Exhibit 10.8
==========================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
NBTY, INC.
and the other Grantors party hereto
in favor of
JPMORGAN CHASE BANK,
as Administrative Agent
Dated as of July 24, 2003
==========================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS 1
1.1 Definitions 1
1.2 Other Definitional Provisions 5
SECTION 2. GUARANTEE 5
2.1 Guarantee 5
2.2 Right of Contribution 6
2.3 No Subrogation 7
2.4 Amendments, etc. with respect to the Borrower Obligations 7
2.5 Guarantee Absolute, Irrevocable and Unconditional 7
2.6 Reinstatement 8
2.7 Payment 8
SECTION 3. GRANT OF SECURITY INTEREST 8
SECTION 4. REPRESENTATIONS AND WARRANTIES 9
4.1 Representations in Credit Agreement 9
4.2 Title; No Other Liens 10
4.3 Perfected First Priority Lien 10
4.4 Chief Executive Office 10
4.5 Inventory and Equipment 10
4.6 Farm Products 11
4.7 Pledged Securities 11
4.8 Receivables 11
4.9 Intellectual Property 11
4.10 Deposit Accounts; Security Accounts; Commodity Accounts 12
4.11 Commercial Tort Claims 12
SECTION 5. COVENANTS 12
5.1 Covenants in Credit Agreement 12
5.2 Delivery of Instruments and Chattel Paper 12
5.3 Maintenance of Insurance 13
5.4 Payment of Obligations 13
5.5 Maintenance of Perfected Security Interest; Further
Documentation 13
5.6 Changes in Jurisdiction of Organization, Locations,
Name, etc 14
5.7 Notices 14
5.8 Pledged Securities 14
5.9 Receivables 16
5.10 Intellectual Property 16
5.11 Jurisdiction of Organization 17
5.12 Commercial Tort Claims 17
i
Page
----
5.13 Additional Accounts 18
SECTION 6. REMEDIAL PROVISIONS 18
6.1 Certain Matters Relating to Receivables 18
6.2 Communications with Obligors; Grantors Remain Liable 19
6.3 Pledged Stock 19
6.4 Proceeds To Be Turned Over to Administrative Agent 20
6.5 Application of Proceeds 20
6.6 Code and Other Remedies 21
6.7 Private Sales 21
6.8 Deficiency 22
SECTION 7. THE ADMINISTRATIVE AGENT 22
7.1 Administrative Agent's Appointment as Attorney-in-Fact,
etc 22
7.2 Duty of Administrative Agent 24
7.3 Execution of Financing Statement 24
7.4 Authority of Administrative Agent 24
SECTION 8. MISCELLANEOUS 25
8.1 Amendments in Writing 25
8.2 Notices 25
8.3 No Waiver by Course of Conduct; Cumulative Remedies 25
8.4 Enforcement Expenses; Indemnification 25
8.5 Successors and Assigns 26
8.6 Set-Off 26
8.7 Counterparts 26
8.8 Severability 27
8.9 Section Headings 27
8.10 Integration 27
8.11 GOVERNING LAW 27
8.12 Submission to Jurisdiction; Waivers 27
8.13 Acknowledgements 28
8.14 WAIVER OF JURY TRIAL 28
8.15 Additional Grantors 28
8.16 Releases 28
ii
SCHEDULES
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Securities
Schedule 3 Filings and Other Actions Required to Perfect Security
Interests
Schedule 4 Jurisdictions of Organization; Identification Numbers and
Locations of Chief Executive Offices
Schedule 5 Locations of Inventory and Equipment
Schedule 6 Copyrights and Copyright Licenses; Patents and
Patent Licenses;Trademark and Trademark Licenses
Schedule 7 Existing Prior Liens
Schedule 8 Commercial Tort Claims
Schedule 9 Deposit Accounts; Securities Accounts; Commodities Accounts
ANNEXES
Annex 1 Form of Assumption Agreement
Annex 2 Issuer's Acknowledgement
iii
GUARANTEE AND COLLATERAL AGREEMENT, dated as of July 24, 2003, made
by each of the signatories hereto other than the Administrative Agent
(together with any other entity that may become a party hereto as a Grantor
as provided herein, the "Grantors"), in favor of JPMORGAN CHASE BANK, as
Administrative Agent (in such capacity, the "Administrative Agent") for the
banks and other financial institutions (the "Lenders") from time to time
party to the Credit Agreement, dated as of July 24, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among NBTY, INC., a Delaware corporation (the "Borrower")
FLEET NATIONAL BANK, as Syndication Agent, the Lenders and ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
BANK, as Collateral Agent and as the Administrative Agent.
W I T N E S S E T H :
_ _ _ _ _ _ _ _ _ _
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor,
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the
operation of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit
Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the
Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrower under
the Credit Agreement, each Grantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Lenders as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement, and the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Account, Certificated Security,
Chattel Paper, Commercial Tort Claim, Commodity Account, Document,
Equipment, Farm Product, General Intangibles, Instrument, Inventory, Letter
of Credit Right, Proceeds, Securities Account and Supporting Obligations.
(b) The following terms shall have the following meanings:
1
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans, the Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of such Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to any Agent or any Lender (or, in
the case of any Hedge Agreement or Cash Management Obligations referred to
below, any Affiliate of any Lender), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement,
this Agreement, the other Loan Documents, any Letter of Credit, any Hedge
Agreement (including any guarantees of the Borrower of any Hedge Agreements
made by any Grantor) or Cash Management Obligation entered into by the
Borrower with any Lender (or any Affiliate of any Lender) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by such Borrower pursuant to the terms
of any of the foregoing agreements).
"Cash Management Obligation": any obligation of the Borrower or any
of its Subsidiaries in respect of overdrafts and related liabilities owed
to any Lender (or any Affiliate of a Lender) that arise from treasury,
depositary or cash management services including in connection with any
automated clearing house transfers of funds or any similar transactions.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Control Agreement" shall mean an agreement in form and substance
reasonably acceptable to the Administrative Agent sufficient to establish
the Administrative Agent's control (within the meaning of the applicable
Uniform Commercial Code as in effect in the applicable jurisdiction) over
any applicable Investment Property (including, without limitation, any
Securities Account or Commodities Account) or Deposit Account, for the
benefit of the Administrative Agent and the ratable benefit of the Lenders.
"Copyrights": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, in-
2
cluding, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright, to the
extent (after giving effect to the provisions of 9-408(a) of the New York
UCC) the grant by such Grantor of a security interest pursuant to this
Agreement in its right, title and interest in such Copyright License is not
prohibited by such Copyright License without the consent of any other party
thereto, would not give any other party to such Copyright License the right
to terminate its obligations thereunder, or is permitted with consent if
all necessary consents to such grant of a security interest have been
obtained from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate such Grantor to obtain such
consents); provided that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any money or other amounts due or to become
due under any such Copyright License.
"Deposit Account": the "deposit accounts" as such term is defined in
Section 9-102(a)(29) of the New York UCC listed on Schedule 9 hereto under
the heading "Deposit Accounts" or required to be disclosed to the
Administrative Agent pursuant to Section 5.13 hereof.
"Guarantor Obligation": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are required to
be paid by such Guarantor pursuant to the terms of this Agreement or any
other Loan Document).
"Guarantors": the collective reference to each Grantor other than
the Borrower.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to ▇▇▇ at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Intercompany Note": any promissory note evidencing loans made by
any Grantor to the Borrower or any of its Subsidiaries (other than the
promissory note dated May 12, 2003, evidencing the loan made by the
Borrower to Holland & ▇▇▇▇▇▇▇ Europe Limited in the amount of [Pounds]
200,000,000 and any Refinancing Indebtedness in respect thereof permitted
by the Credit Agreement.
"Investment Property": the collective reference to all "investment
property" as such term is defined in Section 9-102(a)(49) of the New York
UCC (other than Capital Stock of a Foreign Subsidiary which is not required
to be pledged to the Administrative Agent pursuant to the terms of this
Agreement and the Credit Agreement).
"Issuers": the collective reference to each issuer of any Pledged
Security.
"material": as the context may reasonably permit or require,
material in relation to the Borrower and its Subsidiaries, taken as a
whole.
3
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligation": (i) in the case of the Borrower, its Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patent": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in Schedule 6, (ii) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in Schedule
6, and (iii) all rights to obtain any reissues or extensions of the
foregoing.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6, to the extent
(after giving effect to the provisions of 9-408(a) of the New York UCC) the
grant by such Grantor of a security interest pursuant to this Agreement in
its right, title and interest in such Patent License is not prohibited by
such Patent License without the consent of any other party thereto, would
not give any other party to such Patent License the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents); provided that the
foregoing limitation shall not affect, limit, restrict or impair the grant
by such Grantor of a security interest pursuant to this Agreement in any
money or other amounts due or to become due under any such Patent License.
"Pledged Note": all Intercompany Notes at any time issued to any
Grantor and all other promissory notes issued to or held by any Grantor
(other than promissory notes issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business and other than the
promissory note dated May 12, 2003, evidencing the loan made by the
Borrower to Holland & ▇▇▇▇▇▇▇ Europe Limited in the amount of [Pounds]
200,000,000 and any Refinancing Indebtedness in respect thereof permitted
by the Credit Agreement.).
"Pledged Securities": the collective reference to the Pledged Notes
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2
together with any other shares, stock certificates, options or rights of
any nature whatsoever pledged pursuant to subsection 7.9 of the Credit
Agreement.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Secured Parties": as defined in Section 2.1
"Securities Act": the Securities Act of 1933, as amended.
4
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 6, and (ii) the
right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in Schedule 6, to the extent (after giving effect to the provisions of 9-
408(a) of the New York UCC) the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in
such Trademark License is not prohibited by such Trademark License without
the consent of any other party thereto, would not give any other party to
such Trademark License the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); provided that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any money or other amounts
due or to become due under any such Trademark License.
"Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title law
of any state.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein," "hereto" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references
are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, absolutely, unconditionally and irrevocably, guarantees to the
Administrative Agent, for the ratable benefit of the Lenders and, in the
case of any Hedge Agreement or Cash Management Obligations, between the
Borrower and any Affiliate of a Lender, such Affiliate of a Lender
(together with the Agents and the Lenders, the "Secured Parties") and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Borrower Obligations.
5
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which
can be guaranteed by such Guarantor under applicable federal and state laws
relating to the insolvency of debtors (after giving effect to the right of
contribution established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this
Section 2 or affecting the rights and remedies of the Administrative Agent
or any other Secured Party hereunder.
(d) Subject to reinstatement as provided in Section 2.6, the
guarantee contained in this Section 2 shall remain in full force and effect
until all the Borrower Obligations and the obligations of each Guarantor
under the guarantee contained in this Section 2 shall have been satisfied
by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from the
Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any other Secured Party from the Borrower, any of
the Guarantors, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Borrower
Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of
the Borrower Obligations or any payment received or collected from such
Guarantor in respect of the Borrower Obligations), remain liable for the
Borrower Obligations up to the maximum liability of such Guarantor
hereunder until (subject to reinstatement as provided in Section 2.6) all
Borrower Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to
seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and
conditions of Section 2.3. The provisions of this Section 2.2 shall in no
respect limit the obligations and liabilities of any Guarantor to the
Secured Parties, and each Guarantor shall remain liable to the Secured
Parties for the full amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor
by any Secured Party, no Guarantor shall be entitled to be subrogated to
any of the rights of any Secured Party against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held
by the Administrative Agent or any other Secured Party for the payment of
the Borrower Obligations, nor shall any Guarantor seek or be entitled to
seek any contribution or reimbursement from the Borrower or any other
Guarantor in respect of payments made by such Guarantor hereunder, until
all Borrower Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time
when all of the Borrower Obligations shall not have
6
been paid in full, such amount shall be held by such Guarantor in trust for
the Secured Parties, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, as
provided by Section 6.5 hereof.
2.4 Amendments, etc. with respect to the Borrower Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the
Borrower Obligations made by any Secured Party may be rescinded by the
Administrative Agent or such Secured Party and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of
any other Person upon or for any part thereof, or any collateral security
or guarantee therefor or right of offset with respect thereto, may, from
time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the
Administrative Agent or any other Secured Party, and the Credit Agreement
and the other Loan Documents and any other documents executed and delivered
in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the
Majority Lenders or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent or any other Secured
Party for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any
other Secured Party shall have any obligation to protect, secure, perfect
or insure any Lien at any time held by it as security for the Borrower
Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute, Irrevocable and Unconditional. Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Borrower Obligations and notice of or proof of
reliance any Secured Party upon the guarantee contained in this Section 2
or acceptance of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon the guarantee contained in this Section 2; and all
dealings between the Borrower and any of the Guarantors, on the one hand,
and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon
the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute,
irrevocable and unconditional guarantee of payment without regard to (a)
the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time
or from time to time held by any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Borrower or any other Person
against any Secured Party, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such
Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance (other than payment or performance in full). When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Guarantor, the Administrative Agent or any other
Secured Party may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights
7
and remedies as it may have against the Borrower, any other Guarantor or
any other Person or against any collateral security or guarantee for the
Borrower Obligations or any right of offset with respect thereto, and any
failure by the Administrative Agent or any other Secured Party to make any
such demand, to pursue such other rights or remedies or to collect any
payments from the Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower, any other Guarantor
or any other Person or any such collateral security, guarantee or right of
offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative
Agent or any other Secured Party against any Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative
Agent or any Secured Party upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or any Guarantor, or upon or
as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments
had not been made.
2.7 Payment. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars pursuant to the Credit Agreement at the relevant
payment office specified in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, for the ratable benefit of the Secured Parties, and hereby grants to
the Administrative Agent, for the ratable benefit of the Secured Parties, a
security interest in all of the following property now owned or at any time
hereafter acquired by such Grantor or in which such Grantor now has or at
any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Commercial Tort Claims, in which any Grantor has
rights, in excess of $1,000,000;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
8
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all Letter of Credit Rights;
(m) all Pledged Securities;
(n) all books and records pertaining to the Collateral;
(o) to the extent not otherwise included, all Proceeds,
Supporting Obligations and products of any and all of the foregoing
and all collateral security and guarantees given by any Person with
respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders and the other Secured Parties to make
their respective extensions of credit to the Borrower thereunder, each
Grantor hereby represents and warrants to the Administrative Agent and each
Lender that:
4.1 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 5 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents
to which such Guarantor is a party, each of which is hereby incorporated
herein by reference, are true and correct, and each Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein; provided that each reference in each such representation and
warranty to the Borrower's knowledge shall, for the purposes of this
Section 4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement and the other Liens permitted to exist
on the Collateral by the Credit Agreement, such Grantor owns each item of
the Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part
of the Collateral is on file or of record in any public office, except (a)
such as have been filed in favor of the Administrative Agent, for the
ratable benefit of the Lenders, pursuant to this Agreement, (b) as are
permitted by the Credit Agreement, (c) as filed in favor of the
Administrative Agent pursuant to the Existing Credit Agreement for the
ratable benefit of the lenders (and certain of their affiliates) thereunder
(and arrangements for the release of which have been made to the
satisfaction of the Administrative Agent), or (d) as previously identified
in writing to the Administrative Agent, arrangements for the release of
which satisfactory to the Administrative Agent have been made.
9
4.3 Perfected First Priority Lien. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other
actions specified on Schedule 3 (which, in the case of all filings and
other documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and (to the extent required) duly
executed form) will constitute valid perfected security interests in all of
the Collateral in favor of the Administrative Agent, for its benefit and
the ratable benefit of the Secured Parties, as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof
against all creditors of such Grantor and any Persons purporting to
purchase any Collateral from such Grantor and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for (i)
unrecorded Liens permitted by the Credit Agreement which have priority over
the Liens on the Collateral by operation of law, (ii) Liens described on
Schedule 7, and (ii) Liens previously identified in writing to the
Administrative Agent, arrangements for the release of which satisfactory to
the Administrative Agent have been made, and except to the extent that
filings outside the United States might be required to perfect such
security interest in non-U.S. intellectual property.
4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization, identification number from such jurisdiction
of organization (if any) and the location of such Grantor's chief executive
office or principal place of business are specified on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 Pledged Securities. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of
all classes of the Capital Stock of each Issuer owned by such Grantor,
except that the shares of Pledged Stock of any Issuer which is a Foreign
Subsidiary constitute no more than 65% of all the issued and outstanding
Capital Stock of such Issuer and no shares of any Issuer that are owned by
a Foreign Subsidiary shall constitute Pledged Stock.
(b) All the shares of the Pledged Stock have been duly and validly
issued and, to the extent the same are shares of Capital Stock of a
corporation, are fully paid and nonassessable.
(c) Each of the Pledged Notes that is an Intercompany Note
constitutes the legal, valid and binding obligation of the obligor with
respect thereto, enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing. No obligor with respect to any such Pledged Note has any
defense or counterclaim with respect to such Pledged Note or any payment
thereunder. All Pledged Notes with a principal amount in excess of
$100,000 are listed on Schedule 2.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Securities pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of,
any other Person, except the security interest created by this Agreement.
10
4.8 Receivables. (a) No amount payable to such Grantor under or in
connection with any material Receivable is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Administrative Agent.
(b) Receivables in respect of which a Governmental Authority is the
obligor do not constitute more than 5%, in face amount, of all Receivables.
(c) The amounts represented by such Grantor to the Lenders from
time to time as owing to such Grantor in respect of the Receivables will at
such times be accurate in all material respects.
4.9 Intellectual Property. (a) Schedule 6 lists all material
Intellectual Property owned by such Grantor in its own name on the date
hereof and all applications to register any such Intellectual Property.
(b) On the date hereof, all material Intellectual Property, and to
the best of Grantor's knowledge, all other Intellectual Property, is valid,
subsisting, unexpired and enforceable, has not been abandoned and does not
infringe the intellectual property rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof, none of
the material Intellectual Property, and to the best of Grantor's knowledge,
none of the other Intellectual Property, is the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity
of, or such Grantor's rights in, any Intellectual Property in any respect
that could reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of
such Grantor, threatened, on the date hereof (i) seeking to limit, cancel
or question the validity of any material Intellectual Property or such
Grantor's ownership therein, or to the best of Grantor's knowledge, any
other Intellectual Property or such Grantor's ownership interest therein,
or (ii) which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
4.10 Deposit Accounts; Security Accounts; Commodity Accounts.
Schedule 9 lists all (i) deposit accounts that are owned by such Grantor in
its own name on the date hereof (as such term is defined in Section 9-
102(a)(29) of the New York UCC) (a) that have had an average daily balance
in excess of $500,000, or such other amount to be agreed by the Borrower
and the Administrative Agent, for twelve months prior to the date hereof
and (b) in which the amounts held therein are not deposited into a Deposit
Account on a nightly basis and (ii) all Securities Accounts or Commodities
Accounts maintained by such Grantor.
4.11 Commercial Tort Claims. Schedule 8 lists all Commercial Tort
Claims in which any Grantor has any rights in excess of $1,000,000.
11
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the other Secured Parties that, from and after the date of this Agreement
until the Obligations shall have been paid in full, no Letter of Credit
shall be outstanding and the Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor,
such Guarantor shall comply with and perform each covenant set forth in the
Credit Agreement applicable thereto as if such Guarantor were a party to
the Credit Agreement.
5.2 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral in excess of
$1,000,000 shall be or become evidenced by any Instrument, Certificated
Security or Chattel Paper, such Instrument, Certificated Security (unless
such Certificated Security is in a Securities Account subject to a Control
Agreement) or Chattel Paper shall be immediately delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance. Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring
the Inventory, Equipment and Vehicles against loss by fire, explosion,
theft and such other casualties as may be reasonably satisfactory to the
Administrative Agent and (ii) insuring such Grantor, the Administrative
Agent and the Lenders against liability for personal injury and property
damage relating to such Inventory, Equipment and Vehicles, such policies to
be in such form and amounts and having such coverage as may be reasonably
satisfactory to the Administrative Agent and the Lenders.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall
be effective until at least 30 days after receipt by the Administrative
Agent of written notice thereof, (ii) name the Administrative Agent as
insured party or additional loss payee, (iii) if reasonably requested by
the Administrative Agent, include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such
insurance during the month of February in each calendar year and such
supplemental reports with respect thereto as the Administrative Agent may
from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent,
as the case may be, all taxes, assessments and governmental charges or
levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings, reserves in conformity with GAAP with respect
thereto have been provided on the books of such Grantor and such
proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any
interest therein.
12
5.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest
created by this Agreement as a perfected security interest having at least
the priority described in Section 4.3 and shall defend such security
interest against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (i) filing of any financing
or continuation statements under the Uniform Commercial Code (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby and (ii) in the case of Investment Property,
Pledged Securities, Deposit Accounts and any other relevant Collateral,
taking any actions necessary to enable the Administrative Agent to obtain
"control" (within the meaning of the applicable Uniform Commercial Code)
with respect thereto.
5.6 Changes in Jurisdiction of Organization, Locations, Name, etc.
Such Grantor will not, except upon 15 days' prior written notice to the
Administrative Agent and delivery to the Administrative Agent of all
additional executed financing statements and other documents (in each case
executed to the extent required) reasonably requested by the Administrative
Agent to maintain the validity, perfection and priority of the security
interests provided for herein:
(i) change its jurisdiction of organization, or if such
Grantor does not have a jurisdiction of organization for purposes of
the New York UCC, the location of its chief executive office or
principal place of business from that referred to in Section 4.4; or
(ii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative
Agent in connection with this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of the Collateral
which would adversely affect the ability of the Administrative Agent
to exercise any of its remedies hereunder; and
(b) the occurrence of any other event which could reasonably
be expected to have a material adverse effect on the aggregate value
of the Collateral or on the security interests created hereby.
13
5.8 Pledged Securities. (a) If such Grantor shall become entitled
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution
in connection with any reclassification, increase or reduction of capital
or any certificate issued in connection with any reorganization), option or
rights in respect of the Capital Stock of any Issuer, whether in addition
to, in substitution of, as a conversion of, or in exchange for, any shares
of the Pledged Stock, or otherwise in respect thereof such Grantor shall
accept the same as the agent of the Administrative Agent and the other
Secured Parties, hold the same in trust for the Administrative Agent and
the other Secured Parties and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such
Grantor to the Administrative Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations, provided
that the foregoing shall not require any Grantor to so deliver any such
Capital Stock of any Issuer which is a Foreign Subsidiary if, as a result
thereof, the Capital Stock of such Foreign Subsidiary pledged hereunder
would exceed 65% of all Capital Stock of such Foreign Subsidiary. Any sums
paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent to
be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or in
respect of the Pledged Securities or any property shall be distributed upon
or with respect to the Pledged Securities pursuant to the recapitalization
or reclassification of the capital of any Issuer or pursuant to the
reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative
Agent, be delivered to the Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged
Securities shall be received by such Grantor, such Grantor shall, until
such money or property is paid or delivered to the Administrative Agent,
hold such money or property in trust for the Secured Parties, segregated
from other funds of such Grantor, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the Administrative Agent
(not to be unreasonably withheld or delayed), such Grantor will not (i)
vote to enable, or take any other action to permit, any Issuer to issue any
stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange
for any stock or other equity securities of any nature of any Issuer, (ii)
sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Securities or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement),
(iii) create, incur or permit to exist any Lien or option in favor of, or
any claim of any Person with respect to, any of the Pledged Securities or
Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement and Liens permitted by the Credit
Agreement or (iv) enter into any agreement or undertaking restricting the
right or ability of such Grantor or the Administrative Agent to sell,
assign or transfer any of the Pledged Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to
the Pledged Securities issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Administrative
Agent promptly in writing of the occurrence of any of the events described
in Section 5.8(a) with respect to the Pledged Securities issued by it and
(iii) the terms of Section 6.3(c) shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section
6.3(c) with respect to the Pledged Securities issued by it.
14
(d) Such Grantor hereby agrees that if any Issuer of Pledged Stock is
organized in a jurisdiction which does not permit the use of certificates
to evidence equity ownership, or if any of the Pledged Stock is at any time
not evidenced by certificates of ownership, then such applicable Grantor
shall, to the extent permitted by applicable law, record such pledge on the
equityholder register or the books of the issuer, cause the issuer to
execute and deliver to the Administrative Agent an acknowledgment of the
pledge of such Pledged Stock substantially in the form of Annex 2 annexed
hereto, execute any customary pledge forms or other documents necessary or
appropriate to complete the pledge and give the Administrative Agent the
right to transfer such Pledged Stock under the terms hereof.
5.9 Receivables. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable,
(iv) allow any credit or discount whatsoever on any Receivable or (v)
amend, supplement or modify any Receivable in any manner that could
adversely affect the value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or
calls into doubt the validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables of the Borrower and
its Subsidiaries.
5.10 Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each
and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of abandonment
for non-use, (ii) maintain as in the past the quality of products and
services offered under such Trademark, (iii) use such Trademark with any
appropriate notice of registration and all other notices and legends
required by applicable Requirements of Law, (iv) not adopt or use any ▇▇▇▇
which is confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of the Secured
Parties, shall obtain a perfected security interest in such ▇▇▇▇ pursuant
to this Agreement, and (v) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material portion of such Copyrights may become invalidated
or otherwise impaired. Such Grantor will not (either itself or through
licensees) do any act whereby any material portion of such Copyrights may
fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
15
(e) Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or has reason to know, that any
application or registration relating to any material Intellectual Property
may become forfeited, abandoned or dedicated to the public, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any material Intellectual
Property or such Grantor's right to register the same or to own and
maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office
or agency in any State of the United States, such Grantor shall report such
filing to the Administrative Agent within five Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may reasonably request to evidence the security
interest of the Administrative Agent and the other Secured Parties in any
Copyright, Patent or Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any State of the United States, to maintain and
pursue each application (and to obtain the relevant registration) and to
maintain each registration of material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use
and affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall
(i) take such actions as such Grantor shall reasonably deem appropriate
under the circumstances to protect such Intellectual Property and (ii) if
such Intellectual Property is of material economic value, promptly notify
the Administrative Agent after it learns thereof and ▇▇▇ for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate
and to recover any and all damages for such infringement, misappropriation
or dilution.
5.11 Jurisdiction of Organization. At the Administrative Agent's
request, each Grantor will provide its jurisdiction of organization,
identification number from the jurisdiction of organization (if any), and
the location of such Grantor's chief executive office or sole place of
business. In addition, the Administrative Agent may request, and such
Grantor shall provide upon such request, a certified charter, certificate
of incorporation, or other organizational document and long form good
standing certificate from each Grantor.
5.12 Commercial Tort Claims. Such Grantor will advise the
Administrative Agent of such Grantor's interest in any Commercial Tort
Claim in an amount in excess of $1,000,000 in which such Grantor believes
it has rights, and such Grantor shall promptly provide the Administrative
Agent with an updated Schedule 8 describing such Commercial Tort Claim or
such information with respect thereto as the Administrative Agent may
reasonably request in order to attach and perfect a security interest
therein in accordance with applicable law.
16
5.13 Additional Accounts. Such Grantor will advise the
Administrative Agent of the creation of any new (i) deposit account (as
such term is defined in Section 9-102(a)(29) of the New York UCC) which (a)
has had an average daily balance in excess of $500,000 for the four most
recent fiscal quarters for which financial information is available
(measured at the end of each fiscal quarter) and (b) in which the amounts
held therein are not deposited into a Deposit Account on a nightly basis
(any such deposit account will be a "Deposit Account" with respect to the
definition of such term heron), (ii) Securities Account or (iii) Commodity
Account, and such Grantor shall promptly provide the Administrative Agent
with an updated Schedule 9 describing such Deposit Account, Securities
Account or Commodities Account, as the case may be or such information with
respect thereto as the Administrative Agent may reasonably request.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Administrative
Agent shall have the right to make test verifications of the Receivables in
any manner and through any medium that it reasonably considers advisable,
and each Grantor shall furnish all such assistance and information as the
Administrative Agent may require in connection with such test
verifications. At any time and from time to time (but not more frequently
than once per fiscal quarter), upon the Administrative Agent's request and
at the expense of the relevant Grantor, such Grantor shall cause
independent public accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial balances for,
the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables and the Administrative Agent may curtail
or terminate said authority at any time and only at any time after the
occurrence and during the continuance of an Event of Default. If required
by the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within
two Business Days) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for
the account of the Lenders only as provided in Section 6.5, and (ii) until
so turned over, shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Receivables shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.
(c) At the Administrative Agent's request, at any time after the
occurrence and during the continuance of an Event of Default, each Grantor
shall deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave
rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any
time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
17
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each
Grantor shall notify obligors on the Receivables that the Receivables have
been assigned to the Administrative Agent for the ratable benefit of the
Lenders and that payments in respect thereof shall be made directly to the
Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by
the Administrative Agent or any Lender of any payment relating thereto, nor
shall the Administrative Agent or any Lender be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto), to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Grantor of the Administrative Agent's intent to
exercise its corresponding rights pursuant to Section 6.3(b), each Grantor
shall be permitted to receive all cash dividends paid in respect of the
Pledged Stock and all payments made in respect of the Pledged Notes, in
each case paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate rights with respect to
the Investment Property; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which would materially
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any
other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such
rights to the relevant Grantor or Grantors, (i) the Administrative Agent
shall have the right to receive any and all cash dividends, payments or
other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in such order as the Credit
Agreement shall prescribe, and (ii) any or all of the Pledged Securities
shall be registered in the name of the Administrative Agent or its nominee,
and the Administrative Agent or its nominee may thereafter exercise (x) all
voting, corporate and other rights pertaining to such Pledged Securities at
any meeting of shareholders of the relevant Issuer or Issuers or otherwise
and (y) any and all rights of conversion, exchange and subscription and any
other rights, privileges or options pertaining to such Pledged Securities
as if it were the absolute owner thereof (including, without limitation,
the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of any Issuer, or
upon the exercise by any Grantor or the Administrative Agent of any right,
privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Administrative Agent may determine), all without liability except to
account for property actually received by it, but the Administrative Agent
shall have no duty to any Grantor to exercise
18
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to comply with any
instruction received by it from the Administrative Agent in writing that
(i) states that an Event of Default has occurred and is continuing and (ii)
is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from such Grantor, and each Grantor agrees
that each Issuer shall be fully protected in so complying.
6.4 Proceeds To Be Turned Over to Administrative Agent. In
addition to the rights of the Administrative Agent and the Lenders
specified in Section 6.1 with respect to payments of Receivables, if an
Event of Default shall occur and be continuing, and the Administrative
Agent has so requested, all Proceeds received by any Grantor in respect of
Collateral consisting of cash, checks and other near-cash items shall be
held by such Grantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Grantor, and shall, forthwith upon
receipt by such Grantor, be turned over to the Administrative Agent in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in
a Collateral Account maintained under its sole dominion and control. All
Proceeds while held by the Administrative Agent in a Collateral Account (or
by such Grantor in trust for the Administrative Agent and the Lenders)
shall continue to be held as collateral security for all the Obligations
and shall not constitute payment thereof until applied as provided in
Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Administrative Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the
Administrative Agent's election, the Administrative Agent may apply all or
any part of Proceeds held in any Collateral Account in payment of the
Obligations:
(a) first, to the payment of the costs and expenses of such
collection, sale or other realization, including out-of-pocket costs and
expenses of the Administrative Agent and the fees and expenses of its
agents and counsel, and all expenses incurred and advances made by the
Administrative Agent in connection therewith; and
(b) next, to the payment in full of the Obligations, in each case
equally and ratably in accordance with the respective amounts thereof then
due and owing or as the Lenders holding the same may otherwise agree,
and any part of such funds which are not required to be applied in payment
of the Obligations in accordance with the foregoing provisions and which
Administrative Agent deems not required as collateral security for the
Obligations shall be paid over from time to time by the Administrative
Agent to the Borrower or to whomsoever may be lawfully entitled to receive
the same. Any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding and
the Commitments shall have terminated shall be paid over to the Borrower or
to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur
and be continuing, the Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and reme-
19
dies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights
and remedies of a secured parry under the New York UCC or any other
applicable law. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, protests, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office
of the Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent or any Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the
proceeds of any action taken by it pursuant to this Section 6.6, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in the manner set forth in paragraphs
(a) and (b) of Section 6.5, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Administrative Agent account for the surplus, if
any, to any Grantor. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 Business Days before such
sale or other disposition.
6.7 Private Sales. (a) Each Grantor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all
the Pledged Stock, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may
be compelled to resort to one or more private sales thereof to a restricted
group of purchasers which will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not with a
view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner. The Administrative Agent
shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register
such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
(b) Each Grantor agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales
of all or any portion of the Pledged Stock pursuant to
20
this Section 6.7 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Grantor further agrees that a breach
of any of the covenants contained in this Section 6.7 will cause
irreparable injury to the Administrative Agent and the other Secured
Parties, that the Administrative Agent and the other Secured Parties have
no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 6.7 shall be
specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default
has occurred and is continuing under the Credit Agreement.
6.8 Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Obligations and the fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name
of such Grantor or in its own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without
limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the
following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise reasonably deemed
appropriate by the Administrative Agent for the purpose of collecting
any and all such moneys due under any Receivable or with respect to
any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may reasonably
request to evidence the Administrative Agent's and the other Secured
Parties' security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral;
and
21
(v) (i) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (ii) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (iii) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral; (iv)
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (v) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; (vi)
settle, compromise or adjust any such suit, action or proceeding and,
in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (vii) assign any
Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Copyright, Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and
in such manner, as the Administrative Agent shall in its sole
discretion determine; and (viii) generally, sell, transfer, pledge
and make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes, and do, at
the Administrative Agent's option and such Grantor's expense, at any
time, or from time to time, all acts and things which the
Administrative Agent reasonably deems necessary to protect, preserve
or realize upon the Collateral and the Administrative Agent's and the
other Secured Parties' security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such
Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of
Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with
interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Revolving Credit Loans that are
ABR Loans under the Credit Agreement, from the date of payment by the
Administrative Agent to the date reimbursed by the relevant Grantor, shall
be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the New York UCC
or otherwise, shall be to deal with it in the same manner as the
Administrative
22
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so
or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof, except in each case as regards the disposition of any Collateral
permitted under the Credit Agreement. The powers conferred on the
Administrative Agent and the Lenders hereunder are solely to protect the
Administrative Agent's and the Lenders' interests in the Collateral and
shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall
be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any
act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
7.3 Execution of Financing Statement. Pursuant to applicable law,
each Grantor authorizes the Administrative Agent to file or record
financing statements and other filing or recording documents or instruments
with respect to the Collateral without the signature of such Grantor in
such form and in such offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. Each Grantor authorizes the
Administrative Agent to use the collateral description of "all personal
property, whether now owned or hereafter acquired" in any such financing
statements. A photographic or other reproduction of this Agreement shall
be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or
the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement
and by such other agreements with respect thereto as may exist from time to
time among them, but, as between the Administrative Agent and the Grantors,
the Administrative Agent shall be conclusively presumed to be acting as
agent for the Lenders with full and valid authority so to act or refrain
from acting, and no Grantor shall be under any obligation, or entitlement,
to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by each affected Grantor and the
Administrative Agent (acting with the required consent, if any, of the
Lenders as provided in the Credit Agreement), provided that any provision
of this Agreement imposing obligations on any Grantor may be waived by the
Administrative Agent in a written instrument executed by the Administrative
Agent (acting with the required consent, if any, of the Lenders as provided
in the Credit Agreement) of the Credit Agreement, subject to the terms of
the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the
manner provided for in subsection 11.2 of the Credit
23
Agreement; provided that any such notice, request or demand to or upon any
Guarantor shall be addressed to such Guarantor at its notice address set
forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Administrative Agent nor any Lender shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which
the Administrative Agent or such Lender would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay or reimburse each Lender and the Administrative Agent for all
its costs and expenses incurred in collecting against such Guarantor under
the guarantee contained in Section 2 or otherwise enforcing or preserving
any rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, the fees and
disbursements of counsel to each Lender and of counsel to the
Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Secured Parties harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other similar taxes which may be payable or determined to
be payable with respect to any of the Collateral or in connection with any
of the transactions contemplated by this Agreement to the extent the
Borrower would be required to do so pursuant to subsection 11.5 of the
Credit Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the other Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and administration of
this Agreement to the extent the Borrower would be required to do so
pursuant to subsection 11.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive termination of
the Loan Documents and repayment of the Obligations and all other amounts
payable under the Credit Agreement and the other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit
of the Administrative Agent and the other Secured Parties and their
successors and assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time
while an Event of Default shall have occurred and be continuing, without
notice to such Grantor or any other Grantor, any such notice being
expressly waived by
24
each Grantor, to set off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Administrative Agent or such
Lender to or for the credit or the account of such Grantor, or any part
thereof in such amounts as the Administrative Agent or such Lender may
elect, against and on account of the obligations and liabilities of such
Grantor to the Administrative Agent or such Lender hereunder and claims of
every nature and description of the Administrative Agent or such Lender
against such Grantor, in any currency, whether arising hereunder, under the
Credit Agreement, any other Loan Document or otherwise, as the
Administrative Agent or such Lender may elect, whether or not the
Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such
Grantor promptly of any such set-off and the application made by the
Administrative Agent or such Lender of the proceeds thereof, provided that
the failure to give such notice shall not affect the validity of such set-
off and application. The rights of the Administrative Agent and each
Lender under this Section 8.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Grantors, the Administrative Agent
and the other Secured Parties with respect to the subject matter hereof and
thereof; and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Secured Party relative to
subject matter hereof and thereof not expressly set forth or referred to
herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
8.12 Submission to Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of
25
the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address referred to in Section 8.2 or
at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 8.12 any consequential
damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents to which it is
a party;
(b) neither the Administrative Agent nor any other Secured Party
has any fiduciary relationship with or duty to any Grantor arising out of
or in connection with this Agreement or any of the other Loan Documents,
and the relationship between the Grantors, on the one hand, and the
Administrative Agent and other Secured Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor, and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Grantors and the Secured Parties.
8.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
8.15 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to subsection 7.9 of
the Credit Agreement shall become a Grantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.
8.16 Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of
26
Credit shall be outstanding, the Collateral shall be released from the
Liens created hereby, and this Agreement and all obligations (other than
those expressly stated to survive such termination) of the Administrative
Agent and each Grantor hereunder shall terminate, all without delivery of
any instrument or performance of any act by any party, and all rights to
the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Administrative
Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such
termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the
Credit Agreement, then the Administrative Agent, at the request and sole
expense of such Grantor, shall execute and deliver to such Grantor all
releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral. At the request and
sole expense of the Borrower, a Subsidiary Guarantor shall be released from
its obligations hereunder in the event that all the Capital Stock of such
Subsidiary Guarantor shall be sold, transferred or otherwise disposed of,
or such Subsidiary Guarantor shall be liquidated or dissolved, in each case
in a transaction permitted by the Credit Agreement, provided that the
Borrower shall have delivered to the Administrative Agent, at least ten
Business Days prior to the date of the proposed release, a written request
for release identifying the relevant Subsidiary Guarantor and the terms of
the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.
[Signature Page Follows]
27
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered as of the date first above written.
NBTY, INC.
By: _________________________
Name:
Title:
S-1
AMERICAN HEALTH, INC.,
ARCO PHARMACEUTICALS, INC.,
ARTHRITIS RESEARCH CORP.,
BIOSMART DIRECT SALES, LLC,
DE TUINEN LTD.,
DYNAMIC ESSENTIALS (DE), INC.,
EUROLEAN RESEARCH, LLC,
GOOD N' NATURAL MANUFACTURING CORP.,
HEALTHWATCHERS (DE), INC.,
HOLLAND & ▇▇▇▇▇▇▇ LTD.,
LIFE'S FINEST, INC.,
MET-RX NUTRITION, INC.,
MET-RX SUBSTRATE TECHNOLOGY, INC.,
MET-RX USA, INC.,
NABARCO ADVERTISING ASSOCIATES,
INC.,
NATURAL WEALTH NUTRITION
CORPORATION,
NATURE'S BOUNTY INC.,
NATURE'S BOUNTY MANUFACTURING CORP.,
NATURE'S BOUNTY, INC.,
NATURESMART, LLC,
NBTY CAH COMPANY,
NBTY CAM COMPANY,
NBTY DISTRIBUTION, INC.,
NBTY MANUFACTURING, LLC,
NUTRITION HEADQUARTERS (DE), INC.,
NUTRITIONAL ▇▇▇▇▇▇▇.▇▇▇ INC.
OMNI VITAMIN AND NUTRITION CORP.,
PHYSIOLOGICS, LLC,
PURITAN'S PRIDE, INC.,
REXALL SUNDOWN, INC.,
REXALL US DELAWARE, INC.,
REXALL US NEWCO 1 LLC,
REXALL US NEWCO 2 LLC,
REXALL US NEWCO DGP1,
REXALL US NEWCO DGP2,
REXALL, INC.,
▇▇▇▇▇▇▇▇▇▇ LABS, INC.,
RSL HOLDINGS, INC.,
RXSD, INC.,
SUNDOWN, INC.,
THE NON-IRRADIATED HERBAL
MANUFACTURERS GROUP, LLC,
UNITED VITAMIN MANUFACTURING CORP.,
VITAMIN WORLD (BOCA), LLC,
VITAMIN WORLD OF GUAM, LLC,
VITAMIN WORLD ONLINE, INC.,
VITAMIN WORLD OUTLET STORES, INC.,
VITAMIN WORLD, INC.,
WORLDWIDE SPORT NUTRITIONAL
SUPPLEMENTS, INC.,
By: ____________________________
Name:
Title:
S-2
JPMORGAN CHASE BANK,
as Administrative Agent
By: _____________________________
Name:
Title:
S-3
ANNEX 1
[FORM OF ASSUMPTION AGREEMENT]
ASSUMPTION AGREEMENT, dated as of [ ]. made
by [ ], a [
] corporation (the "Additional Grantor"), in favor of ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank,
as administrative agent (in such capacity, the "Administrative Agent"), for
the banks and other financial institutions (the "Lenders") parties to the
Credit Agreement referred to below. Unless otherwise indicated, all
capitalized terms not defined herein shall have the meaning ascribed to
them in such Credit Agreement.
W I T N E S S E T H :
_ _ _ _ _ _ _ _ _ _
WHEREAS, NBTY, Inc. (the "Borrower"), the Lenders, FLEET NATIONAL
BANK, as syndication agent and JPMORGAN CHASE BANK, as Administrative Agent
and collateral agent, have entered into a Credit Agreement, dated as of
July 24, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Subsidiaries (other than the Additional Grantor) have
entered into the Guarantee and Collateral Agreement, dated as of July 24,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee and Collateral Agreement") in favor of the Administrative Agent
for the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided
in Section 8.15 of the Guarantee and Collateral Agreement, hereby becomes a
party to the Guarantee and Collateral Agreement as a Grantor thereunder
with the same force and effect as if originally named therein as a Grantor
and, without limiting the generality of the foregoing, hereby expressly
assumes all obligations and liabilities of a Grantor thereunder. In
furtherance of the foregoing, the Additional Grantor hereby assigns and
transfers to the Administrative Agent, and hereby grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a
security interest in, all of the Collateral (as defined in the Guarantee
and Collateral Agreement) now owned or at any time hereafter acquired by
the Additional Grantor or in which the Additional Grantor now has or at any
time in the future may acquire any right, title or interest, as collateral
security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Additional Grantor's Obligations (as defined in the Guarantee and
Collateral Agreement). The information set forth in Annexes 2 and 4 [and [
]] hereto is hereby added to the information set
2
forth in Schedules 2 and 4 [and [ ]] to the Guarantee and Collateral
Agreement. The Additional Grantor hereby represents and warrants that each
of the representations and warranties contained in Section 4 of the
Guarantee and Collateral Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and
as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above
written.
[ ]
By: ______________________________
Name:
Title:
ANNEX 2
FORM OF ISSUER'S ACKNOWLEDGMENT
The undersigned hereby (i) acknowledges receipt of a copy of that
certain Guarantee and Collateral Agreement, dated as of July 24, 2003, made
by NBTY, Inc., a Delaware corporation (the "Borrower") and the other
signatories thereto, other than the Administrative Agent (together with any
entity that may become a party thereto as a Grantor as provided therein
(collectively, with the Borrower, and together with any successors in such
capacities, the "Grantors"), as pledgors, assignors and debtors, in favor
of JPMorgan Chase Bank, a New York banking corporation, in its capacity as
administrative agent pursuant to the Credit Agreement, as pledgee, assignee
and secured party (in such capacities and together with any successors in
such capacities, the "Administrative Agent") (and as further amended,
amended and restated, supplemented or otherwise modified from time to time,
the "Guarantee and Collateral Agreement"; capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in
the Guarantee and Collateral Agreement), (ii) agrees promptly to note on
its books the security interests granted to the Administrative Agent in
respect of the Pledged Stock of the undersigned and confirmed under the
Guarantee and Collateral Agreement, (iii) agrees that it will comply with
instructions of the Administrative Agent with respect to such Pledged Stock
without further consent by the applicable Grantor, (iv) agrees to notify
the Administrative Agent upon obtaining knowledge of any interest in favor
of any Person in the such Pledged Stock that is adverse to the interest of
the Administrative Agent therein and (v) waives any right or requirement at
any time hereafter to receive a copy of the Guarantee and Collateral
Agreement in connection with the exercise of voting rights by the
Administrative Agent or its nominee.
[ ]
By: _________________________
Name:
Title: