EXECUTION VERSION
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GUARANTEE AND COLLATERAL AGREEMENT
made by
APPLETON PAPERS CANADA LTD.,
in favor of
FIFTH THIRD BANK,
as Administrative Agent
Dated as of February 8, 2010
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TABLE OF CONTENTS
Page
ANNEX I - Form of Assumption Agreement
Schedule 1 - Notices
Schedule 2 - Pledged Collateral
Schedule 3 - Perfected Liens
Schedule 4 - Jurisdiction of Organization
Schedule 5 - Inventory and Equipment
Schedule 6 - Intellectual Property
Schedule 7 - Accounts
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GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 8, 2010,
made by Appleton Papers Canada Ltd., a corporation formed under the laws of the
Province of Ontario, Canada ("Appleton Canada"; together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
Fifth Third Bank, as administrative agent (in such capacity, the "Administrative
Agent") for the banks, financial institutions and other entities (the "Lenders")
from time to time parties to the Credit Agreement, dated as of the date hereof
(as amended, restated, supplemented and/or otherwise modified from time to time,
the "Credit Agreement"), among Appleton Papers Inc., a Delaware corporation (the
"Borrower"), Paperweight Development Corp., a Wisconsin corporation
("Holdings"), the Administrative Agent and the Lenders.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part (i) to repay certain existing indebtedness and
(ii) to enable the Borrower to make valuable transfers to one or more of the
other Grantors in connection with the operation of their respective businesses;
WHEREAS, the Borrower and the Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Administrative Agent and
the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent for the
ratable benefit of the Administrative Agent and the Lenders as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in the PPSA:
Accounts, Certificated Security, Chattel
Paper, Documents of Title, Equipment, Financial Assets, Goods, Intangibles,
Instruments, Inventory, Money, Personal Property, Proceeds and Securities
Account, .
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
be amended, restated, supplemented and/or otherwise modified from time to time.
"Borrower Credit Agreement Obligations": with respect to the Borrower,
the collective reference to the unpaid principal of and interest on the Loans
and Reimbursement Obligations and all other obligations and liabilities of the
Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and Reimbursement Obligations and interest accruing at the then applicable rate
provided in the Credit Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).
"Borrower Obligations": with respect to the Borrower, the collective
reference to (i) the Borrower Credit Agreement Obligations, (ii) the Secured
Hedge Agreement Obligations, (iii) Secured Cash Management Obligations and (iv)
all other obligations and liabilities of the Loan Parties to the Administrative
Agent or any Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of this
Agreement).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights arising under the laws of Canada, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished (including, without
limitation, those listed in Schedule 6), all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the Canadian
Intellectual Property Office or any other similar authority throughout the
world, (ii) all rights corresponding thereto throughout the world and (iii) the
right to obtain all extensions and renewals thereof.
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"Copyright Licenses": any written or oral agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
"Credit Agreement Collateral": all "Collateral" under, and as defined
in, the Credit Agreement.
"Deposit Account": a demand, savings, passbook, or similar account
maintained with a bank or other deposit taking institution. The Deposit Accounts
of the Grantors as of the Closing Date are listed on Schedule 8.
"Excluded Stock": all interests of any Grantor in any of their
respective Subsidiaries that are not a Domestic Subsidiary and are not a
Guarantor (as such term is defined in the Credit Agreement).
"Governmental Authority": the government of Canada or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Guarantor Obligations": with respect to any Guarantor, the collective
reference to (i) the Borrower Credit Agreement Obligations, (ii) the Secured
Hedge Agreement Obligations, (iii) the Secured Cash Management Obligations and
(iv) all other obligations and liabilities of such Guarantor to the
Administrative Agent or any Lender which may arise under or in connection with
this Agreement (including, without limitation, Section 2) or any other Loan
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent or the Lenders that are required to be
paid by such Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Guarantors": the collective reference to each Grantor.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property or similar
proprietary rights, whether arising under Canadian, multinational or foreign
laws or otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark
Licenses, Trade Secrets and Trade Secret Licenses and all rights thereto
throughout the world including, without limitation, all claims, causes of
action, defenses arising out of or related to any of the foregoing and the right
to xxx at law or in equity for any past, present and future infringement,
misappropriation, misuse, dilution or other impairment thereof, including the
right to receive all proceeds and damages from all of the foregoing.
"Intercompany Note": any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.
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"Intercreditor Agreement" as defined in Section 3.
"Investment Property": the collective reference to (i) a security,
whether certificated or uncertificated, security entitlement, securities
account, commodity contract or commodity account and (ii) whether or not
constituting "investment property" as so defined in the preceding clause (i),
all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
Property.
"Obligations": in the case of any Grantor, such Person's (i) Borrower
Obligations and/or (ii) Guarantor Obligations.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
"Patents": (i) all letters patent of Canada, any other country or any
political subdivision thereof, all reissues and extensions thereof, including,
without limitation, any of the foregoing referred to in Schedule 6, (ii) all
applications for letters patent of Canada or any other country and all reissues,
extensions, renewals, reexaminations, divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule 6, (iii) all invention disclosures, utility
models or similar industrial property rights and (iv) all rights corresponding
thereto throughout the world, including rights to obtain any reissues or
extensions of the foregoing.
"Permitted Unperfected Account": with respect to any Grantor, any
Deposit Account or Securities Account of such Grantor (a) that contains a
balance of deposits equal to or less than $10,000; provided that such Deposit
Account or Securities Account shall not cease to be a Permitted Unperfected
Account if it contains a balance greater than $10,000 for not longer than 2
consecutive Business Days and provided that the balance of deposits in all such
Deposit Accounts and Securities Accounts of the Grantors and all other
Guarantors combined shall not exceed $100,000 in the aggregate at any time, (b)
with respect to Deposit Accounts only, is used solely as (i) a payroll account,
(ii) an employee benefit account, (ii) an operating expenses disbursement
account that is zero-balanced on a daily basis, (iii) a sub-concentration
account that is zero-balanced on a daily basis, or (iii) a fiduciary or trust
account; or (c) as to which the Administrative Agent otherwise agrees that no
control agreement need be obtained. The Permitted Unperfected Accounts of the
Grantors as of the Closing Date are so indicated on Schedule 8. Notwithstanding
the foregoing, no "Notes Priority Collateral Account" (as such term is defined
in the First Lien Note Indenture) shall in any event constitute a "Permitted
Unperfected Account" for purposes of this Agreement.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options, interests or rights
of any nature whatsoever in
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respect of the Capital Stock of any Person that may be issued or granted to, or
held by, any Grantor while this Agreement is in effect; provided that such term
shall not, in any case, include any Excluded Stock.
"PPSA": the Personal Property Security Act (Ontario); provided, that
if the attachment, perfection or priority of the Administrative Agent's security
interests, for the benefit of the Lenders, in any Collateral are governed by the
personal property security laws of any jurisdiction other than Ontario, PPSA
shall mean those personal property laws in such other jurisdiction in Canada for
the purpose of the provisions hereof relating to such attachment, perfection or
priority and for the definitions related to such provisions.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Requirement of Law": as to any Person, the certificate or articles of
incorporation and by laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Secured Cash Management Obligations": the collective reference to all
obligations and liabilities of a Loan Party (including, without limitation,
interest accruing at the then applicable rate provided in any Secured Cash
Management Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to a
Loan Party, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) to any Cash Management Bank, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, any
Secured Cash Management Agreement or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
relevant Lender or affiliate thereof that are required to be paid by any Loan
Party pursuant to the terms of any Secured Cash Management Agreement).
"Secured Hedge Agreement Obligations": the collective reference to all
obligations and liabilities of a Loan Party (including, without limitation,
interest accruing at the then applicable rate provided in any Secured Hedge
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such Loan Party,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Hedge Bank, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, any Secured Hedge Agreement or
any other document made, delivered or given in connection therewith, in each
case whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the relevant Lender or affiliate thereof
that are required to be paid by the Borrower pursuant to the terms of any
Secured Hedge Agreement).
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"Securities Account": the Securities Accounts, as defined in the PPSA,
of the Grantors as of the Closing Date are listed on Schedule 8.
"Securities Laws": applicable federal, provincial, state, territorial
or foreign securities laws and regulations.
"STA": the Securities Transfer Act, 2006 (Ontario).
"Trade Secret Licenses": any and all written or oral agreements
granting any right in or to Trade Secrets (whether a Grantor is a licensee or
licensor thereunder).
"Trade Secrets": all trade secrets, as recognized under applicable
local law, whether or not reduced to a writing or other tangible form, now or
hereafter in force, owned or used in, or contemplated at any time for use in,
the business of any Grantor, including with respect to any and all of the
foregoing: (i) all documents and things embodying, incorporating, or referring
in any way thereto, (ii) all rights to xxx for past, present and future
infringement thereof, (iii) all claims, damages, and proceeds of suit arising
therefrom, and (iv) all payments and royalties and rights to payments and
royalties arising out of the sale, lease, license, assignment or other
dispositions thereof.
"Trademark License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule 6.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the Canadian Intellectual Property Office or in any
similar office or agency of Canada, any province thereof or any other country or
any political subdivision thereof, or otherwise, and all common-law rights
related thereto, including, without limitation, any of the foregoing referred to
in Schedule 6, and (ii) the right to obtain all renewals thereof.
1.2 Other Definitional Provisions.
(a) The words "hereof," "herein", "hereto" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section and Schedule references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
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(d) Unless the context otherwise requires, any Cash Management Bank or
Hedge Bank which is party to a Secured Hedge Agreement or a Secured Cash
Management Agreement shall be deemed to be a "Lender" for purposes of this
Agreement.
SECTION 2. GUARANTEE
2.1 Guarantee.
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent for the
ratable benefit of the Administrative Agent and the Lenders and their respective
successors, endorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of all Obligations.
(b) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Obligations and the obligations of each Guarantor
under the guarantee contained in this Section 2 shall have been satisfied by
payment in full, no Letter of Credit shall be outstanding and the Commitments
shall be terminated, notwithstanding that from time to time during the term of
the Credit Agreement the Borrower may be free from any Obligations.
(c) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
release the liability of any Guarantor hereunder which shall, notwithstanding
any such payment (other than any payment made by such Guarantor in respect of
the Obligations or any payment received or collected from such Guarantor in
respect of the Obligations), remain liable for the Borrower Obligations up to
the maximum liability of such Guarantor hereunder until the Borrower Obligations
are paid in full, no Letter of Credit shall be outstanding and the Commitments
are terminated. Notwithstanding the foregoing, in no event shall the Guarantors
be liable for payment of any amount in excess of the then outstanding Borrower
Obligations and, without duplication, Guarantor Obligations.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent
that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the
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Administrative Agent or any Lender against the Borrower or any other Guarantor
or any collateral security or guarantee or right of offset held by the
Administrative Agent or any Lender for the payment of the Borrower Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by such Guarantor hereunder, until all amounts owing to the Administrative
Agent and the Lenders by the Borrower on account of the Borrower Obligations are
paid in full, no Letter of Credit shall be outstanding and the Commitments are
terminated. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Borrower Obligations shall not
have been paid in full, such amount shall be held by such Guarantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
endorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
such Agent or such Lender and any of the Borrower Obligations continued, and the
Borrower Obligations, or the liability of any other Person upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and the Credit Agreement and
the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required Lenders or all
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Borrower Obligations
may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor the Lenders shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the
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guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Administrative Agent or any Lender
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against any Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the appropriate funding office as set forth in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
3.1 Grant of Security Interest in Collateral. Each Grantor hereby assigns
and transfers to the Administrative Agent, and hereby grants to the
Administrative Agent, for the ratable benefit of the Administrative Agent and
the Lenders, a security interest in, all present and after-acquired personal
property 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 "Collateral"), as collateral security for the
prompt and complete payment and
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performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations consisting of:
(a) all Accounts;
(b) all Chattel Paper;
(c) all contracts;
(d) all Deposit Accounts;
(e) all Documents of Title;
(f) all Equipment;
(g) all Financial Assets;
(h) all Goods;
(i) all Intangibles;
(j) all Instruments;
(k) all Intellectual Property;
(l) all Inventory;
(m) all Investment Property;
(n) all Letter-of-Credit Rights;
(o) all Money;
(p) all books and records pertaining to the Collateral; and
(q) to the extent not otherwise included, all Proceeds, Supporting
Obligations 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;
provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, this Agreement shall not constitute a grant of a security
interest in (x) any consumer goods, (y) any property to the extent that such
grant of a security interest is prohibited by any Requirement of Law, requires a
consent not obtained of any Governmental Authority pursuant to any such
Requirement of Law or is prohibited by, or constitutes a breach or default
under, or results in the termination of or requires any consent not obtained
under, any contract, license, agreement, instrument or other document evidencing
or giving rise to such property or, in the case of any Investment Property,
Pledged Stock or Pledged Note, any applicable shareholder or similar agreement,
except to the extent that such Requirement of Law or the applicable terms in
such contract, license, agreement, instrument or other document or shareholder
or similar agreement
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providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law or (z) such property constitutes
"Collateral" under and as defined in the Fox River Security Agreement.
3.2 Exception to Last Day. The security interest granted hereby shall not
extend or apply to, and Collateral shall not include, the last day of the term
of any lease or agreement therefor, but upon enforcement of the security
interest, each Grantor shall stand possessed of such last day in trust or assign
the same to any person acquiring such term.
3.3 Attachment. Each Grantor acknowledges that (i) value has been given,
(ii) it has rights in the Collateral, (iii) it has not agreed to postpone the
time for attachment of the Lien granted hereunder, and (iv) it has received a
copy of this Agreement.
3.4 NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, ALL TERMS OF THIS
AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE REPRESENTATIONS AND WARRANTIES
MADE HEREIN, THE LIENS AND SECURITY INTERESTS GRANTED TO THE ADMINISTRATIVE
AGENT PURSUANT TO THIS AGREEMENT, THE EXERCISE OF ANY RIGHT OR REMEDY BY THE
ADMINISTRATIVE AGENT AND LENDERS HEREUNDER, ALL OTHER RIGHTS AND BENEFITS
AFFORDED HEREUNDER TO THE ADMINISTRATIVE AGENT AND THE LENDERS AND ALL
OBLIGATIONS OF THE GRANTORS HEREUNDER) ARE SUBJECT IN ALL RESPECTS TO THE TERMS,
CONDITIONS AND PROVISIONS OF THAT CERTAIN INTERCREDITOR AGREEMENT, DATED AS OF
FEBRUARY __, 2010 (AS AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM
TIME TO TIME IN ACCORDANCE WITH THE TERMS THEREOF, THE "INTERCREDITOR
AGREEMENT") BY AND AMONG FIFTH THIRD BANK, AS RCF REPRESENTATIVE FOR THE BENEFIT
OF THE RCF SECURED PARTIES (AS DEFINED THEREIN), AND U.S. BANK NATIONAL
ASSOCIATION, AS NOTE REPRESENTATIVE FOR THE NOTE SECURED PARTIES (AS DEFINED
THEREIN), FIFTH THIRD BANK, IN ITS CAPACITY AS FIRST LIEN REPRESENTATIVE (AS
DEFINED THEREIN), AND CERTAIN OTHER PERSONS PARTY OR THAT MAY BECOME PARTY
THERETO FROM TIME TO TIME. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE
INTERCREDITOR AGREEMENT AND THE TERMS OF THIS AGREEMENT, THE TERMS OF THE
INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to Agent and each Lender that:
4.1 Representations in Credit Agreement. In the case of each Guarantor,
the representations and warranties set forth in Article V of the Credit
Agreement as they relate to such Guarantor or to the Loan Documents to which
such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and each Agent and each Lender shall be
entitled to rely on each of them as if they were fully set forth herein,
provided that each
11
reference in each such representation and warranty to the Borrower's knowledge
shall, for the purposes of this Section 4.1, be deemed to be a reference to such
Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interest granted to the
Administrative Agent for the ratable benefit of the Administrative Agent and the
Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns its Collateral in all
material respects free and clear of any and all Liens or claims of others. For
the avoidance of doubt, it is understood and agreed that any Grantor may, as
part of its business, grant licenses to third parties to use Intellectual
Property owned or developed by a Grantor. For purposes of this Agreement and the
other Loan Documents, such licensing activity shall not constitute a "Lien" or a
"claim" on such Intellectual Property. Each of the Administrative Agent and each
Lender understands that any such licenses may be exclusive to the applicable
licensees, and such exclusivity provisions may limit the ability of the
Administrative Agent to utilize, sell, Lease or transfer the related
Intellectual Property or otherwise realize value from such Intellectual Property
pursuant hereto.
4.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (including obtaining "control" (within the meaning of
the STA) of Deposit Accounts and Securities Accounts (other than Permitted
Unperfected Accounts), Investment Property and, to the extent requested in
writing by the Administrative Agent, Letter-of-Credit Rights (which, in the case
of all filings and other documents referred to on said Schedule, unless
otherwise noted, have been delivered to the Administrative Agent in completed
and, where applicable, duly executed form) will constitute valid perfected
security interests (to the extent perfection of security interests therein may
be perfected by filing of a financing statement under the PPSA and/or filings
with the Canadian Intellectual Property Office or Canadian Industrial Design
Office, as applicable, possession by the Administrative Agent of the respective
Investment Property or "control" of Deposit Accounts and Securities Accounts) in
all of the Collateral (excluding Letter-of-Credit Rights where written request
has not been made by the Administrative Agent) in favor of the Administrative
Agent, for the ratable benefit of the Administrative Agent and the Lenders, as
collateral security for such Grantor's Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor, other than purchasers
in the ordinary course of business, and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Liens permitted by the
Credit Agreement and other Liens which have priority over the Liens granted
hereunder on the Collateral by operation of law. Notwithstanding anything to the
contrary contained above or elsewhere in this Agreement, but nonetheless subject
to the terms of the Intercreditor Agreement, with respect to Letter-of-Credit
Rights where the relevant Grantor has been requested by the Administrative Agent
to obtain "control" of same, the respective Grantor shall have a reasonable
period of time to comply with such request and such "control" shall not be
required if the respective Grantor is unable to obtain any required consents for
such "control" after using commercially reasonable efforts to obtain same, and
unless and until "control" of the respective Letter-of-Credit Rights is obtained
in accordance with the above provisions of this Section 4.3 (including this
sentence), there shall be no violation of any representation or warranty or
covenant contained in this Agreement as a result thereof.
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4.4 Jurisdiction of Organization; Chief Executive Office. On the date
hereof, such Grantor's jurisdiction of organization, identification number from
the jurisdiction of organization (if any), and the location of such Grantor's
chief executive office or sole place of business or principal residence, as the
case may be, are specified on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, except where the value
of such Inventory and Equipment at any one location does not exceed $250,000 in
the aggregate for the Grantors and all other Guarantors combined, all of the
Grantors' Inventory and Equipment (other than goods in transit) is kept at the
locations listed on Schedule 5.
4.6 Reserved.
4.7 Investment Property.
(a) The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor, except for Excluded Stock.
(b) On the date hereof, all the shares of the Pledged Stock have
been duly and validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes issued by a Loan Party constitutes
the legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Investment Property pledged by it hereunder,
free of any and all Liens in favor of, or claims of, any other Person, except
the security interest created by this Agreement and as otherwise would not
violate the applicable requirements of the Credit Agreement.
4.8 Receivables.
(a) Except to the extent that such amounts so payable to Grantors
and the other Guarantors combined do not exceed $50,000, no amount payable to
such Grantor under or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper that has not been delivered to the Administrative
Agent.
(b) As of the date hereof, not more than ten percent (10%) of the
Receivables have a Governmental Authority as an obligor.
4.9 Intellectual Property.
(a) Schedule 6 lists all registered and applied for Patents,
Trademarks and Copyrights in Canada and the United States that are owned by such
Grantor in its own name on the date hereof. As of the date hereof, all
Intellectual Property owned by such Grantor and set
13
forth on Schedule 6 is valid, in full force and effect, subsisting, unexpired
and enforceable, and has not been abandoned. The business of such Grantor and
the use of any Intellectual Property in connection therewith, does not infringe,
misappropriate, dilute or violate the intellectual property rights of any third
Person. There are no pending or, to such Grantor's knowledge, threatened claims
of infringement, misappropriation, dilution or violation by Grantor of any third
Person's intellectual property rights, and there are no facts or circumstances
that such Grantor reasonably believes are likely to form the basis for any such
claim, and such Grantor has not received written notice of any such claim.
(b) Except as set forth in Schedule 6, on the date hereof none of
the material Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
SECTION 5. COVENANTS.
Each Grantor covenants and agrees with the Administrative Agent and the
Lenders that, from and after the date of this Agreement until the Obligations
shall have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor, such
Guarantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor or any of its Subsidiaries.
5.2 Delivery of Instruments, Certificated Securities and Chattel
Paper. Except to the extent that such amounts so payable to Grantors and the
other Guarantors combined do not exceed $50,000, if any amount payable under or
in connection with any of the Collateral shall be or become evidenced by any
Instrument, Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be promptly delivered to the
Administrative Agent, duly endorsed in a manner reasonably satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance.
(a) Such Grantor will maintain, with financially sound and
reputable companies, insurance policies, in accordance with the terms of the
Credit Agreement, (i) insuring the Inventory and Equipment against loss by fire,
explosion, theft and such other casualties in accordance with the terms of the
Credit Agreement and (ii) insuring such Grantor against liability for personal
injury and property damage relating to such Inventory and Equipment.
(b) All such insurance shall (i) provide for not less than 30 days'
prior notice to the Administrative Agent of termination, lapse or cancellation
of such insurance (the extent such provision is obtainable using commercially
reasonably efforts) and (ii) name the Administrative Agent as an additional
insured and/or loss payee, as applicable.
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5.4 Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest (but only to the extent that
such security interest can be perfected by filing a filing a financing
statements under the PPSA (or other similar laws) or obtaining "control" (within
the meaning of the STA) of Deposit Accounts (other than Permitted Unperfected
Accounts) or Investment Property) having at least the priority described in
Section 4.3 and shall defend such security interest against the claims and
demands of all Persons whomsoever (other than Persons with prior Liens permitted
under clause (b) of Section 4.3), subject to the rights of such Grantor under
the Loan Documents to dispose of the Collateral.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the reasonable written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) filing any financing
statements or financing change statements under the PPSA in effect in any
jurisdiction with respect to the security interests created hereby, (ii) in the
case of Investment Property, Deposit Accounts and Securities Accounts (other
than Permitted Unperfected Accounts), Letter-of-Credit Rights (but, in the case
of such Letter-of-Credit Rights, only after written request from the
Administrative Agent and subject to the last sentence of Section 4.3) and any
other relevant Collateral, taking any actions necessary to enable the
Administrative Agent to obtain "control" (within the meaning of the STA) with
respect thereto and (iii) in the case of Intellectual Property, filings to the
Canadian Intellectual Property Office or Canadian Industrial Design Office, as
applicable, or other similar authority in any jurisdiction in the world.
5.5 Changes in Locations, Name, etc. Such Grantor will not, except upon
15 days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional financing statements and other documents
reasonably requested by the Administrative Agent to maintain the validity,
perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization from that referred to
in Section 4.4; or
(ii) change its name.
5.6 Notices. Such Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, of the occurrence of any event which
could reasonably be expected to have a material adverse effect on the aggregate
value of the Credit Agreement Collateral or on the security interests created
hereby.
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5.7 Investment Property.
(a) If such Grantor shall become entitled to receive or shall
receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the Administrative
Agent and the Lenders, hold the same in trust for the Administrative Agent and
the Lenders and deliver the same forthwith to the Administrative Agent in the
exact form received, duly endorsed by such Grantor to the Administrative Agent,
if required, together with an undated stock power covering such certificate duly
executed in blank by such Grantor to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security for the
Obligations. If an Event of Default has occurred and is continuing, any sums
paid upon or in respect of the Investment Property upon the liquidation or
dissolution of, or as a distribution of capital by, any Issuer shall be paid
over to the Administrative Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any property (if an Event
of Default has occurred and is continuing) or any Investment Property shall be
distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor (when otherwise required to be paid or delivered over
to the Administrative Agent as set forth above), such Grantor shall, until such
money or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) if an Event of Default has occurred and is continuing,
vote to enable, or take any other action to permit, any Issuer to issue any
Capital Stock of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any Capital Stock of any nature
of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property or Proceeds thereof
(except pursuant to a transaction permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or otherwise permitted in the Credit Agreement or (iv) enter into any
agreement or undertaking, other than as permitted under the Credit Agreement,
restricting the right or ability of such Grantor or the Administrative Agent to
sell, assign or transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it and (ii) the terms of
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Section 6.3(c) shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) with respect to the
Investment Property issued by it.
5.8 Receivables.
(a) Other than in the ordinary course of business, such Grantor
will not, with respect to any material portion of the Receivables, (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could materially adversely affect the
value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that challenges the
validity or enforceability of more than five percent (5%) of the aggregate
amount of the then outstanding Receivables.
(c) If, as of any fiscal quarter end occurring after the Closing
Date, the Grantors determine that more than ten percent (10%) of Receivables (in
the aggregate for all Grantors) have a Governmental Authority as an obligor,
then the Grantors shall so notify the Administrative Agent (such notice to be
given substantially concurrently with the delivery of the quarterly financial
statements required pursuant to Section 6.01(b) of the Credit Agreement) and,
upon the reasonable request of the Administrative Agent, promptly take such
steps as may be necessary to comply with any applicable assignment of claims
laws and other comparable laws.
5.9 Intellectual Property.
(a) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor will (i)
continue to use each Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current catalogs, brochures
and price lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such Trademark
with the appropriate notice of registration and all other notices and legends
required by applicable Requirements of Law, (iv) not adopt or use any xxxx which
is confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Administrative Agent and
the Lenders, shall obtain a perfected security interest in such xxxx pursuant to
this Agreement, and (v) not do any act or knowingly omit to do any act whereby
such Trademark may become invalidated or impaired in any way.
(b) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor will not do any
act, or omit to do any act, whereby any Patent may become forfeited, abandoned
or dedicated to the public.
(c) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor (i) will employ
each Copyright and (ii) will not do any act or knowingly omit to do any act
whereby any Copyright may become invalidated or otherwise impaired. Such Grantor
will not do any act whereby any Copyright may fall into the
17
public domain, to the extent such Copyright is material to the aggregate value
of the Credit Agreement Collateral.
(d) Except as would not have a material adverse effect on the
aggregate value of the Credit Agreement Collateral, such Grantor will not do any
act that knowingly uses any Intellectual Property to infringe the intellectual
property rights of any other Person.
(e) Such Grantor will promptly notify the Administrative Agent and
the Lenders if it knows, or has reason to know, that any application or
registration relating to any Intellectual Property may become forfeited,
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the Canadian Intellectual
Property Office, the Canadian Industrial Design Office or any court or tribunal
in any country) regarding such Grantor's ownership of, or the validity of, any
Intellectual Property or such Grantor's right to register the same or to own and
maintain the same, in each case to the extent such Intellectual Property is
material to the aggregate value of the Credit Agreement Collateral.
(f) Whenever such Grantor, either by itself or through the
Administrative Agent, employee, licensee or designee, shall file an application
for the registration of any Intellectual Property with the Canadian Intellectual
Property Office, the Canadian Industrial Design Office or any similar office or
agency in any other country or any political subdivision thereof, such Grantor
shall report such filing to the Administrative Agent in accordance with Section
6.02(a)(iii)(y) of the Credit Agreement. Upon reasonable request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the Canadian
Intellectual Property Office, the Canadian Industrial Design Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of Intellectual Property,
including, without limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability, in each case to the extent such
Intellectual Property is material to the aggregate value of the Credit Agreement
Collateral.
(h) In the event that any Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) promptly notify the
Administrative Agent after it learns thereof, in each case to the extent such
Intellectual Property is material to the aggregate value of the Credit Agreement
Collateral.
(i) Upon the occurrence and during the continuance of an Event of
Default, each Grantor shall use its best efforts to obtain all requisite
consents or approvals from the licensor of each Copyright License, Patent
License, Trade Secret License or Trademark License to effect the assignment or
sublicense of all of such Grantor's right, title and interest thereunder
18
to the Grantee or its designee for the benefit of the Grantees in accordance
with this Agreement or the Credit Agreement.
5.10 [Reserved.]
5.11 Cash Management Systems.
(a) Each Deposit Account or Securities Account of any Grantor that
is not a Permitted Unperfected Account (each such Deposit Account, a "Controlled
Deposit Account," and each such Securities Account, a "Controlled Securities
Account," Controlled Securities Accounts together with Controlled Deposit
Accounts may sometimes be referred to herein individually as a "Controlled
Account" and, collectively, as "Controlled Accounts") shall be maintained with
the Administrative Agent or such other Lender as shall be reasonably acceptable
to the Administrative Agent (each, a "Depositary Account Bank").
(b) On or prior to the Closing Date, each Grantor shall have
entered into a deposit account control agreement or securities account control
agreement in form and substance satisfactory to the Administrative Agent with
respect to each Controlled Account with the respective Depositary Account Bank
and in favor of the Administrative Agent (each an "Account Control Agreement"),
which, in the case of Account Control Agreements with respect to Controlled
Deposit Accounts, shall provide that, among other things, (i) upon the
occurrence and during the continuance of an Event of Default or (ii) upon the
commencement and during the continuance of an Availability Trigger Period, all
available amounts held in each Controlled Deposit Account maintained at such
Depositary Account Bank shall be wired on each Business Day into an account (the
"Administrative Agent Account") maintained by the Administrative Agent;
provided, that the Administrative Agent hereby agrees that it will not give any
instructions under any Account Control Agreement unless and until an Event of
Default shall have occurred and be continuing or the occurrence of an
Availability Trigger Period. All amounts swept and wired into an Administrative
Agent Account pursuant to any Account Control Agreement during the continuance
of an Availability Trigger Period shall, subject to Section 6.5 if an Event of
Default shall have occurred and be continuing and subject to the Administrative
Agent's election to subject such amounts to Section 6.5, be applied first to
reduce that portion of the Obligations consisting of the then aggregate
outstanding balance of the Loans, L/C Borrowings and all other Obligations,
second to Cash Collateralize that portion of the L/C Obligations comprised of
the aggregate undrawn amount of Letters of Credit, and last, after all other
Obligations then due have been indefeasibly paid in full, to be deposited into
an account as directed by the Grantor.
(c) The closing of any Controlled Deposit Account and the
termination of any Account Control Agreement shall require in each case the
prior written consent of the Administrative Agent.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) If an Event of Default shall have occurred and be continuing,
(x) the Administrative Agent shall have the right to make test verifications of
the Receivables in any
19
reasonable manner and through any medium that it reasonably considers advisable,
and each Grantor shall furnish all such assistance and information as the
Administrative Agent may require in connection with such test verifications and
(y) upon the Administrative Agent's reasonable request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly endorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor.
(c) If an Event of Default shall have occurred and be continuing,
at the Administrative Agent's reasonable request, (i) each Grantor shall deliver
to the Administrative Agent all original (to the extent such Grantor has
original copies) and other documents evidencing, and relating to, the agreements
and transactions which gave rise to the Receivables, including, without
limitation, all original (to the extent such Grantor has original copies)
orders, invoices and shipping receipts and (ii) the applicable Grantor shall
take such steps as may be necessary to comply with any applicable assignment of
claims laws and other comparable laws.
6.2 Communications with Obligors; Grantors Remain Liable.
(a) The Administrative Agent in its own name or in the name of
others may at any time after the occurrence and during the continuance of an
Event of Default communicate with obligors under the Receivables and parties to
the Contracts to verify with them to the Administrative Agent's satisfaction the
existence, amount and terms of any Receivables or Contracts.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent for
the ratable benefit of the Administrative Agent and the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. No Agent or Lender shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
20
arising out of this Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating thereto, nor shall the Administrative Agent or
any Lender be obligated in any manner to perform any of the obligations of any
Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto) or Contract, to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
6.3 Pledged Stock.
(a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the relevant
Grantor of the Administrative Agent's intent to exercise its corresponding
rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive
all dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes and to exercise all voting and corporate or other
organizational rights with respect to the Investment Property; provided,
however, that no vote shall be cast or corporate or other organizational right
exercised or other action taken which would materially impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Investment Property shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this
21
Agreement, without any other or further instructions from such Grantor, and each
Grantor agrees that each Issuer shall be fully protected in so complying, and
(ii) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Investment Property directly to the Administrative
Agent.
6.4 Proceeds to be Turned Over to Administrative Agent. In addition
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and other similar near-cash items shall be held by such Grantor in trust
for the Administrative Agent and the Lenders, segregated from other funds of
such Grantor, and shall, upon the request of the Administrative Agent, be turned
over to the Administrative Agent forthwith upon receipt by such Grantor in the
exact form received by such Grantor (duly endorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor in trust
for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. Subject to any different order of
payment set forth in the Credit Agreement (which different order shall be
controlling), if an Event of Default shall have occurred and be continuing, at
any time at the Administrative Agent's election, the Administrative Agent may
apply all or any part of Proceeds constituting Collateral, whether or not held
in any Collateral Account, and any proceeds of the guarantee set forth in
Section 2, in payment of the Obligations in the following order:
(a) First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
(b) Second, to the Administrative Agent, for application by it
towards payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Lenders according to the amounts of the
Obligations then due and owing and remaining unpaid to the Lenders;
(c) Third, to the Administrative Agent, for application by it
towards prepayment of the Obligations, pro rata among the Lenders according to
the amounts of the Obligations then held by the Lenders; and
(d) Fourth, to any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Other Remedies.
(a) PPSA Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing,
22
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the PPSA or any other applicable law. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, have assigned to it, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, license,
sublicense, assign, give option or options to purchase, or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Upon written demand from the Administrative
Agent, each Grantor shall grant, assign, convey or otherwise transfer to the
Collateral Agent an absolute assignment of all of such Grantor's right, title
and interest in and to the Intellectual Property and shall execute and deliver
to the Collateral Agent such documents as are necessary or appropriate to carry
out the intent and purposes of this Agreement. The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released
to the extent permitted by law. Each Grantor further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Administrative Agent and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in the order set forth in Section 6.5
hereof, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law need
the Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Lender arising
out of the exercise by them of any rights hereunder, except for gross negligence
or willful misconduct on the part of the Administrative Agent or such Lender. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 20 days before such sale or other disposition.
(b) Appointment of Receiver. Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent may appoint or
reappoint by instrument in writing, any Person or Persons, whether an officer or
officers or an employee or employees of the Administrative Agent or not, to be
an interim receiver, receiver or receivers (hereinafter called a "Receiver,"
which term when used herein shall include a receiver and manager) of Collateral
(including any interest, income or profits therefrom) and may remove any
Receiver so appointed and appoint another in his/her/its stead. Any such
Receiver shall, so far as concerns responsibility for his/her/its acts, be
deemed the agent of the applicable Grantor and not
23
the Administrative Agent or any of the Lenders, and neither the Administrative
Agent nor any Lender shall be in any way responsible for any misconduct,
negligence or nonfeasance on the part of any such Receiver or his/her/its
servants, agents or employees. Subject to the provisions of the instrument
appointing him/her/it and the provisions of applicable law, any such Receiver
shall have power to take possession of Collateral, to preserve Collateral or its
value, to carry on or concur in carrying on all or any part of the business of
the applicable Grantor and to sell, lease, license or otherwise dispose of or
concur in selling, leasing, licensing or otherwise disposing of Collateral. To
facilitate the foregoing powers, any such Receiver may, to the exclusion of all
others, including the applicable Grantor, enter upon, use and occupy all
premises owned or occupied by the applicable Grantor wherein Collateral may be
situated, maintain Collateral upon such premises, borrow money on a secured or
unsecured basis and use Collateral directly in carrying on the applicable
Grantor's business or as security for loans or advances to enable the Receiver
to carry on the applicable Grantor's business or otherwise, as such Receiver
shall, in its discretion, determine. Except as may be otherwise directed by the
Agent, all Money received from time to time by such Receiver in carrying out
his/her/its appointment shall be received in trust for and be paid over to the
Administrative Agent. Every such Receiver may, in the discretion of the
Administrative Agent, be vested with all or any of the rights and powers of the
Administrative Agent.
(i) The Administrative Agent may, either directly or through its
agents or nominees, exercise any or all of the powers and rights given to a
Receiver by virtue of this Section 6.6(b).
6.7 Private Sales.
(a) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Laws, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale of
any of the Pledged Stock for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Laws
even if such Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such
24
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.
6.8 Deficiency. Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Obligations and the reasonable fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such
deficiency.
6.9 Intellectual Property License. The Grantors hereby grant the
Grantee a non-exclusive, transferable, sublicensable, worldwide license and
right, effective solely during an Event of Default, to the maximum extent
permitted by applicable law and to the extent of the Grantors' interest therein,
exercisable without payment of royalty or other compensation, under and to any
and all of the Intellectual Property now or hereafter owned by, licensed to, or
otherwise used by the Grantors to purchase, use, market, repossess, possess,
store, assemble, manufacture, process, sell, transfer, distribute, lease,
license and otherwise exploit and dispose of any asset included in the
Collateral to the extent the Grantee takes possession of such in accordance with
the terms and conditions of this Agreement and the Credit Agreement. For the
avoidance of doubt, in the event that any such Event of Default is cured in
accordance with the terms and conditions of this Agreement and the Credit
Agreement, the foregoing license shall automatically be suspended. The Grantors
agree that any sale, transfer, grant of an exclusive license or other
disposition of any of the foregoing Intellectual Property (whether by
foreclosure or otherwise) will be subject to the Grantee's rights as set forth
in this Section 6.9. Any use of Trademarks under the foregoing license shall be
consistent with the historical use of such Trademarks by the Grantors and shall
meet the Grantors' standards of quality in all material respects. At the
Grantors' reasonable request, the Grantee shall provide samples of any goods to
be sold under a Grantor Trademark.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes, acceptances
or other instruments for the payment of moneys due under any Receivable or
Contract or with respect to any other Collateral and file any claim or take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Administrative Agent
25
for the purpose of collecting any and all such moneys due under any
Receivable or Contract or with respect to any other Collateral whenever
payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and papers
as the Administrative Agent may reasonably request to evidence the
Administrative Agent's and Lenders' security interest in such Intellectual
Property and the goodwill and intangibles of such Grantor relating thereto
or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(3) sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole discretion
determine; and (8) generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's option and
such Grantor's expense, at any time, or from time to time, all acts and
things which the Administrative Agent deems necessary to protect, preserve
or realize upon the Collateral and the Administrative Agent's and the
Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1 to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1 unless an Event of Default shall
have occurred and be continuing.
26
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on Revolving Loans that are Base Rate Loans (which rate shall
increase to the rate applicable to such Loans that are past due for periods
after the date that is 5 days after demand for payment has been made upon the
Borrower by the Administrative Agent) under the Credit Agreement, from the date
of payment by the Administrative Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of 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 or willful misconduct.
7.3 Filing of Financing Statements. Pursuant to any applicable law, each
Grantor authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with respect
to the Collateral without the signature of such Grantor in such form and in such
offices as the Administrative Agent determines appropriate to perfect the
security interests of the Administrative Agent under this Agreement. Each
Grantor authorizes the Administrative Agent to use the collateral description
"all personal property" or similar language containing an equally effective
description in any such financing statements. Each Grantor hereby ratifies and
authorizes the filing by the Administrative Agent of any financing statement
with respect to the Collateral made prior to the date hereof.
7.4 Authority of Administrative Agent. Each Grantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent
27
of any option, voting right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Administrative Agent and the Lenders with full and valid authority so to act
or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.01 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.02 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Agent or
Lender shall by any act (except by a written instrument pursuant to Section
8.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which such Agent
or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification.
(a) Each Guarantor agrees to pay or reimburse the Administrative
Agent, and during the existence of an Event of Default, each Lender, for all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Agreement and the other Loan Documents to which such Guarantor is a
party, including, without limitation, the reasonable fees and disbursements of
counsel to each Lender and of counsel to the Administrative Agent.
(b) Each Grantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
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(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrower would be required to do so pursuant to Section 10.04 of the
Credit Agreement.
(d) Any amounts received by the Administrative Agent or the Lenders
as a consequence of the exercise of the Administrative Agent's rights provided
for herein, including in respect of an Event of Default shall be applied
pursuant to the terms of this Agreement. Where applicable, such amounts will be
converted into U.S. Dollars at the reasonable market rates in force on the day
of such conversion and then remitted (minus any commission or other amounts
charged in connection with such conversion, if applicable) to the Administrative
Agent for the benefit of the Lenders or directly to the Lenders, provided that
if such conversion or remittance is not legally permitted or possible for any
reason outside the Administrative Agent's control at the time, such amounts may,
at the sole discretion of the Administrative Agent or the Lenders, and if so
permitted under applicable law and regulations, be received in Canadian Dollars
by the Administrative Agent or the Lenders.
(e) The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Agent and
each Lender at any time after the Loans and other amounts payable under the
Credit Agreement shall have become due and payable pursuant to Article VIII of
the Credit Agreement, without notice to such Grantor or any other Grantor, any
such notice being expressly waived by each Grantor, to set-off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Agent or such Lender to
or for the credit or the account of such Grantor, or any part thereof in such
amounts as such Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to such Agent or such Lender
hereunder and claims of every nature and description of such Agent or such
Lender against such Grantor, in any currency, whether arising hereunder, under
the Credit Agreement, any other Loan Document or otherwise, as such Agent or
such Lender may elect, whether or not the Administrative Agent or any Lender has
made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. Each Agent and each Lender shall notify
such Grantor promptly of any such set-off and the application made by such Agent
or such Lender of the proceeds thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Agent and each Lender under this Section 8.6 are in
29
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy or other electronic transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents represent the
agreement of the Grantors, the Administrative Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE PROVINCE OF ONTARIO AND THE
FEDERAL LAWS OF CANADA APPLICABLE THEREIN.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the Province
of Ontario;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
30
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) no Agent or Lender has any fiduciary relationship with or duty
to any Grantor arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Grantors, on the one
hand, and the Administrative Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is required
to become a party to this Agreement pursuant to Section 6.09 of the Credit
Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations and
the other Obligations (other than Secured Hedge Agreement Obligations and
Secured Cash Management Obligations to the extent (x) such Obligations have been
secured or backstopped to the satisfaction of the Lender holding such
Obligations or (y) the Lender holding such Obligations has otherwise consented
to such exclusion) shall have been paid in full, the Commitments have been
terminated and no Letters of Credit shall be outstanding (other than those
Letters of Credit secured or backstopped to the satisfaction of the L/C Issuer),
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination
and to authorize the filing by Grantors of any necessary PPSA financing change
statements evidencing the termination of the Liens so released or other
terminations or releases.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative
31
Agent, at the request and sole expense of such Grantor, shall execute and
deliver to such Grantor all releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby on such Collateral. At the
request and sole expense of the Borrower, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the Capital Stock
of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of
in a transaction permitted by the Credit Agreement; provided that the Borrower
shall have delivered to the Administrative Agent a certification by the Borrower
stating that such transaction is in compliance with the Credit Agreement and the
other Loan Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.17 Permitted Liens. Subject to the terms of the Intercreditor Agreement,
The inclusion or reference to liens permitted under the Credit Agreement in this
Agreement or in any other Loan Document is not intended to subordinate and shall
not subordinate, and shall not be interpreted as subordinating, the Lien and
security interest created by this Agreement or any other Loan Document to any
liens permitted under the Credit Agreement.
8.18 Amalgamation. Each Grantor acknowledges and agrees that, in the event
it amalgamates with any other corporation or corporations, it is the intention
of the parties hereto that the term "Grantor", when used herein, shall apply to
each of the amalgamating corporations and to the amalgamated corporation, such
that the security interest granted hereby:
(a) Shall extend the Collateral owned by each of the amalgamating
corporations and the amalgamated corporation at the time of amalgamation and to
any Collateral thereafter owned or acquired by the amalgamated corporation, and
(b) Shall secure all Obligations of each of the amalgamating
corporations and the amalgamated corporation to Administrative Agent and Secured
Parties thereafter arising. The security interest shall attach to all Collateral
owned by each corporation amalgamating with any debtor and by the amalgamated
company, at the time of the amalgamation, and shall attach to all Collateral
thereafter owned or acquired by the amalgamated corporation when such becomes
owned or is acquired.
[Signature Pages Follow]
32
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.
APPLETON PAPERS CANADA LTD., a
corporation formed under the laws of the Province
of Ontario, Canada
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Treasurer
----------------------------
Guarantee and Collateral Agreement (Canada)
Annex I
to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 20___, made by
______________________________, a ______________ [corporation] (the "Additional
Grantor"), in favor of Fifth Third Bank, as administrative agent (in such
capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, Appleton Papers Inc., a Delaware corporation (the "Borrower"),
Paperweight Development Corp., a Wisconsin corporation ("Holdings"), the Lenders
and Fifth Third Bank, as administrative agent (in such capacity, the
"Administrative Agent") have entered into a Credit Agreement, dated as of
February__, 2010 (as amended, restated, supplemented and/or otherwise modified
from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, certain of Borrower's
Subsidiaries (other than the Additional Grantor) have entered into the Guarantee
and Collateral Agreement, dated as of February __, 2010 (as amended, restated,
supplemented and/or otherwise modified from time to time, the "Canadian
Guarantee and Collateral Agreement") in favor of the Administrative Agent for
the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to become a
party to the Canadian Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Canadian Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Canadian Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.14 of the Canadian Guarantee and Collateral Agreement, hereby becomes
a party to the Canadian Guarantee and Collateral Agreement as a Grantor
thereunder and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor thereunder. The
information set forth in Annex 1-A hereto is hereby added to the information set
forth in Schedules ____________(*) to the Canadian Guarantee and Collateral
Agreement. The Additional Grantor hereby represents and warrants that each of
the representations and warranties contained in Section 4 of the Canadian
Guarantee and Collateral Agreement is true and correct on and as the date hereof
(after giving effect to this Assumption Agreement) as if made on and as of such
date.
----------
* Refer to each Schedule which needs to be supplemented.
Guaranty and Collateral Agreement
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE PROVINCE OF ONTARIO
AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
-------------------------------
Name:
Title:
Guaranty and Collateral Agreement