Security Agreement - Toy Biz Inc. and UBS AG
Execution Copy
SECURITY AGREEMENT
dated as of
September 28, 1998
among
TOY BIZ, INC.
(to be renamed Marvel Enterprises, Inc.)
THE SUBSIDIARY GUARANTORS PARTY HERETO
and
UBS AG, Stamford Branch,
as Collateral Agent
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TABLE OF CONTENTS
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PAGE
SECTION 1. Definitions........................................................2
SECTION 2. Representations and Warranties....................................12
SECTION 3. The Security Interests............................................14
SECTION 4. Delivery of Certain Collateral....................................15
SECTION 5. Further Assurances; Covenants.....................................16
SECTION 6. Record Ownership of Pledged Equity Securities.....................20
SECTION 7. Right to Vote Pledged Equity Interests............................21
SECTION 8. Right to Receive Distributions on Collateral......................21
SECTION 9. Collateral Accounts...............................................22
SECTION 10. General Authority................................................24
SECTION 11. Remedies upon Event of Default...................................25
SECTION 12. Limitation on Duty of Collateral Agent in Respect of
Collateral.......................................................28
SECTION 13. Application of Proceeds..........................................28
SECTION 14. Concerning the Collateral Agent..................................30
SECTION 15. Appointment of Co-Agents.........................................30
SECTION 16. Expenses.........................................................31
SECTION 17. Termination of Security Interests; Release of Collateral.........31
SECTION 18. Additional Subsidiary Guarantors.................................32
SECTION 19. Notices..........................................................32
SECTION 20. Waivers, Non-Exclusive Remedies..................................33
SECTION 21. Successors and Assigns...........................................33
SECTION 22. Changes in Writing...............................................33
SECTION 23. New York Law.....................................................33
SECTION 24. Severability.....................................................33
SECTION 25. Counterparts.....................................................33
Schedule 1 -- Equity Interests
Exhibit A -- Form of Perfection Certificate
Exhibit B -- Form of Lockbox Letter
Exhibit C -- Form of Security Agreement Supplement
Exhibit D -- Form of Copyright Security Agreement
Exhibit E -- Form of Patent Security Agreement
Exhibit F -- Form of Trademark Security Agreement
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SECURITY AGREEMENT
AGREEMENT dated as of September 28, 1998 among TOY BIZ, INC. (to be
renamed Marvel Enterprises, Inc.), a Delaware corporation, the SUBSIDIARY
GUARANTORS party hereto and UBS AG, Stamford Branch, as Collateral Agent (the
"Collateral Agent").
W I T N E S S E T H :
WHEREAS the Borrower, the Subsidiary Guarantors, certain Lenders (the
"Revolving Lenders") and the Issuers referred to therein and the Collateral
Agent are parties to a $50,000,000 Credit Agreement of even date herewith (as
the same may be amended from time to time, the "Revolving Credit Agreement");
WHEREAS the Borrower, the Subsidiary Guarantors, certain Lenders (the
"Bridge Lenders" and, together with the Revolving Lenders, the "Lenders") are
parties to a $200,000,000 Bridge Loan Agreement of even date herewith (as the
same may be amended from time to time, the "Bridge Credit Agreement" and,
together with the Revolving Credit Agreement, the "Credit Agreements");
WHEREAS, the Borrower is willing to secure its obligations under the
Credit Agreements and the other Loan Documents by granting Liens on its assets
to the Collateral Agent as provided in this Agreement and the other Collateral
Documents;
WHEREAS, each of the Borrower's U.S. Subsidiaries has guaranteed the
foregoing obligations of the Borrower pursuant to the Credit Agreements and is
willing to secure its obligations under such the Credit Agreements by granting
Liens on its assets to the Collateral Agent as provided in this Agreement and
the other Collateral Documents; and
WHEREAS, the Lenders and the Issuers are not willing to make loans or
maintain, issue or participate in letters of credit under the Credit Agreements
unless the foregoing obligations of the Borrower are secured by Liens on its
assets as provided in the Collateral Documents.
NOW THEREFORE in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreements and not
otherwise defined herein have, as used herein, the respective meanings provided
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for therein. The following additional terms, as used herein, have the following
respective meanings:
"Accounts" means, with respect to any Lien Grantor, all "accounts" (as
defined in the UCC) now owned or hereafter acquired by such Lien Grantor, and
shall also mean and include all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness owing to such Lien
Grantor arising from the sale, lease or exchange of goods or other property by
it and/or the performance of services by it (including, without limitation, any
such obligation which might be characterized as an account, contract right or
general intangible under the Uniform Commercial Code in effect in any
jurisdiction) and all of such Lien Grantor's rights in, to and under all
purchase orders for goods, services or other property, and all of such Lien
Grantor's rights to any goods, services or other property represented by any of
the foregoing (including returned or repossessed goods and unpaid sellers'
rights of rescission, replevin, reclamation and rights to stoppage in transit)
and all monies due to or to become due to such Lien Grantor under all contracts
for the sale, lease or exchange of goods or other property and/or the
performance of services by it (whether or not yet earned by performance on the
part of such Lien Grantor), in each case whether now in existence or hereafter
arising or acquired, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.
"Bank Agents" means the Revolving Agent and the Bridge Agent, and "Bank
Agent" means either of the foregoing.
"Bridge Agent" has the meaning ascribed to the term "Agent" in the
Bridge Credit Agreement.
"Bridge Credit Agreement" has the meaning set forth in the recitals
hereto.
"Bridge Loan" has the meaning ascribed to the term "Loan" in the Bridge
Credit Agreement.
"Bridge Loan Documents" has the meaning ascribed to the term "Loan
Documents" in the Bridge Credit Agreement.
"Collateral" has the meaning set forth in Section 3.
"Collateral Accounts" means the General Collateral Account and the
Insurance Account.
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"Collateral Documents" means this Agreement, the Security Agreement
Supplements, the Intellectual Property Security Agreements and all other
supplemental or additional security agreements, mortgages or similar instruments
delivered pursuant hereto or thereto.
"Contingent Secured Obligation" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such time,
including (without limiting the generality of the foregoing) any obligation to
reimburse the Issuer for drawings not yet made under a Letter of Credit.
"Commodity Account" means an account maintained by a commodity
intermediary in which a commodity contract is carried for a commodity customer.
"Commodity Contract" means a commodity futures contract, an option on a
commodity futures contract, a commodity option, or other contract that, in each
case, is:
(i) traded on or subject to the rules of a board of trade that has been
designated as a contract market for such a contract pursuant to the federal
commodities laws; or
(ii) traded on a foreign commodity board of trade, exchange or market,
and is carried on the books of a commodity intermediary for a commodity
customer.
"Copyright License" means any agreement now or hereafter in existence
(i) granting to any Lien Grantor (except to the extent that the granting of a
security interest therein would result in a breach of, or default under, such
agreement) or (ii) pursuant to which any Lien Grantor has granted to any other
Person, in each case, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which a
Copyright is in existence or may come into existence, including, without
limitation, any agreement identified in Schedule 1 to a Copyright Security
Agreement.
"Copyrights" means all of the following: (i) all copyrights under the
laws of the United States or any other country (whether or not the underlying
works of authorship have been published), all registrations and recordings
thereof, all copyrightable works of authorship (whether or not published), and
all applications for copyrights under the laws of the United States or any other
country, including, without limitation, registrations, recordings and
applications in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, (ii) all renewals thereof, (iii) all claims for,
and rights to sue for, past or future infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or hereafter due or payable
with respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.
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"Copyright Security Agreement" means a Copyright Security Agreement
executed and delivered by a Lien Grantor in favor of the Collateral Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit C to
this Agreement, as the same may be amended from time to time.
"Documents" means, with respect to any Lien Grantor, all "documents"
(as defined in the UCC) or other receipts covering, evidencing or representing
goods, now owned or hereafter acquired by such Lien Grantor.
"Equipment" means, with respect to any Lien Grantor, all "equipment"
(as defined in the UCC) now owned or hereafter acquired by it, and including
without limitation all motor vehicles, trucks, trailers, railcars and barges
other than motor vehicles the perfection of a security interest in which is
excluded from the Uniform Commercial Code in the relevant jurisdiction.
"Equity Interest" means (i) in the case of a corporation, any shares of
its capital stock, (ii) in the case of a limited liability company, any
membership interest therein, (iii) in the case of a partnership, any partnership
interest (whether general or limited) therein, (iv) in the case of any other
business entity, any participation or other interest in the equity or profits
thereof or (v) any warrant, option or other right to acquire any Equity Interest
described in the foregoing clauses (i), (ii), (iii) and (iv).
"Event of Default" has the meaning ascribed to such term in either
Credit Agreement.
"Financial Asset" means:
(i) a security;
(ii) an obligation of a person or a share, participation, or other
interest in a person or in property or an enterprise of a person, which is, or
is of a type, dealt in or traded on financial markets, or which is recognized in
any area in which it is issued or dealt in as a medium for investment; or
(iii) any property that is held by a securities intermediary for
another person in a Securities Account if the securities intermediary has
expressly agreed with the other person that the property is to be treated as a
financial asset under Article 8 of the UCC.
As the context requires, Financial Asset means either the interest itself or the
means by which a person's claim to it is evidenced, including a certificated or
uncertificated Security, a Security certificate, or a Security Entitlement.
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"Foreign Person" means any Person organized under the laws of a
jurisdiction, and conducting substantially all of its operations, outside of the
United States, other than any such Person that is, whether as a matter of law,
pursuant to an election by such Person or otherwise, treated as a partnership in
which any Lien Grantor is a partner or a branch of any Lien Grantor for United
States income tax purposes.
"General Collateral Account" has the meaning set forth in Section 9(A).
"General Intangibles" means, with respect to any Lien Grantor, all
"general intangibles" (as defined in the UCC) now owned or hereafter acquired by
such Lien Grantor, including without limitation (i) all obligations or
indebtedness owing to such Lien Grantor (other than Accounts) from whatever
source arising, (ii) all Intellectual Property and any rights or interests of
such Lien Grantor in any Intellectual Property (including without limitation any
rights therein by way of collateral assignment or collateral security), rights
in other intellectual property, goodwill, service marks, trade secrets, permits
and licenses, (iii) all rights or claims in respect of refunds for taxes paid
and (iv) all rights in respect of any pension plan or similar arrangement
maintained for employees of any member of the ERISA Group.
"Instruments" means, with respect to any Lien Grantor, all
"instruments", "chattel paper" or "letters of credit" (each as defined in the
UCC), including those evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of, any of
the Accounts, including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances, now owned or hereafter acquired by such Lien
Grantor.
"Insurance Account" has the meaning set forth in Section 9(C).
"Insurance Proceeds" has the meaning set forth in Section 9(C).
"Intellectual Property" means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Copyrights and (vi) Copyright Licenses.
"Intellectual Property Filing" means (i) with respect to any Patent,
Patent License, Trademark or Trademark License, the filing of the applicable
Patent Security Agreement or Trademark Security Agreement with the United States
Patent and Trademark Office, together with an appropriately completed
recordation form, and (ii) with respect to any Copyright or Copyright License,
the filing of the applicable Copyright Security Agreement with the United States
Copyright Office, together with an appropriately completed recordation form, in
each case sufficient to record the Security Interest granted to the Collateral
Agent in such Intellectual Property.
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"Intellectual Property Security Agreement" means a Copyright Security
Agreement, a Patent Security Agreement or a Trademark Security Agreement.
"Inventory" means, with respect to any Lien Grantor, all "inventory"
(as defined in the UCC), now owned or hereafter acquired by it, wherever
located, and shall also mean and include all raw materials and other materials
and supplies, work-in-process and finished goods and any products made or
processed therefrom and all substances, if any, commingled therewith or added
thereto.
"Investment Property" means (i) a Security, whether certificated or
uncertificated, (ii) a Security Entitlement, (iii) a Securities Account, (iv) a
Commodities Contract, or (v) a Commodities Account.
"Letter of Credit" has the meaning set forth in the Revolving Credit
Agreement.
"Lien Grantor" means the Borrower or any Subsidiary Guarantor and "Lien
Grantors" means all of the foregoing.
"Liquid Investments" has the meaning set forth in Section 9(G).
"Loans" means the Bridge Loans and the Revolving Loans and "Loan" means
any of the foregoing.
"Lockbox Letter" means a lockbox letter substantially in the form of
Exhibit A hereto, delivered to a bank or financial institution, pursuant to
which a lockbox account is irrevocably assigned to the Collateral Trustee.
"Loan Documents" means the Revolving Loan Documents and the Bridge Loan
Documents, and "Loan Document" means any of the foregoing.
"Non-Contingent Secured Obligation" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"Opinion of Counsel" means a written opinion of legal counsel (who may
be counsel to a Lien Grantor or other counsel, in either case approved by the
Bank Agents or the Required Lenders in a writing delivered to the Collateral
Agent) addressed and delivered to the Collateral Agent.
"Original Lien Grantor" means the Borrower or any Subsidiary Guarantor
that grants a Lien on any of its assets hereunder on the Closing Date, and
"Original Lien Grantors" means all of the foregoing.
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"Other Investment Property" means, with respect to any Lien Grantor,
all Investment Property now owned or hereafter acquired by it, other than any
such Investment Property constituting an Equity Interest.
"Other Pledged Securities" means, with respect to any Lien Grantor, all
"securities" (as such term is defined in Article 8 of the UCC) now owned or
hereafter acquired by such Lien Grantor, other than any Pledged Equity Interests
of such Lien Grantor.
"Patent License" means any agreement now or hereafter in existence
granting any Lien Grantor, or pursuant to which any Lien Grantor has granted to
any other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether a
patent or application for patent on such invention may come into existence or
not, including, without limitation, any agreement identified in Schedule 1 to a
Patent Security Agreement.
"Patents" means all of the following: (i) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States or any other country or any political subdivision thereof, (ii)
all reissues, continuations, continuations-in-part or extensions thereof, (iii)
all claims for, and rights to sue for, past or future infringements of any of
the foregoing and (iv) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past or future infringements
thereof.
"Patent Security Agreement" means a Patent Security Agreement executed
and delivered by a Lien Grantor in favor of the Collateral Agent, for the
benefit of the Secured Parties, substantially in the form of Exhibit D to this
Agreement, as the same may be amended from time to time.
"Perfection Certificate" means, with respect to any Lien Grantor, a
certificate substantially in the form of Exhibit A, completed and supplemented
with the schedules and attachments contemplated thereby to the satisfaction of
the Collateral Agent, and duly executed by a duly authorized officer of such
Lien Grantor.
"Permitted Liens" means the Security Interests and the Liens on the
Collateral permitted to be created, to be assumed or to exist pursuant to
Section 5.09 of each Credit Agreement.
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"Pledged Certificates" means at any time all "certificated securities"
(as such term is defined in Article 8 of the UCC) that evidence or represent
Pledged Equity Interests or Other Pledged Securities at such time.
"Pledged Equity Interests" means at any time all Equity Interests
included in the Collateral at such time.
"Pledged Instruments" means at any time all Instruments included in the
Collateral at such time.
"Pledged LLC Interest" means at any time any membership interest or
similar interest in a limited liability company that is included in the Pledged
Equity Interests at such time.
"Pledged Partnership Interest" means at any time any partnership
interest (whether general or limited) that is included in the Pledged Equity
Interests at such time.
"Post-Petition Interest" means any interest which accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Borrower or would accrue but for the
operation of applicable bankruptcy or insolvency laws, whether or not such
interest is allowed or allowable as a claim in any such proceeding.
"Proceeds" means, with respect to any Lien Grantor, all proceeds of,
and all other profits, products, rents or receipts, in whatever form, arising
from the collection, sale, lease, exchange, assignment, licensing or other
disposition of, or other realization upon, collateral, including, without
limitation, all claims of such Lien Grantor against third parties for loss of,
damage to or destruction of, or for proceeds payable under, or unearned premiums
with respect to, policies of insurance in respect of, any collateral, and any
condemnation or requisition payments with respect to any collateral, in each
case whether now existing or hereafter arising.
"Required Lenders" means (i) at any time at which Loans or Letters of
Credit and/or commitments to make Loans or issue Letters of Credit are
outstanding under both Credit Agreements, both of (x) the Required Lenders (as
defined in the Revolving Credit Agreement) and (y) the Required Lenders (as
defined in the Bridge Credit Agreement) and (ii) at any time at which Loans or
Letters of Credit and/or commitments to make Loans or issue Letters of Credit
are outstanding under only one Credit Agreement Required Lenders (as defined in
such Credit Agreement).
"Revolving Agent" has the meaning ascribed to the term "Agent" in the
Revolving Credit Agreement.
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"Revolving Credit Agreement" has the meaning set forth in the recitals
hereto.
"Revolving Loan" has the meaning ascribed to the term "Loan" in the
Revolving Credit Agreement.
"Revolving Loan Documents" has the meaning ascribed to the term "Loan
Documents" in the Revolving Credit Agreement.
"Secured Obligations" means:
(A) with respect to the Borrower, all principal of all Loans and LC
Reimbursement Obligations outstanding from time to time under either Credit
Agreement, all interest (including, without limitation, Post-Petition Interest)
on such Loans and LC Reimbursement Obligations and all other amounts now or
hereafter payable by the Borrower pursuant to any Loan Document;
(B) with respect to any Subsidiary Guarantor, all obligations of such
Subsidiary Guarantor under either Credit Agreement or any other Loan Document
(including, without limitation, obligations in respect of Post-Petition
Interest); and
(C) with respect to any Lien Grantor, any renewals or extensions of any
Secured Obligations.
"Secured Parties" means the Collateral Agent, the Lenders and the
Issuers.
"Securities Account" means an account to which a Financial Asset is or
may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise the rights that comprise the Financial Asset.
"Security" means an obligation of an issuer or a share, participation,
or other interest in an issuer or in property or an enterprise of an issuer:
(i) which is represented by a security certificate in bearer or
registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer;
(ii) which is one of a class or series or by its terms is divisible
into a class or series of shares, participations, interests, or obligations; and
(iii) which:
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(A) is, or is of a type, dealt in or traded on securities
exchanges or securities markets; or
(B) is a medium for investment and by its terms expressly
provides that it is a security governed by Article 8 of the
Uniform Commercial Code as in effect in any jurisdiction;
provided that any share or similar equity interest issued by a corporation,
business trust, joint stock company or similar entity or by an entity that is
registered as an investment company under the federal investment company laws,
any interest in a unit trust that is so registered and any face-amount
certificate that is issued by a fact-amount certificate company that is so
registered, is a "Security".
"Security Agreement Supplement" means a letter substantially in the
form of Exhibit A hereto, executed and delivered to the Collateral Agent
pursuant to Section 18 for the purpose of adding a new Subsidiary Guarantor as a
party hereto and/or adding additional property to the Collateral.
"Security Entitlement" means a "security entitlement" (as defined in
the UCC).
"Security Interests" means the security interests in the Collateral
granted hereunder securing the Secured Obligations.
"Subsidiary Guarantors" means each Person listed on the signature pages
hereof under the caption "Subsidiary Guarantors" and each Person that shall, at
any time after the date hereof, become a party hereto and a "Subsidiary
Guarantor" as provided in Section 18.
"Trademarks" means: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of the
foregoing have appeared or appear, package and other designs, and any other
source or business identifiers, and general intangibles of like nature, and the
rights in any of the foregoing which arise under applicable law, (ii) the
goodwill of the business symbolized thereby or associated with each of them,
(iii) all registrations and applications in connection therewith, including,
without limitation, registrations and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including, without limitation, those described in Schedule 1 to any Trademark
Security Agreement, (iv) all renewals thereof, (v) all claims for, and rights to
sue for, past or future infringements of any of the foregoing and (vi) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.
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"Trademark License" means any agreement now or hereafter in existence
granting to any Lien Grantor. or pursuant to which any Lien Grantor has granted
to any other Person, any right to use any Trademark.
"Trademark Security Agreement" means a Trademark Security Agreement
executed and delivered by a Lien Grantor in favor of the Collateral Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit E to
this Agreement, as the same may be amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
"U.S. Person" means any Person other than a Foreign Person.
SECTION 2. Representations and Warranties. Each Lien Grantor represents
and warrants as follows:
(A) Such Lien Grantor owns the Equity Interests listed as being
owned by it in Schedule 1 hereto or to any Security Agreement
Supplement to which it is a party, free and clear of any Lien other
than the Security Interests. All shares of capital stock identified in
any such Schedule as being beneficially owned by such Lien Grantor have
been duly authorized and validly issued, are fully paid and
non-assessable, and are subject to no option to purchase or similar
right of any Person. Such Lien Grantor is not and will not become a
party to or otherwise bound by any agreement, other than the Loan
Documents, which restricts in any manner the rights of any present or
future holder of any Equity Interest with respect thereto.
(B) Such Lien Grantor has good and marketable title to all of the
Collateral, free and clear of any Liens other than the Permitted Liens.
Such Lien Grantor has taken all actions necessary under the UCC to
perfect its interest in any Accounts purchased or otherwise acquired by
it, as against its assignors and creditors of its assignors.
(C) Such Lien Grantor has not entered into any agreement which is
reasonably likely to, or taken any action which is reasonably likely
to, prevent the Collateral Agent from enforcing any of the terms of
this Agreement or which would limit the Collateral Agent in any such
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enforcement. Other than financing statements or other similar or
equivalent documents or instruments with respect to the Security
Interests and Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument
covering all or any part of the Collateral is on file or of record in
any jurisdiction in which such filing or recording would be effective
to perfect a Lien on such Collateral. No Collateral is in the
possession of any Person (other than such Lien Grantor or a bailee or
warehouseman of such Lien Grantor) asserting any claim thereto or
security interest therein, except that the Collateral Agent or its
designee may have possession of Collateral as contemplated hereby.
(D) Such Lien Grantor has delivered a Perfection Certificate to
the Collateral Agent. The information set forth therein is correct and
complete as of the Closing Date. Not later than 30 days following the
Closing Date, such Lien Grantor shall furnish to the Collateral Agent
file search reports from each UCC filing office set forth in Schedule 6
to such Perfection Certificate confirming the filing information set
forth in such Schedule.
(E) The Security Interests constitute, under the UCC, valid
security interests in all Collateral owned by such Lien Grantor,
securing its Secured Obligations other than any Collateral the grant of
a security in which is excluded from Section 9-104 of the UCC.
(F) Upon the delivery of actual possession of the Pledged
Instruments (if any) and the Pledged Certificates, if any, owned by
such Lien Grantor to the Collateral Agent in accordance with Section 4,
the Security Interests in such Collateral will be perfected, subject to
no prior Lien and, in the case of any Pledged Certificates evidencing
"securities" (as defined in the UCC) the Collateral Agent will have
"control" (as defined in Section 8-106 of the UCC) thereof and will be
a "protected purchaser" (as defined in Section 8-303 of the UCC) of
such Security Interests therein.
(G) When UCC financing statements in the form specified in Exhibit
5(A) to such Lien Grantor's Perfection Certificate shall have been
filed in the offices specified in such Lien Grantor's Perfection
Certificate, the Security Interests will constitute perfected security
interests in the Collateral (except Inventory in transit and
Intellectual Property) owned by such Lien Grantor to the extent that a
security interest therein may be perfected by filing pursuant to the
UCC, prior to all Liens and rights of others therein except Permitted
Liens. When, in addition to the filing of such UCC financing
statements, the applicable Intellectual Property Filings have been made
with respect to such Lien Grantor's Intellectual Property (including
any future filings required pursuant to Section 5(C) and 5(D)), the
Security Interests will constitute perfected security interests in all
right,
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title and interest of such Lien Grantor in its Intellectual Property to
the extent that security interests therein may be perfected by such
filings, prior to all other Liens and rights of others therein except
Permitted Liens. Except for the filing of such UCC financing statements
and such Intellectual Property Filings, no registration, recordation or
filing with any governmental body, agency or official is required in
connection with the execution or delivery of the Collateral Documents
or is necessary for the validity or enforceability thereof or for the
perfection or due recordation of the Security Interests or for the
enforcement of the Security Interests.
(H) Such Lien Grantor's Collateral is insured in accordance with
the requirements of the Credit Agreements.
(I) All of such Lien Grantor's Inventory has or will have been
produced in compliance with the applicable requirements, if any, of the
Fair Labor Standards Act, as amended.
(J) The "securities intermediary's jurisdiction" (as defined in
the UCC) in respect of each of such Lien Grantor's Securities Accounts
and Security Entitlements, the "commodity intermediary's jurisdiction"
(as defined in the UCC) in respect of each of such Lien Grantor's
Commodity Accounts and Commodity Contracts, and the location of such
Lien Grantor's chief executive office, is a jurisdiction that has
adopted, in substantial part, Uniform Commercial Code, Revised Article
8, Investment Securities (with Conforming and Miscellaneous Amendments
to Articles 1, 3, 4, 5, 9 and 10) 1994 Official Text.
SECTION 3. The Security Interests. (A) In order to secure the full and
punctual payment and performance of the Secured Obligations in accordance with
the terms thereof, each Lien Grantor hereby grants to the Collateral Agent for
the ratable benefit of the Secured Parties a continuing security interest in and
to all of the following property of such Lien Grantor, whether now owned or
existing or hereafter acquired or arising and regardless of where located (all
being collectively referred to as the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents;
(v) Instruments;
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(vi) Equipment;
(vii) (x) Equity Interests in any U.S. Person now owned or hereafter
beneficially owned by such Lien Grantor, (y) the lesser of all voting
Equity Interests in any Foreign Person now owned or hereafter
beneficially acquired by such Lien Grantor and 65% of all voting Equity
Interests in such Foreign Person held by any Person and (z) all
non-voting Equity Interests in any Foreign Person now owned or
hereafter beneficially acquired by such Lien Grantor and, in each case,
all rights and privileges of such Lien Grantor with respect to such
Equity Interests, and all dividends, distributions and other payments
with respect thereto;
(viii) Other Investment Property;
(ix) The Collateral Accounts, all cash deposited therein from time to
time, the Liquid Investments made pursuant to Section 5(F) and other
monies and property of any kind of any Lien Grantor in the possession
or under the control of the Collateral Agent;
(x) All books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of such Lien Grantor pertaining to any of the
Collateral; and
(xi) All Proceeds of all or any of the Collateral described in Clauses
3(A)(i) through 3(A)(x) hereof.
(B) The Security Interests are granted as security only and shall not
subject any Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of any Lien Grantor with respect to any of the
Collateral or any transaction in connection therewith.
SECTION 4. Delivery of Certain Collateral. (A) On the Closing Date,
each Original Lien Grantor is delivering to the Collateral Agent as Collateral
hereunder (i) with respect to each U.S. Person, all stock certificates or other
certificates, if any, representing Equity Interests in such U.S. Person then
owned by such Original Lien Grantor, (ii) with respect to each Foreign Person,
stock certificates or other certificates, if any, representing (a) the lesser of
(1) all voting Equity Interests in such Foreign Person then owned by such
Original Lien Grantor and (2) 65% of all voting Equity Interests in such Foreign
Person and (b) all non-voting equity Interests in such Foreign Person then owed
by such Original Lien Grantor and (iii) all Instruments and all certificates
evidencing Other Pledged Securities then owned by such Person.
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(B) On the date it signs and delivers its Security Agreement
Supplement, each Lien Grantor (other than an Original Lien Grantor) will deliver
to the Collateral Agent as Collateral hereunder (i) with respect to each U.S.
Person, all stock certificates or other certificates, if any, representing
Equity Interests in such U.S. Person then owned by it, (ii) with respect to each
Foreign Person stock certificates or other certificates representing (a) the
lesser of (1) all voting Equity Interests in such Foreign Person then owned by
such Original Lien Grantor and (2) 65% of all voting Equity Interests in such
Foreign Person and (b) all non-voting equity Interests in such Foreign Person
then owed by such Original Lien Grantor and (iii) all Instruments and all
certificates evidencing Other Pledged Securities then owned by such Person.
(C) After the Closing Date (in the case of an Original Lien Grantor) or
the date of its Security Agreement Supplement (in the case of any other Lien
Grantor), if any Lien Grantor receives (i) any stock certificate or other
certificate representing Equity Interests in another Person then owned by it
(provided that no Lien Grantor shall be required to pledge more than 65% of the
voting Equity Interests in any Foreign Person), (ii) any certificate
representing any Other Pledged Securities then owned by it or (iii) any
Instrument, in which a security interest is granted pursuant to Section 3 hereof
or pursuant to the Security Agreement Supplement signed by it, such Lien Grantor
will immediately deliver such certificate or Instrument to the Collateral Agent
to be held by it as Collateral hereunder.
(D) Notwithstanding the foregoing, so long as no Event of Default shall
have occurred and be continuing, each Lien Grantor may retain for collection in
the ordinary course any Instruments (other than checks and drafts constituting
payments in respect of Accounts as to which the provisions of Section 9(B) shall
apply) received by it in the ordinary course of business, and the Collateral
Agent shall, promptly upon request by such Lien Grantor, make appropriate
arrangements for making any other Instrument pledged by such Lien Grantor
hereunder available to it for purposes of presentation, collection or renewal
(any such arrangement to be effected, to the extent deemed appropriate by the
Collateral Agent, against trust receipt or like document).
(E) All Pledged Certificates delivered to the Collateral Agent
hereunder will be delivered in suitable form for transfer by delivery, or
accompanied by duly executed instruments of transfer or assignment in blank and
accompanied by any required transfer tax stamps, all in form and substance
satisfactory to the Collateral Agent. All Pledged Instruments delivered to the
Collateral Agent hereunder will be endorsed to the order of the Collateral Agent
and accompanied by any required transfer tax stamps, all in form and substance
satisfactory to the Collateral Agent.
SECTION 5. Further Assurances; Covenants. Each Lien Grantor covenants
as follows:
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(A) It will not change its name, identity or corporate structure in any
manner unless such Lien Grantor shall have given the Collateral Agent notice of
such proposed action not more than six months nor less than 30 days prior to the
date on which such Lien Grantor proposes to take such action and delivered an
Opinion of Counsel with respect thereto in accordance with Section 5(E).
(B) It will not change the location of (i) its chief executive office
or chief place of business or (ii) the locations where it keeps or holds any
Collateral or any records relating thereto from the applicable location
described in its Perfection Certificate, unless such Lien Grantor shall have
given the Collateral Agent prior notice thereof and delivered an Opinion of
Counsel with respect thereto in accordance with Section 5(D). It will not in any
event change the location of any Collateral owned by it if such change would
cause the Security Interests in such Collateral to lapse or cease to be
perfected.
(C) It will, from time to time, at its expense, execute, deliver, file
and record any statement, assignment, instrument, document, agreement or other
paper and take any other action (including, without limitation, any filings of
financing or continuation statements under the UCC and any Intellectual Property
Filings) that from time to time may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to create, preserve, perfect,
confirm or validate the Security Interests in such Lien Grantor's Collateral or
to enable the Collateral Agent and the other Secured Parties to obtain the full
benefits of the Collateral Documents, or to enable the Collateral Agent to
exercise and enforce any of its rights, powers and remedies thereunder with
respect to any of such Lien Grantor's Collateral. To the extent permitted by
applicable law, such Lien Grantor authorizes the Collateral Agent to execute and
file such financing statements or continuation statements without such Lien
Grantor's signature appearing thereon. Such Lien Grantor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. Such Lien Grantor
shall pay the costs of, or incidental to, any recording or filing of any such
financing or continuation statements in which it is named as the debtor. Such
Lien Grantor hereby constitutes the Collateral Agent its attorney-in-fact to
execute and file all Intellectual Property Filings required or so requested for
the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; and such power, being coupled with an interest, shall be irrevocable
until such Lien Grantor's Collateral is released pursuant to Section 17.
(D) On the Closing Date (in the case of an Original Lien Grantor) or
the date of its Security Agreement Supplement (in the case of any other Lien
Grantor), it will sign and deliver to the Collateral Agent Intellectual Property
Security Agreements with respect to all Intellectual Property owned by it on
such date. Within 30 days of each January 1, it will sign and deliver to the
Collateral Agent Intellectual Property Security Agreements with respect to all
Intellectual Property owned by it on such January 1 that is not covered by
Intellectual Property Security
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Agreements previously so signed and delivered by it. In each case, it will make
all Intellectual Property Filings necessary to record the Security Interests in
such Intellectual Property.
(E) At least 30 days before it takes any action contemplated by Section
5(A) or 5(B), such Lien Grantor will, at its expense, cause to be delivered to
the Collateral Agent an Opinion of Counsel, in form and substance satisfactory
to the Collateral Agent, to the effect that all financing statements and
amendments or supplements thereto, continuation statements and other documents
required to be recorded or filed in order to perfect the Security Interests
against all creditors of and purchasers from such Lien Grantor (except any
continuation statements specified in such Opinion of Counsel that are to be
filed more than six months after the date thereof) have been filed in each
filing office necessary for such purpose and that all filing fees and taxes, if
any, payable in connection with such filings have been paid in full.
(F) If any Collateral is at any time in the possession or control of
any warehouseman, bailee or any agent or processor (other than the Borrower or
any of its Subsidiaries), such Lien Grantor will notify such warehouseman,
bailee, agent or processor of the Security Interests created hereby and instruct
it to hold all such Collateral for the Collateral Agent's account subject to the
Collateral Agent's instructions.
(G) It shall keep full and accurate books and records relating to the
Collateral, and, if requested, stamp or otherwise mark such books and records in
such manner as the Collateral Agent may reasonably require in order to reflect
the Security Interests.
(H) It shall use its best efforts to cause to be collected from its
account debtors, as and when due, any and all amounts owing under or on account
of each of its Accounts (including, without limitation, Accounts which are
delinquent, such Accounts to be collected in accordance with lawful collection
procedures) and shall apply forthwith upon receipt thereof all such amounts as
are so collected to the outstanding balance of such Account for credit to the
subaccounts of the applicable Lien Grantor. Subject to the rights of the
Collateral Agent and the other Secured Parties hereunder if an Event of Default
shall have occurred and be continuing, such Lien Grantor may allow in the
ordinary course of business as adjustments to amounts owing under its Accounts
(i) an extension or renewal of the time or times of payment, or settlement for
less than the total unpaid balance, which such Lien Grantor finds appropriate in
accordance with sound business judgment and (ii) a refund or credit due in
accordance with such Lien Grantor's ordinary course of business consistent with
its historical collection practices. The costs and expenses (including, without
limitation, attorney's fees) of collection, whether incurred by such Lien
Grantor or the Collateral Agent, shall be borne by such Lien Grantor.
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(I) Upon the occurrence and during the continuance of any Event of
Default, such Lien Grantor will, upon the request of the Collateral Agent,
promptly notify (and such Lien Grantor hereby authorizes the Collateral Agent so
to notify) each account debtor in respect of any Accounts or Instruments that
such Collateral has been assigned to the Collateral Agent hereunder, and that
any payments due or to become due in respect of such Collateral are to be made
directly to the Collateral Agent or its designee.
(J) It will, (i) on or prior to the date of the first Borrowing under
either Credit Agreement, in the case of Equipment (other than motor vehicles)
now owned and (ii) within 10 days of acquiring any other Equipment, deliver to
the Collateral Agent any and all certificates of title, applications for title
or similar evidence of ownership of such Equipment and shall cause the
Collateral Agent to be named as lienholder on any such certificate of title or
other evidence of ownership. The Grantor shall promptly inform the Collateral
Agent of any additions to or deletions from the Equipment and shall not permit
any such items to become a fixture to real estate or an accession to other
personal property.
(K) Without the prior written consent of the Required Lenders, such
Lien Grantor will not sell, lease, exchange, assign or otherwise dispose of, or
grant any option with respect to, any Collateral except, subject to the rights
of the Secured Parties hereunder if an Event of Default shall have occurred and
be continuing, as permitted under the Credit Agreements. Upon any such permitted
sale, exchange, assignment or other disposition of any asset (other than any
such sale, exchange, assignment or other disposition to a Subsidiary), the
Security Interests created hereby in such asset (but not in any Proceeds arising
therefrom) shall cease immediately without any further action on the part of the
Collateral Agent or any other Secured Party, but the Collateral Agent shall
comply with Section 17(C) hereof.
(L) On or prior to the Closing Date, such Lien Grantor will cause the
Collateral Agent to be named as an additional insured and loss payee on each
insurance policy required to be maintained pursuant to Section 5.03 of the
Credit Agreements, including, without limitation, policies relating to any of
its Inventory and Equipment. Such Lien Grantor will deliver to the Collateral
Agent, upon request of the Collateral Agent, the insurance policies for such
insurance or certificates of insurance evidencing such coverage. Each such
insurance policy shall (i) include effective waivers by the insurer of all
claims for insurance premiums against the Collateral Agent or any Lender, (ii)
provide for coverage to the Collateral Agent regardless of the breach by such
Lien Grantor of any warranty or representation made therein, (iii) not be
subject to co-insurance, (iv) provide that all insurance proceeds in excess of
$1,000,000 per claim shall be adjusted with and payable to the Collateral Agent
and (v) provide that no cancellation, termination or material modification
thereof shall be effective until at least 30 days
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after receipt by the Collateral Agent of notice thereof. Such Lien Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to make proof of
loss, claim for insurance and adjustments with insurers, and to execute or
endorse all documents, checks or drafts in connection with payments made as a
result of any insurance policies.
(M) It will, promptly upon request, provide to the Collateral Agent all
information and evidence it may reasonably request concerning the Collateral to
enable the Collateral Agent to enforce the provisions of this Agreement.
(N) It will notify the Collateral Agent promptly if any application or
registration relating to any material Intellectual Property owned or licensed by
it is reasonably likely to become abandoned or dedicated to the public, or of
any materially adverse determination or development (including, without
limitation, the institution of, or any such determination or development in, any
proceeding in the United States Copyright Office, the United States Patent and
Trademark Office or any court) regarding such Lien Grantor's ownership of such
material Intellectual Property, its right to register or patent the same or its
right to keep and maintain the same and (i) if any of such Lien Grantor's rights
to any material Intellectual Property are infringed, misappropriated or diluted
by a third party, such Lien Grantor shall notify the Collateral Agent within 30
days after it learns thereof and shall, unless such Lien Grantor shall
reasonably determine that any such action would be of negligible value, economic
or otherwise, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as such Lien Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property.
SECTION 6. Record Ownership of Pledged Equity Securities. The
Collateral Agent may on and after the occurrence and continuance of an Event of
Default, in its sole discretion, cause the Pledged Equity Interests (or any
portion thereof) to be transferred of record into the name of the Collateral
Agent or its nominee. Each Lien Grantor will promptly give to the Collateral
Agent copies of any notices and other communications received by it with respect
to Pledged Equity Interests registered in its name, and the Collateral Agent
will promptly give to such Lien Grantor copies of any notices and other
communications received by the Collateral Agent with respect to such Lien
Grantor's Pledged Equity Interests registered in the name of the Collateral
Agent or its nominee.
SECTION 7. Right to Vote Pledged Equity Interests. (A) Unless an Event
of Default shall have occurred and be continuing, each Lien Grantor shall have
the right, from time to time, to vote and to give consents, ratifications and
waivers with respect to the Pledged Equity Interests owned by it, and the
Collateral Agent shall, upon receiving a written request from such Lien Grantor,
deliver to such Lien Grantor as specified in such request such proxies, powers
of attorney,
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consents, ratifications and waivers in respect of any of such Pledged Equity
Interests which are registered in the name of the Collateral Agent or its
nominee as shall be specified in such request and be in form and substance
satisfactory to the Collateral Agent. Unless an Event of Default shall have
occurred and be continuing, the Collateral Agent shall have no right to take any
action which the owner of a Pledged Partnership Interest or Pledged LLC Interest
is entitled to take with respect thereto, except the right to receive and retain
payments and other distributions to the extent provided in Section 8.
(B) If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right, to the extent permitted by law (and, in
the case of a Pledged Partnership Interest or Pledged LLC Interest, by the
relevant partnership agreement, limited liability company agreement, operating
agreement or other governing document), and each Lien Grantor shall take all
such action as may be necessary or appropriate to give effect to such right, to
vote and to give consents, ratifications and waivers and take any other action
with respect to any or all of the Pledged Equity Interests with the same force
and effect as if the Collateral Agent were the absolute and sole owner thereof.
SECTION 8. Right to Receive Distributions on Collateral. Subject to
Section 17, the Collateral Agent shall have the right to receive and to retain
as Collateral hereunder all dividends, interest and other payments and
distributions made upon or with respect to the Pledged Equity Interests and the
Other Investment Property and each Lien Grantor shall take all such action as
the Collateral Agent may deem necessary or appropriate to give effect to such
right; provided that, unless an Event of Default shall have occurred and be
continuing, this sentence shall not apply to dividends, interest and other
payments and distributions made in cash or cash equivalents ("Cash
Distributions"). All such dividends, interest and other payments and
distributions which are received by any Lien Grantor (except Cash Distributions
received when no Event of Default shall have occurred and be continuing) shall
be received in trust for the benefit of the Secured Parties and shall be
segregated from other assets of such Lien Grantor and shall, promptly upon such
Lien Grantor's receipt thereof, be delivered or paid over to the Collateral
Agent in the same form as received (with any necessary endorsements or executed
assignments in blank), together with a statement identifying the source of such
Collateral and stating that it is being delivered to the Collateral Agent to be
held as Collateral under this Agreement.
SECTION 9. Collateral Accounts. (A) There is hereby established with
the Collateral Agent a cash collateral account (the "General Collateral
Account") in the name and under the control of the Collateral Agent into which
there shall be deposited from time to time the cash proceeds of the Collateral
required to be delivered to the Collateral Agent pursuant to Section 9(B) or any
other provision of this Agreement for credit to subaccounts therein of the
respective Lien Grantors. Any income received by the Collateral Agent with
respect to the balance
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from time to time standing to the credit of the General Collateral Account,
including any interest or capital gains on Liquid Investments, shall remain, or
be deposited, in the General Collateral Account for credit to the subaccount of
the applicable Lien Grantor. All right, title and interest in and to the cash
amounts on deposit from time to time in the General Collateral Account for
credit to the subaccount of the applicable Lien Grantor, together with any
Liquid Investments from time to time made pursuant to subsection 9(G) hereof,
shall constitute part of the Collateral hereunder but shall not constitute
payment of the Secured Obligations until applied thereto as hereinafter
provided.
(B) Each Lien Grantor shall (x) not more than 60 days after the Closing
Date, in the case of any Subsidiary Guarantor and (y) not later than January 31,
1999, in the case of the Borrower, instruct all account debtors and other
Persons obligated in respect of all Accounts of such Lien Grantor to make all
payments in respect of such Accounts either (i) directly to the Collateral Agent
(by instructing that such payments be remitted to a post office box which shall
be in the name and under the control of the Collateral Agent) or (ii) to one or
more other banks in any state (other than Louisiana) in the United States (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of such bank) under a Lockbox Letter
substantially in the form of Exhibit B hereto duly executed by such Lien Grantor
and such bank or under other arrangements, in form and substance satisfactory to
the Collateral Agent, pursuant to which such Lien Grantor shall have irrevocably
instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Collateral Agent for deposit into the
General Collateral Account or as the Collateral Agent may otherwise instruct
such bank. All such payments made to the Collateral Agent shall be deposited in
the General Collateral Account. In addition to the foregoing, each Lien Grantor
agrees that if the proceeds of any Collateral hereunder (including the payments
made in respect of Accounts) shall be received by it, such Lien Grantor shall as
promptly as possible deposit such proceeds into the General Collateral Account.
Until so deposited, all such proceeds shall be held in trust by such Lien
Grantor for and as the property of the Collateral Agent and the Lenders and
shall not be commingled with any other funds or property of any Lien Grantor.
(C) There is hereby established with the Collateral Agent a cash
collateral account (the "Insurance Account") in the name and under the control
of the Collateral Agent into which there shall be deposited any amounts required
to be paid to the Collateral Agent pursuant to Section 5.03 of the Credit
Agreement (the "Insurance Proceeds") for credit to subaccounts therein of the
respective Lien Grantors. Each Lien Grantor hereby agrees, to the extent
required under Section 5.03(d) of the Credit Agreements, to cause any Insurance
Proceeds received by it to be deposited in the Insurance Account for credit to
such Lien Grantor's subaccount therein. Any income received with respect to the
balance from time to time standing to the credit of the Insurance Account,
including any interest or
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capital gains on Liquid Investments, shall remain, or be deposited, in the
Insurance Account for credit to the subaccount of the applicable Lien Grantor,
subject to the rights of such Lien Grantor to receive any amounts on deposit in
such Insurance Account in accordance with Section 9(E). All right, title and
interest in and to the cash amounts on deposit from time to time in the
Insurance Account together with any Liquid Investments from time to time made
pursuant to Section 9(G) hereof shall vest in the Collateral Agent, shall
constitute part of the Collateral hereunder and shall not constitute payment of
the Secured Obligations until applied thereto as hereinafter provided, subject
to the rights of such Lien Grantor to receive any such amounts in accordance
with Section 9(E).
(D) The balance from time to time standing to the credit of the General
Collateral Account shall, except upon the occurrence and continuance of an Event
of Default, be distributed to the Borrower or the applicable Lien Grantor upon
its order. If immediately available cash on deposit in the General Collateral
Account is not sufficient to make any distribution to the Borrower referred to
in the previous sentence of this Section (D), the Collateral Agent shall
liquidate as promptly as practicable Liquid Investments as required to obtain
sufficient cash to make such distribution and, notwithstanding any other
provision of this Section 9, such distribution shall not be made until such
liquidation has taken place.
(E) The balance from time to time standing to the credit of the
Insurance Account shall be subject to withdrawal only upon the instructions of
the Collateral Agent. Except upon the occurrence and continuance of an Event of
Default, the Collateral Agent agrees to give instructions to distribute such
amounts to the Borrower at such times and in such amounts as the Borrower shall
request for the purpose of repairing, reconstructing or replacing the property
in respect of which such Insurance Proceeds were received. Any such request
shall be accompanied by a certificate of the chief executive officer, chief
financial officer or treasurer of the Borrower setting forth in detail
reasonably satisfactory to the Required Lenders the repair, reconstruction or
replacement for which such funds will be expended.
(F) Upon the occurrence and during the continuation of an Event of
Default, the Collateral Agent shall, if so instructed by the Required Lenders,
apply or cause to be applied (subject to collection) any or all of the balance
from time to time standing to the credit of the Collateral Accounts in the
manner specified in Section 13.
(G) Amounts on deposit in the Collateral Accounts shall be invested and
re-invested from time to time in such Liquid Investments as the Borrower shall
determine, which Liquid Investments shall be held in the name and be under the
control of the Collateral Agent; provided that, if an Event of Default has
occurred and is continuing, the Collateral Agent shall, if instructed by the
Required Lenders, cause such Liquid Investments to be liquidated and apply or
cause to be applied
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the proceeds thereof allocable to any Lien Grantor to the payment of the Secured
Obligations of such Lien Grantor in the manner specified in Section 13. For this
purpose, "Liquid Investments" means Temporary Cash Investments; provided that
(i) each Liquid Investment shall mature within 30 days after it is acquired by
the Collateral Agent and (ii) in order to provide the Collateral Agent, for the
benefit of the Secured Parties, with a perfected Security Interest therein, each
Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Collateral Agent, which
(together with any appropriate instruments of transfer) are delivered
to, and held by, the Collateral Agent or an agent thereof (which shall
not be the Grantor or any of its Affiliates) in the State of New York;
or
(ii) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations
and as to which (in the opinion of counsel to the Collateral Agent)
appropriate measures shall have been taken for perfection of the
Security Interests.
SECTION 10. General Authority. Each Lien Grantor hereby irrevocably
appoints the Collateral Agent its true and lawful attorney, with full power of
substitution, in the name of such Lien Grantor, any Secured Party or otherwise,
for the sole use and benefit of the Secured Parties, but at the expense of such
Lien Grantor, to the extent permitted by law to exercise, at any time and from
time to time while an Event of Default has occurred and is continuing, all or
any of the following powers with respect to all or any of such Lien Grantor's
Collateral:
(a) to demand, sue for, collect, receive and give acquittance for
any and all monies due or to become due thereon or by virtue thereof,
(b) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(c) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if
the Collateral Agent were the absolute owner thereof, and
(d) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Collateral Agent shall give such Lien Grantor not less than
ten days' prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market. The Collateral Agent and each Lien Grantor agree
that such
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notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC.
SECTION 11. Remedies upon Event of Default. (A) If any Event of Default
has occurred and is continuing, the Collateral Agent may exercise on behalf of
the Secured Parties all rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) and, in addition,
the Collateral Agent may, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law, (i)
withdraw all cash held in the Collateral Accounts and apply such cash and other
cash, if any, then held by it as Collateral as specified in Section 13 and (ii)
if there shall be no such cash or if such cash shall be insufficient to pay all
the Secured Obligations of any Lien Grantor in full, sell the Collateral of such
Lien Grantor or any part thereof at public or private sale or any broker's board
or on any securities exchange, for cash, upon credit or for future delivery, and
at such price or prices as the Collateral Agent may deem satisfactory. The
Collateral Agent or any other Secured Party may be the purchaser of any or all
of the Collateral so sold at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely distributed standard price quotations, at any private sale). The
Collateral Agent is authorized, in connection with any such sale, if it deems it
advisable so to do, to restrict the prospective bidders on or purchasers of any
of the securities included in the Collateral to a limited number of
sophisticated investors who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
sale of any of such securities, to cause to be placed on any security included
in the Collateral a legend to the effect that such security has not been
registered under the Securities Act of 1933 and may not be disposed of in
violation of the provisions of said Act, and to impose such other limitations or
conditions in connection with any such sale as the Collateral Agent deems
necessary or advisable in order to comply with said Act or any other law. Each
Lien Grantor agrees that it will execute and deliver such documents and take
such other action as the Collateral Agent deems necessary or advisable in order
that any such sale may be made in compliance with law. Upon any such sale the
Collateral Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at any such sale shall
hold the Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind, including any equity or right of redemption of any Lien Grantor
which may be waived, and each Lien Grantor, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or appraisal which it
has or may have under any law now existing or hereafter adopted. The notice (if
any) of such sale required by Section 10 shall (1) in the case of a public sale,
state the time and place fixed for such sale, (2) in the case of sale at a
broker's board or on a securities exchange, state the board or exchange at which
such sale is to be made and the day on which the Collateral or the portion
thereof so being sold, will first be offered for sale at such board or exchange
and (3) in the case of a private sale, state the day after
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<PAGE>
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by the
purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Collateral Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(B) For the purpose of enforcing any and all rights and remedies under
this Agreement the Collateral Agent may (i) require each Lien Grantor to, and
each Lien Grantor agrees that it will, at its expense and upon the request of
the Collateral Agent, forthwith assemble all or any part of the Collateral as
directed by the Collateral Agent and make it available at a place designated by
the Collateral Agent which is, in its opinion, reasonably convenient to the
Collateral Agent and such Lien Grantor, whether at the premises of such Lien
Grantor or otherwise, (ii) to the extent permitted by applicable law, enter,
with or without process of law and without breach of the peace, any premise
where any of the Collateral is or may be located, and without charge or
liability to it seize and remove such Collateral from such premises, (iii) have
access to and use such Lien Grantor's books and records relating to the
Collateral and (iv) prior to the disposition of the Collateral, store or
transfer it without charge in or by means of any storage or transportation
facility owned or leased by such Lien Grantor, process, repair or recondition it
or otherwise prepare it for disposition in any manner and to the extent the
Collateral Agent deems appropriate and, in connection with such preparation and
disposition, use without charge any trademark, trade name, copyright, patent or
technical process used by the Grantor. The Collateral Agent may also render any
or all of the Collateral unusable at the Grantor's premises and may dispose of
such Collateral on such premises without liability for rent or costs.
(C) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Collateral Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or
non-exclusive
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<PAGE>
basis, any Intellectual Property included in the Collateral throughout
the world for such term or terms, on such conditions and in such manner
as the Collateral Agent shall in its sole discretion determine;
(ii) the Collateral Agent may (without assuming any obligations or
liability thereunder), at any time and from time to time, enforce (and
shall have the exclusive right to enforce) against any licensor,
licensee or sublicensee all rights and remedies of any Lien Grantor in,
to and under any Patent Licenses, Trademark Licenses or Copyright
Licenses and take or refrain from taking any action under any thereof,
and each Lien Grantor hereby releases the Collateral Agent and each of
the other Secured Parties from, and agrees to hold the Collateral Agent
and each of the other Secured Parties free and harmless from and
against, any claims arising out of any lawful action so taken or
omitted to be taken with respect thereto, except any such claim to the
extent that it arises solely as the result of the gross negligence or
willful misconduct of any Secured Party; and
(iii) upon request by the Collateral Agent, each Lien Grantor will
execute and deliver to the Collateral Agent a further power of
attorney, in form and substance satisfactory to the Collateral Agent,
for the implementation of any lease, assignment, license, sublicense,
grant of option, sale or other disposition of any Intellectual
Property. In the event of any such disposition pursuant to this
Section, such Lien Grantor shall supply its know-how and expertise
relating to the products or services made or rendered in connection
with its Intellectual Property, and its customer lists and other
records relating to such Intellectual Property and to the distribution
of said products and services, to the Collateral Agent.
SECTION 12. Limitation on Duty of Collateral Agent in Respect of
Collateral. Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agent shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Collateral Agent in good
faith.
SECTION 13. Application of Proceeds. (A) Upon the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held in the
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Collateral Accounts shall be applied by the Collateral Agent in the following
order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to agents and counsel
for the Collateral Agent, and all expenses, liabilities and advances
incurred or made by the Collateral Agent in connection therewith, and
any other unreimbursed expenses for which the Collateral Agent or any
other Secured Party is to be reimbursed pursuant to Section 10.03 of
either Credit Agreement or Section 16 hereof and unpaid fees owing to
Bank Agents and the Collateral Agent under the Loan Documents;
second, to the ratable payment of unpaid principal of, and any
unpaid LC Reimbursement Obligations constituting, Secured Obligations;
third, to the ratable payment of accrued but unpaid interest
on the Secured Obligations in accordance with the provisions of the
Credit Agreements;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to pay to the relevant Lien Grantor or its successors
or assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds of the Collateral owned by
it; provided that Collateral owned by a Subsidiary Guarantor (and any
proceeds thereof) shall be applied pursuant to the foregoing clauses
first, second, third and fourth only to the extent of the Secured
Obligations of such Subsidiary Guarantor (and subject to the limitation
in Section 9.07 of each Credit Agreement). The Collateral Agent may
make such distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
(B) If at any time any portion of any monies collected or received by
the Collateral Agent would, but for the provisions of this subsection (B), be
payable pursuant to subsection (A) of this Section in respect of a Contingent
Secured Obligation, the Collateral Agent shall not apply any monies to pay such
Contingent Secured Obligation but (i) in the case of any Contingent Secured
Obligations other than contingent LC Reimbursement Obligations, shall request
the holder thereof, at least three Domestic Business Days before each proposed
distribution hereunder, to notify the Collateral Agent as to the maximum amount
of such Contingent Secured Obligation if then ascertainable and if the holder of
such Contingent Secured Obligation does not notify the Collateral Agent of the
maximum ascertainable amount thereof at least two Domestic Business Days before
such distribution, such holder shall not be entitled to share in such
distribution. In the
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case of any holder of Contingent Secured Obligations consisting of contingent LC
Reimbursement Obligations or other Contingent Secured Obligations as to which
the Collateral Agent shall have received notice from the holder thereof in
accordance with the preceding sentence, the Collateral Agent will allocate to
such holder a portion of the monies to be distributed in such distribution,
calculated as if such Contingent Secured Obligation were outstanding in such
maximum ascertainable amount. However, the Collateral Agent shall not apply such
portion of such monies to pay such Contingent Secured Obligation, but instead
shall hold such monies or invest such monies in Temporary Cash Investments at
the direction of the holder of such Contingent Secured Obligation. All such
monies and Temporary Cash Investments shall constitute collateral hereunder and
shall be subject to the Security Interests, but shall be subject to distribution
in accordance with this subsection (B) rather than subsection (A) above. The
Collateral Agent shall hold all such monies and all such Temporary Cash
Investments and the net proceeds thereof in trust until such time as all or part
of such Contingent Secured Obligation becomes a Non-Contingent Secured
Obligation, whereupon the Collateral Agent at the request of the relevant
Secured Party shall apply the amount so held in trust to pay such Non-Contingent
Secured Obligation; provided that, if the other Secured Obligations theretofore
paid pursuant to the same clause of subsection (A) (i.e., clause second or
fourth) were not paid in full, the Collateral Agent shall apply the amount so
held in trust to pay the same percentage of such Non-Contingent Secured
Obligation as the percentage of such other Secured Obligations theretofore paid
pursuant to the same clause of subsection (A). If (i) the holder of such
Contingent Secured Obligation shall advise the Collateral Agent that no portion
thereof remains in the category of a Contingent Secured Obligation and (ii) the
Collateral Agent still holds any amount held in trust pursuant to this
subsection (B) in respect of such Contingent Secured Obligation (after paying
all amounts payable pursuant to the preceding sentence with respect to any
portions thereof that became Non-Contingent Secured Obligations), such remaining
amount shall be applied by the Collateral Agent in the order of priorities set
forth in subsection (A) of this Section.
(C) All distributions made by the Collateral Agent pursuant to this
Section shall be final (except in the event of manifest error) and the
Collateral Agent shall have no duty to inquire as to the application by the
Secured Parties of any amount distributed to them.
SECTION 14. Concerning the Collateral Agent. The provisions of Article
7 of each Credit Agreements shall inure to the benefit of the Collateral Agent
in respect of this Agreement and shall be binding upon the parties to the Credit
Agreements in such respect. In furtherance and not in derogation of the rights,
privileges and immunities of the Collateral Agent therein set forth:
(A) The Collateral Agent is authorized to take all such action as
is provided to be taken by it as Collateral Agent hereunder and all
other
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<PAGE>
action reasonably incidental thereto. As to any matters not expressly
provided for herein (including, without limitation, the timing and
methods of realization upon the Collateral) the Collateral Agent shall
act or refrain from acting in accordance with written instructions from
the Required Lenders or, in the absence of such instructions, in
accordance with its discretion.
(B) The Collateral Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests in any of the Collateral, whether impaired by operation of
law or by reason of any action or omission to act on its part
hereunder. The Collateral Agent shall have no duty to ascertain or
inquire as to the performance or observance of any of the terms of this
Agreement by the Grantor.
SECTION 15. Appointment of Co-Agents. At any time or times, in order to
comply with any legal requirement in any jurisdiction, the Collateral Agent may
appoint another bank or trust company or one or more other persons, either to
act as co-agent or co-agents, jointly with the Collateral Agent, or to act as
separate agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment (which may, in the
discretion of the Collateral Agent, include provisions for the protection of
such co-agent or separate agent similar to the provisions of Section 14).
SECTION 16. Expenses. In the event that a Lien Grantor fails to comply
with the provisions of the Credit Agreements or this Agreement, such that the
value of any Collateral or the validity, perfection, rank or value of any
Security Interest is thereby diminished or potentially diminished or put at
risk, the Collateral Agent if requested by the Required Lenders may, but shall
not be required to, effect such compliance on behalf of such Lien Grantor, and
such Lien Grantor shall reimburse the Collateral Agent for the costs thereof on
demand. All insurance expenses and all expenses of protecting, storing,
warehousing, appraising, insuring, handling, maintaining, and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral, or in respect of
periodic appraisals and inspections of the Collateral to the extent the same may
be requested by the Required Lenders from time to time or in respect of the sale
or other disposition thereof shall be borne and paid by the applicable Lien
Grantor; and if the applicable Lien Grantor fails to promptly pay any portion
thereof when due, the Collateral Agent or any other Secured Party may, at its
option, but shall not be required to, pay the same and charge such Lien
Grantor's account therefor, and such Lien Grantor agrees to reimburse the
Collateral Agent or such other Secured Party therefor on demand. All sums so
paid or incurred by the Collateral Agent or any other Secured Party for any of
the foregoing and any and all other sums for which a Lien Grantor may become
liable
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<PAGE>
hereunder and all costs and expenses (including attorneys' fees, legal expenses
and court costs (including the reasonable allocation of the compensation, costs
and expenses of in-house counsel, based upon time spent)) reasonably incurred by
the Collateral Agent or any other Secured Party in enforcing or protecting the
Security Interests or any of their rights or remedies under this Agreement,
shall, together with interest thereon until paid at the rate applicable to Base
Rate Loans plus 2%, in each case for each day until paid, be additional Secured
Obligations hereunder.
SECTION 17. Termination of Security Interests; Release of Collateral.
(A) When (i) all the Commitments (as defined in either Credit Agreement) shall
have expired or been terminated, (ii) all Letters of Credit shall have expired
or been canceled or been secured with cash collateral in an amount and on terms
satisfactory to the relevant Issuer and (iii) all outstanding Secured
Obligations shall have been paid in full, the Security Interests shall terminate
and all rights to the Collateral shall revert to the Lien Grantor that owns such
item of Collateral.
(B) At any time before the Security Interests terminate pursuant to
subsection (A) of this Section, the Collateral Agent may, upon the written
request of the Borrower, release any of the Collateral with the prior written
consent of the Required Lenders; provided that any release of all or
substantially all of the Collateral (for purposes of this proviso, as defined in
the Credit Agreements) shall require the prior written consent of all the
Lenders.
(C) In addition, so long as no Event of Default shall have occurred and
be continuing, upon the consummation of any sale, exchange, assignment or other
disposition of any asset included in the Collateral (other than any such sale,
exchange, assignment or other disposition to a Subsidiary) that is permitted
under the Credit Agreements, the Security Interests in the Collateral subject to
such transaction (but not any Proceeds arising from such transaction) shall
cease immediately without any further action on the part of the Collateral Agent
or any Lender. The Collateral Agent shall be fully protected in relying on a
certificate of the Borrower certifying that any Asset Sale is permitted by the
terms of the Credit Agreements and that no Event of Default has occurred and is
continuing. Upon any termination of the Security Interests or release of
Collateral in accordance with this Section, the Collateral Agent will, at the
expense of the Borrower, execute and deliver to the applicable Lien Grantor such
documents as such Lien Grantor shall reasonably request to evidence the
termination of the Security Interests or the release of such Collateral, as the
case may be.
SECTION 18. Additional Subsidiary Guarantors. Any Subsidiary of the
Borrower which is not a party hereto may become a party hereto by executing and
delivering to the Collateral Agent a Security Agreement Supplement, whereupon
such Subsidiary shall become a "Subsidiary Guarantor", a "Lien Grantor" and a
party hereto.
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<PAGE>
SECTION 19. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission or
similar writing) and shall be given to such party (i) in the case of any Lien
Grantor, to it at the address, telex number or facsimile number of the Borrower
set forth or referred to in or pursuant to Section 10.01 of the Credit
Agreements or (ii) in the case of any Lender Party, at its address or facsimile
number specified in or pursuant to Section 10.01 of the Credit Agreements. Each
such notice, request or other communication shall be effective in accordance
with Section 10.01 of the Credit Agreements.
SECTION 20. Waivers, Non-Exclusive Remedies. No failure on the part of
the Collateral Agent to exercise, and no delay in exercising and no course of
dealing with respect to, any right under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any Secured Party of any right under the Credit Agreements, this Agreement or
any of the other Loan Documents preclude any other or further exercise thereof
or the exercise of any other right. The rights in this Agreement, the Credit
Agreements and the other Loan Documents are cumulative and are not exclusive of
any other remedies provided by law.
SECTION 21. Successors and Assigns. This Agreement is for the benefit
of the Collateral Agent and the Secured Parties and their successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the indebtedness
so assigned, may be transferred with such indebtedness. This Agreement shall be
binding on the Lien Grantors and their respective successors and assigns.
SECTION 22. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Lien Grantors and the Collateral Agent with the
consent of the Required Lenders.
SECTION 23. New York Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT AS OTHERWISE REQUIRED BY
MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY
THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF
SUCH JURISDICTION.
SECTION 24. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Collateral Agent
and the
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<PAGE>
other Secured Parties in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 25. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TOY BIZ, INC. (to be renamed Marvel
Enterprises, Inc.), as Borrower
By:_____________________________
Name:
Title:
MARVEL ENTERTAINMENT
GROUP, INC., as Subsidiary Guarantor
By:_____________________________
Name:
Title:
THE ASHER CANDY COMPANY, as
Subsidiary Guarantor
By:_____________________________
Name:
Title:
FLEER CORP., as Subsidiary Guarantor
By:_____________________________
Name:
Title:
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<PAGE>
FRANK H. FLEER CORP., as Subsidiary
Guarantor
By:_____________________________
Name:
Title:
HEROES WORLD DISTRIBUTION,
INC. as Subsidiary Guarantor
By:_____________________________
Name:
Title:
MALIBU COMICS ENTERTAINMENT,
INC., as Subsidiary Guarantor
By:_____________________________
Name:
Title:
MARVEL CHARACTERS, INC.
as Subsidiary Guarantor
By:_____________________________
Name:
Title:
MARVEL DIRECT MARKETING, INC.
as Subsidiary Guarantor
By:_____________________________
Name:
Title:
SKYBOX INTERNATIONAL INC.
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<PAGE>
as Subsidiary Guarantor
By:_____________________________
Name:
Title:
MARVEL RESTAURANT VENTURE
CORP., as Subsidiary Guarantor
By:_____________________________
Name:
Title:
MRV, INC., as Subsidiary Guarantor
By:_____________________________
Name:
Title:
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<PAGE>
UBS AG, STAMFORD BRANCH, as
Collateral Agent
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
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<PAGE>
DISCLOSURE SCHEDULE TO SECURITY AGREEMENT
AMONG TOY BIZ, INC
(TO BE RENAMED MARVEL ENTERPRISES, INC.)
THE SUBSIDIARY GUARANTORS PARTY THERETO AND
UBS AG, STAMFORD BRANCH, AS COLLATERAL AGENT
SCHEDULE 1 -- Equity Interests
Toy Biz, Inc. (to be renamed Marvel Enterprises, Inc.)
Marvel Enterprises, Inc.
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<PAGE>
EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, the chief executive officer and chief legal officer of
[Borrower] [Subsidiary Guarantor], a ________ corporation (the "Lien Grantor"),
hereby certify with reference to the Security Agreement dated as of September
28, 1998 among Toy Biz, Inc. (to be renamed Marvel Enterprises, Inc.), the
Subsidiary Guarantors party thereto and UBS AG, New York Branch, as Collateral
Agent (the "Collateral Agent") (terms defined therein being used herein as
therein defined), to the Collateral Agent and each Lender (as defined in either
Credit Agreement) as follows:
(A). Names. (i) The exact corporate name of the Lien Grantor as it
appears in its certificate of incorporation is as follows:
(ii) Set forth below is each other corporate name the Lien Grantor has
had since its organization, together with the date of the relevant change:
(iii) Except as set forth in Schedule 1, the Lien Grantor has not
changed its identity or corporate structure in any way within the past five
years.
(iv) The following is a list of all other names (including trade names
or similar appellations) used by the Lien Grantor or any of its divisions or
other business units at any time during the past five years:
(B). Current Locations. (i) The chief executive office of the Lien
Grantor is located at the following address:
Mailing Address Country State
----------------------------- --------------- -----------------
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<PAGE>
(ii) The following are all the locations where the Lien Grantor
maintains any books or records relating to any Accounts:
Mailing Address Country State
----------------------------- --------------- -----------------
(iii) The following are all the places of business of the Lien Grantor
not identified above:
Mailing Address Country State
----------------------------- --------------- -----------------
(iv) The following are all the locations where the Lien Grantor
maintains any Inventory not identified above:
Mailing Address Country State
----------------------------- --------------- -----------------
(v) The following are the names and addresses of all Persons other than
the Lien Grantor which have possession of any of the Lien Grantor's Inventory:
Mailing Address Country State
----------------------------- --------------- -----------------
(C). Prior Locations. (i) Set forth below is the information required
by paragraphs (B)(i), (B)(ii) and (B)(iii) hereof with respect to each location
or place of business maintained by the Lien Grantor at any time during the past
five years:
Mailing Address Country State
----------------------------- --------------- -----------------
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<PAGE>
(ii) Set forth below is the information required by paragraphs (B)(iv)
and (B)(v) hereof with respect to each location or bailee where or with whom
Inventory has been lodged at any time during the past four months:
(D). Unusual Transactions. All Accounts have been originated by the
Lien Grantor and all Inventory and Equipment has been acquired by the Lien
Grantor in the ordinary course of its business.
(E). UCC Filings. A duly signed financing statement on Form UCC-1 in
substantially the form of Schedule 5(A) hereto has been delivered to the
Collateral Agent for filing in the Uniform Commercial Code filing office in each
jurisdiction identified in paragraph (B) hereof.
(F). Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth filing information with respect to the filings described in
paragraph (E) above.
(G). Filing Fees. All filing fees and taxes payable in connection with
the filings described in paragraph (E) above will be promptly paid.
IN WITNESS WHEREOF, we have hereunto set our hands this ____ day of
________, 1998.
By:_____________________________
Name:
Title:
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<PAGE>
SCHEDULE 5(A)
DESCRIPTION OF COLLATERAL
All accounts, chattel paper, securities, instruments, contract rights,
general intangibles, goods, inventory, equipment, documents and investment
property, now owned or hereafter acquired, wherever located, and all proceeds
thereof.
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<PAGE>
SCHEDULE 6
SCHEDULE OF FILINGS
Grantor Filing Officer File Number Date of Filing 1
------------- ------------------ -------------- --------------------
------------
1 Indicate lapse date, if other than fifth anniversary.
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<PAGE>
EXHIBIT B
FORM OF LOCKBOX LETTER
-------------
[Lockbox Bank]
[Address]
Attention: _____________
Re: [Borrower] [Subsidiary Guarantor]
Ladies and Gentlemen:
We hereby notify you that effective ____________, we have transferred
exclusive ownership and control of our lockbox account No. _________________
(the "Lockbox Account") maintained with you under the terms of the Lockbox
Account Agreement attached hereto as Exhibit A (the "Lockbox Account Agreement")
to UBS AG, Stamford Branch, as Collateral Agent (the "Collateral Agent").
We hereby irrevocably instruct you to make all payments to be made by
you out of or in connection with the Lockbox Account as you may be instructed by
the Collateral Agent.
We also hereby notify you that the Collateral Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lockbox Account, including, without limitation, the right to
specify when payments are to be made out of or in connection with the Lockbox
Account.
All funds deposited into the Lockbox Account will not be subject to
deductions, set-off, banker's lien or any other right in favor of any other
person than the Collateral Agent, except that you may set-off against the
Lockbox Account the face amount of any check deposited in and credited to such
Lockbox Account which is subsequently returned for any reason. Your compensation
for providing the services contemplated herein shall be as mutually agreed
between you and us from time to time and we will continue to pay such
compensation.
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<PAGE>
Please confirm your acknowledgment of and agreement to the foregoing
instructions by signing in the space provided below.
Very truly yours,
[Borrower] [Subsidiary Guarantor]
By:--------------------------------
Name:
Title:
Acknowledged and agreed to
as of this ____ day of _________
[LOCKBOX BANK]
By:-----------------------------------
Name:
Title:
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<PAGE>
EXHIBIT C
to Security Agreement
SECURITY AGREEMENT SUPPLEMENT
SECURITY AGREEMENT SUPPLEMENT dated as of _______, ____, between [name
of Subsidiary Guarantor] (the "New Lien Grantor") and UBS AG, Stamford Branch,
as Collateral Agent.
WHEREAS, Toy Biz, Inc. (to be renamed Marvel Enterprises, Inc.), the
Lien Grantors party thereto and UBS AG, Stamford Branch, as Collateral Agent,
are parties to a Security Agreement dated as of September 28, 1998 (as
heretofore amended, supplemented or otherwise modified, the "Security
Agreement");
WHEREAS, terms defined in the Security Agreement (or whose definitions
are incorporated by reference in Section 1 of the Security Agreement) and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein; and
WHEREAS, [name of New Lien Grantor] desires to become a party to the
Security Agreement as an additional Lien Grantor thereunder;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Security Interest. (a) In order to secure the full and
punctual payment of the Secured Obligations of the New Lien Grantor in
accordance with the terms thereof, the New Lien Grantor grants to the Collateral
Agent for the benefit of the Secured Parties a continuing security interest in
all of the following assets of the New Lien Grantor, whether now owned or
existing or hereafter acquired or arising and regardless of where located (the
"New Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents;
(v) Instruments;
(vi) Equipment;
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<PAGE>
(vii) (x) Equity Interests in any U.S. Person now owned or
hereafter beneficially owned by such New Lien Grantor, (y) the lesser
of all voting Equity Interests in any Foreign Person now owned or
hereafter beneficially acquired by such New Lien Grantor and 65% of all
voting Equity Interests in such Foreign Person held by any Person and
(z) all non-voting Equity Interests in any Foreign Person now owned or
hereafter beneficially acquired by such New Lien Grantor and, in each
case, all rights and privileges of such New Lien Grantor with respect
to such Equity Interests, and all dividends, distributions and other
payments with respect thereto;
(viii) Other Investment Property;
(ix) The Collateral Accounts, all cash deposited therein from time
to time, the Liquid Investments made pursuant to Section 5(F) of the
Security Agreement and other monies and property of any kind of the New
Lien Grantor in the possession or under the control of the Collateral
Agent;
(x) All books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of such New Lien Grantor pertaining to any of
the Collateral; and
(xi) All Proceeds of all or any of the Collateral described in
Clauses 1(A)(i) through 1(A)(ix) hereof.
(b) The Security Interests are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of the New Lien Grantor
with respect to any of the Collateral or any transaction in connection
therewith.
2. Delivery of Collateral. Concurrently with delivering this Security
Agreement Supplement to the Collateral Agent, the New Lien Grantor is complying
with the provisions of Section 4 of the Security Agreement with respect to all
stock certificates and other certificates representing Equity Interests or Other
Pledged Securities (if any) included in the New Collateral and all Instruments
(if any) included in the New Collateral.
3. Party to Security Agreement. Upon delivery of this Security
Agreement Supplement to the Collateral Agent, the New Lien Grantor will become a
party to the Security Agreement and will thereafter have all of the rights and
obligations of a Lien Grantor thereunder and be bound by all of the provisions
thereof as fully as if the New Lien Grantor were one of the original parties
thereto.
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<PAGE>
4. Representations and Warranties. 2 (a) The New Lien Grantor is a
corporation duly incorporated, validly existing and in good standing under the
laws of [jurisdiction of incorporation].
(b) The New Lien Grantor has delivered a Perfection Certificate to the
Collateral Agent. The information set forth therein is correct and complete as
of the date hereof. Within 60 days of the date hereof, the New Lien Grantor
shall furnish to the Collateral Agent file search reports from each UCC filing
office confirming the filing information set forth in such Perfection
Certificate.
(c) The execution and delivery of this Security Agreement Supplement by
the New Lien Grantor and the performance by it of its obligations under
theSecurity Agreement as supplemented hereby are within its corporate or other
powers, have been duly authorized by all necessary corporate or other action,
require no action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of its articles or certificate of
incorporation or by-laws or other constitutive documents, or of any agreement,
judgment, injunction, order, decree or other instrument binding upon it or
result in the creation or imposition of any Lien (other than the Liens created
by the Collateral Documents) on any of its assets.
(d) The Security Agreement as supplemented hereby constitutes a valid
and binding agreement of the New Lien Grantor, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and general principles of equity.
(e) Each of the representations and warranties set forth in Section 2
of the Security Agreement is true and correct as applied to the New Lien Grantor
and the New Collateral.
5. Governing Law. This Security Agreement Supplement shall be construed
in accordance with and governed by the laws of the State of New York.
----------------------
2 Modify as needed for any Subsidiary Guarantor that is not a
corporation.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have cause this Security
Agreement Supplement to be duly executed by their respective authorized officers
as of the day and year first above written.
[Name of New Lien Grantor]
By:___________________________
Name:
Title:
UBS AG, Stamford Branch,
as Collateral Agent
By:___________________________
Name:
Title:
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<PAGE>
SCHEDULE 1
to Security Agreement
Supplement
EQUITY INTERESTS OWNED BY
NEW LIEN GRANTOR
Number of
State of Percentage Shares-or-Units
Name Organization Owner (if certificated)
------------ ----------------- -------------- -------------------
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<PAGE>
EXHIBIT D
to Security Agreement
COPYRIGHT SECURITY AGREEMENT
(Copyrights, Copyright Registrations, Copyright
Applications and Copyright Licenses)
WHEREAS, [Name of Lien Grantor], a _____________ corporation1 (herein
referred to as the "Lien Grantor"), owns, or in the case of licenses is a party
to, the Copyright Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated as of
September 28, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement") among Toy Biz, Inc. (to be renamed Marvel
Enterprises, Inc.), the Subsidiary Guarantors party thereto and UBS AG, Stamford
Branch, as Collateral Agent for the Secured Parties referred to therein (in such
capacity, together with its successors in such capacity, the "Grantee"), the
Lien Grantor has granted to the Grantee for the benefit of such Secured Parties
a continuing security interest in or other Lien on substantially all the
personal property of the Lien Grantor, including all right, title and interest
of the Lien Grantor in, to and under the Copyright Collateral (as defined
below), whether now owned or existing or hereafter acquired or arising, to
secure the Secured Obligations (as defined in the Security Agreement) of the
Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor does hereby grant
to the Grantee, to secure the Secured Obligations of the Lien Grantor, a
continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Copyright Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Copyright (as defined in the Security Agreement) owned by
the Lien Grantor, including, without limitation, each Copyright
registration or application therefor referred to in Schedule 1 hereto;
------------------
1 Modify as needed for any Lien Grantor that is not a corporation.
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<PAGE>
(ii) each Copyright License (as defined in the Security Agreement)
to which the Lien Grantor is a party, including, without limitation,
each Copyright License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from, and accounts and general
intangibles arising out of, the foregoing, including, without
limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future infringement
of any Copyright, including, without limitation, any Copyright owned by
the Lien Grantor referred to in Schedule 1, and all rights and benefits
of the Lien Grantor under any Copyright License, including, without
limitation, any Copyright License identified in Schedule 1 hereto.
The Lien Grantor hereby irrevocably constitutes and appoints the
Grantee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as any Event of Default shall have occurred and be
continuing, to take with respect to the Copyright Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Copyright Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Copyright Security
Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the Credit
Agreements, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the foregoing Copyright Collateral.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor does hereby further acknowledge and affirm
that the rights and remedies of the Grantee with respect to the security
interest in the Copyright Collateral granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
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D-2
<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of _______, ____.
[NAME OF LIEN GRANTOR]
By:_______________________________
Title:
Acknowledged:
UBS AG, Stamford Branch,
as Collateral Agent
By:____________________________
Title:
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<PAGE>
STATE OF ____________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of ---------------,
----.
[Seal]
Signature of notary public
My Commission expires __________
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<PAGE>
Schedule 1
to Copyright
Security Agreement
[NAME OF LIEN GRANTOR]
COPYRIGHT REGISTRATIONS
Registration Registration Expiration
-------------- ---------------- -----------
No. Date Title Date
----- ------ ------- ------
COPYRIGHT LICENSES
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<PAGE>
EXHIBIT E
to Security Agreement
PATENT SECURITY AGREEMENT
(Patents, Patent Applications and Patent Licenses)
WHEREAS, [Name of Lien Grantor], a _____________ corporation 1 (herein
referred to as the "Lien Grantor"), owns, or in the case of licenses is a party
to, the Patent Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated as of
September 28, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Toy Biz, Inc. (to be renamed Marvel Enterprises,
Inc.), the Subsidiary Guarantors party thereto and UBS AG, Stamford Branch, as
Collateral Agent for the Secured Parties referred to therein (in such capacity,
together with its successors in such capacity, the "Grantee"), the Lien Grantor
has granted to the Grantee for the benefit of such Secured Parties a continuing
security interest in or other Lien on substantially all the personal property of
Lien Grantor, including all right, title and interest of the Lien Grantor in, to
and under the Patent Collateral (as defined below), whether now owned or
existing or hereafter acquired or arising, to secure the Secured Obligations (as
defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor does hereby grant
to the Grantee, to secure the Secured Obligations of the Lien Grantor, a
continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Patent Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Patent (as defined in the Security Agreement) owned by
the Lien Grantor, including, without limitation, each Patent referred
to in Schedule 1 hereto;
(ii) each Patent License (as defined in the Security Agreement) to
which the Lien Grantor is a party, including, without limitation, each
Patent License identified in Schedule 1 hereto; and
(iii) all proceeds of and revenues from, and accounts and general
intangibles arising out of, the foregoing, including, without
limitation, all
----------------------------
1 Modify as needed for any Lien Grantor that is not a corporation.
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<PAGE>
proceeds of and revenues from any claim by the Lien Grantor against
third parties for past, present or future infringement of any Patent
owned by the Lien Grantor, including, without limitation, any Patent
referred to in Schedule 1 hereto, and all rights and benefits of the
Lien Grantor under any Patent License, including, without limitation,
any Patent License identified in Schedule 1 hereto.
The Lien Grantor hereby irrevocably constitutes and appoints the
Grantee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as an Event of Default shall have occurred and be
continuing, to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the Patent
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Patent Security Agreement
and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the Credit
Agreements, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the Patent Collateral.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor does hereby further acknowledge and affirm
that the rights and remedies of the Grantee with respect to the security
interest in the Patent Collateral granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
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<PAGE>
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of ____________, ____.
[NAME OF LIEN GRANTOR]
By:_____________________________
Title:
Acknowledged:
UBS AG, Stamford Branch,
as Collateral Agent
By:_________________________
Title:
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<PAGE>
STATE OF __________ )
) ss.:
COUNTY OF __________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of
---------------, ----.
[Seal]
Signature of notary public
My Commission expires __________
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<PAGE>
Schedule 1
to Patent
Security Agreement
[NAME OF LIEN GRANTOR]
PATENTS AND PATENT APPLICATIONS
Issue or Filing
---------------
Patent No. or Date or Expected
------------- ----------------
Country Serial No. Filing Date Inventor Title
---------- ----------- ------------- ---------- -------
PATENT LICENSES
Effective Expiration Subject
--------- ---------- -------
Country Licensor Licensee Date Date Matter
-------- --------- ---------- -------- ------- ------
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<PAGE>
EXHIBIT F
to Security Agreement
TRADEMARK SECURITY AGREEMENT
(Trademarks, Trademark Registrations, Trademark
Applications and Trademark Licenses)
WHEREAS, [Name of Lien Grantor], a _____________ corporation 1 (herein
referred to as the "Lien Grantor"), owns, or in the case of licenses is a party
to, the Trademark Collateral (as defined below);
WHEREAS, pursuant to the terms of the Security Agreement dated as of
September 28, 1998 (as such agreement may be amended from time to time, the
"Security Agreement") among Toy Biz, Inc. (to be renamed Marvel Enterprises,
Inc.), the Subsidiary Guarantors party thereto and UBS AG, Stamford Branch, as
Collateral Agent for the Secured Parties referred to therein (in such capacity,
together with its successors in such capacity, the "Grantee"), the Lien Grantor
has granted to the Grantee for the benefit of such Secured Parties a continuing
security interest in or other Lien on substantially all the personal property of
the Lien Grantor, including all right, title and interest of Lien Grantor in, to
and under the Trademark Collateral (as defined below), whether now owned or
existing or hereafter acquired or arising, to secure the Secured Obligations (as
defined in the Security Agreement) of the Lien Grantor;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor does hereby grant
to the Grantee, to secure the Secured Obligations of the Lien Grantor, a
continuing security interest in all of the Lien Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Trademark Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Trademark (as defined in the Security Agreement) owned by
Lien Grantor, including, without limitation, each Trademark
registration and application referred to in Schedule 1 hereto, and all
of the goodwill of the business connected with the use of, or
symbolized by, each Trademark;
----------------
1 Modify as needed for any Lien Grantor that is not a corporation.
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<PAGE>
(ii) each Trademark License (as defined in the Security Agreement)
to which the Lien Grantor is a party, including, without limitation,
each Trademark License identified in Schedule 1 hereto, and all of the
goodwill of the business connected with the use of, or symbolized by,
each Trademark licensed pursuant thereto; and
(iii) all proceeds of and revenues from, and accounts and general
intangibles arising out of, the foregoing, including, without
limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future unfair
competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any
Trademark owned by the Lien Grantor, including, without limitation, any
Trademark referred to in Schedule 1 hereto, and all rights and benefits
of the Lien Grantor under any Trademark License, including, without
limitation, any Trademark License identified in Schedule 1 hereto, or
for injury to the goodwill associated with any of the foregoing.
The Lien Grantor hereby irrevocably constitutes and appoints the
Grantee and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Lien Grantor or in its name, from time to time, in the Grantee's
discretion, so long as any Event of Default shall have occurred and be
continuing, to take with respect to the Trademark Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Trademark Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Trademark Security
Agreement and to accomplish the purposes hereof.
Except to the extent permitted in the Security Agreement or the Credit
Agreements, the Lien Grantor agrees not to sell, license, exchange, assign or
otherwise transfer or dispose of, or grant any rights with respect to, or
mortgage or otherwise encumber, any of the foregoing Trademark Collateral.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor does hereby further acknowledge and affirm
that the rights and remedies of the Grantee with respect to the security
interest in the Trademark Collateral granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of __________, ____.
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<PAGE>
[NAME OF LIEN GRANTOR]
By:_____________________________
Title:
Acknowledged:
UBS AG, Stamford Branch,
as Collateral Agent
By:_________________________
Title:
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<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ___________ )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of [NAME OF LIEN GRANTOR] (the "Company"), personally known to
me to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of
---------------, ----.
[Seal]
Signature of notary public
My Commission expires __________
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<PAGE>
Schedule 1
to Trademark
Security Agreement
[NAME OF LIEN GRANTOR]
U.S. TRADEMARK REGISTRATIONS
TRADEMARK REG. NO. REG. DATE
U.S. TRADEMARK APPLICATIONS
TRADEMARK REG. NO. REG. DATE
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<PAGE>
EXCLUSIVE TRADEMARK LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
--------- ----------------- ----------- --------