor any other Secured Party will have any duty
to advise such Guarantor of information known to it or any of them regarding
such circumstances or risks.
SECTION 2.07 TAXES. Each Guarantor agrees that the provisions
of Section 2.19 of the Credit Agreement shall apply equally to such Guarantor
with respect to payments made by it hereunder.
ARTICLE III
PLEDGE OF SECURITIES
SECTION 3.01 PLEDGE. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under (a)(i) the Equity Interests owned by such Grantor on the date
hereof (including all such Equity Interests listed on Schedule II), (ii) any
other Equity Interests obtained in the future by such Grantor and (iii) all
certificates, if any, representing any such Equity Interests (all the foregoing
collectively referred to herein as the "PLEDGED EQUITY INTERESTS"), (b)(i) the
debt securities held by such Grantor on the date hereof (including all such debt
securities listed opposite the name of such Grantor on Schedule II), (ii) any
debt securities obtained in the future by such Grantor and (iii) all promissory
notes and other instruments evidencing any such debt securities (all the
foregoing collectively referred to herein as the "PLEDGED DEBT SECURITIES"), (c)
all other property that may be delivered to and held by the Collateral Agent
pursuant to the terms of this Section 3.01, (d) subject to Section 3.06, all
payments of principal or interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of, in exchange for or upon the conversion of, and all other Proceeds
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received in respect of, the securities referred to in clauses (a) and (b) above,
(e) subject to Section 3.06, all rights and privileges of such Grantor with
respect to the securities and other property referred to in clauses (a), (b),
(c) and (d) above, and (f) all Proceeds of any of the foregoing (the items
referred to in clauses (a) through (f) above being collectively referred to as
the "PLEDGED COLLATERAL").
TO HAVE AND TO HOLD the Pledged Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth.
SECTION 3.02 DELIVERY OF THE PLEDGED COLLATERAL. (a) To the
extent required in order for the Collateral and Guarantee Requirement to remain
satisfied at all times, each Grantor agrees promptly to deliver or cause to be
delivered to the Collateral Agent any and all certificates, instruments or other
documents representing or evidencing Pledged Securities.
(b) Upon delivery to the Collateral Agent, (i) any
certificate, instrument or document representing or evidencing Pledged
Securities constituting a "security" shall be accompanied by undated
stock or unit powers duly executed in blank or other undated
instruments of transfer satisfactory to the Collateral Agent and duly
executed in blank and by such other instruments and documents as the
Collateral Agent may reasonably request and (ii) all other property
composing part of the Pledged Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Grantor and
such other instruments or documents as the Collateral Agent may
reasonably request. Each delivery of Pledged Securities shall be
accompanied by a schedule describing the applicable securities, which
schedule shall be attached hereto as SCHEDULE II and made a part
hereof; PROVIDED that failure to attach any such schedule hereto shall
not affect the validity of the pledge of such Pledged Securities. Each
schedule so delivered shall supplement any prior schedules so
delivered.
SECTION 3.03 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each
Grantor, jointly with the other Grantors and severally, represents and warrants,
as of the Effective Date, that, and covenants to and with the Collateral Agent,
for the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the
issued and outstanding units of each class of the Equity Interests of
the issuer thereof represented by such Pledged Equity Interests and
includes all Equity Interests, debt securities and promissory notes
required to be pledged hereunder in order to satisfy the Collateral and
Guarantee Requirement;
(b) the Pledged Equity Interests and Pledged Debt Securities
have been duly and validly authorized and issued by the issuers thereof
and (i) in the case of Pledged Equity Interests, are fully paid and
(ii) in the case of Pledged Debt Securities, are legal, valid and
binding obligations of the issuers thereof;
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(c) except for the security interests granted hereunder (or
otherwise permitted under the Credit Agreement), each Grantor (i) is
and, subject to any transfers made in compliance with the Credit
Agreement, will continue to be the direct owner, beneficially and of
record, of the Pledged Securities indicated on Schedule II as owned by
such Grantor, (ii) holds the same free and clear of all Liens and (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Pledged Collateral, other than transfers made in compliance with
the Credit Agreement;
(d) except for restrictions and limitations imposed by the
Loan Documents, the Second Lien Loan Documents or securities laws
generally, the Pledged Collateral is and will continue to be freely
transferable and assignable, and none of the Pledged Collateral is or
will be subject to any option, right of first refusal, shareholders
agreement, charter or by-law provisions or contractual restriction of
any nature that might prohibit, impair, delay or otherwise affect the
pledge of such Pledged Collateral hereunder, the sale or disposition
thereof pursuant hereto or the exercise by the Collateral Agent of
rights and remedies hereunder;
(e) each Grantor (i) has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or
therein against any and all Liens (other than any Lien created or
permitted by the Loan Documents), however arising, of all persons
whomsoever;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other person was or is necessary to the
validity of the pledge effected hereby (other than such as have been
obtained and are in full force and effect);
(g) by virtue of the execution and delivery by each Grantor of
this Agreement, when any Pledged Securities are delivered to the
Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain a legal, valid and perfected first priority lien upon
and security interest in such Pledged Securities as security for the
payment and performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the ratable benefit of the Secured Parties, the
rights of the Collateral Agent in the Pledged Collateral as set forth
herein and all action by any Grantor necessary or desirable to protect
and perfect the Lien on the Pledged Collateral has been duly taken.
SECTION 3.04 CERTIFICATION OF LIMITED LIABILITY COMPANY
INTERESTS AND LIMITED PARTNERSHIP INTERESTS. As of the Effective Date, each
interest in the Borrower or any limited liability company or limited partnership
which is a Subsidiary is represented by a certificate and is a "security" within
the meaning of Article 8 of the New York UCC or governed by Article 8 of the New
York UCC and such certificates have been delivered to the Collateral Agent.
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SECTION 3.05 REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
applicable Grantor, endorsed or assigned in blank or in favor of the Collateral
Agent. Each Grantor will promptly give to the Collateral Agent copies of any
notices or other communications received by it with respect to Pledged
Securities in its capacity as the registered owner thereof. The Collateral Agent
shall at all times have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
SECTION 3.06 VOTING RIGHTS; DIVIDENDS AND INTEREST, ETC. (a)
Unless and until an Event of Default shall have occurred and be continuing and,
subject to the terms of the Intercreditor Agreement and applicable law, the
Collateral Agent shall have given the Grantors notice of its intent to exercise
its rights under this Agreement (which notice shall be deemed to have been given
immediately upon the occurrence of an Event of Default under paragraph (g) or
(h) of Article VII of the Credit Agreement):
(i) Each Grantor shall be entitled to exercise any
and all voting and/or other consensual rights and powers
inuring to an owner of Pledged Securities or any part thereof
for any purpose consistent with the terms of this Agreement,
the Credit Agreement and the other Loan Documents; PROVIDED,
HOWEVER, that such rights and powers shall not be exercised in
any manner that could materially and adversely affect the
rights inuring to a holder of any Pledged Securities or the
rights and remedies of the Collateral Agent or the other
Secured Parties under this Agreement or the Credit Agreement
or any other Loan Document or the ability of the Secured
Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver
to each Grantor, or cause to be executed and delivered to each
Grantor, all such proxies, powers of attorney and other
instruments as such Grantor may reasonably request for the
purpose of enabling such Grantor to exercise the voting and/or
consensual rights and powers it is entitled to exercise
pursuant to subparagraph (i) above.
(iii) Each Grantor shall be entitled to receive and
retain any and all dividends, interest, principal and other
distributions paid on or distributed in respect of the Pledged
Securities to the extent and only to the extent that such
dividends, interest, principal and other distributions are
permitted by, and otherwise paid or distributed in accordance
with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable law; PROVIDED, HOWEVER,
that any noncash dividends, interest, principal or other
distributions that would constitute Pledged Equity Interests
or Pledged Debt Securities, whether resulting from a
subdivision, combination or reclassification of the
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outstanding Equity Interests in the issuer of any Pledged
Securities or received in exchange for Pledged Securities or
any part thereof, or in redemption thereof, or as a result of
any merger, consolidation, acquisition or other exchange of
assets to which such issuer may be a party or otherwise, shall
be and become part of the Pledged Collateral, and, if received
by any Grantor, shall not be commingled by such Grantor with
any of its other funds or property but shall be held separate
and apart therefrom, shall be held in trust for the ratable
benefit of the Secured Parties and shall be forthwith
delivered to the Collateral Agent in the same form as so
received (with any necessary endorsement or instrument of
assignment).
(b) Subject to the terms of the Intercreditor Agreement, upon
the occurrence and during the continuance of an Event of Default, after
the Collateral Agent shall have notified (or shall be deemed to have
notified pursuant to Section 3.06(a)) the Grantors of the suspension of
their rights under paragraph (a)(iii) of this Section 3.06, then all
rights of any Grantor to dividends, interest, principal or other
distributions that such Grantor is authorized to receive pursuant to
paragraph (a)(iii) of this Section 3.06 shall cease, and all such
rights shall thereupon become vested in the Collateral Agent, for the
ratable benefit of the Secured Parties, and in the Second Lien
Collateral Agent, for the ratable benefit of the Second Lien Secured
Parties. The Collateral Agent shall have the sole and exclusive right
and authority to receive and retain such dividends, interest, principal
or other distributions. All dividends, interest, principal or other
distributions received by any Grantor contrary to the provisions of
this Section 3.06 shall be held in trust for the benefit of the
Collateral Agent, for the ratable benefit of the Secured Parties, and
the Second Lien Collateral Agent, for the ratable benefit of the Second
Lien Secured Parties, shall be segregated from other property or funds
of such Grantor and shall be forthwith delivered to the Collateral
Agent upon demand in the same form as so received (with any necessary
endorsement or instrument of assignment). Any and all money and other
property paid over to or received by the Collateral Agent pursuant to
the provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral
Agent upon receipt of such money or other property and shall be applied
in accordance with the provisions of Section 5.02. After all Events of
Default have been cured or waived and each applicable Grantor has
delivered to the Collateral Agent certificates to that effect, the
Collateral Agent shall, promptly after all such Events of Default have
been cured or waived, repay to each applicable Grantor (without
interest) all dividends, interest, principal or other distributions
that such Grantor would otherwise be permitted to retain pursuant to
the terms of paragraph (a)(iii) of this Section 3.06 and that remain in
such account.
(c) Subject to the terms of the Intercreditor Agreement, upon
the occurrence and during the continuance of an Event of Default, after
the Collateral Agent shall have notified (or shall be deemed to have
notified pursuant to Section 3.06(a)) the Grantors of the suspension of
their rights under paragraph (a)(i) of this Section 3.06, then all
rights of any Grantor to exercise the voting and consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 3.06, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 3.06, shall cease, and all such
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rights shall thereupon become vested in the Collateral Agent, for the
ratable benefit of the Secured Parties, and in the Second Lien
Collateral Agent, for the ratable benefit of the Second Lien Secured
Parties. The Collateral Agent shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers;
PROVIDED that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and
during the continuance of an Event of Default to permit the Grantors to
exercise such rights.
(d) Any notice given by the Collateral Agent to the Grantors
exercising its rights under paragraph (a) of this Section 3.06 (i) may
be given by telephone if promptly confirmed in writing, (ii) may be
given to one or more of the Grantors at the same or different times and
(iii) may suspend the rights of the Grantors under paragraph (a)(i) or
paragraph (a)(iii) in part without suspending all such rights (as
specified by the Collateral Agent in its sole and absolute discretion)
and without waiving or otherwise affecting the Collateral Agent's
rights to give additional notices from time to time suspending other
rights so long as an Event of Default has occurred and is continuing.
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
SECTION 4.01 SECURITY INTEREST. (a) As security for the
payment or performance, as the case may be, in full of the Obligations, each
Grantor hereby assigns and pledges to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, and hereby grants to
the Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest (the "SECURITY INTEREST"), in all right,
title or interest in or to any and all of the following assets and properties
now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "ARTICLE 9 COLLATERAL"):
(i) all Accounts;
(ii) all As-Extracted Collateral;
(iii) all Chattel Paper;
(iv) all cash and Deposit Accounts;
(v) all Documents;
(vi) all Equipment;
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(vii) all Fixtures;
(viii) all General Intangibles;
(ix) all Instruments;
(x) all Inventory;
(xi) all Investment Property;
(xii) all Letter-of-Credit Rights;
(xiii) all Commercial Tort Claims;
(xiv) all Securities Accounts;
(xv) all books and records pertaining to the Article 9
Collateral; and
(xvi) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any person with respect to any of the
foregoing.
(b) Each Grantor 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) with respect to the Article 9 Collateral or any part thereof
and amendments thereto that (i) indicate the Article 9 Collateral as
"all assets" of such Grantor or words of similar effect and (ii)
contain the information required by Article 9 of the Uniform Commercial
Code of each applicable jurisdiction for the filing of any financing
statement or amendment, including whether such Grantor is an
organization, the type of organization and any organizational
identification number issued to such Grantor. Each Grantor agrees to
provide such information to the Collateral Agent promptly upon request.
Each Grantor also ratifies its authorization for the
Collateral Agent to file in any relevant jurisdiction any initial
financing statements or amendments thereto if filed prior to the
Closing Date.
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The Collateral Agent is further authorized to file 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) such documents as may be necessary or advisable for the
purpose of perfecting, confirming, continuing, enforcing or protecting
the Security Interest granted by each Grantor, without the signature of
such Grantor, and naming such Grantor or the Grantors as debtors and
the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and
shall not subject the Collateral Agent or any other Secured Party to,
or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Article 9 Collateral.
(d) Notwithstanding anything herein to the contrary, in no
event shall the Security Interest attach to (A) any contract or
agreement (other than any Lease or other contract or agreement relating
to a Hydrocarbon Interest) to which any Grantor is a party or any of
its rights or interests thereunder to the extent and for so long as the
grant of the Security Interest shall constitute or result in (I) the
unenforceability of any right of such Grantor therein or (II) a breach
or termination pursuant to the terms of, or a default under, any such
contract or agreement (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 New York UCC or any other applicable law or principles
of equity), (B) any real property, improvements thereto or equipment
acquired by any Grantor after the Effective Date if (I) at least 80% of
the purchase price of such real property, improvements or equipment was
financed through the incurrence of Indebtedness, (II) such Indebtedness
is secured by a Lien on such real property, improvements or equipment
and (III) the terms of the instrument or instruments governing such
Indebtedness (but not of any refinancings or replacements thereof)
would be violated by the attachment of the Security Interest to such
real property, improvements or equipment and (C) the Equity Interests
in any person that is not the Borrower or a Subsidiary to the extent
and for so long as the grant of the Security Interest shall constitute
or result in a breach of, or default under, the terms of such person's
joint venture agreement, limited liability company agreement, joint
operating agreement or similar document (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 New York UCC or any other applicable law
or principles of equity); PROVIDED, HOWEVER, that, in the case of
clauses (A), (B) and (C) above, the Security Interest shall attach
immediately at such time as the condition causing such unenforceability
shall be remedied or removed, such Indebtedness shall be repaid,
refinanced or replaced or such term shall be removed and, to the extent
severable, shall attach immediately to any portion of such contract,
agreement, document, real property, improvement or equipment (including
any proceeds of the foregoing) that does not result in any of the
consequences specified in clauses (A), (B)(III) or (C) above, as the
case may be.
SECTION 4.02 REPRESENTATIONS AND WARRANTIES. Each Grantor,
jointly with the other Grantors and severally, represents and warrants, as of
the Effective Date, to the Collateral Agent and the other Secured Parties that:
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(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant
to the Collateral Agent, for the ratable benefit of the Secured
Parties, the Security Interest in such Article 9 Collateral pursuant
hereto and to execute, deliver and perform its obligations in
accordance with the terms of this Agreement, without the consent or
approval of any other person other than any consent or approval that
has been obtained and is in full force and effect.
(b) The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein (including
(x) the exact legal name of each Grantor and (y) the jurisdiction of
organization of each Grantor) is correct and complete as of the Closing
Date and the Effective Date. Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a
description of the Article 9 Collateral have been prepared by the
Collateral Agent based upon the information provided to the Collateral
Agent and the other Secured Parties in the Perfection Certificate for
filing in each governmental, municipal or other office specified in
SECTION 2 of the Perfection Certificate (or specified by notice from
the Borrower to the Collateral Agent after the Closing Date in the case
of filings, recordings or registrations required by Sections 5.06 or
5.12 of the Credit Agreement), which are all the filings, recordings
and registrations (other than filings required to be made in the United
States Patent and Trademark Office and the United States Copyright
Office in order to perfect the Security Interest in the Article 9
Collateral consisting of United States Patents, United States
registered Trademarks and United States registered Copyrights) that are
necessary to publish notice of and protect the validity of and to
establish a legal, valid and perfected security interest in favor of
the Collateral Agent (for the ratable benefit of the Secured Parties)
in respect of all Article 9 Collateral in which the Security Interest
may be perfected by filing, recording or registration in the United
States of America, its territories or possessions, any constituent
State of the United States of America or the District of Columbia, and
no further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such jurisdiction,
except as provided under applicable law with respect to the filing of
continuation statements. Each Grantor represents and warrants that a
fully executed agreement in the form hereof (or a fully executed short
form agreement in form and substance reasonably satisfactory to the
Collateral Agent), and containing a description of all Article 9
Collateral consisting of Intellectual Property with respect to United
States Patents (and Patents for which the United States patent
applications are pending), United States registered Trademarks (and
Trademarks for which United States registration applications are
pending) and United States registered Copyrights (and Copyrights for
which United States registration applications are pending) has been
delivered to the Collateral Agent for recording by the United States
Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. ss.261, 15 U.S.C. ss.1060 or 17 U.S.C. ss.205 and
the regulations thereunder, as applicable, and otherwise as may be
required pursuant to the laws of any other necessary jurisdiction, to
protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Article 9 Collateral
consisting of Patents, Trademarks and Copyrights in which a security
16
interest may be perfected by filing, recording or registration in the
United States of America, its territories or possessions, any
constituent State of the United States of America or the District of
Columbia, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with
respect to any Article 9 Collateral consisting of Patents, Trademarks
and Copyrights (or registration or application for registration
thereof) acquired or developed after the date hereof).
(c) The Security Interest constitutes (i) a legal and valid
security interest in all the Article 9 Collateral securing the payment
and performance of the Obligations, (ii) subject to the filings
described in Section 4.02(b), a perfected security interest in all
Article 9 Collateral in which a security interest may be perfected by
filing, recording or registering a financing statement or analogous
document in the in the United States of America, its territories or
possessions, any constituent State of the United States of America or
the District of Columbia pursuant to the Uniform Commercial Code or
other applicable law in such jurisdictions and (iii) a security
interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of
this Agreement (or a fully executed short form agreement in form and
substance reasonably satisfactory to the Collateral Agent) with the
United States Patent and Trademark Office and the United States
Copyright Office, as applicable. The Security Interest is and shall be
prior to any other Lien on any of the Article 9 Collateral, other than
Liens expressly permitted pursuant to Section 6.02 of the Credit
Agreement that have priority as a matter of law.
(d) The Article 9 Collateral is owned by the Grantors free and
clear of any Lien, except for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement. No Grantor has filed or consented
to the filing of (i) any financing statement or analogous document
under the Uniform Commercial Code or any other applicable laws covering
any Article 9 Collateral, (ii) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar instrument
covering any Article 9 Collateral with the United States Patent and
Trademark Office or the United States Copyright Office, (iii) any
notice under the Assignment of Claims Act or (iv) any assignment in
which any Grantor assigns any Article 9 Collateral or any security
agreement or similar instrument covering any Article 9 Collateral with
any foreign governmental, municipal or other office, which financing
statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
No Grantor holds any Commercial Tort Claims except as indicated on the
Perfection Certificate.
SECTION 4.03 COVENANTS. (a) Each Grantor agrees promptly to
notify the Collateral Agent in writing of any change (i) in such Grantor's legal
name, as reflected in its organizational documents, (ii) in the jurisdiction of
organization or formation of such Grantor, (iii) if it is not a registered
organization (as defined in the New York UCC), in the location of its chief
executive office or its principal place of business, (iv) in such Grantor's
17
organizational form or (v) in such Grantor's Federal Taxpayer Identification
Number or organizational identification number assigned by the jurisdiction of
organization. Each Grantor agrees to promptly provide the Collateral Agent with
certified organizational documents reflecting any of the changes described in
the first sentence of this paragraph. Each Grantor agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required in
order for the Collateral Agent to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral. Each
Grantor also agrees promptly to notify the Collateral Agent in writing if any
material portion of the Collateral is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Article
9 Collateral owned by it as is consistent with its current practices
and in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which such
Grantor is engaged, but in any event to include complete accounting
records indicating all payments and proceeds received with respect to
any part of the Article 9 Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and
deliver to the Collateral Agent a duly certified schedule or schedules
in form and detail satisfactory to the Collateral Agent showing the
identity, amount and location of any and all Article 9 Collateral.
(c) Upon request of the Collateral Agent, at the time of
delivery of annual financial statements pursuant to Section 5.04(a) of
the Credit Agreement, the Borrower shall deliver to the Collateral
Agent a certificate executed by a Responsible Officer of the Borrower
certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings
recordings or registrations, including all refilings, recordings and
registrations, containing a description of the Article 9 Collateral
have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to
paragraph (a) of this Section to the extent necessary to protect and
perfect the Security Interest for a period of not less than 18 months
after the date of such certificate (except as noted therein with
respect to any continuation statements to be filed within such period).
Each certificate delivered pursuant to this paragraph shall identify in
the format of SCHEDULE III all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
(d) Each Grantor shall, at its own expense, take any and all
actions necessary to defend title to the Article 9 Collateral against
all persons and to defend the Security Interest and the priority
thereof against any Lien not expressly permitted pursuant to Section
6.02 of the Credit Agreement.
(e) Each Grantor agrees, at its own expense, promptly to
execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the
Collateral Agent may from time to time reasonably request to better
18
assure, obtain, preserve, protect and perfect the Security Interest and
the rights and remedies created hereby, including the payment of any
fees and Taxes required in connection with the execution and delivery
of this Agreement, the granting of the Security Interest and the filing
of any financing or continuation statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount
payable to any Grantor under or in connection with any of the Article 9
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be promptly pledged and
delivered to the Collateral Agent, duly endorsed in a manner reasonably
satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to
the Grantors, to supplement this Agreement by supplementing Schedule
III or adding additional schedules hereto to identify specifically any
asset or item of a Grantor that constitutes Copyrights, Licenses,
Patents or Trademarks; PROVIDED that any Grantor shall have the right,
exercisable within 10 days after it has been notified by the Collateral
Agent of the specific identification of such Collateral, to advise the
Collateral Agent in writing of any inaccuracy of the representations
and warranties made by such Grantor hereunder with respect to such
Collateral. Each Grantor agrees that it will use its reasonable best
efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been
notified by the Collateral Agent of the specific identification of such
Collateral.
(f) The Collateral Agent and such persons as the Collateral
Agent may designate shall have the right, at the applicable Grantor's
own cost and expense, to inspect the Article 9 Collateral, all records
related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Article 9 Collateral is located, to
discuss the applicable Grantor's affairs with the officers of such
Grantor and its independent accountants and to verify under reasonable
procedures, the existence, validity, amount, quality, quantity, value,
condition and status of, or any other matter relating to, the Article 9
Collateral, including, in the case of Accounts or other Article 9
Collateral in the possession of any third person, by contacting Account
Debtors or the third person possessing such Article 9 Collateral for
the purpose of making such a verification. The Collateral Agent shall
have the absolute right to share any information it gains from such
inspection or verification with any Secured Party, the Second Lien
Collateral Agent or any other Second Lien Secured Party.
(g) At its option, the Collateral Agent may discharge past due
Taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Article 9 Collateral
and not expressly permitted pursuant to Section 5.03 or Section 6.02 of
the Credit Agreement, and may pay for the maintenance and preservation
of the Article 9 Collateral to the extent any Grantor fails to do so as
required by the Credit Agreement or this Agreement, and each Grantor
jointly and severally agrees to reimburse the Collateral Agent on
demand for any payment made or any expense incurred by the Collateral
19
Agent pursuant to the foregoing authorization; PROVIDED, HOWEVER, that
nothing in this paragraph shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral
Agent or any Secured Party to cure or perform, any covenants or other
promises of any Grantor with respect to Taxes, assessments, charges,
fees, Liens, security interests or other encumbrances and maintenance
as set forth herein or in the other Loan Documents.
(h) Each Grantor shall remain liable to observe and perform
all the conditions and obligations to be observed and performed by it
under each contract, agreement or instrument relating to the Article 9
Collateral, all in accordance with the terms and conditions thereof,
and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the other Secured Parties from and
against any and all liability for such performance.
(i) No Grantor shall make or permit to be made an assignment,
pledge or hypothecation of the Article 9 Collateral or shall grant any
other Lien in respect of the Article 9 Collateral or permit any notice
to be filed under the Assignment of Claims Act, except, in each case,
as expressly permitted by Section 6.02 of the Credit Agreement. No
Grantor shall make or permit to be made any transfer of the Article 9
Collateral and each Grantor shall remain at all times in possession or
otherwise in control of the Article 9 Collateral owned by it, except as
permitted by the Credit Agreement.
(j) No Grantor will, without the Collateral Agent's prior
written consent, grant any extension of the time of payment of any
Accounts included in the Article 9 Collateral, compromise, compound or
settle the same for less than the full amount thereof, release, wholly
or partly, any person liable for the payment thereof or allow any
credit or discount whatsoever thereon, other than extensions,
compromises, compoundings, settlements, releases, credits or discounts
granted or made in the ordinary course of business and consistent with
its current practices and in accordance with such prudent and standard
practice used in industries that are the same as or similar to those in
which such Grantor is engaged.
SECTION 4.04 OTHER ACTIONS. In order to further insure the
attachment, perfection and priority of, and the ability of the Collateral Agent
to enforce, the Security Interest in the Article 9 Collateral, each Grantor
agrees, in each case at such Grantor's own expense, to take the following
actions with respect to the following Article 9 Collateral:
(a) INSTRUMENTS. If any Grantor shall at any time hold or
acquire any Instruments, such Grantor shall forthwith endorse, assign
and deliver the same to the Collateral Agent, accompanied by such
undated instruments of endorsement, transfer or assignment duly
executed in blank as the Collateral Agent may from time to time
reasonably specify.
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(b) DEPOSIT ACCOUNTS. At all times after the 30th day
following the Closing Date and thereafter, for each Deposit Account
that any Grantor at any time opens or maintains, such Grantor shall
cause such Deposit Account to be subject to an Account Control
Agreement.
(c) INVESTMENT PROPERTY. Except to the extent otherwise
provided in Article III, if any Grantor shall at any time hold or
acquire any certificated securities, such Grantor shall forthwith
endorse, assign and deliver the same to the Collateral Agent,
accompanied by such undated instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time
specify. If any securities now or hereafter acquired by any Grantor are
uncertificated and are issued to such Grantor or its nominee directly
by the issuer thereof, such Grantor shall promptly notify the
Collateral Agent thereof and, at the Collateral Agent's request and
option, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, either (i) cause the issuer to
agree to comply with instructions from the Collateral Agent as to such
securities, without further consent of any Grantor or such nominee or
(ii) arrange for the Collateral Agent to become the registered owner of
the securities. If any securities, whether certificated or
uncertificated, or other Investment Property now or hereafter acquired
by any Grantor are held by such Grantor or its nominee through a
Securities Intermediary or Commodity Intermediary, such Grantor shall
promptly notify the Collateral Agent thereof and, at the Collateral
Agent's request and option, pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, either (i)
cause such Securities Intermediary or Commodity Intermediary, as the
case may be, to agree to comply with Entitlement Orders from the
Collateral Agent to such Securities Intermediary as to such securities
or other Investment Property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by
the Collateral Agent to such Commodity Intermediary, in each case
without further consent of any Grantor or such nominee or (ii) in the
case of Financial Assets (as governed by Article 8 of the New York UCC)
or other Investment Property held through a Securities Intermediary,
arrange for the Collateral Agent to become the Entitlement Holder with
respect to such Investment Property, with the Grantor being permitted,
only with the consent of the Collateral Agent, to exercise rights to
withdraw or otherwise deal with such Investment Property. The
Collateral Agent agrees with each Grantor that the Collateral Agent
shall not give any such Entitlement Orders or instructions or
directions to any such issuer, Securities Intermediary or Commodity
Intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by any Grantor, unless an Event of Default
has occurred and is continuing, or, after giving effect to any such
investment and withdrawal rights would occur.
(d) ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If any
Grantor at any time holds or acquires an interest in any Electronic
Chattel Paper or any "transferable record" with a principal amount in
excess $250,000, 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, such Grantor shall promptly notify the
Collateral Agent thereof and, at the request of the Collateral Agent,
21
shall take such action as the Collateral Agent may reasonably request
to vest in the Collateral Agent control under New York 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 Collateral Agent agrees with such Grantor that
the Collateral Agent will arrange, pursuant to procedures reasonably
satisfactory to the Collateral Agent and so long as such procedures
will not result in the Collateral Agent's loss of control, for the
Grantor 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 Grantor with
respect to such Electronic Chattel Paper or transferable record.
(e) LETTER-OF-CREDIT RIGHTS. If any Grantor is at any time a
beneficiary under a letter of credit with a face value in excess of
$500,000 now or hereafter issued in favor of such Grantor, such Grantor
shall promptly notify the Collateral Agent thereof and, at the request
and option of the Collateral Agent, such Grantor shall, 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 the letter of credit, with the Collateral Agent agreeing, in each
case, that the proceeds of any drawing under the letter of credit are
to be paid to the applicable Grantor unless an Event of Default has
occurred or is continuing, in which case they will be applied to the
repayment of the Loans.
(f) COMMERCIAL TORT CLAIMS. If any Grantor shall at any time
hold or acquire a Commercial Tort Claim in an amount reasonably
estimated to exceed $1,500,000, such Grantor shall promptly notify the
Collateral Agent thereof in a writing signed by such Grantor including
a summary description of such claim and grant to the Collateral Agent,
for the ratable benefit of the Secured Parties, 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.
SECTION 4.05 COVENANTS REGARDING PATENT, TRADEMARK AND
COPYRIGHT COLLATERAL. (a) Each Grantor agrees that it will not, and will not
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent that is material to the conduct of any Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
xxxx any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
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(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of
any Grantor's business, (i) maintain such Trademark in full force free
from any claim of abandonment or invalidity for non-use, (ii) maintain
the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and
preserve its maximum rights under applicable law and (iv) not knowingly
use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a Copyright material to
the conduct of any Grantor's business, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright
notice as necessary and sufficient to establish and preserve its
maximum rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if
it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of its business may become abandoned, lost or
dedicated to the public, or of any material and adverse determination
or development (including the institution of, or any such determination
or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or
similar office of any country) regarding such Grantor's ownership of
any Patent, Trademark or Copyright, its right to register the same, or
its right to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any
Patent, Trademark or Copyright (or for the registration of any
Trademark or Copyright) with the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or
any political subdivision thereof, unless it promptly notifies the
Collateral Agent, and, upon request of the Collateral Agent, executes
and delivers any and all agreements, instruments, documents and papers
as the Collateral Agent may reasonably request to evidence the Security
Interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled
with an interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States
Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States or
in any other country or any political subdivision thereof, to maintain
and pursue each material application relating to the Patents,
Trademarks and/or Copyrights (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration
of the Trademarks and Copyrights that is material to the conduct of any
23
Grantor's business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment
of maintenance fees, and, if consistent with good business judgment, to
initiate opposition, interference and cancellation proceedings against
third parties.
(g) If any Grantor knows or has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright
material to the conduct of any Grantor's business has been or is about
to be infringed, misappropriated or diluted by a third person, such
Grantor promptly shall notify the Collateral Agent and shall, if
consistent with good business judgment, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for
such infringement, misappropriation or dilution, and take such other
actions as are appropriate under the circumstances to protect such
Article 9 Collateral.
(h) Upon the occurrence and during the continuance of an Event
of Default, each Grantor shall use its reasonable best efforts to
obtain all requisite consents or approvals by the licensor of each
Copyright License, Patent License, Trademark License and each other
material License to effect the assignment of all such Grantor's right,
title and interest thereunder to the Collateral Agent, for the ratable
benefit of the Secured Parties, or its designee.
ARTICLE V
REMEDIES
SECTION 5.01 REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed
that, subject to the terms of the Intercreditor Agreement, the Collateral Agent
shall have the right to take any of or all the following actions at the same or
different times: (a) with respect to any Article 9 Collateral consisting of
Intellectual Property, on demand, to cause the Security Interest to become an
assignment, transfer and conveyance of any of or all such Article 9 Collateral
by the applicable Grantor to the Collateral Agent, or to license or sublicense,
whether general, special or otherwise, and whether on an exclusive or
nonexclusive basis, any such Article 9 Collateral throughout the world on such
terms and conditions and in such manner as the Collateral Agent shall determine
(other than in violation of any then-existing licensing arrangements to the
extent that waivers cannot be obtained) and (b) with or without legal process
and with or without prior notice or demand for performance, to take possession
of the Article 9 Collateral and without liability for trespass to enter any
premises where the Article 9 Collateral may be located for the purpose of taking
possession of or removing the Article 9 Collateral and, generally, to exercise
any and all rights afforded to a secured party under the Uniform Commercial Code
or other applicable law. Without limiting the generality of the foregoing, each
Grantor agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral at a public or private sale or at any broker's board
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or on any securities exchange, for cash, upon credit or for future delivery as
the Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the property sold absolutely, free from
any claim or right on the part of any Grantor, and each Grantor hereby waives
(to the extent permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
The Collateral Agent shall give each applicable Grantor 10
days' written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by applicable law, private)
sale made pursuant to this Agreement, any Secured Party may bid for or purchase,
free (to the extent permitted by applicable law) from any right of redemption,
stay, valuation or appraisal on the part of any Grantor (all said rights being
also hereby waived and released to the extent permitted by applicable law), the
Collateral or any part thereof offered for sale and may make payment on account
thereof by using any claim then due and payable to such Secured Party from any
Grantor as a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Grantor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in full.
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As an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to foreclose
under this Agreement and to sell the Collateral or any portion thereof pursuant
to a judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the
provisions of this Section 5.01 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-610(b) of the New York UCC or its
equivalent in other jurisdictions.
Notwithstanding anything to the contrary herein, any remedies
provided in this Section 5.01, and the exercise thereof by the Collateral Agent,
shall be subject to the Intercreditor Agreement.
SECTION 5.02 APPLICATION OF PROCEEDS. Subject to the
Intercreditor Agreement, the Collateral Agent shall apply the proceeds of any
collection, sale, foreclosure or other realization upon any Collateral,
including any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent and the Administrative Agent in connection with
such collection, sale, foreclosure or realization or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent or the Administrative Agent hereunder or under any
other Loan Document on behalf of any Grantor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of Unfunded
Advances/Participations;
THIRD, to the payment in full of all other Obligations (the
amounts so applied to be distributed among the Secured Parties PRO RATA
in accordance with the amounts of the Obligations owed to them on the
date of any such distribution);
FOURTH, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent and the Administrative Agent shall have absolute discretion
as to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of Collateral by the Collateral
Agent (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 5.03 GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY.
For the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Agreement at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
26
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors), to use, license or
sublicense any of the Article 9 Collateral consisting of Intellectual Property
now owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof. The use of such
license by the Collateral Agent may be exercised, at the option of the
Collateral Agent, only upon the occurrence and during the continuation of an
Event of Default; PROVIDED, HOWEVER, that any license, sublicense or other
transaction entered into by the Collateral Agent in accordance herewith shall be
binding upon each Grantor notwithstanding any subsequent cure of an Event of
Default.
SECTION 5.04 SECURITIES ACT, ETC. In view of the position of
the Grantors in relation to the Pledged Collateral, or because of other current
or future circumstances, a question may arise under the U.S. Securities Act of
1933, as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the "FEDERAL SECURITIES LAWS") with respect
to any disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
"blue sky" or other state securities laws or similar laws analogous in purpose
or effect. Each Grantor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a limited number of potential
purchasers (including a single potential purchaser) to effect such sale. Each
Grantor acknowledges and agrees that any such sale might result in prices and
other terms less favorable to the seller than if such sale were a public sale
without such restrictions. In the event of any such sale, the Collateral Agent
shall incur no responsibility or liability for selling all or any part of the
Pledged Collateral at a price that the Collateral Agent, in its sole and
absolute discretion, may in good xxxxx xxxx reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid or
if more than a limited number of purchasers (or a single purchaser) were
approached. The provisions of this Section 5.04 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.
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ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
SECTION 6.01 INDEMNITY AND SUBROGATION. In addition to all
such rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 6.03), the Borrower agrees that (a) in
the event a payment shall be made by any Guarantor (other than Holdings) under
this Agreement, the Borrower shall indemnify such Guarantor for the full amount
of such payment and such Guarantor shall be subrogated to the rights of the
person to whom such payment shall have been made to the extent of such payment
and (b) in the event any assets of any Guarantor (other than Holdings) shall be
sold pursuant to this Agreement or any other Security Document to satisfy in
whole or in part a claim of any Secured Party, the Borrower shall indemnify such
Guarantor in an amount equal to the greater of the book value or the fair market
value of the assets so sold.
SECTION 6.02 CONTRIBUTION AND SUBROGATION. Each Guarantor
(other than Holdings) (a "CONTRIBUTING PARTY") agrees (subject to Section 6.03)
that, in the event a payment shall be made by any other Guarantor (other than
Holdings) hereunder in respect of any Obligation or assets of any other
Guarantor (other than Holdings) shall be sold pursuant to any Security Document
to satisfy any Obligation owed to any Secured Party, and such other Guarantor
(the "CLAIMING PARTY") shall not have been fully indemnified by the Borrower as
provided in Section 6.01, the Contributing Party shall indemnify the Claiming
Party in an amount equal to (i) the amount of such payment or (ii) the greater
of the book value or the fair market value of such assets, as the case may be,
in each case multiplied by a fraction of which the numerator shall be the net
worth of the Contributing Party on the date hereof and the denominator shall be
the aggregate net worth of all the Guarantors (other than Holdings) on the date
hereof (or, in the case of any Guarantor becoming a party hereto pursuant to
Section 7.16, the date of the supplement hereto executed and delivered by such
Guarantor). Any Contributing Party making any payment to a Claiming Party
pursuant to this Section 6.02 shall be subrogated to the rights of such Claiming
Party under Section 6.01 to the extent of such payment.
SECTION 6.03 SUBORDINATION. (a) Notwithstanding any provision
of this Agreement to the contrary, all rights of the Guarantors under Sections
6.01 and 6.02 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the part
of the Borrower or any Guarantor to make the payments required by Sections 6.01
and 6.02 (or any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities of any Guarantor with
respect to its obligations hereunder, and each Guarantor shall remain liable for
the full amount of its obligations hereunder.
(b) The Borrower and each Guarantor hereby agree that all
Indebtedness and other monetary obligations owed by it to any other
Guarantor or the Borrower shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01 NOTICES. All communications and notices hereunder
(a) to any party other than the Subsidiary Loan Parties, shall (except as
otherwise expressly permitted herein) be in writing and given as provided in
Section 9.01 of the Credit Agreement or (b) to any Subsidiary Loan Party, shall
(except as otherwise expressly permitted herein) be in writing and given to it
in care of the Borrower as provided in Section 9.01 of the Credit Agreement.
SECTION 7.02 SECURITY INTEREST ABSOLUTE. All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Pledged Collateral and all obligations of each Grantor hereunder
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument relating
to the foregoing, (c) any exchange, release or non-perfection of any Lien on
other collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
SECTION 7.03 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any Lender or on its behalf and
notwithstanding that the Collateral Agent, the Administrative Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended under the Credit
Agreement, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under any Loan Document is outstanding and unpaid.
SECTION 7.04 BINDING EFFECT; SEVERAL AGREEMENT. This Agreement
shall become effective as to any Loan Party when a counterpart hereof executed
on behalf of such Loan Party shall have been delivered to the Collateral Agent
and a counterpart hereof shall have been executed on behalf of the Collateral
Agent, and thereafter shall be binding upon such Loan Party and the Collateral
Agent and their permitted successors and assigns, and shall inure to the benefit
of such Loan Party, the Collateral Agent and the other Secured Parties and their
successors and assigns, except that no Loan Party shall have the right to assign
or transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated or permitted by this Agreement or the Credit Agreement.
This Agreement shall be construed as a separate agreement with respect to each
Loan Party and may be amended, modified, supplemented, waived or released with
respect to any Loan Party without the approval of any other Loan Party and
without affecting the obligations of any other Loan Party hereunder.
29
SECTION 7.05 SUCCESSORS AND ASSIGNS. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Grantor or the
Collateral Agent that are contained in this Agreement shall bind and inure to
the benefit of their successors and assigns.
SECTION 7.06 COLLATERAL AGENT'S FEES AND EXPENSES;
INDEMNIFICATION. (a) Each Grantor shall pay all reasonable out-of-pocket
expenses incurred by the Collateral Agent, the Administrative Agent and their
respective Affiliates, including the reasonable fees, charges and disbursements
of counsel, in connection with (i) the administration of the Loan Documents and
any amendments, modifications or waivers of the provisions thereto, (ii) the
custody, inspection, supervision and preservation of, the sale of, the
collection from, or any other realization upon, the Collateral, (iii) the
enforcement or protection of the Collateral Agent's rights under the Loan
Documents, including its rights under this Section and during any workout,
restructuring or negotiations in respect of the Loans and (iv) the failure of
any Grantor to perform or observe any of the provisions thereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor agrees to, jointly and
severally, indemnify the Collateral Agent, the Administrative Agent and
the other Indemnitees against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of (i) the execution, delivery or
performance of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance
by the parties thereto of their obligations thereunder or the
consummation of the Transactions and the other transactions
contemplated hereby or thereby, (ii) the use of the proceeds of the
Loans, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing or to the Collateral, whether or not
any Indemnitee is a party thereto (and regardless of whether such
matter is initiated by a third party, a Loan Party or any of Affiliate
thereof) or (iv) any actual or alleged presence or Release of Hazardous
Materials on any property currently or formerly owned or operated by
the Borrower or the Subsidiaries, or any Environmental Liability
related in any way to the Borrower or the Subsidiaries; PROVIDED that
such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted primarily from the gross
negligence or wilful misconduct of such Indemnitee. To the extent
permitted by applicable law, no Grantor shall assert, and each Grantor
hereby waives any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, the other Loan Documents, any
agreement or instrument contemplated hereby, the Transactions, any Loan
or the use of proceeds thereof.
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(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security
Documents. The provisions of this Section 7.06 shall remain operative
and in full force and effect regardless of the termination of this
Agreement or any other Loan Document, the consummation of the
transactions contemplated hereby, the repayment of any of the
Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent, the
Administrative Agent or any other Secured Party. All amounts due under
this Section 7.06 shall be payable on written demand therefor and shall
bear interest, on and from the date of demand, at the rate specified in
Section 2.05(a) of the Credit Agreement.
SECTION 7.07 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each
Grantor hereby appoints the Collateral Agent as the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof, (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral, (c) to sign the name of any Grantor on any invoice or xxxx of lading
relating to any of the Collateral, (d) to send verifications of Accounts
Receivable to any Account Debtor, (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral, (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral, (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent, and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement in accordance with
its terms, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; PROVIDED, HOWEVER, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other Secured Parties
shall be accountable only for amounts actually received as a result of the
exercise of the powers granted to them herein, and neither they nor their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence,
wilful misconduct or bad faith.
SECTION 7.08 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
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SECTION 7.09 WAIVERS; AMENDMENT. (a) No failure or delay by
the Collateral Agent, the Administrative Agent or any Lender in exercising any
right or power hereunder or under any other Loan Document shall operate as a
waiver hereof or thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the exercise
of any other right or power. The rights and remedies of the Collateral Agent,
the Administrative Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of any Loan Document or
consent to any departure by any Loan Party therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section
7.09, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Collateral Agent, the Administrative Agent or
any Lender may have had notice or knowledge of such Default at the time. No
notice or demand on any Loan Party in any case shall entitle any Loan Party to
any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Collateral Agent and the Loan
Party or Loan Parties with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in accordance
with Section 9.08 of the Credit Agreement.
SECTION 7.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.
SECTION 7.11 SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
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SECTION 7.12 COUNTERPARTS. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
7.04. Delivery of an executed signature page to this Agreement by facsimile
transmission or other electronic imaging means shall be as effective as delivery
of a manually signed counterpart of this Agreement.
SECTION 7.13 HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 7.14 JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a)
Each of the Grantors hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America, sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the Loan Parties hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the Loan Parties agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that the Collateral Agent, the Administrative Agent or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against any Grantor or its properties in
the courts of any jurisdiction.
(b) Each of the Loan Parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any other Loan Document in any court
referred to in paragraph (a) of this Section (it being understood that
such waiver shall not require any suit, action or proceeding initiated
in any court to be remanded or removed to any court referred to in
paragraph (a) of this Section). Each of the Loan Parties hereby
irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each of the Loan Parties hereby irrevocably consents to
service of process in the manner provided for notices in Section 7.01.
Nothing in this Agreement or any other Loan Document will affect the
right of the Collateral Agent to serve process in any other manner
permitted by law.
SECTION 7.15 TERMINATION OR RELEASE. This Agreement, the
guarantees made herein, the Security Interest and all other security interests
granted hereby shall terminate, and the Loan Parties shall automatically be
released from their obligations hereunder, in accordance with Section 9.17 of
the Credit Agreement and the Intercreditor Agreement.
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SECTION 7.16 ADDITIONAL SUBSIDIARIES. Any Subsidiary that is
required to become a party hereto pursuant to Section 5.12 of the Credit
Agreement shall enter into this Agreement as a Guarantor and a Grantor upon
becoming such a Subsidiary. Upon execution and delivery by the Collateral Agent
and such Subsidiary of a supplement in the form of Exhibit A hereto, such
Subsidiary shall become a Guarantor and a Grantor hereunder with the same force
and effect as if originally named as a Guarantor and a Grantor herein. The
execution and delivery of any such instrument shall not require the consent of
any other Loan Party hereunder. The rights and obligations of each Loan Party
hereunder shall remain in full force and effect notwithstanding the addition of
any new Loan Party as a party to this Agreement.
SECTION 7.17 RIGHT OF SETOFF. If an Event of Default shall
have occurred and is continuing, each Secured Party is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all Collateral (including any deposits (general or special,
time or demand, provisional or final)) at any time held and other obligations at
any time owing by such Secured Party to or for the credit or the account of any
Grantor against any and all of the obligations of such Grantor now or hereafter
existing under this Agreement and the other Loan Documents held by such Secured
Party, irrespective of whether or not such Secured Party shall have made any
demand under this Agreement or any other Loan Document and although such
obligations may be unmatured. The rights of each Secured Party under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Secured Party may have.
SECTION 7.18 SUBSIDIARY LOAN PARTY ACKNOWLEDGMENT. Each
Subsidiary Loan Party agrees and acknowledges that a condition to its creation
or continued existence, and its receipt and continued ownership of assets and
properties, is its execution and delivery of this Agreement and the performance
of its obligations hereunder, including the extension of its guarantee hereunder
and the grant of a security interest on its assets and properties as
contemplated hereunder.
SECTION 7.19 INTERCREDITOR AGREEMENT. Notwithstanding anything
herein to the contrary, the Security Interest and the other Liens granted to the
Collateral Agent pursuant to this Agreement and the exercise of any right or
remedy by the Collateral Agent hereunder are subject to the provisions of the
Intercreditor Agreement. In the event of any conflict or inconsistency between
the terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern and control.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
First Lien Guarantee and Collateral Agreement as of the day and year first above
written.
PACIFIC ENERGY ALASKA OPERATING LLC,
/s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President
PACIFIC ENERGY ALASKA HOLDINGS, LLC,
/s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President
SILVER POINT FINANCE, LLC,
as Collateral Agent
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Authorized Signatory
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