Document/Exhibit Description Pages Size
1: 10-K Annual Report 155 891K
2: EX-3.2 Amended and Restated Bylaws 13 52K
3: EX-4.18 Credit Agreement 164 671K
4: EX-4.19 Credit Agreement 175 682K
5: EX-4.20 Indenture 129 582K
6: EX-4.21 Indenture 89 410K
7: EX-4.24 Pledge Agreement 25 93K
8: EX-4.25 Intercreditor Agreement 68 199K
9: EX-4.26 Intercreditor Agreement 82 189K
10: EX-4.27 Security Agreement 56 224K
11: EX-4.28 Security Agreement 50 193K
12: EX-4.29 Pledge Agreement 27 94K
13: EX-4.30 Security and Pledge Agreement 20 67K
14: EX-4.31 Revolving Credit and Guaranty Agreement 85 326K
15: EX-4.32 First Amendment to Revolving Credit Agreement 6 23K
16: EX-4.33 Second Amendment to Revolving Credit and Guaranty 15 48K
17: EX-4.34 Third Amendment to Revolving Credit and Guaranty 6 20K
18: EX-4.35 Fourth Amendment to Revolving Credit and Guaranty 6 23K
19: EX-4.36 First Preferred Fleet Mortgage 42 141K
20: EX-4.37 First Preferred Fleet Mortgage 42 141K
21: EX-4.38 First Preferred Fleet Mortgage 42 141K
22: EX-10.14 Separation and Termination Agreement 12 56K
23: EX-10.15 Separation and Termination Agreement 4 23K
24: EX-10.17 Release and Waiver of Employment 9 41K
25: EX-10.20 Engagement Letter 7 47K
26: EX-10.25 Tax Sharing Agreement 14 50K
27: EX-10.26 Corporate Services Reimbursement Agreement 6 31K
28: EX-10.28 Credit Agreement 157 576K
29: EX-10.29 Credit Agreement 132 576K
30: EX-10.30 Management Services and Reimbursement Agreement 24 76K
31: EX-23.1 Consent of Independent Accountants 1 11K
32: EX-31.1 Certificate of CEO 2± 15K
33: EX-31.2 Certificate of CFO 2± 15K
34: EX-32.1 Certificate of CEO 1 12K
35: EX-32.2 Certificate of CFO 1 12K
EXHIBIT 4.27
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is dated as of
March __, 2004 and entered into by and among COVANTA ENERGY CORPORATION, a
Delaware corporation ("COVANTA" or "COMPANY"), each of THE OTHER BORROWERS
LISTED ON THE SIGNATURE PAGES HEREOF, and each ADDITIONAL BORROWER that may
become a party hereto after the date hereof in accordance with Section 24 hereof
(each an "ADDITIONAL GRANTOR" and collectively "ADDITIONAL GRANTORS"; Borrowers,
including any Additional Grantors, are sometimes collectively referred to herein
as "GRANTORS" and individually as a "GRANTOR"), and BANK OF AMERICA, N.A., in
its capacity as collateral agent for and representative of the Secured Parties
(as defined in the Intercreditor Agreement referred to below) (the "COLLATERAL
AGENT"). All capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed thereto in the Intercreditor Agreement.
RECITALS
WHEREAS, pursuant to the Credit Agreement dated as of March
__, 2004 (said Credit Agreement or any credit agreement entered into by Detroit
L/C Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness and letters of credit issued thereunder to
the extent permitted pursuant to the New L/C Facility Agreement (as defined
below) and the High Yield Indenture (as defined below), as said Credit Agreement
or any replacement to said Credit Agreement may be amended, restated,
supplemented or otherwise modified from time to time, being the "DETROIT L/C
FACILITY AGREEMENT"), by and among Grantors as borrowers, the financial
institutions from time to time party thereto as lenders (the "DETROIT L/C
LENDERS"), Bank of America, N.A., as administrative agent (the "DETROIT L/C
FACILITY AGENT"), and Deutsche Bank Securities, Inc., as documentation agent for
the Detroit L/C Lenders (in such capacity "DETROIT L/C DOCUMENTATION AGENT," and
together with the Detroit L/C Facility Agent, THE "DETROIT L/C AGENTS"), the
Detroit L/C Lenders have made certain commitments (each, a "DETROIT L/C
COMMITMENT"), subject to the terms and conditions set forth in the Detroit L/C
Facility Agreement, to extend certain letter of credit facilities (each, a
"DETROIT L/C") to Grantors;
WHEREAS, pursuant to the Credit Agreement dated as of March
__, 2004, (said Credit Agreement or any credit agreement entered into by New L/C
Borrowers to refinance, replace, renew or extend, in whole or in part, said
Credit Agreement and the indebtedness and letters of credit issued thereunder to
the extent permitted pursuant to the Detroit L/C Facility Agreement and the High
Yield Indenture, as said Credit Agreement or any replacement to said Credit
Agreement may be amended, restated, supplemented or otherwise modified from time
to time, being the "NEW L/C FACILITY AGREEMENT"), by and among Grantors as
borrowers, the financial institutions listed therein as lenders (the "NEW L/C
LENDERS") and Bank One, NA, as administrative agent for the New L/C Lenders (in
such capacity, the "NEW L/C AGENT," and collectively with the Detroit L/C
Agents, the Detroit L/C Lenders, the High Yield Trustee, the High Yield
Noteholders, the New L/C Lenders and the Cash Management Bank (as defined
below), the "BENEFITED PARTIES"), the New L/C Lenders have made certain
commitments (each, a "NEW L/C COMMITMENT," and together with the Detroit L/C
Commitments, collectively, the "COMMITMENTS"), subject to the terms and
conditions set forth in the New L/C Facility Agreement, to extend certain letter
of credit and revolving credit facilities (each, a "NEW L/C," and together with
the Detroit L/Cs, the "LETTERS OF CREDIT") to the New L/C Borrowers;
WHEREAS, pursuant to the indenture dated as of March __, 2004
(said indenture or any replacement to said indenture entered into in connection
with a refinancing, defeasance, renewal, replacement or extension of the High
Yield Notes (as defined below) permitted under the Detroit L/C Facility
Agreement and New L/C Facility Agreement (as defined below), as said indenture
or replacement to said indenture may be amended, supplemented or otherwise
modified from time to time, being the "HIGH YIELD INDENTURE") by and between
Company and U.S. Bank National Association, in its capacity as trustee (the
"HIGH YIELD TRUSTEE"), Company has issued $205,000,000 in aggregate initial face
principal amount (accruing to $230,000,000 at stated maturity) of its 8.25%
Senior Notes due 2011 (the "HIGH YIELD NOTES");
Security Agreement
1
WHEREAS, Grantors other than the Company (the "HIGH YIELD
GUARANTORS," and together with the Company and the Grantors, each individually a
"LOAN PARTY," and collectively the "LOAN PARTIES") have agreed, in favor of the
holders of the High Yield Notes (the "HIGH YIELD NOTEHOLDERS"), to guarantee the
prompt payment and performance when due of all obligations of Company under the
High Yield Notes on the terms and conditions set forth in the High Yield
Indenture;
WHEREAS, in accordance with the terms of the Credit
Agreements, Borrowers are required to maintain the Cash Management System with
Bank of America (in such capacity, the "CASH MANAGEMENT BANK"), and it is
desired that the Cash Management Obligations be secured hereunder;
WHEREAS, Company, the Detroit L/C Borrowers, the New L/C
Borrowers, DHC, the Detroit L/C Agents, the Detroit L/C Lenders, the High Yield
Trustee for the benefit of the High Yield Noteholders, the New L/C Agent, the
New L/C Lenders, the Cash Management Bank and Collateral Agent have entered into
that certain Intercreditor Agreement dated as of March __, 2004 (as it may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, the "INTERCREDITOR AGREEMENT"), pursuant to which the Detroit L/C Agents,
the Detroit L/C Lenders, the High Yield Trustee for the benefit of the High
Yield Noteholders, the New L/C Agent, the New L/C Lenders and Cash Management
Bank have appointed Collateral Agent, and Collateral Agent has agreed to act, as
collateral agent for the Detroit L/C Agents, the Detroit L/C Lenders, the High
Yield Noteholders, the New L/C Agent , the New L/C Lenders and the Cash
Management Bank hereunder; and
WHEREAS, it is a condition precedent to (i) the extension of
credit by the Detroit L/C Lenders under the Detroit L/C Facility Agreement, (ii)
the effectiveness of the High Yield Indenture and (iii) the extension of credit
by the New L/C Lenders that the Grantors listed on the signature pages hereof
shall have granted the security interest and undertaken the obligations
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises and in order
to induce the Detroit L/C Lenders to make extensions of credit from time to time
under the Detroit L/C Facility Agreement, the New L/C Lenders to make extensions
of credit from time to time under the New L/C Facility Agreement, the High Yield
Noteholders to accept the High Yield Notes issued under the High Yield
Indenture, the Cash Management Bank to provide cash management services to the
Grantors and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, each Grantor hereby agrees with Collateral
Agent as follows:
SECTION 1. GRANT OF SECURITY.
Each Grantor hereby assigns and grants to Collateral Agent a
security interest, subject to the terms of the Intercreditor Agreement
(including, without limitation, the provisions regarding lien priority), in all
of such Grantor's right, title and interest in and to all of such Grantor's
personal property and fixture property of every kind and nature, and all
proceeds and products thereof, in each case whether now or hereafter acquired
and wherever the same may be located, including, without limitation, the
following (the "COLLATERAL"), to secure the obligations as set forth in Section
2 herein except as provided in the penultimate paragraph to this Section 1:
(a) all equipment, in all of its forms, all parts thereof and
all accessions thereto (any and all such equipment, parts and accessions being
the "EQUIPMENT");
(b) all inventory in all of its forms, including but not
limited to (i) all goods held by such Grantor for sale or lease or to be
furnished under contracts of service or so leased or furnished, (ii) all raw
materials, work in process, finished goods, and materials used or consumed in
the manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in such Grantor's
business, (iii) all goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind, and (iv) all goods which are
returned to or repossessed by such Grantor and all accessions thereto and
products thereof (collectively the "INVENTORY") and all negotiable and
non-negotiable documents of title (including without limitation, documents,
warehouse receipts, dock receipts and bills of lading) issued by any Person
covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");
Security Agreement
2
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles, letter-of-credit rights and other rights and
obligations of any kind owned by or owing to such Grantor and all rights in, to
and under all security agreements, leases and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel paper,
documents, instruments, general intangibles, letter-of-credit rights or other
rights and obligations (any and all such accounts, contract rights, chattel
paper, documents, instruments, general intangibles, letter of credit rights and
other rights and obligations being the "ACCOUNTS," and any and all such security
agreements, leases and other contracts being the "RELATED CONTRACTS").
(d) all deposit accounts, including any restricted deposit
accounts established and maintained by Collateral Agent pursuant to Sections 12
and 13 hereof and all the accounts and concentration accounts which constitute
the Cash Management System, together with (i) all amounts on deposit from time
to time in such deposit accounts and (ii) all interest, cash, instruments,
securities and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing (the "DEPOSIT ACCOUNTS");
(e) the "SECURITIES COLLATERAL," which term means:
(i) the shares of stock, partnership interests,
interests in joint ventures, limited liability company
interests and all other equity interests in any other Person,
including all securities convertible into, and rights,
warrants, options and other rights to purchase or otherwise
acquire, any of the foregoing now or hereafter owned by such
Grantor, including those owned on the date hereof and
described on Schedule 1(e)(i), and the certificates or other
instruments representing any of the foregoing and any interest
of such Grantor in the entries on the books of any securities
intermediary pertaining thereto (the "PLEDGED SHARES"), and
all dividends, distributions, returns of capital, cash,
warrants, options, rights, instruments, rights to vote or
manage the business of such Person pursuant to organizational
documents governing the rights and obligations of the
stockholders, partners, members or other owners thereof and
other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such Pledged Shares;
(ii) the indebtedness from time to time owed to such
Grantor by any obligor, and the instruments evidencing such
indebtedness (the "PLEDGED DEBT"), and all interest, cash,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Debt; and
(iii) all other investment property of such Grantor
not otherwise included in this clause (e) or the definition of
Investment Collateral below; provided, however, that the
Securities Collateral shall not include (1) any shares of
stock, partnership interests, interests in joint ventures,
limited liability company interests or other equity interests
of any Subsidiary that was not incorporated or organized under
the laws of the United States, any state thereof or the
District of Columbia (a "FOREIGN SUBSIDIARY") in excess of the
number of shares or other such interests of such issuer
possessing up to but not exceeding 65% of the voting power of
all classes of capital stock or other such interests entitled
to vote of such Foreign Subsidiary, or (2) any shares of
stock, partnership interests, interests in joint ventures,
limited liability company interests or all other equity
interests of those Subsidiaries the pledge of which would
constitute a violation of (A) a valid and enforceable
Contractual Obligation in favor of or for the benefit of a
Person other than Company or any of its Subsidiaries and their
respective Affiliates for which the required consents have not
been obtained, or (B) applicable law affecting such Grantor or
such Subsidiary;
(f) the "INVESTMENT COLLATERAL", which term means:
(i) all securities accounts, including any restricted
securities accounts established and maintained by Collateral
Agent pursuant to Section 14 herein, (ii) all credit balances
held from time to time in such securities accounts, (iii) any
property, including any Financial Assets (as defined in the
UCC) credited to any such securities account by Collateral
Agent and any other property acquired by Collateral Agent as
securities intermediary in exchange for, with proceeds from or
distributions on, or otherwise in respect of any of the
foregoing (any such property an
Security Agreement
3
"INVESTMENT") and any security entitlements, securities
(whether certificated or uncertificated), instruments,
accounts, chattel paper, general intangibles and deposits
representing or evidencing any Investment, and (iv) all
interest, dividends, cash, instruments, securities and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
Investments.
(g) the "INTELLECTUAL PROPERTY COLLATERAL," which term means:
(i) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all
trademarks, service marks, designs, logos, indicia,
tradenames, trade dress, corporate names, company names,
business names, fictitious business names, trade styles and/or
other source and/or business identifiers and applications
pertaining thereto, owned by such Grantor, or hereafter
adopted and used, in its business (including, without
limitation, the trademarks specifically identified in Schedule
1(g)(i), as the same may be amended pursuant hereto from time
to time) (collectively, the "TRADEMARKS"), all registrations
that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in
foreign countries (including, without limitation, the
registrations and applications specifically identified in
Schedule 1(g)(i), as the same may be amended pursuant hereto
from time to time) (the "TRADEMARK REGISTRATIONS"), all common
law and other rights in and to the Trademarks in the United
States and any state thereof and in foreign countries (the
"TRADEMARK RIGHTS"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith
(the "ASSOCIATED GOODWILL");
(ii) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all
patents and patent applications and rights and interests in
patents and patent applications under any domestic or foreign
law that are presently, or in the future may be, owned or held
by such Grantor and all patents and patent applications and
rights, title and interests in patents and patent applications
under any domestic or foreign law that are presently, or in
the future may be, owned by such Grantor in whole or in part
(including, without limitation, the patents and patent
applications listed in Schedule 1(g)(ii)(A), as the same may
be amended pursuant hereto from time to time, but excluding
those listed in Schedule 1(g)(ii)(B)), all rights
corresponding thereto (including, without limitation, the
right, exercisable only upon the occurrence and during the
continuation of an Event of Default, to sue for past, present
and future infringements in the name of such Grantor or in the
name of Collateral Agent, the Detroit L/C Lenders, the High
Yield Noteholders or the New L/C Lenders and/or any other
Benefited Parties), and all re-issues, divisions,
continuations, renewals, extensions and continuations-in-part
thereof (all of the foregoing being collectively referred to
as the "PATENTS"); it being understood that the rights and
interests included in the Intellectual Property Collateral
hereby shall include, without limitation, all rights and
interests pursuant to licensing or other contracts in favor of
such Grantor pertaining to patent applications and patents
presently or in the future owned or used by third parties but,
in the case of third parties which are not Affiliates of such
Grantor, only to the extent permitted by such licensing or
other contracts and, if not so permitted, only with the
consent of such third parties; and
(iii) all rights, title and interest (including
rights acquired pursuant to a license or otherwise) under
copyright in various published and unpublished works of
authorship including, without limitation, computer programs,
computer data bases, other computer software, layouts, trade
dress, drawings, designs, writings, and formulas owned by such
Grantor (including, without limitation, the works listed on
Schedule 1(g)(iii), as the same may be amended pursuant hereto
from time to time) (collectively, the "COPYRIGHTS"), all
copyright registrations issued to such Grantor and
applications for copyright registration that have been or may
hereafter be issued or applied for thereon by such Grantor in
the United States and any state thereof and in foreign
countries (including, without limitation, the registrations
listed on Schedule 1(g)(iii), as the same may be amended
pursuant hereto from time to time) (collectively, the
"COPYRIGHT REGISTRATIONS"), all common law and other rights in
and to the Copyrights in the United States and any state
thereof and in foreign countries including all copyright
licenses (but with respect to
Security Agreement
4
such copyright licenses, only to the extent permitted by such
licensing arrangements) (the "COPYRIGHT RIGHTS"), including,
without limitation, each of the Copyrights, rights, titles and
interests in and to the Copyrights, all derivative works and
other works protectable by copyright, which are presently, or
in the future may be, owned, created (as a work for hire for
the benefit of such Grantor), authored (as a work for hire for
the benefit of such Grantor), or acquired by such Grantor, in
whole or in part, and all Copyright Rights with respect
thereto and all Copyright Registrations therefor, heretofore
or hereafter granted or applied for, and all renewals and
extensions thereof, throughout the world, including all
proceeds thereof (such as, by way of example and not by
limitation, license royalties and proceeds of infringement
suits), the right to renew and extend such Copyright
Registrations and Copyright Rights and to register works
protectable by copyright and the right to sue for past,
present and future infringements of the Copyrights and
Copyright Rights;
(h) all information used or useful or arising from the
business including all goodwill, trade secrets, trade secret rights, know-how,
customer lists, processes of production, ideas, confidential business
information, techniques, processes, formulas, and all other proprietary
information;
(i) all licenses, contracts and agreements, as each such
license, contract and agreement may be amended, restated, supplemented or
otherwise modified from time to time (said agreements, as so amended, restated,
supplemented or otherwise modified, being referred to herein individually as an
"ASSIGNED AGREEMENT" and collectively as the "ASSIGNED AGREEMENTS"), including,
without limitation, (i) all rights of such Grantor to receive moneys due or to
become due under or pursuant to the Assigned Agreements, (ii) all rights of such
Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) all claims of such Grantor for
damages arising out of any breach of or default under the Assigned Agreements,
and (iv) all rights of such Grantor to terminate, amend, supplement, modify or
exercise rights or options under the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder;
(j) to the extent not included in any other paragraph of this
Section 1, each Grantor's commercial tort claims (as defined under Article 9 of
the UCC), potential claims, causes of action and potential causes of action,
including, but not limited to, those listed on Schedule 1(j) (collectively, the
"COMMERCIAL TORT CLAIMS"), and all general intangibles (including, without
limitation, tax refunds, payment intangibles, other rights to payment or
performance, choses in action, software and judgments taken on any rights or
claims included in the Collateral);
(k) all plant fixtures, business fixtures and other fixtures,
and storage and office facilities, and all accessions thereto and products
thereof;
(l) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(m) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance related to the Collateral (whether or not
Collateral Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral. For purposes of this Agreement, the term
"PROCEEDS" includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, (i) in no
event shall the Collateral include, and no Grantor shall be deemed to have
granted a security interest in (x) any of such Grantor's rights or interests in
any license, contract or agreement to which such Grantor is a party or any of
its rights or interests thereunder, to the extent, but only to the extent, that
such a grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under the
provisions of any license, contract or agreement to which such Grantor is a
party on the date hereof (other than to the extent that any such provision would
be rendered ineffective pursuant to the UCC or any other applicable law
(including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such
Security Agreement
5
provision, the Collateral shall include, and such Grantor shall be deemed to
have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Collateral, (y) any real property leasehold, unless a Grantor has executed a
leasehold mortgage or leasehold deed of trust covering such real property
leasehold, or (z) any amounts in Deposit Accounts that are reserves or escrow
arrangements established in accordance with the Approved Plan of Reorganization,
and (ii) in no event shall DSS Environmental, Inc., a New York corporation, be
deemed to have granted a security interest to the Collateral Agent for the
benefit of the High Yield Noteholders.
Each item of Collateral listed in this Section 1 that is
defined in Articles 8 or 9 of the UCC shall also include the meanings set forth
in the UCC, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range
of assets.
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Collateral assigned by each
Grantor is collateral security for, the Secured Obligations.
SECTION 3. GRANTORS REMAIN LIABLE.
Anything contained herein to the contrary notwithstanding, (a)
each Grantor shall remain liable under any contracts, licenses and agreements
included in the Collateral, to the extent set forth therein, to perform all of
its duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by Collateral Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts, licenses and agreements included in the Collateral, and (c)
Collateral Agent shall not have any obligation or liability under any contracts,
licenses, and agreements included in the Collateral by reason of this Agreement,
nor shall Collateral Agent be obligated to perform any of the obligations or
duties of any Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Grantor represents and warrants as follows:
(a) OWNERSHIP OF COLLATERAL. Except as expressly permitted by
the Credit Documents, such Grantor owns the Collateral owned by such Grantor
free and clear of any Lien. Except as expressly permitted by the Credit
Documents and such as may have been filed in favor of Collateral Agent in
connection with this Agreement, no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office.
(b) LOCATIONS OF EQUIPMENT AND INVENTORY. All of the Equipment
and Inventory having a value in excess of $500,000 is, as of the date hereof, or
in the case of an Additional Grantor, the date of the applicable counterpart
entered into pursuant to Section 24 hereof (each, a "COUNTERPART") located at
the places specified in Schedule 4(b), except for Equipment that is temporarily
moved from places specified in Schedule 4(b) to undergo repair or Inventory
which, in the ordinary course of business, is in transit either (i) from a
supplier to a Grantor, (ii) between the locations specified in Schedule 4(b), or
(iii) to customers of a Grantor.
(c) NEGOTIABLE DOCUMENTS OF TITLE. Except as set forth on
Schedule 4(c), no Negotiable Documents of Title are outstanding with respect to
any of the Inventory with a value in excess of $100,000.
(d) OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION.
The chief place of business, the chief executive office and the office where
such Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts are, as of the date hereof, and, except as
described on Schedule 4(d), have been for the four-month period preceding the
date hereof, or, in the case of an Additional Grantor, the date of the
applicable Counterpart, located at the locations described on Schedule 4(d);
such Grantor's type (i.e.,
Security Agreement
6
corporation, limited partnership, etc.) and jurisdiction of organization are
listed on Schedule 4(d); and no Grantor is an unregistered entity.
(e) NAMES. No Grantor (or predecessor by merger or otherwise
of such Grantor) has, within the four-month period preceding the date hereof,
or, in the case of an Additional Grantor, the date of the applicable
Counterpart, had a different name from the name of such Grantor listed on the
signature pages hereof, except the names listed in Schedule 4(e) annexed hereto.
(f) DELIVERY OF CERTAIN COLLATERAL. All certificates or
instruments (excluding checks) evidencing, comprising or representing the
Collateral (including, without limitation, the Securities Collateral) have been
or, when required pursuant to this Agreement will be, delivered to Collateral
Agent duly endorsed or accompanied by duly executed instruments of transfer or
assignment in blank.
(g) SECURITIES COLLATERAL. (i) All of the Pledged Shares
described on Schedule 1(e)(i) have been duly authorized and validly issued in
compliance with all applicable federal and state securities laws and, in the
case of capital stock, are fully paid and non-assessable; (ii) all of the
Pledged Debt issued by Company or any of its Subsidiaries has been duly
authorized, authenticated or issued, and delivered and is the legal, valid and
binding obligation of the issuers thereof and is not in default; (iii) except as
described more fully on Schedule 1(e)(i), the Pledged Shares constitute all of
the issued and outstanding shares of stock or other equity interests of each
issuer thereof (subject to the proviso to Section 1(e)(iii) with respect to
shares of a Foreign Subsidiary), and there are no outstanding warrants, options
or other rights to purchase, or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares, except pursuant to any Contractual
Obligation set forth on Schedule 4(g); (iv) the Pledged Debt issued by Company
or any of its Subsidiaries constitutes all of the issued and outstanding
intercompany indebtedness evidenced by a promissory note; and (v) Schedule
1(e)(i) sets forth all of the Pledged Shares owned by each Grantor on the date
hereof, or in the case of an Additional Grantor, the date of the applicable
Counterpart.
(h) INTELLECTUAL PROPERTY COLLATERAL.
(i) a true and complete list of all Trademark
Registrations and Trademark applications owned, held (whether
pursuant to a license or otherwise) or used by such Grantor,
in whole or in part, is set forth in Schedule 1(g)(i);
(ii) a true and complete list of all Patents owned,
held (whether pursuant to a license or otherwise) or used by
such Grantor, in whole or in part, is set forth in Schedule
1(g)(ii);
(iii) a true and complete list of all Copyright
Registrations and applications for Copyright Registrations
held (whether pursuant to a license or otherwise) by such
Grantor, in whole or in part, is set forth in Schedule
1(g)(iii);
(iv) after reasonable inquiry, such Grantor is not
aware of any pending or threatened claim by any third party
that any of the Intellectual Property Collateral owned, held
or used by such Grantor is invalid or unenforceable; and
(v) except as expressly permitted by each Credit
Document, no effective security interest or other Lien
covering all or any part of the Intellectual Property
Collateral is on file in the United States Patent and
Trademark Office or the United States Copyright Office.
(i) PERFECTION. The security interest in the Collateral is
granted to Collateral Agent on the basis described in Section 2 hereof and
constitutes a valid security interest (except for the security interest
purported to be granted in commercial tort claims other than those listed on
Schedule 1(j)), to the extent the UCC or United States patent, trademark or
copyright statutes are applicable thereto, securing the payment of the
applicable Secured Obligations. Upon (i) the filing of UCC financing statements
naming each Grantor as "debtor," naming Collateral Agent as "secured party" and
describing the Collateral in the filing office with respect to such Grantor set
forth on Schedule 4(i), (ii) in the case of the Securities Collateral consisting
of certificated securities or evidenced by
Security Agreement
7
instruments, delivery of the certificates representing such certificated
securities and delivery of such instruments to Collateral Agent, in each case
duly endorsed or accompanied by duly executed instruments of assignment or
transfer in blank, and (iii) in the case of the Intellectual Property Collateral
listed on Schedules 1g(i), (ii) and (iii) hereto, excluding the Intellectual
Property held under foreign law, in addition to the filing of such UCC financing
statements, the filing of a Grant of Trademark Security Interest, substantially
in the form of Exhibit I, and a Grant of Patent Security Interest, substantially
in the form of Exhibit II, with the United States Patent and Trademark Office
and the filing of a Grant of Copyright Security Interest, substantially in the
form of Exhibit III, with the United States Copyright Office (each such Grant of
Trademark Security Interest, Grant of Patent Security Interest and Grant of
Copyright Security Interest being referred to herein as a "GRANT"), the security
interest in the Collateral referred to in the immediately preceding sentence in
each case will constitute a perfected security interest therein (except for the
security interest purported to be granted in commercial tort claims other than
those listed on Schedule 1(j)), to the extent the UCC or United States patent,
trademark or copyright statutes are applicable thereto, prior to all other Liens
(except for Liens otherwise permitted under any Credit Document to the extent
such Liens are permitted to be senior in priority to the Liens in favor of the
Collateral Agent, the Cash Management Bank, the Detroit L/C Agents and the
Detroit L/C Lenders, the New L/C Agent and the New L/C Lenders or the High Yield
Noteholders, as the case may be), and all filings and other actions in the
United States necessary or desirable to perfect and protect such security
interest have been duly made or taken. In the case of Intellectual Property held
under foreign law, after the occurrence of an Event of Default, all actions
necessary or desirable to perfect and protect such security interest shall be
taken.
(j) COMMERCIAL TORT CLAIMS. Schedule 1(j) identifies with
specificity each claim or cause of action that any Grantor may have, which
arises in tort, for which a related action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration ("PROCEEDING") has been initiated by any Person.
(k) ROLLING STOCK. The rolling stock of the Grantors
(collectively) as of the date hereof has an aggregate book value of less than
$1,500,000.00.
SECTION 5. FURTHER ASSURANCES.
(a) GENERALLY. Each Grantor agrees that from time to time, at
the expense of Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect the security interest granted or purported to be
granted hereby under the UCC or United States patent, trademark or copyright
statutes or to enable Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) at the request of Collateral
Agent, upon the occurrence and continuation of an Event of Default, mark
conspicuously each item of chattel paper included in the Accounts, each Related
Contract and, at the request of Collateral Agent, each of its records pertaining
to the Collateral, with a legend, in form and substance satisfactory to
Collateral Agent, indicating that such Collateral is subject to the security
interest granted hereby, (ii) at the request of Collateral Agent, upon the
occurrence and continuation of an Event of Default, deliver and pledge to
Collateral Agent hereunder all instruments (including checks) and all original
counterparts of chattel paper constituting Collateral, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Collateral Agent, (iii) execute and file such
financing or continuation statements, or amendments thereto, and execute and
deliver such agreements establishing that Collateral Agent has control of
specified items of Collateral and such other instruments or notices, as may be
necessary, or as Collateral Agent may reasonably request, in order to perfect
and preserve the security interest granted or purported to be granted hereby
under the UCC or United States patent, trademark or copyright statutes, (iv)
furnish to Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Collateral Agent may reasonably request, all in
reasonable detail, (v) upon the reasonable request of Collateral Agent, execute
and file with the registrar of motor vehicles or other appropriate authority in
such jurisdiction an application or other document requesting the notation or
other indication of the security interest created hereunder on such certificate
of title or any item of Equipment that is covered by a certificate of title
under a statute of any jurisdiction under the law of which indication of a
security interest on such certificate is required as a condition of perfection
thereof, (vi) at any time during normal business hours, upon reasonable request
by Collateral Agent, exhibit the Collateral in its existing location to, and
allow inspection of the Collateral by, Collateral Agent, or
Security Agreement
8
persons designated by Collateral Agent, (vii) at Collateral Agent's request,
appear in and defend any action or proceeding that may affect such Grantor's
title to, or Collateral Agent's security interest in all or any material part
of, the Collateral, except for Intellectual Property Collateral; provided,
however, that the foregoing exception for Intellectual Property Collateral shall
not apply if such Intellectual Property is of material value as determined by
Collateral Agent in its sole and absolute discretion; (viii) use commercially
reasonable efforts to obtain any necessary consents of third parties to the
assignment and perfection of a security interest to Collateral Agent with
respect to any Collateral, and (ix) at Collateral Agent's reasonable request,
Grantors shall promptly deliver, execute and file any and all documents,
instruments and certificates that Collateral Agent deems necessary or desirable,
and in each case in form and substance satisfactory to Collateral Agent.
Notwithstanding the foregoing sentence, no Grantor shall be required to amend or
otherwise modify the description of the Collateral to provide a description of
any claim or cause of action which arises in tort unless and until a Proceeding
relating to such claim or cause of action has been initiated by any Person. Each
Grantor hereby authorizes Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of any Grantor. Each Grantor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed or authenticated by such Grantor shall be sufficient
authorization to file a financing statement and may be filed as a financing
statement in any and all jurisdictions.
(b) SECURITIES COLLATERAL. Without limiting the generality of
the foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other equity or debt securities required to be
pledged hereunder, immediately (and in any event within five (5) Business Days)
deliver to Collateral Agent a Pledge Supplement, duly executed by such Grantor,
in substantially the form of Exhibit IV (a "PLEDGE SUPPLEMENT"), in respect of
the additional Pledged Shares or Pledged Debt (to the extent issued by Company
or any of its Subsidiaries) to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Supplement to Collateral Agent, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) hereof shall be deemed
to have been made by such Grantor as to the Securities Collateral described in
such Pledge Supplement as of the date thereof. Each Grantor hereby authorizes
Collateral Agent to attach each Pledge Supplement to this Agreement and agrees
that all Pledged Shares or Pledged Debt of such Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of such
Grantor; provided that the failure of any Grantor to execute a Pledge Supplement
with respect to any additional Pledged Shares or Pledged Debt pledged pursuant
to this Agreement shall not impair the security interest of Collateral Agent
therein or otherwise adversely affect the rights and remedies of Collateral
Agent hereunder with respect thereto.
(c) INTELLECTUAL PROPERTY COLLATERAL. Without limiting the
generality of the foregoing Section 5(a), each Grantor shall execute and deliver
to Collateral Agent contemporaneous with its execution and delivery of this
Agreement or a counterpart hereto (i) with respect to all of such Grantor's
Trademark Collateral, a Grant of Trademark Security Interest, substantially in
the form of Exhibit I, (ii) with respect to all of such Grantor's Patent
Collateral, a Grant of Patent Security Interest, substantially in the form of
Exhibit II, and (iii) with respect to all of such Grantor's Copyright
Collateral, a Grant of Copyright Security Interest, substantially in the form of
Exhibit III. In addition, if any Grantor shall hereafter obtain rights to any
new Intellectual Property Collateral or become entitled to the benefit of (i)
any patent application or patent or any reissue, division, continuation,
renewal, extension or continuation-in-part of any Patent or any improvement of
any Patent or (ii) any material Copyright Registration, application for
Copyright Registration or renewals or extension of any material Copyright, then
in any such case, the provisions of this Agreement shall automatically apply
thereto. Each Grantor shall promptly notify Collateral Agent in writing of any
of the foregoing rights acquired by such Grantor after the date hereof and of
(i) any Trademark Registrations issued or application for a Trademark
Registration or application for a Patent made, and (ii) any Copyright
Registrations issued or applications for Copyright Registration made, in any
such case, after the date hereof. Promptly after the filing of an application
for any material (1) Trademark Registration; (2) Patent; or (3) Copyright
Registration, each Grantor shall execute and deliver to Collateral Agent and
record in all places where a Grant is recorded an IP Supplement, substantially
in the form of Exhibit V (an "IP SUPPLEMENT"), pursuant to which such Grantor
shall grant to Collateral Agent a security interest to the extent of its
interest in such Intellectual Property Collateral; provided, if, in the
reasonable judgment of such Grantor, after due inquiry, granting such interest
would result in the grant of a Trademark Registration or Copyright Registration
in the name of Collateral Agent, such Grantor shall give written notice to
Collateral Agent as soon as reasonably practicable and the filing shall instead
be undertaken as soon as practicable but in no case later than immediately
following the grant of the applicable Trademark Registration or Copyright
Registration, as the case may be. Upon delivery to Collateral Agent of an IP
Supplement, Schedules 1(g)(i), 1(g)(ii), and 1(g)(iii) hereto and Schedule A to
each Grant, as
Security Agreement
9
applicable, shall be deemed modified to include reference to any right, title or
interest in any existing Intellectual Property Collateral or any Intellectual
Property Collateral included on Schedule A to such IP Supplement. Each Grantor
hereby authorizes Collateral Agent to modify this Agreement without the
signature or consent of any Grantor by attaching Schedules 1(g)(i), 1(g)(ii),
and 1(g)(iii), as applicable, that have been modified to include such
Intellectual Property Collateral or to delete any reference to any right, title
or interest in any Intellectual Property Collateral in which any Grantor no
longer has or claims any right, title or interest; provided, the failure of any
Grantor to execute an IP Supplement with respect to any additional Intellectual
Property Collateral pledged pursuant to this Agreement shall not impair the
security interest of Collateral Agent therein or otherwise adversely affect the
rights and remedies of Collateral Agent hereunder with respect thereto.
SECTION 6. CERTAIN COVENANTS OF GRANTORS.
Each Grantor shall:
(a) not use or permit any material Collateral under its
control to be used unlawfully or in violation of any provision of this Agreement
or any applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral;
(b) notify Collateral Agent of any change in such Grantor's
name, identity or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of (i)
any change in such Grantor's chief place of business, chief executive office or
offices where such Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts or (ii) reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization, incorporation, formation or "location" of such Grantor under the
UCC;
(d) if Collateral Agent gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes;
(e) except as expressly permitted by each Credit Document, pay
promptly when due all property and other taxes, assessments and governmental
charges or levies imposed upon, and all claims (including claims for labor,
services, materials and supplies) against, the Collateral; provided that no such
tax, assessment, charge, levy or claim need be paid if it is being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as (i) such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor and
(ii) in the case of a tax, assessment, charge, levy or claim which has or may
become a Lien against any of the Collateral, such proceedings conclusively
operate to stay the sale of any portion of the Collateral to satisfy such charge
or claim; provided however, that notwithstanding the foregoing proviso, such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against such Grantor or
any of the Collateral as a result of the failure to make such payment; and
(f) after the date hereof, give Collateral Agent prompt notice
with sufficient particularity of any claim or cause of action of any Grantor
arising in tort and not otherwise identified on Schedule 1(j) relating to a
Proceeding that has been initiated by any Person.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Each Grantor shall:
(a) keep the items of Equipment and Inventory owned by such
Grantor having a value in excess of $500,000 at its main place of business or
the places therefor specified on Schedule 4(b) or, upon 30 days' prior written
notice to Collateral Agent, at such other places in jurisdictions where all
action that may be necessary or desirable, or that Collateral Agent may
reasonably request, in order to perfect and protect the security interest
Security Agreement
10
granted or purported to be granted hereby, or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder, with respect to such
Equipment and Inventory shall have been taken;
(b) promptly furnish to Collateral Agent a statement
respecting any material loss or damage to any of the material Equipment owned by
such Grantor;
(c) keep correct and accurate records of Inventory owned by
such Grantor, in accordance with such Grantor's customary practices;
(d) if any Inventory is in possession or control of any of
such Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $500,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for the
account of Collateral Agent and subject to the instructions of Collateral Agent;
(e) after an Event of Default has occurred and is continuing,
promptly upon the issuance and delivery to such Grantor of any Negotiable
Document of Title, deliver such Negotiable Document of Title to Collateral
Agent; and
(f) at its own expense, maintain insurance with respect to the
Equipment and Inventory in accordance with the terms of the Credit Documents.
SECTION 8. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper in such
Grantor's possession that evidence Accounts, at the locations therefor set forth
on Schedule 4(d) or upon 30 days' prior written notice to Collateral Agent, at
such other location in a jurisdiction where all action that may be necessary, or
that Collateral Agent may reasonably request, in order to perfect and protect
the security interest granted or purported to be granted hereby, or to enable
Collateral Agent to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of Collateral Agent, upon reasonable notice during normal
business hours, to inspect and make abstracts from such records and chattel
paper, and each Grantor agrees to render to Collateral Agent, at Grantor's cost
and expense, such clerical and other assistance as may be reasonably requested
with regard thereto. Promptly upon the reasonable request of Collateral Agent,
each Grantor shall deliver to Collateral Agent complete and correct copies of
each Related Contract.
(b) Each Grantor shall maintain (i) complete records of each
Account, in accordance with its customary business practices, including records
of all payments received, credits granted and merchandise returned, and (ii) all
documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Collateral
Agent's direction, shall take) such action as such Grantor or Collateral Agent
may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however, that Collateral Agent shall
have the right at any time, upon the occurrence and during the continuation of
an Event of Default and upon written notice to such Grantor of its intention to
do so, to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to Collateral Agent and, to the extent such Grantor
is not legally or contractually prohibited from doing so and such contractual
prohibitions are enforceable under applicable law, to direct such account
debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to Collateral Agent, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts have been directed to make payment to remit all
amounts representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Collateral Agent and, upon such notification and at the expense of Grantors, to
enforce collection of any such Accounts and to adjust, settle or compromise the
amount or payment
Security Agreement
11
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice from Collateral Agent referred
to in the proviso to the preceding sentence, (i) all amounts and proceeds
(including checks and other instruments) received by such Grantor in respect of
the Accounts and the Related Contracts shall be received in trust for the
benefit of Collateral Agent hereunder, shall be segregated from other funds of
such Grantor and shall be forthwith paid over or delivered to Collateral Agent
in the same form as so received (with any necessary endorsement) to be held as
cash Collateral and applied as provided by Section 20 hereof, and (ii) such
Grantor shall not adjust, settle or compromise the amount or payment of any
Account, or release wholly or partly any account debtor or obligor thereof, or
allow any credit or discount thereon.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO THE SECURITIES COLLATERAL.
(a) DELIVERY. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Collateral Agent pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to Collateral Agent. Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing such Securities Collateral for certificates or instruments of smaller
or larger denominations. Nothing in this Section 9(a) shall apply to Pledged
Shares held by a Grantor in a Person in whom Borrowers in the aggregate hold
less than 10% (whether in voting power or economic value or both) of the shares
of stock or other equity interests.
(b) COVENANTS. Each Grantor shall (i) not, except as expressly
permitted by each of the Credit Documents, permit any issuer of Pledged Shares
that is a Subsidiary or an Affiliate of any Grantor to merge or consolidate
unless all the outstanding capital stock or other equity interests of the
surviving or resulting Person is, upon such merger or consolidation, pledged
hereunder and no cash, securities or other property is distributed in respect of
the outstanding shares of any other constituent corporation; provided, if the
surviving or resulting Person upon any such merger or consolidation involving an
issuer of Pledged Shares which is a Foreign Subsidiary is a Foreign Subsidiary
then such Grantor shall only be required to pledge outstanding capital stock of
such surviving or resulting Person possessing up to but not exceeding 65% of the
voting power of all classes of capital stock or other equity interests of such
issuer entitled to vote; (ii) to the extent legally able to do so, cause each
issuer of Pledged Shares that is controlled by such Grantor not to issue any
stock, other equity interests or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor or unless such stock, equity interests or securities received by the
Grantor are pledged hereunder; (iii) pledge hereunder, and deliver to Collateral
Agent as soon as practicable (but in no event later than three Business Days)
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock, other equity interests or other securities of each issuer of
Pledged Shares; (iv) pledge hereunder, and deliver to Collateral Agent as soon
as practicable (but in no event later than three Business Days) upon its
acquisition (directly or indirectly) thereof, any and all shares of stock or
other equity interests of any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a direct Subsidiary of such Grantor;
provided that, notwithstanding anything contained in this clause (iv) to the
contrary, such Grantor shall only be required to pledge the outstanding capital
stock or other equity interests of a Foreign Subsidiary up to but not exceeding
65% of the voting power of all classes of capital stock or other equity
interests of such Foreign Subsidiary entitled to vote; (v) pledge hereunder, as
soon as practicable (but in no event later than five Business Days) upon their
issuance, any and all instruments or other evidences of additional indebtedness
from time to time owed to such Grantor by any obligor on the Pledged Debt (to
the extent issued by Company or any of its Subsidiaries); (vi) pledge hereunder,
as soon as practicable (but in no event later than five Business Days) upon
their issuance, any and all instruments or other evidences of indebtedness from
time to time owed to such Grantor by any Person that after the date of this
Agreement becomes, as a result of any occurrence, a direct or indirect
Subsidiary of such Grantor; and (vii) at the request of Collateral Agent,
promptly execute and deliver to Collateral Agent an agreement providing for the
control, as that term is defined in the UCC, by Collateral Agent of all
securities entitlements and securities accounts of such Grantor; provided,
however, that nothing in this Section 9(b) shall be construed as a waiver of the
prohibitions and restrictions on the Grantors with respect to investments as set
forth in any applicable Credit Document.
(c) VOTING AND DISTRIBUTIONS. So long as no Event of Default
shall have occurred and be continuing, (i) each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement, the
Security Agreement
12
Detroit L/C Facility Agreement, the New L/C Facility Agreement or the High Yield
Indenture; provided, no Grantor shall exercise or refrain from exercising any
such right if Collateral Agent shall have notified such Grantor that, in
Collateral Agent's judgment, such action would have a material adverse effect on
the value of the Securities Collateral or any part thereof; and provided
further, such Grantor shall give Collateral Agent at least five Business Days'
prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right if exercising, or
refraining from exercising, such right would reasonably be expected to have a
material adverse effect on the value of the Securities Collateral or any part
thereof (it being understood, however, that neither (among other things) (A) the
voting by such Grantor of any Pledged Shares for or such Grantor's consent to
the election of directors or other members of a governing body of an issuer of
Pledged Shares at a regularly scheduled annual or other meeting of stockholders
or holders of equity interests or with respect to incidental matters at any such
meeting, nor (B) such Grantor's consent to or approval of any action otherwise
permitted under this Agreement, the Detroit L/C Facility Agreement, the New L/C
Facility Agreement or the High Yield Indenture shall be deemed inconsistent with
the terms of this Agreement, the Detroit L/C Facility Agreement, the New L/C
Facility Agreement or the High Yield Indenture, respectively, within the meaning
of this Section 9(c), and no notice of any such voting or consent need be given
to Collateral Agent) and (ii) each Grantor shall be entitled to receive and
retain, and to utilize any and all dividends, other distributions and interest
paid in respect of the Securities Collateral to the extent permitted under the
Credit Documents; provided, that except as otherwise provided in the Credit
Documents, any and all (A) dividends, distributions and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Securities Collateral, (B) dividends and other distributions paid or payable in
cash in respect of any Securities Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange for any
Securities Collateral, shall be, and shall forthwith be delivered to Collateral
Agent to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Collateral Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Collateral
Agent as Securities Collateral in the same form as so received (with all
necessary endorsements).
Upon the occurrence and during the continuation of an Event of
Default, (x) all rights of such Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
hereto shall cease, and all such rights shall thereupon become vested in
Collateral Agent who shall thereupon have the sole right to exercise such voting
and other consensual rights; (y) all rights of such Grantor to receive the
dividends, other distributions and interest payments which it would otherwise be
authorized to receive and retain pursuant hereto shall cease, and all such
rights shall thereupon become vested in Collateral Agent who shall thereupon
have the sole right to receive and hold as Securities Collateral such dividends,
other distributions and interest payments; and (z) all dividends, principal,
interest payments and other distributions which are received by such Grantor
contrary to the provisions of clause (ii) of the immediately preceding paragraph
or clause (y) above shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of such Grantor and shall forthwith
be paid over to Collateral Agent as Securities Collateral in the same form as so
received (with any necessary endorsements).
(d) IRREVOCABLE PROXY. In order to permit Collateral Agent to
exercise the voting and other consensual rights which it may be entitled to
exercise pursuant hereto and to receive all dividends, principal or interest
payments and other distributions which it may be entitled to receive hereunder,
(I) each Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to Collateral Agent all such proxies, dividend payment orders and
other instruments as Collateral Agent may from time to time request, and (II)
without limiting the effect of clause (I) above, each Grantor hereby grants to
Collateral Agent an IRREVOCABLE PROXY to vote the Pledged Shares and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Shares would be entitled (including giving or withholding written
consents of shareholders or other holders of equity interests, calling special
meetings of shareholders or other holders of equity interests and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Shares on the
record books of the issuer thereof) by any other Person (including the issuer of
the Pledged Shares or any officer or agent thereof), upon the occurrence and
during the continuance of an Event of Default and which proxy shall only
terminate upon the Payment in Full of all Secured Obligations.
SECTION 10. SPECIAL COVENANTS WITH RESPECT TO THE INTELLECTUAL PROPERTY
COLLATERAL.
Security Agreement
13
(a) Each Grantor shall:
(i) use commercially reasonable efforts so as not to
permit the inclusion in any contract to which it hereafter
becomes a party of any provision that could or might in any
way impair or prevent the creation of a security interest in,
or the assignment of, such Grantor's rights and interests in
any property that is material Intellectual Property Collateral
acquired under such contracts; and
(ii) furnish to Collateral Agent from time to time at
Collateral Agent's reasonable request statements and schedules
further identifying and describing any material Intellectual
Property Collateral and such other reports in connection with
such Collateral, all in reasonable detail.
(b) Except as otherwise provided in this Section 10, each
Grantor shall continue to collect in accordance with its customary business
practice, at its own expense, all amounts due or to become due to such Grantor
in respect of the material Intellectual Property Collateral or any portion
thereof. In connection with such collections, each Grantor may take (and, after
the occurrence and during the continuance of any Event of Default at Collateral
Agent's reasonable direction, shall take) such action as such Grantor or
Collateral Agent may deem reasonably necessary or advisable to enforce
collection of such amounts; provided, Collateral Agent shall have the right (but
not the obligation) at any time, upon the occurrence and during the continuation
of an Event of Default, to notify the obligors with respect to any such amounts
of the existence of the security interest created hereby and to direct such
obligors to make payment of all such amounts directly to Collateral Agent, and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such amounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. Upon the occurrence and during the continuation of any Event of Default,
(i) all amounts and proceeds (including checks and other instruments) received
by each Grantor in respect of amounts due to such Grantor in respect of the
Intellectual Property Collateral or any portion thereof shall be received in
trust for the benefit of Collateral Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over or delivered to
Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as provided by Section 20
herein, and (ii) such Grantor shall not adjust, settle or compromise the amount
or payment of any such amount or release wholly or partly any obligor with
respect thereto or allow any credit or discount thereon.
(c) Each Grantor shall give Collateral Agent 10 Business Days
prior written notice of any abandonment of any material Intellectual Property
Collateral (it being understood that no such notice needs to be given by such
Grantor of the abandonment of non-material Intellectual Property) or any pending
patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution, misappropriation or other
damage, or reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Each Grantor shall promptly, following its
becoming aware thereof, notify Collateral Agent of the institution of, or of any
adverse determination in, any proceeding (whether in the United States Patent
and Trademark Office, the United States Copyright Office or any federal, state,
local or foreign court) regarding such Grantor's ownership, right to use, or
interest in any material Intellectual Property Collateral. Each Grantor shall
provide to Collateral Agent any information with respect thereto requested by
Collateral Agent.
(e) In addition to, and not by way of limitation of, the
granting of a security interest in the Collateral pursuant hereto, each Grantor,
effective upon the occurrence and during the continuation of an Event of
Default, hereby assigns, transfers and conveys to Collateral Agent the
nonexclusive right and license to use all trademarks, tradenames, copyrights,
patents or technical processes (including, without limitation, the Intellectual
Property Collateral) owned or used by such Grantor that relate to the Collateral
and any other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable Collateral Agent to realize on the Collateral in accordance
with this Agreement and to enable any transferee or assignee of the Collateral
to enjoy the benefits of the Collateral. This right shall inure to the
Security Agreement
14
benefit of all successors, assigns and transferees of Collateral Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation
of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license shall be granted free of charge, without
requirement that any monetary payment whatsoever be made to such Grantor.
SECTION 11. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED AGREEMENTS.
(a) Each Grantor shall at its expense:
(i) if consistent with sound business practices,
perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the
Assigned Agreements in accordance with such Grantor's
customary business practice; and
(ii) after the occurrence and during the continuation
of an Event of Default and upon the request of Collateral
Agent, furnish to Collateral Agent, promptly upon receipt
thereof, copies of all notices, requests and other material
documents received by such Grantor under or pursuant to the
Assigned Agreements, and from time to time (A) furnish to
Collateral Agent such information and reports regarding the
Assigned Agreements as Collateral Agent may reasonably request
and (B) upon request of Collateral Agent make to the parties
to such Assigned Agreements such demands and requests for
information and reports or for action as such Grantor is
entitled to make under the Assigned Agreements.
(b) Upon the occurrence and during the continuance of an Event
of Default, no Grantor shall:
(i) cancel or terminate any of the Assigned
Agreements or consent to or accept any cancellation or
termination thereof;
(ii) amend or otherwise modify the Assigned
Agreements or give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the
Assigned Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned
Agreements, except as expressly provided therein; or
(v) take any other action in connection with the
Assigned Agreements that could reasonably be expected to
materially impair the value of the interest or rights of such
Grantor thereunder or that could reasonably be expected to
materially impair the interest or rights of Collateral Agent.
SECTION 12. DETROIT L/C COLLATERAL ACCOUNT.
(a) Collateral Agent is hereby authorized to establish and
maintain, as a blocked account in the name of the Company and under the sole
dominion and control of Collateral Agent a restricted Deposit Account designated
as "Covanta Energy Corporation/Detroit L/C Collateral Account" (hereinafter
referred to as the "DETROIT L/C COLLATERAL ACCOUNT"). The Company hereby
acknowledges and the Company and Collateral Agent hereby agree that the dominion
and control exercised by the Collateral Agent in respect of the Detroit L/C
Collateral Account shall constitute control for the purposes Section 9-104 of
the UCC.
(b) All funds to be applied in respect of the Detroit L/C
Obligations pursuant to Sections 4.1 and 4.2 of the Intercreditor Agreement
shall be deposited into the Detroit L/C Collateral Account. Funds deposited into
the Detroit L/C Collateral Account shall not be withdrawn or transferred except
as set forth in clause (c) below, and as otherwise set forth in, and in
accordance with, the Intercreditor Agreement. Each of the parties hereto hereby
Security Agreement
15
acknowledges that amounts on deposit in the Detroit L/C Collateral Account shall
be released from time to time in accordance with the Intercreditor Agreement.
(c) If an Event of Default (as defined in the Detroit L/C
Facility Agreement) has occurred and is continuing and, in accordance with
Section 8 of the Detroit L/C Facility Agreement, the Grantors are required to
pay to Collateral Agent an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to
105% of the maximum amount that may at any time be drawn under all Detroit L/Cs
then outstanding under the Detroit L/C Facility Agreement, the Grantors shall
deliver funds in such an amount for deposit in the Detroit L/C Collateral
Account. If for any reason the aggregate amount delivered by the Grantors for
deposit in the Detroit L/C Collateral Account as aforesaid is less than the
Aggregate Available Amount, the aggregate amount so delivered by Company shall
be apportioned among all outstanding Detroit L/Cs for purposes of this clause
(c) in accordance with the ratio of the maximum amount available for drawing
under each such Detroit L/C (as to such Detroit L/C, the "MAXIMUM AVAILABLE
AMOUNT") to the Aggregate Available Amount. Upon any drawing under any
outstanding Detroit L/C, Collateral Agent may apply the amount apportioned to
such Detroit L/C to reimburse the Detroit L/C Lender that issued such Detroit
L/C for the amount of such drawing. In the event of cancellation or expiration
of any Detroit L/C in respect of which Company has deposited in the Detroit L/C
Collateral Account any amounts described above, or in the event of any reduction
in the Maximum Available Amount under such Detroit L/C, Collateral Agent shall
apply the amount then on deposit in the Detroit L/C Collateral Account in
respect of such Detroit L/C (less, in the case of such a reduction, the Maximum
Available Amount under such Detroit L/C immediately after such reduction),
first, to the cash collateralization pursuant to the terms of this Agreement of
any outstanding Detroit L/Cs in respect of which the Grantors have failed to pay
all or a portion of the amounts described above (such cash collateralization to
be apportioned among all such Detroit L/Cs in the manner described above),
second, to the extent of any excess, to the payment of any other outstanding
Detroit L/C Obligations, third, to the extent of any further excess, to the
payment of any other outstanding Secured Obligations in accordance with Section
20 hereof and fourth, to the extent of any further excess, to the payment to
whomsoever shall be lawfully entitled to receive such funds.
SECTION 13. NEW L/C COLLATERAL ACCOUNT.
(a) Collateral Agent is hereby authorized to establish and
maintain, as a blocked account in the name of the Company and under the sole
dominion and control of Collateral Agent a restricted Deposit Account designated
as "Covanta Energy Corporation/New L/C Collateral Account" (hereinafter referred
to as the "NEW L/C COLLATERAL ACCOUNT"). The Company hereby acknowledges and the
Company and Collateral Agent hereby agree that the dominion and control
exercised by the Collateral Agent in respect of the New L/C Collateral Account
shall constitute control for the purposes Section 9-104 of the UCC.
(b) All funds to be applied in respect of the New L/C
Obligations pursuant to Sections 4.1 and 4.2 of the Intercreditor Agreement
shall be deposited into the New L/C Collateral Account. Funds deposited into the
New L/C Collateral Account shall not be withdrawn or transferred except as set
forth in clause (c) below, and as otherwise set forth in, and in accordance
with, the Intercreditor Agreement. Each of the parties hereto hereby
acknowledges that amounts on deposit in the New L/C Collateral Account shall be
released from time to time in accordance with the Intercreditor Agreement.
(c) If an Event of Default (as defined in the New L/C Facility
Agreement) has occurred and is continuing and, in accordance with Section 8 of
the New L/C Facility Agreement, the Grantors are required to pay to Collateral
Agent an amount (the "NEW L/C AGGREGATE AVAILABLE AMOUNT") equal to 105% of the
maximum amount that may at any time be drawn under all New L/Cs then outstanding
under the New L/C Facility Agreement, the Grantors shall deliver funds in such
an amount for deposit in the New L/C Collateral Account. If for any reason the
aggregate amount delivered by the Grantors for deposit in the New L/C Collateral
Account as aforesaid is less than the New L/C Aggregate Available Amount, the
aggregate amount so delivered by Company shall be apportioned among all
outstanding New L/Cs for purposes of this clause (c) in accordance with the
ratio of the aggregate maximum amount available for drawing under each such New
L/C (as to such New L/C, the "NEW L/C MAXIMUM AVAILABLE AMOUNT") to the New L/C
Aggregate Available Amount. Upon any drawing under any outstanding New L/C,
Collateral Agent may apply the amount apportioned to such New L/C to reimburse
the New L/C Lender that issued such New L/C for the amount of such drawing. In
the event of cancellation or expiration of any New L/C in respect of which
Company has deposited in the New L/C Collateral Account any amounts described
above, or in the event of any reduction in the New L/C Maximum Available Amount
under such New L/C, Collateral Agent shall apply the amount then on deposit in
the New L/C Collateral Account in respect of such New L/C (less, in the case of
such a reduction, the New L/C Maximum Available Amount under such New L/C
Security Agreement
16
immediately after such reduction), first, to the cash collateralization pursuant
to the terms of this Agreement of any outstanding New L/Cs in respect of which
the Grantors have failed to pay all or a portion of the amounts described above
(such cash collateralization to be apportioned among all such New L/Cs in the
manner described above), second, to the extent of any excess, to the payment of
any other outstanding New L/C Obligations, third, to the extent of any further
excess, to the payment of any other outstanding Secured Obligations in
accordance with Section 20 hereof and fourth, to the extent of any further
excess, to the payment to whomsoever shall be lawfully entitled to receive such
funds.
SECTION 14. SPECIAL PROVISIONS WITH RESPECT TO THE COLLATERAL ACCOUNTS.
Collateral Agent is hereby authorized to establish and
maintain at its offices restricted deposit accounts and restricted securities
accounts which shall be in the names of Grantors, jointly or each individually,
and under the sole dominion and control of Collateral Agent. Each Grantor agrees
that from time to time, at the expense of Grantors, such Grantor will promptly
execute and deliver account control agreements in form and substance
satisfactory to Collateral Agent and take all further action that may be
necessary or desirable, or that Collateral Agent may reasonably request, in
order to perfect and protect the security interest granted or purported to be
granted hereby in such accounts or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any such accounts.
SECTION 15. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints Collateral Agent as
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor, Collateral Agent or otherwise,
from time to time in Collateral Agent's discretion to take any action and to
execute any instrument that Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) upon the occurrence and during the continuance of an Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Collateral Agent pursuant to Section 7 hereof;
(b) upon the occurrence and during the continuance of an Event
of Default, to ask for, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(c) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Collateral Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of Collateral Agent with
respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or each of the Credit Documents) levied or placed
upon the Collateral, the legality or validity thereof and the amounts necessary
to discharge the same to be determined by Collateral Agent in its sole
discretion, any such payments made by Collateral Agent to become obligations of
such Grantor to Collateral Agent, due and payable immediately without demand;
(f) upon the occurrence and during the continuance of an Event
of Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
Security Agreement
17
(g) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Collateral Agent were the absolute owner thereof for all purposes, and to
do, at Collateral Agent's option and Grantors' expense, at any time or from time
to time, all acts and things that Collateral Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and Collateral Agent's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
SECTION 16. COLLATERAL AGENT MAY PERFORM.
If any Grantor fails to perform any agreement contained
herein, Collateral Agent may itself perform, or cause performance of (but shall
not be obligated to perform or cause the performance of), such agreement, and
the expenses of Collateral Agent incurred in connection therewith shall be
payable by Grantors under Section 21(b) hereof.
SECTION 17. STANDARD OF CARE.
The powers conferred on Collateral Agent hereunder are solely
to protect its interest in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Collateral Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its own
property.
SECTION 18. REMEDIES.
(a) GENERALLY. Subject to the terms of the Intercreditor
Agreement, if any Event of Default shall have occurred and be continuing,
Collateral Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Collateral), and also may (i) require each
Grantor to, and each Grantor hereby agrees that it will at its expense and upon
request of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent reasonably deems appropriate, (iv) take possession
of any Grantor's premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of such Grantor's equipment for
the purpose of completing any work in process, taking any actions described in
the preceding clause (iii) and collecting any Secured Obligation, (v) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as Collateral Agent may
deem commercially reasonable, (vi) exercise dominion and control over and refuse
to permit further withdrawals from any Deposit Account maintained with
Collateral Agent or any Benefited Party and provide instructions directing the
disposition of funds in Deposit Accounts not maintained with Collateral Agent or
any Benefited Party and (vii) provide entitlement orders with respect to
securities entitlements and other investment property constituting a part of the
Collateral and with notice to the relevant Grantor, transfer to or register in
the name of Collateral Agent or any of its nominees any or all of the Securities
Collateral. Collateral Agent or any Benefited Party (subject to the terms of the
Intercreditor Agreement) may be the purchaser of any or all of the Collateral at
any such sale and Collateral Agent, as agent for and representative of the
Benefited Parties (but not any Benefited Party in its individual capacity unless
Requisite Obligees shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of
Security Agreement
18
law or statute now existing or hereafter enacted. Each Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days' notice to
such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. To the extent permitted by applicable
law, each Grantor hereby waives any claims against Collateral Agent arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Collateral Agent accepts the first offer received and does
not offer such Collateral to more than one offeree. If the proceeds of any sale
or other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantors shall be jointly and severally liable for the deficiency
and the fees of any attorneys employed by Collateral Agent to collect such
deficiency. Each Grantor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to Collateral Agent,
that Collateral Agent has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against such Grantor, and each Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has occurred
giving rise to the Secured Obligations becoming due and payable prior to their
stated maturities.
(b) SECURITIES COLLATERAL.
(i) Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act and
applicable state securities laws, Collateral Agent may be
compelled, with respect to any sale of all or any part of the
Securities Collateral conducted without prior registration or
qualification of such Securities Collateral under the
Securities Act and/or such state securities laws, to limit
purchasers to those who will agree, among other things, to
acquire the Securities Collateral for their own account, for
investment and not with a view to the distribution or resale
thereof. Each Grantor acknowledges that any such private sales
may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions
(including a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding such
circumstances and the registration rights granted to
Collateral Agent by such Grantor pursuant hereto and
notwithstanding the provisions of Section 9-610(c) of the UCC,
which each Grantor hereby waives to the extent permitted by
applicable law, each Grantor agrees that any such private sale
shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of
any Securities Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would,
or should, agree to so register it. If Collateral Agent
determines to exercise its right to sell any or all of the
Securities Collateral, upon written request, each Grantor
shall and shall cause each issuer of any Pledged Shares to be
sold hereunder from time to time to furnish to Collateral
Agent all such information as Collateral Agent may request in
order to determine the number of shares and other instruments
included in the Securities Collateral which may be sold by
Collateral Agent in exempt transactions under the Securities
Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to
time in effect and to otherwise comply with the Securities Act
and such rules and regulations in connection with such sale.
(ii) If Collateral Agent shall determine to exercise
its right to sell all or any of the Securities Collateral
pursuant to this Section, each Grantor agrees that, upon
request of Collateral Agent (which request may be made by
Collateral Agent in its sole discretion), such Grantor will,
at its own expense (A) execute and deliver, and cause each
issuer of the Securities Collateral contemplated to be sold
and the directors and officers thereof to execute and deliver,
all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the
opinion of Collateral Agent, advisable to register such
Securities Collateral under the provisions of the Securities
Act and to cause the registration statement relating thereto
to become effective and to remain effective for such period as
prospectuses are required by law to be
Security Agreement
19
furnished, and to make all amendments and supplements thereto
and to the related prospectus which, in the opinion of
Collateral Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange
Commission applicable thereto; (B) use its best efforts to
qualify the Securities Collateral under all applicable state
securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Securities
Collateral, as requested by Collateral Agent; (C) cause each
such issuer to make available to its security holders, as soon
as practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act; (D) do or
cause to be done all such other acts and things as may be
necessary to make such sale of the Securities Collateral or
any part thereof valid and binding and in compliance with
applicable law; and (E) bear all costs and expenses, including
reasonable attorneys' fees, of carrying out its obligations
under this Section.
(iii) Without limiting the generality of those
provisions of the Detroit L/C Facility Agreement (or any
successor provisions thereto), the New L/C Facility Agreement
(or any successor provisions thereto) and the High Yield
Indenture (or any successor provisions thereto) that require
one or more of the Grantors to reimburse expenses of or
indemnify the Collateral Agent or any Benefited Party in the
event of any public sale described herein, each Grantor agrees
to indemnify and hold harmless Collateral Agent and the
Benefited Parties and each of their respective directors,
officers, employees and agents from and against any loss, fee,
cost, expense, damage, liability or claim, joint or several,
to which any such Persons may become subject or for which any
of them may be liable, under the Securities Act or otherwise,
insofar as such losses, fees, costs, expenses, damages,
liabilities or claims (or any litigation commenced or
threatened in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, registration
statement, prospectus or other such document published or
filed in connection with such public sale, or any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse
Collateral Agent and such other Persons for any legal or other
expenses reasonably incurred by Collateral Agent and such
other Persons in connection with any litigation, of any nature
whatsoever, commenced or threatened in respect thereof
(including any and all fees, costs and expenses whatsoever
reasonably incurred by Collateral Agent and such other Persons
and counsel for Collateral Agent and such other Persons in
investigating, preparing for, defending against or providing
evidence, producing documents or taking any other action in
respect of, any such commenced or threatened litigation or any
claims asserted). This indemnity shall be in addition to any
liability which any Grantor may otherwise have and shall
extend upon the same terms and conditions to each Person, if
any, that controls Collateral Agent or such Persons within the
meaning of the Securities Act.
(c) REMEDIES WITH RESPECT TO BORROWERS. Furthermore, upon the
occurrence and during the continuance of any Event of Default, Collateral Agent
may revoke each Grantor's rights to use cash collateral in which Collateral
Agent has an interest; provided that, any other provision of this Agreement or
any other Credit Document to the contrary notwithstanding, with respect to the
foregoing, Collateral Agent shall give each Loan Party five Business Days prior
written notice (which notice shall be delivered by facsimile or overnight
courier) of the exercise of its rights and remedies with respect to the
Collateral. The enumeration of the foregoing rights and remedies is not intended
to be exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative and
not alternative. Each Grantor hereby waives (i) presentment, demand and protest
and notice of presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties or other
property at any time held by Collateral Agent and any Benefited Party on which
Loan Parties may in any way be liable and hereby ratify and confirm whatever
Collateral Agent and the Benefited Parties may lawfully do in this regard, (ii)
subject to the notice provisions of the preceding paragraph, all rights to
notice and hearing prior to Collateral Agent's taking possession or control of,
or to the reply of Collateral Agent or any Benefited Party, attachment or levy
upon, the Collateral, or any bond or security which might be required by any
court prior to allowing Collateral Agent or any Benefited Party to exercise any
of their remedies, and (iii) the benefit of all
Security Agreement
20
valuation, appraisal and exemption laws. Each Grantor acknowledges they have
been advised by counsel of their choice with respect to the effect of the
foregoing waivers and this Agreement, the Credit Documents and the transactions
evidenced by this Agreement and the Credit Documents.
SECTION 19. ADDITIONAL REMEDIES FOR INTELLECTUAL PROPERTY COLLATERAL.
(a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, (i)
Collateral Agent shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, Collateral Agent or otherwise, to enforce any
Intellectual Property Collateral, in which event each Grantor shall, at the
request of Collateral Agent, do any and all lawful acts and execute any and all
documents required by Collateral Agent in aid of such enforcement and each
Grantor shall promptly, upon demand, reimburse and indemnify Collateral Agent as
provided in those provisions of the Detroit L/C Facility Agreement (or any
successor provisions thereto), the New L/C Facility Agreement (or any successor
provisions thereto) and the High Yield Indenture (or any successor provisions
thereto) that require one or more of the Grantors to reimburse expenses of or
indemnify the Collateral Agent or the Benefited Parties and as provided in
Section 21 hereof, as applicable, in connection with the exercise of its rights
under this Section, and, to the extent that Collateral Agent shall elect not to
bring suit to enforce any Intellectual Property Collateral as provided in this
Section, each Grantor agrees to use all reasonable measures, whether by action,
suit, proceeding or otherwise, to prevent the infringement of any of the
Intellectual Property Collateral by others and for that purpose agrees to use
its commercially reasonable judgment in maintaining any action, suit or
proceeding against any Person so infringing reasonably necessary to prevent such
infringement; (ii) upon written demand from Collateral Agent, each Grantor shall
execute and deliver to Collateral Agent an assignment or assignments of the
Intellectual Property Collateral and such other documents as are necessary or
appropriate to carry out the intent and purposes of this Agreement; (iii) each
Grantor agrees that such an assignment and/or recording shall be applied to
reduce the Secured Obligations outstanding only to the extent that Collateral
Agent (or any Detroit L/C Lender, New L/C Lender or High Yield Noteholder,
subject to the terms of the Intercreditor Agreement) receives cash proceeds in
respect of the sale of, or other realization upon, the Intellectual Property
Collateral; and (iv) within five Business Days after written notice from
Collateral Agent, each Grantor shall make available to Collateral Agent, to the
extent within such Grantor's power and authority, such personnel in such
Grantor's employ on the date of such Event of Default as Collateral Agent may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with the Trademarks, Trademark Registrations and Trademark Rights, such persons
to be available to perform their prior functions on Collateral Agent's behalf
and to be compensated by Collateral Agent at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure applicable
to each as of the date of such Event of Default.
(b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Collateral Agent of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, Collateral
Agent shall promptly execute and deliver to such Grantor, at such Grantor's cost
and expense, such assignments as may be necessary to reassign to such Grantor
any such rights, title and interests as may have been assigned to Collateral
Agent as aforesaid, subject to any disposition thereof that may have been made
by Collateral Agent; provided, after giving effect to such reassignment,
Collateral Agent's security interest granted pursuant hereto, as well as all
other rights and remedies of Collateral Agent granted hereunder, shall continue
to be in full force and effect; and provided further, the rights, title and
interests so reassigned shall be free and clear of all Liens other than Liens
(if any) encumbering such rights, title and interest at the time of their
assignment to Collateral Agent and Liens permitted under the relevant provisions
of the Credit Documents.
SECTION 20. APPLICATION OF PROCEEDS.
Except as expressly provided in Sections 12 and 13 hereof and
elsewhere in this Agreement, all proceeds received by Collateral Agent in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral shall be applied in accordance with the Intercreditor
Agreement. In furtherance of, and without limiting the foregoing, in the event
that (i) the Detroit L/C Commitments and the obligation of the Detroit L/C
Security Agreement
21
Lenders to issue and maintain Detroit L/Cs have terminated and all Detroit L/C
Obligations have been Paid in Full, and (ii) the New L/C Commitments and the
obligation of the New L/C Lenders to issue and maintain New L/Cs have terminated
and the New L/C Obligations have been Paid in Full, then in each case, any cash
collateral held by Collateral Agent in each of the Detroit L/C Collateral
Account and the New L/C Collateral Account shall be applied in accordance with
the Intercreditor Agreement.
SECTION 21. INDEMNITY AND EXPENSES.
(a) Grantors jointly and severally agree to indemnify
Collateral Agent, each Detroit L/C Agent, each Detroit L/C Lender, the New L/C
Agent, each New L/C Lender, each High Yield Noteholder and each other Benefited
Party from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including without limitation enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
solely from Collateral Agent's or such Detroit L/C Agent's, Detroit L/C
Lender's, New L/C Agent's, New L/C Lender's, High Yield Noteholder's or
Benefited Party's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction.
(b) Grantors jointly and severally agree to pay to Collateral
Agent upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Collateral Agent hereunder, or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof.
(c) The obligations of Grantors in this Section 21 shall
survive the termination of this Agreement and the discharge of Grantors' other
obligations under this Agreement, the Detroit L/C Facility Agreement, the New
L/C Facility Agreement and the High Yield Indenture (subject to the terms of the
Intercreditor Agreement).
SECTION 22. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; TERMINATION\
AND RELEASE.
(a) This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
Payment in Full of all Secured Obligations, (ii) be binding upon Grantors and
their respective successors and assigns, and (iii) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), but subject to the relevant assignment
provisions set forth in each of the Credit Documents and the Intercreditor
Agreement, (A) any Detroit L/C Agent or Detroit L/C Lender may assign or
otherwise transfer its rights under the Detroit L/C Facility Agreement to any
other Person, and in each case such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Detroit L/C Agents or
Detroit L/C Lenders, as applicable, herein or otherwise (subject to the terms of
the Intercreditor Agreement), (B) the New L/C Agent and any New L/C Lender may
assign or otherwise transfer its rights under the New L/C Facility Agreement to
any other Person, and in each case such other Person shall thereupon become
vested with all the benefits in respect thereof granted to the New L/C Agent or
such New L/C Lender, as applicable, herein or otherwise (subject to the terms of
the Intercreditor Agreement) and (C) any High Yield Noteholder may assign or
otherwise transfer any High Yield Note to any other Person in accordance with
the High Yield Indenture, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to High Yield Noteholders
herein or otherwise (subject to the terms of the Intercreditor Agreement).
(b) Upon the Payment in Full of all Secured Obligations, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantors. Upon any such termination
Collateral Agent will, at Grantors' expense, execute and deliver to Grantors
such documents as Grantors shall reasonably request to evidence such
termination. In addition, upon the proposed sale, transfer or other disposition
of any Collateral by a Grantor in accordance with the relevant provisions of
each Credit Document for which such Grantor desires to obtain a security
interest release from Collateral Agent, such Grantor shall deliver an Officer's
Certificate (x) stating that the Collateral subject to such disposition is being
sold, transferred or otherwise disposed of in compliance with the terms of the
Credit Documents and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such
Officer's Certificate and so long as no Event of Default has occurred and is
continuing or would result from the proposed disposition of the Collateral and
Security Agreement
22
so long as the proceeds from such disposition are applied in accordance with the
Credit Documents, Collateral Agent shall, at Grantor's expense, so long as
Collateral Agent believes in good faith that the Officer's Certificate delivered
by such Grantor with respect to such sale is true, correct and complete, execute
and deliver such releases of its security interest in such Collateral which is
to be so sold, transferred or disposed of, as may be reasonably requested by
such Grantor.
SECTION 23. COLLATERAL AGENT AS AGENT.
(a) Collateral Agent has been appointed to act as Collateral
Agent hereunder by the Detroit L/C Agents, the Detroit L/C Lenders, the New L/C
Agent, the New L/C Lenders, the High Yield Trustee on behalf of the High Yield
Noteholders and the Cash Management Bank. Collateral Agent shall be obligated,
and shall have the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking any action (including without limitation the release or substitution of
Collateral), solely in accordance with this Agreement and the Credit Documents.
(b) Collateral Agent shall at all times be the same Person
that is the Collateral Agent under the Intercreditor Agreement. Written notice
of resignation by Collateral Agent pursuant to subsections 6.1(h) or (i) of the
Intercreditor Agreement shall also constitute notice of resignation as
Collateral Agent under this Agreement; removal of Collateral Agent pursuant to
subsections 6.1(h) or (i) of the Intercreditor Agreement shall also constitute
removal as Collateral Agent under this Agreement; and appointment of a successor
Collateral Agent pursuant to subsections 6.1(h) or (i) of the Intercreditor
Agreement shall also constitute appointment of a successor Collateral Agent
under this Agreement. Upon the acceptance of any appointment as Collateral Agent
under subsections 6.1(h) or (i) of the Intercreditor Agreement by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
or removed Collateral Agent under this Agreement, and the retiring or removed
Collateral Agent under this Agreement shall promptly (i) transfer to such
successor Collateral Agent all sums, securities and other items of Collateral
held hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Collateral Agent under this Agreement, and (ii) execute and deliver to such
successor Collateral Agent such amendments to financing statements, and take
such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Collateral Agent of the security interest created
hereunder, whereupon such retiring or removed Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Collateral Agent hereunder.
SECTION 24. ADDITIONAL GRANTORS.
Any Subsidiary of Company that is party to any of the Credit
Documents but is not a party hereto may become a party hereto as an additional
Grantor by executing a Counterpart substantially in the form of Exhibit VI
annexed hereto, whereupon such Subsidiary shall become a Grantor hereunder and
such Subsidiary shall also execute a Counterpart substantially in the form of
Annex 2 to the Intercreditor Agreement pursuant to Section 6.1(l) of the
Intercreditor Agreement, whereupon such Subsidiary shall become a Detroit L/C
Borrower or New L/C Borrower, as applicable, under the Intercreditor Agreement.
Upon delivery of any such Counterpart to Collateral Agent, notice of which is
hereby waived by Grantors, each such Additional Grantor shall be a Grantor and
shall be as fully a party hereto as if such Additional Grantor were an original
signatory hereto. Each Grantor expressly agrees that its obligations arising
hereunder shall not be affected or diminished by the addition or release of any
other Grantor hereunder, nor by any election of Collateral Agent not to cause
any Subsidiary of Company to become an Additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
SECTION 25. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Collateral Agent and, in the case of any such amendment or
modification, by Grantors; provided that this Agreement may be modified by the
execution of a Counterpart by an Additional Grantor in accordance with
Security Agreement
23
Section 24 hereof and Grantors hereby waive any requirement of notice of or
consent to any such amendment. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. In the event of any refinancing, replacement or extension of the New L/C
Facility Agreement or Detroit L/C Facility Agreement, references in this
Agreement to sections or subsections of the New L/C Facility Agreement and
Detroit L/C Facility Agreement shall refer to the functionally equivalent
sections or subsections in such refinanced, replaced or extended agreement as
the context requires.
SECTION 26. NOTICES.
Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Collateral Agent shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature page hereof or such other address as shall be designated by
such party in a written notice delivered to the other parties hereto. Electronic
mail and Internet and intranet websites may be used to distribute routine
communications, provided, however, that no signature with respect to any notice,
request, agreement, waiver, amendment or other document or any notice that is
intended to have a binding effect may be sent by electronic mail.
SECTION 27. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Collateral Agent in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
SECTION 28. SEVERABILITY.
In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 29. HEADINGS.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 30. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT
THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Documents, terms used in Articles 8 and 9 of the
UCC are used herein as therein defined. The rules of construction set forth in
subsection 1.3 of the Detroit L/C Facility Agreement shall be applicable to this
Agreement mutatis mutandis.
SECTION 31. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
Security Agreement
24
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
GRANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH GRANTOR AT ITS
ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 26 HEREOF; (IV) AGREES THAT SERVICE
AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION
OVER SUCH GRANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT
COLLATERAL AGENT RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GRANTOR IN THE COURTS OF
ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 31
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.
SECTION 32. WAIVER OF JURY TRIAL.
GRANTORS AND COLLATERAL AGENT HEREBY AGREE TO WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including without limitation
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Each Grantor and Collateral Agent acknowledge that this
waiver is a material inducement for Grantors and Collateral Agent to enter into
a business relationship, that Grantors and Collateral Agent have already relied
on this waiver in entering into this Agreement and that each will continue to
rely on this waiver in their related future dealings. Each Grantor and
Collateral Agent further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 32
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart thereof.
[Remainder of page intentionally left blank]
Security Agreement
25
IN WITNESS WHEREOF, Grantors and Collateral Agent have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
GRANTORS:
COVANTA ENERGY CORPORATION
By:
--------------------------------
Name: Anthony Orlando
Title: President and Chief Executive Officer
Notice Address:
40 Lane Road
Fairfield, New Jersey 07007
Attn: Jeffrey Horowitz, Esq.
EACH OF THE ENTITIES LISTED ON SCHEDULE A ANNEXED
HERETO
By:
--------------------------------
on behalf of each of the entities listed on
Schedule A annexed hereto
Name: Anthony Orlando
Title: President and Chief Executive Officer
Notice Address:
40 Lane Road
Fairfield, New Jersey 07007
Attn: Jeffrey Horowitz, Esq.
Security Agreement
S-1
BANK OF AMERICA, N.A.,
as Collateral Agent
By:
--------------------------------
Name:
Title:
Notice Address:
Bank of America, N.A., as Collateral Agent
555 So. Flower Street, 17th Floor
CA9-706-17-54
Los Angeles, California 90071
Attention: David Price, Vice President
Voice: (213) 345-1300
Fax: (415) 503-5011
email: david.price@bankofamerica.com
Security Agreement
S-2
SCHEDULE A
OTHER GRANTORS
1. AMOR 14 Corporation
2. Covanta Acquisition, Inc.
3. Covanta Bessemer, Inc.
4. Covanta Cunningham Environmental Support, Inc.
5. Covanta Energy Americas, Inc.
6. Covanta Energy Construction, Inc.
7. Covanta Energy Corporation
8. Covanta Energy Group, Inc.
9. Covanta Energy International, Inc.
10. Covanta Energy Resource Corp.
11. Covanta Energy Services, Inc.
12. Covanta Energy West, Inc.
13. Covanta Engineering Services, Inc.
14. Covanta Geothermal Operations Holdings, Inc.
15. Covanta Geothermal Operations, Inc.
16. Covanta Haverhill Properties, Inc.
17. Covanta Heber Field Energy, Inc.
18. Covanta Hennepin Energy Resource Co., Limited Partnership
19. Covanta Hillsborough, Inc.
20. Covanta Huntsville, Inc.
21. Covanta Hydro Energy, Inc.
22. Covanta Hydro Operations West, Inc.
23. Covanta Hydro Operations, Inc.
24. Covanta Imperial Power Services, Inc.
25. Covanta Kent, Inc.
26. Covanta Lancaster, Inc.
27. Covanta Lee, Inc.
28. Covanta Long Island, Inc.
29. Covanta Marion Land Corp.
30. Covanta Mid-Conn, Inc.
31. Covanta Montgomery, Inc.
32. Covanta New Martinsville Hydroelectric Corporation
33. Covanta New Martinsville Hydro-Operations Corporation
34. Covanta Oahu Waste Energy Recovery, Inc.
Security Agreement
35. Covanta Onondaga Operations, Inc.
36. Covanta Operations of Union, LLC
37. Covanta OPW Associates, Inc.
38. Covanta OPWH, Inc.
39. Covanta Pasco, Inc.
40. Covanta Plant Services of New Jersey, Inc.
41. Covanta Power Equity Corporation
42. Covanta Power Pacific, Inc.
43. Covanta Power Plant Operations
44. Covanta Projects of Hawaii, Inc.
45. Covanta Projects, Inc.
46. Covanta RRS Holdings, Inc.
47. Covanta Secure Services, Inc.
48. Covanta SIGC Energy, Inc.
49. Covanta SIGC Energy II, Inc.
50. Covanta SIGC Geothermal Operations, Inc.
51. Covanta Systems, LLC
52. Covanta Wallingford Associates, Inc.
53. Covanta Waste to Energy , LLC
54. Covanta Water Holdings, Inc.
55. Covanta Water Systems, Inc.
56. Covanta Water Treatment Services, Inc.
57. DSS Environmental, Inc.
58. ERC Energy II, Inc.
59. ERC Energy, Inc.
60. Heber Field Energy II, Inc.
61. Heber Loan Partners
62. LMI, Inc.
63. Mammoth Geothermal Company
64. Mammoth Power Company
65. Mt. Lassen Power
66. Pacific Geothermal Company
67. Pacific Oroville Power, Inc.
68. Pacific Wood Fuels Company
69. Pacific Wood Services Company
70. Three Mountain Operations, Inc.
71. Three Mountain Power, LLC
Security Agreement
SCHEDULE 1(e)(i) TO
SECURITY AGREEMENT
PLEDGED SHARES
[Enlarge/Download Table]
CLASS OF PERCENTAGE OF
ISSUER OF PLEDGED PLEDGED PAR NUMBER OF OUTSTANDING
SHARES SHARES CERTIFICATE NOS. VALUE PLEDGED SHARES PLEDGED SHARES
----------------- -------- ---------------- ----- -------------- --------------
------------------ --------------- ---------------- ------------ --------------- ---------------
------------------ --------------- ---------------- ------------ --------------- ---------------
------------------ --------------- ---------------- ------------ --------------- ---------------
------------------ --------------- ---------------- ------------ --------------- ---------------
Security Agreement
SCHEDULE 1(g)(i) TO
SECURITY AGREEMENT
U.S. TRADEMARKS:
[Download Table]
Trademark Registration Registration
Registered Owner Description Number Date
---------------------------- ------------------ ------------ ------------
FOREIGN TRADEMARKS:
[Download Table]
Trademark Registration Registration
Registered Owner Description Number Date
---------------------------- ------------------ ------------ ------------
Security Agreement
1(g)(i)-1
SCHEDULE 1(g)(ii)(A) TO
SECURITY AGREEMENT
U.S. PATENTS ISSUED:
[Download Table]
Patent No. Issue Date Invention Inventor
------------------------- ----------------- -------------- -------------
U.S. PATENTS PENDING:
[Download Table]
Applicant's Date Application
Name Filed Number Invention Inventor
----------------------- ----------- ---------------- ----------- -----------
Security Agreement
1(g)(ii)(A)-1
SCHEDULE 1(g)(ii)(B) TO
SECURITY AGREEMENT
FOREIGN PATENTS ISSUED:
[Download Table]
Patent No. Issue Date Invention Inventor
------------------------- ----------------- -------------- -------------
FOREIGN PATENTS PENDING:
[Download Table]
Applicant's Date Application
Name Filed Number Invention Inventor
----------------------- ----------- ---------------- ----------- -----------
Security Agreement
1(g)(ii)(B)-1
SCHEDULE 1(g)(iii) TO
SECURITY AGREEMENT
U.S. COPYRIGHTS:
[Download Table]
Title Registration No. Date of Issue Registered Owner
----- ---------------- ------------- ----------------
FOREIGN COPYRIGHT REGISTRATIONS:
[Download Table]
Country Title Registration No. Date of Issue
------- ----- ---------------- -------------
PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:
[Download Table]
Title Reference No. Date of Application Copyright Claimant
----- ------------- ------------------- ------------------
PENDING FOREIGN COPYRIGHT REGISTRATIONS & APPLICATIONS:
[Download Table]
Country Title Registration No. Date of Issue
-------------- ---------------- -------------
Security Agreement
1(g)(ii)(B)-1
SCHEDULE 1(J)
TO
SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
Security Agreement
1(j)-1
SCHEDULE 4(b)
TO
SECURITY AGREEMENT
LOCATIONS OF EQUIPMENT AND INVENTORY
NAME OF GRANTOR LOCATIONS OF EQUIPMENT AND INVENTORY
Security Agreement
4(b)-1
SCHEDULE 4(d)
TO
SECURITY AGREEMENT
OFFICE LOCATIONS, TYPE AND JURISDICTION OF ORGANIZATION
[Download Table]
JURISDICTION OF
NAME OF GRANTOR TYPE OF ORGANIZATION OFFICE LOCATIONS ORGANIZATION
--------------- -------------------- ---------------- ---------------
Security Agreement
4(d)-1
SCHEDULE 4(e)
TO
SECURITY AGREEMENT
OTHER NAMES
NAME OF GRANTOR OTHER NAMES
Security Agreement
4(e)-1
SCHEDULE 4(g)
TO
SECURITY AGREEMENT
CERTAIN CONTRACTUAL OBLIGATIONS
4(g)-1
Security Agreement
SCHEDULE 4(i)
TO
SECURITY AGREEMENT
FILING OFFICES
Grantor Filing Offices
Security Agreement
4(i)-1
EXHIBIT I TO
SECURITY AGREEMENT
[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]
GRANT OF TRADEMARK SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Trademark Collateral (as defined
below);
WHEREAS, COVANTA ENERGY CORPORATION, a Delaware corporation
("COMPANY") and the Subsidiaries of Company listed on the signature pages
thereof (collectively, Company and such Subsidiaries of Company are "BORROWERS"
and each a "BORROWER") have entered into certain Credit Agreement dated as of
March __, 2004 (said Credit Agreement or any credit agreement entered into by
Detroit L/C Borrowers to refinance, replace, renew or extend, in whole or in
part, said Credit Agreement and the indebtedness and letters of credit issued
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "DETROIT L/C FACILITY AGREEMENT") with the financial institutions
listed on the signature pages thereof as Lenders (collectively, together with
their respective successors and assigns party to the Detroit L/C Facility
Agreement from time to time, the "DETROIT L/C LENDERS"), DEUTSCHE BANK
SECURITIES, INC., as Documentation Agent for the Detroit L/C Lenders (in such
capacity, the "DETROIT L/C DOCUMENTATION AGENT"), and BANK OF AMERICA, N.A., as
Administrative Agent for the Detroit L/C Lenders (in such capacity, the "DETROIT
L/C FACILITY AGENT," and together with the Detroit L/C Documentation Agent, the
"DETROIT L/C AGENTS"), pursuant to which the Detroit L/C Lenders have made
certain commitments, subject to the terms and conditions set forth in the
Detroit L/C Facility Agreement, to extend certain letter of credit facilities to
Borrowers;
WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by New L/C Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness and letters of
credit issued thereunder, as said Credit Agreement or any replacement to said
Credit Agreement may be amended, restated, supplemented or otherwise modified
from time to time, being the "NEW L/C FACILITY AGREEMENT") with the financial
institutions listed on the signature pages thereof as Lenders (collectively,
together with their respective successors and assigns party to the Detroit L/C
Facility Agreement from time to time, the "NEW L/C LENDERS"), and Bank One, NA,
as Administrative Agent for the New L/C Lenders (in such capacity, the "NEW L/C
FACILITY AGENT"), pursuant to which the New L/C Lenders have made certain
commitments, subject to the terms and conditions set forth in the New L/C
Facility Agreement, to extend certain letter of credit facilities to Borrowers;
WHEREAS, Company has issued $205,000,000 in aggregate face
principal amount accruing to $230,000,000 at stated maturity of its 8.25% Senior
Notes due 2011 (said notes or any replacement to said notes pursuant to a
refinancing, defeasance, renewal, replacement or extension of such notes, being
the "HIGH YIELD NOTES");
WHEREAS, Borrowers other than the Company have agreed, in
favor of the holders of the High Yield Notes, to guarantee the prompt payment
and performance when due of all obligations of Company under the High Yield
Notes;
WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the New L/C Facility Agreement and the Detroit
L/C Facility Agreement) with Collateral Agent (in such capacity, the "CASH
MANAGEMENT BANK") and the obligations of Borrowers to the Cash Management Bank
arising from or relating to the Cash Management System are secured under the
Security Agreement (as defined below); and
WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise
Security Agreement
I-S-1
modified, the "SECURITY AGREEMENT"), among Grantor, the other grantors named
therein and Bank of America, N.A., in its capacity as collateral agent for and
representative of the Secured Parties (as defined in the Intercreditor Agreement
referred to below), (the "COLLATERAL AGENT"), Grantor has granted in favor of
Collateral Agent a secured and protected interest in, and Collateral Agent has
agreed to become a secured creditor with respect to, the Trademark Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
a security interest, (subject to the terms of the Intercreditor Agreement (as
defined in the Security Agreement) (including, without limitation, the
provisions regarding lien priority)), in all of Grantor's right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "TRADEMARK COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all
trademarks, service marks, designs, logos, indicia, tradenames, trade
dress, corporate names, company names, business names, fictitious
business names, trade styles and/or other source and/or business
identifiers and applications pertaining thereto, owned by such Grantor,
or hereafter adopted and used, in its business (including, without
limitation, the trademarks specifically identified in Schedule A)
(collectively, the "TRADEMARKS"), all registrations that have been or
may hereafter be issued or applied for thereon in the United States and
any state thereof and in foreign countries (including, without
limitation, the registrations and applications specifically identified
in Schedule A) (the "TRADEMARK REGISTRATIONS"), all common law and
other rights (but in no event any of the obligations) in and to the
Trademarks in the United States and any state thereof and in foreign
countries (the "TRADEMARK RIGHTS"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith (the
"ASSOCIATED GOODWILL"); and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Trademark Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Collateral Agent
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Trademark Collateral. For purposes of this Grant of
Trademark Security Interest, the term "PROCEEDS" includes whatever is
receivable or received when Trademark Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Trademark Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Trademark Collateral shall include, and Grantor shall be deemed
to have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Trademark Collateral.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent with respect to the security interests
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.
Security Agreement
I-S-2
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the __ day of _______, 200__.
[NAME OF GRANTOR]
By:
-----------------------------------
Name:
-------------------------------
Title:
------------------------------
Security Agreement
I-S-3
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
[Download Table]
United States
Trademark Registration Registration
Registered Owner Description Number Date
---------------- -------------- ------------- -------------
Security Agreement
I-A-1
EXHIBIT II TO
SECURITY AGREEMENT
[FORM OF GRANT OF PATENT SECURITY INTEREST]
GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Patent Collateral (as defined
below);
WHEREAS, COVANTA ENERGY CORPORATION, a Delaware corporation
("COMPANY") and the Subsidiaries of Company listed on the signature pages
thereof (collectively, Company and such Subsidiaries of Company are "BORROWERS"
and each a "BORROWER") have entered into certain Credit Agreement dated as of
March __, 2004 (said Credit Agreement or any credit agreement entered into by
Detroit L/C Borrowers to refinance, replace, renew or extend, in whole or in
part, said Credit Agreement and the indebtedness and letters of credit issued
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "DETROIT L/C FACILITY AGREEMENT") with the financial institutions
listed on the signature pages thereof as Lenders (collectively, together with
their respective successors and assigns party to the Detroit L/C Facility
Agreement from time to time, the "DETROIT L/C LENDERS"), DEUTSCHE BANK
SECURITIES, INC., as Documentation Agent for the Detroit L/C Lenders (in such
capacity, the "DETROIT L/C DOCUMENTATION AGENT"), and BANK OF AMERICA, N.A., as
Administrative Agent for the Detroit L/C Lenders (in such capacity, the "DETROIT
L/C FACILITY AGENT," and together with the Detroit L/C Documentation Agent, the
"DETROIT L/C AGENTS"), pursuant to which the Detroit L/C Lenders have made
certain commitments, subject to the terms and conditions set forth in the
Detroit L/C Facility Agreement, to extend certain letter of credit facilities to
Borrowers;
WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by New L/C Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness and letters of
credit issued thereunder, as said Credit Agreement or any replacement to said
Credit Agreement may be amended, restated, supplemented or otherwise modified
from time to time, being the "NEW L/C FACILITY AGREEMENT") with the financial
institutions listed on the signature pages thereof as Lenders (collectively,
together with their respective successors and assigns party to the Detroit L/C
Facility Agreement from time to time, the "NEW L/C LENDERS"), and Bank One, NA,
as Administrative Agent for the New L/C Lenders (in such capacity, the "NEW L/C
FACILITY AGENT"), pursuant to which the New L/C Lenders have made certain
commitments, subject to the terms and conditions set forth in the New L/C
Facility Agreement, to extend certain letter of credit facilities to Borrowers;
WHEREAS, Company has issued $205,000,000 in aggregate face
principal amount accruing to $230,000,000 at stated maturity of its 8.25% Senior
Notes due 2011 (said notes or any replacement to said notes pursuant to a
refinancing, defeasance, renewal, replacement or extension of such notes, being
the "HIGH YIELD NOTES");
WHEREAS, Borrowers other than the Company have agreed, in
favor of the holders of the High Yield Notes, to guarantee the prompt payment
and performance when due of all obligations of Company under the High Yield
Notes;
WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the New L/C Facility Agreement and the Detroit
L/C Facility Agreement) with Collateral Agent (in such capacity, the "CASH
MANAGEMENT BANK") and the obligations of Borrowers to the Cash Management Bank
arising from or relating to the Cash Management System are secured under the
Security Agreement (as defined below); and
WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise
Security Agreement
II-1
modified, the "SECURITY AGREEMENT"), among Grantor, the other grantors named
therein and Bank of America, N.A., in its capacity as collateral agent for and
representative of the Secured Parties (as defined in the Intercreditor Agreement
referred to below), (the "COLLATERAL AGENT"), Grantor has granted in favor of
Collateral Agent a secured and protected interest in, and Collateral Agent has
agreed to become a secured creditor with respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
a security interest, (subject to the terms of the Intercreditor Agreement (as
defined in the Security Agreement) (including, without limitation, the
provisions regarding lien priority)), in all of Grantor's right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "PATENT COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) in and to all patents
and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or
in the future may be, owned or held by such Grantor and all patents and
patent applications and rights, title and interests in patents and
patent applications under any domestic or foreign law that are
presently, or in the future may be, owned by such Grantor in whole or
in part (including, without limitation, the patents and patent
applications listed in Schedule A), all rights (but not obligations)
corresponding thereto to sue for past, present and future infringements
and all re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively
referred to as the "PATENTS"); and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Patent Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Collateral Agent
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Patent Collateral. For purposes of this Grant of
Patent Security Interest, the term "PROCEEDS" includes whatever is
receivable or received when Patent Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Patent Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Patent Collateral shall include, and Grantor shall be deemed to
have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the terms of, or constitute a default under the provisions
of such license, contract or agreement, such proceeds shall be included in the
Patent Collateral.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent 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.
[The remainder of this page intentionally left blank.]
Security Agreement
II-2
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the ___ day of ____________, 200__.
[NAME OF GRANTOR]
By:
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Security Agreement
II-S-1
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
PATENTS ISSUED:
[Download Table]
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
PATENTS PENDING:
[Download Table]
Applicant's Date Application
Name Filed Number Invention Inventor
----------- ----- ------------ --------- --------
Security Agreement
II-A-1
EXHIBIT III TO
SECURITY AGREEMENT
[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]
GRANT OF COPYRIGHT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a ___________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Copyright Collateral (as defined
below);
WHEREAS, COVANTA ENERGY CORPORATION, a Delaware corporation
("COMPANY") and the Subsidiaries of Company listed on the signature pages
thereof (collectively, Company and such Subsidiaries of Company are "BORROWERS"
and each a "BORROWER") have entered into certain Credit Agreement dated as of
March __, 2004 (said Credit Agreement or any credit agreement entered into by
Detroit L/C Borrowers to refinance, replace, renew or extend, in whole or in
part, said Credit Agreement and the indebtedness and letters of credit issued
thereunder, as said Credit Agreement or any replacement to said Credit Agreement
may be amended, restated, supplemented or otherwise modified from time to time,
being the "DETROIT L/C FACILITY AGREEMENT") with the financial institutions
listed on the signature pages thereof as Lenders (collectively, together with
their respective successors and assigns party to the Detroit L/C Facility
Agreement from time to time, the "DETROIT L/C LENDERS"), DEUTSCHE BANK
SECURITIES, INC., as Documentation Agent for the Detroit L/C Lenders (in such
capacity, the "DETROIT L/C DOCUMENTATION AGENT"), and BANK OF AMERICA, N.A., as
Administrative Agent for the Detroit L/C Lenders (in such capacity, the "DETROIT
L/C FACILITY AGENT," and together with the Detroit L/C Documentation Agent, the
"DETROIT L/C AGENTS"), pursuant to which the Detroit L/C Lenders have made
certain commitments, subject to the terms and conditions set forth in the
Detroit L/C Facility Agreement, to extend certain letter of credit facilities to
Borrowers;
WHEREAS, Borrowers have entered into certain Credit Agreement
dated as of March __, 2004 (said Credit Agreement or any credit agreement
entered into by New L/C Borrowers to refinance, replace, renew or extend, in
whole or in part, said Credit Agreement and the indebtedness and letters of
credit issued thereunder, as said Credit Agreement or any replacement to said
Credit Agreement may be amended, restated, supplemented or otherwise modified
from time to time, being the "NEW L/C FACILITY AGREEMENT") with the financial
institutions listed on the signature pages thereof as Lenders (collectively,
together with their respective successors and assigns party to the Detroit L/C
Facility Agreement from time to time, the "NEW L/C LENDERS"), and Bank One, NA,
as Administrative Agent for the New L/C Lenders (in such capacity, the "NEW L/C
FACILITY AGENT"), pursuant to which the New L/C Lenders have made certain
commitments, subject to the terms and conditions set forth in the New L/C
Facility Agreement, to extend certain letter of credit facilities to Borrowers;
WHEREAS, Company has issued $205,000,000 in aggregate face
principal amount accruing to $230,000,000 at stated maturity of its 8.25% Senior
Notes due 2011 (said notes or any replacement to said notes pursuant to a
refinancing, defeasance, renewal, replacement or extension of such notes, being
the "HIGH YIELD NOTES");
WHEREAS, Borrowers other than the Company have agreed, in
favor of the holders of the High Yield Notes, to guarantee the prompt payment
and performance when due of all obligations of Company under the High Yield
Notes;
WHEREAS, Borrowers are required to maintain the Cash
Management System (as defined in the New L/C Facility Agreement and the Detroit
L/C Facility Agreement) with Collateral Agent (in such capacity, the "CASH
MANAGEMENT BANK") and the obligations of Borrowers to the Cash Management Bank
arising from or relating to the Cash Management System are secured under the
Security Agreement (as defined below); and
WHEREAS, pursuant to the terms of a Security Agreement dated
as of March __, 2004 (as it may heretofore have been and as it may from time to
time hereafter be amended, restated, supplemented or otherwise
Security Agreement
III-1
modified, the "SECURITY AGREEMENT"), among Grantor, the other grantors named
therein and Bank of America, N.A., in its capacity as collateral agent for and
representative of the Secured Parties (as defined in the Intercreditor Agreement
referred to below), (the "COLLATERAL AGENT"), Grantor has granted in favor of
Collateral Agent a secured and protected interest in, and Collateral Agent has
agreed to become a secured creditor with respect to, the Copyright Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to Collateral Agent
a security interest, (subject to the terms of the Intercreditor Agreement (as
defined in the Security Agreement) (including, without limitation, the
provisions regarding lien priority)), in all of Grantor's right, title and
interest in and to the following, in each case whether now or hereafter existing
or in which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "COPYRIGHT COLLATERAL"):
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise but only to the extent permitted by
agreements governing such license or other use) under copyright in
various published and unpublished works of authorship including,
without limitation, computer programs, computer data bases, other
computer software layouts, trade dress, drawings, designs, writings,
and formulas (including, without limitation, the works listed on
Schedule A, as the same may be amended pursuant hereto from time to
time) (collectively, the "COPYRIGHTS"), all copyright registrations
issued to Grantor and applications for copyright registration that have
been or may hereafter be issued or applied for thereon in the United
States and any state thereof and in foreign countries (including,
without limitation, the registrations listed on Schedule A, as the same
may be amended pursuant hereto from time to time) (collectively, the
"COPYRIGHT REGISTRATIONS"), all common law and other rights in and to
the Copyrights in the United States and any state thereof and in
foreign countries including all copyright licenses (but with respect to
such copyright licenses, only to the extent permitted by such licensing
arrangements) (the "COPYRIGHT RIGHTS"), including, without limitation,
each of the Copyrights, rights, titles and interests in and to the
Copyrights, all derivative works and other works protectable by
copyright, which are presently, or in the future may be, owned, created
(as a work for hire for the benefit of Grantor), authored (as a work
for hire for the benefit of Grantor), or acquired by Grantor, in whole
or in part, and all Copyright Rights with respect thereto and all
Copyright Registrations therefor, heretofore or hereafter granted or
applied for, and all renewals and extensions thereof, throughout the
world, including all proceeds thereof (such as, by way of example and
not by limitation, license royalties and proceeds of infringement
suits), the right (but not the obligation) to renew and extend such
Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right (but not the obligation) to sue
in the name of such Grantor or in the name of Collateral Agent or
Lenders for past, present and future infringements of the Copyrights
and Copyright Rights; and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Copyright Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not Collateral Agent
is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any
of the foregoing Copyright Collateral. For purposes of this Grant of
Copyright Security Interest, the term "PROCEEDS" includes whatever is
receivable or received when Copyright Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Copyright Collateral include, and Grantor shall be not deemed to have
granted a security interest in, any of Grantor's rights or interests in any
license, contract or agreement to which Grantor is a party or any of its rights
or interests thereunder, to the extent, but only to the extent, that such a
grant would, under the terms of such license, contract or agreement or
otherwise, result in a breach of the terms of, or constitute a default under any
license, contract or agreement to which Grantor is a party on the date hereof
(other than to the extent that any such provision would be rendered ineffective
pursuant to the UCC or any other applicable law (including the Bankruptcy Code
(as defined in the Intercreditor Agreement) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Copyright Collateral shall include, and Grantor shall be deemed
to have granted a security interest to Collateral Agent in, all such rights and
interests as if such provision had never been in effect; provided, further that
if the assignment of proceeds of such license, contract or agreement would not
result in a breach of the
Security Agreement
III-2
terms of, or constitute a default under the provisions of such license, contract
or agreement, such proceeds shall be included in the Copyright Collateral.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of Collateral Agent 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.
[The remainder of this page intentionally left blank.]
Security Agreement
III-3
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright
Security Interest to be duly executed and delivered by its officer thereunto
duly authorized as of the ___ day of ___________, 200__.
[NAME OF GRANTOR]
By:
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Security Agreement
III-S-1
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. COPYRIGHTS:
[Download Table]
Title Registration No. Date of Issue Registered Owner
----- --------------- ------------- ----------------
PENDING U.S. COPYRIGHT REGISTRATIONS & APPLICATIONS:
[Download Table]
Title Reference No. Date of Application Copyright Claimant
----- ------------- ------------------- ------------------
Security Agreement
III-A-1
EXHIBIT IV TO
SECURITY AGREEMENT
PLEDGE SUPPLEMENT
This Pledge Supplement, dated as of _________________, 200__
is delivered pursuant to the Security Agreement, dated as of March __, 2004
among ____________, a ____________ ("GRANTOR"), the other Grantors named
therein, and Bank of America, N.A., as Collateral Agent (as it may heretofore
have been and as it may from time to time hereafter be amended, restated,
supplemented or otherwise modified, the "SECURITY AGREEMENT"). Capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
thereto in the Security Agreement.
Grantor hereby agrees that the [Pledged Shares] [Pledged Debt]
listed on the schedule attached hereto shall be deemed to be part of the
[Pledged Shares] [Pledged Debt] and shall become part of the Securities
Collateral and shall secure all Secured Obligations.
IN WITNESS WHEREOF, Grantor has caused this Amendment to be
duly executed and delivered by its duly authorized officer as of
_______________, 200__.
[GRANTOR]
By:
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Security Agreement
IV-1
EXHIBIT V TO
SECURITY AGREEMENT
IP SUPPLEMENT
This IP SUPPLEMENT, dated as of ____________, 200__ is
delivered pursuant to and supplements (i) the Security Agreement, dated as of
March __, 2004 (as it may heretofore have been and as it may from time to time
hereafter be amended, restated, supplemented or otherwise modified, the
"SECURITY AGREEMENT"), among _______________ ("GRANTOR"), the other Grantors
named therein, and Bank of America, N.A., as Collateral Agent, and (ii) the
[Grant of Trademark Security Interest] [Grant of Patent Security Interest]
[Grant of Copyright Security Interest] dated as of ___________, 200__ (the
"GRANT") executed by Grantor. Capitalized terms used herein not otherwise
defined herein shall have the meanings ascribed thereto in the Grant.
Grantor grants to Collateral Agent a security interest (as set
forth in the Security Agreement) in all of Grantor's right, title and interest
in and to the [Trademark Collateral] [Patent Collateral] [Copyright Collateral]
listed on Schedule A attached hereto. All such [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] shall be deemed to be part of the [Trademark
Collateral] [Patent Collateral] [Copyright Collateral] and shall be hereafter
subject to each of the terms and conditions of the Security Agreement and the
Grant.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be
duly executed and delivered by its duly authorized officer as of ______________,
200__.
[GRANTOR]
By:
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
[Attach Schedule A]
Security Agreement
V-1
EXHIBIT VI TO
SECURITY AGREEMENT
[FORM OF COUNTERPART]
COUNTERPART (this "COUNTERPART"), dated as of __________,
200__ is delivered pursuant to Section 24 of the Security Agreement referred to
below. The undersigned hereby agrees that this Counterpart may be attached to
the Security Agreement, dated as of March __, 2004 (as it may heretofore have
been and as it may from time to time hereafter be amended, restated,
supplemented or otherwise modified, the "SECURITY AGREEMENT"; capitalized terms
used herein not otherwise defined herein shall have the meanings ascribed
therein), among Covanta Energy Corporation, the other Grantors named therein,
and Bank of America, N.A., as Collateral Agent. The undersigned by executing and
delivering this Counterpart hereby becomes a Grantor under the Security
Agreement in accordance with Section 24 thereof and agrees to be bound by all of
the terms thereof. Without limiting the generality of the foregoing, the
undersigned hereby:
(i) agrees that all Collateral of the undersigned, including
the items of property described on the Schedules attached hereto, shall
become part of the Collateral and shall secure all Secured Obligations,
and hereby grants to the Collateral Agent for the benefit of the
Lenders a continuing security interest (as set forth in the Security
Agreement) in all such Collateral of the undersigned;
(ii) authorizes the Collateral Agent to add the information
set forth on the Schedules to this Counterpart to the correlative
Schedules attached to the Security Agreement(1);
(iii) agrees that it hereby becomes a party to the Security
Agreement as a Grantor and hereafter has the rights and obligations of
a Grantor thereunder and is bound by all of the provisions thereof as
fully as if the undersigned were one of the original parties thereto;
(iv) makes the representations and warranties set forth in the
Security Agreement, as amended hereby, to the extent relating to the
undersigned; and
(v) agrees that the address and facsimile number of the
undersigned for notice purposes pursuant to Section 26 of the Security
Agreement shall be initially as set forth below.
[NAME OF ADDITIONAL GRANTOR]
By:
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Notice Address:
-----------------------------
-----------------------------
-------------------------------
---------------------
(1) The Schedules to the Counterpart should include copies of all Schedules that
identify Collateral to be granted by the Grantor.
Security Agreement
V-1
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 3/15/04 |
| For Period End: | | 12/31/03 | | | | | | | 10-K/A |
| List all Filings |
↑Top
Filing Submission 0000950123-04-003329 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Thu., Apr. 18, 8:49:26.1pm ET 