EXHIBIT 3
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GUARANTEE AND COLLATERAL AGREEMENT
made by
CIRCUIT RESEARCH LABS, INC.,
as Parent
CRL SYSTEMS, INC.,
as Borrower
and certain of their Subsidiaries
in favor of
▇▇▇▇▇, INC.,
as Lender
Dated as of May 31, 2000
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TABLE OF CONTENTS
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SECTION 1. DEFINED TERMS......................................................1
1.1 DEFINITIONS......................................................1
1.2 OTHER DEFINITIONAL PROVISIONS....................................5
SECTION 2. GUARANTEE..........................................................6
2.1 GUARANTEE........................................................6
2.2 RIGHT OF CONTRIBUTION............................................6
2.3 NO SUBROGATION...................................................6
2.4 AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS........7
2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL.............................7
2.6 REINSTATEMENT....................................................8
2.7 PAYMENTS.........................................................8
SECTION 3. GRANT OF SECURITY INTEREST.........................................8
SECTION 4. REPRESENTATIONS AND WARRANTIES.....................................9
4.1 TITLE; NO OTHER LIENS............................................9
4.2 PERFECTED FIRST PRIORITY LIENS...................................9
4.3 CHIEF EXECUTIVE OFFICE..........................................10
4.4 INVENTORY AND EQUIPMENT.........................................10
4.5 FARM PRODUCTS...................................................10
4.6 INVESTMENT PROPERTY.............................................10
4.7 RECEIVABLES.....................................................10
4.8 INTELLECTUAL PROPERTY...........................................10
4.9 VEHICLES........................................................11
4.10 PARENT REPRESENTATIONS.........................................11
SECTION 5. COVENANTS.........................................................12
5.1 DELIVERY OF INSTRUMENTS, CERTIFICATED SECURITIES AND
CHATTEL PAPER...................................................13
5.2 MAINTENANCE OF INSURANCE........................................13
5.3 PAYMENT OF OBLIGATIONS..........................................13
5.4 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION...................................................13
5.5 CHANGES IN LOCATIONS, NAME, ETC.................................14
5.6 NOTICES.........................................................14
5.7 INVESTMENT PROPERTY.............................................14
5.8 RECEIVABLES.....................................................15
5.9 INTELLECTUAL PROPERTY...........................................16
5.10 VEHICLES.......................................................17
5.11 NOTATION OF SECURITY INTERESTS ON BOOKS AND RECORDS............17
5.12 LANDLORD AND WAREHOUSEMAN WAIVERS..............................17
5.13 FINANCIAL STATEMENTS...........................................17
5.14 MANDATORY PREPAYMENT...........................................18
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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...................................................20
6.4 PROCEEDS TO BE TURNED OVER TO LENDER............................20
6.5 APPLICATION OF PROCEEDS.........................................21
6.6 CODE AND OTHER REMEDIES.........................................21
6.7 REGISTRATION RIGHTS.............................................22
6.8 WAIVER; DEFICIENCY..............................................23
SECTION 7. THE LENDER........................................................23
7.1 LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC...................23
7.2 DUTY OF LENDER..................................................24
7.3 EXECUTION OF FINANCING STATEMENTS...............................25
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....................................................26
8.9 SECTION HEADINGS................................................27
8.10 INTEGRATION....................................................27
8.11 GOVERNING LAW..................................................27
8.12 SUBMISSION TO JURISDICTION; WAIVERS............................27
8.13 ACKNOWLEDGMENTS................................................27
8.14 ADDITIONAL GRANTORS AND SECURITY...............................28
8.15 RELEASES.......................................................29
8.16 WAIVER OF JURY TRIAL...........................................29
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SCHEDULES
Schedule 1 Notice Addresses
Schedule 2 Investment Property
Schedule 3 Perfection Matters
Schedule 4 Jurisdictions of Organization and Chief Executive Offices
Schedule 5 Inventory and Equipment Locations
Schedule 6 Intellectual Property
Schedule 7 Vehicles
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GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 31, 2000,
made by CIRCUIT RESEARCH LABS, INC., an Arizona corporation (the "PARENT"), and
each of the signatories hereto (together with the Parent and any other entity
that may become a party hereto as provided herein, the "GRANTORS"), in favor of
▇▇▇▇▇, INC., a Delaware corporation (the "LENDER"), pursuant to the Credit
Agreement dated as of even date herewith (as amended, supplemented, restated or
otherwise modified from time to time, the "CREDIT AGREEMENT"), between CRL
SYSTEMS, INC., a Nevada corporation (the "BORROWER"), and the Lender.
PRELIMINARY STATEMENTS
A. The Borrower and the Lender have entered into that certain Asset
Sale Agreement, dated as of even date herewith (as amended or modified, the
"ASSET SALE AGREEMENT"), pursuant to which the Borrower will acquire certain of
the Lender's assets.
B. The Borrower and the Lender have entered into the Credit Agreement.
C. Pursuant to the Asset Sale Agreement and the Credit Agreement, the
Lender has agreed to accept the Notes as partial payment by the Borrower for the
Assets (as defined in the Asset Sale Agreement).
D. The Borrower is a member of an affiliated group of companies that
includes each other Grantor.
E. The Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making by the Lender of the extensions of credit under the Credit
Agreement.
F. It is a condition precedent to the obligation of the Lender to
extend credit under the Credit Agreement that the Grantors shall have executed
and delivered to the Lender this Guarantee and Collateral Agreement.
NOW, THEREFORE, in consideration of the premises and to induce
the Lender to enter into the Credit Agreement and to induce the Lender to make
the extensions of credit to the Borrower thereunder, each Grantor hereby agrees
with the Lender as follows:
SECTION 1. DEFINED TERMS
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement, and the following terms are used herein as defined
in the New York UCC: Accounts, Certificated Security, Chattel Paper, Documents,
Equipment, Farm Products, Goods, Instruments and Inventory.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented, restated or otherwise modified from
time to time.
"BORROWER OBLIGATIONS": the collective reference to the unpaid
principal of and interest on the Notes and all other obligations and
liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Notes and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding) to the 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 or any other
document made, delivered or given in connection with any of the
foregoing, 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 Lender that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
"COLLATERAL": as defined in Section 3.
"COLLATERAL ACCOUNT": any collateral account established by
the Lender as provided in Section 6.1 or 6.4. Collateral Accounts may
be established at any financial institution designated by the Lender.
"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 and extensions thereof.
"COPYRIGHT LICENSES": all written agreements naming any
Grantor as licensor or licensee (including, without limitation, those
listed in SCHEDULE 6), granting any right under any Copyright,
including, without limitation, the grant of rights in all derivative
works based upon any Copyright, and all renewals and extensions
thereof.
"DEPOSIT ACCOUNT": as defined in the Uniform Commercial Code
of any applicable jurisdiction and, in any event, including, without
limitation, the Collateral Accounts, the Lockbox Account, and any
demand, time, savings, passbook or like account maintained with a
depositary institution.
"EXCLUDED REAL PROPERTY": the real property located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
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"FIXTURES": all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular
real estate that an interest in them arises under any real estate law
applicable thereto.
"FOREIGN SUBSIDIARY": any Subsidiary organized under the laws
of any jurisdiction outside the United States of America.
"FOREIGN SUBSIDIARY VOTING STOCK": the voting Capital Stock of
any Foreign Subsidiary.
"GENERAL INTANGIBLES": all "general intangibles" as such term
is defined in Section 9-106 of the New York UCC and, in any event,
including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or
any property of such Grantor is subject, as the same may from time to
time be amended, supplemented, restated or otherwise modified,
including, without limitation, (i) all rights of such Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to
exercise all remedies thereunder.
"GUARANTOR OBLIGATIONS": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement (including, without limitation,
Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Lender 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 products, royalties and Proceeds thereof or
received in connection therewith and all claims and rights to ▇▇▇ at
law or in equity for past, present or future (i) infringement, dilution
or other impairment thereof, or (ii) injury to the goodwill associated
with any Trademark or Trademark License, including the right to receive
all proceeds and damages from the foregoing.
"INTERCOMPANY NOTE": any promissory note evidencing loans made
by any Grantor to the Parent or any of its Subsidiaries.
"INVESTMENT PROPERTY": the collective reference to (i) all
"investment property" as such term is defined in Section 9-115 of the
New York UCC (other than any Foreign Subsidiary Voting Stock excluded
from the definition of "Pledged Stock") and
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(ii) whether or not constituting "investment property" as so defined,
all Pledged Notes and all Pledged Stock.
"ISSUERS": the collective reference to each issuer of any
Investment Property.
"LOCKBOX ACCOUNT": account number 73880 at the Lockbox Bank.
"NEW YORK UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"OBLIGATIONS": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"PATENTS": (i) all letters patent, including, without
limitation, utility patents, design patents, industrial designs and
utility model registrations, of the United States, any other country or
any political subdivision thereof and all reissues and extensions
thereof, including, without limitation, those listed 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, those
listed in SCHEDULE 6 and (iii) all rights to obtain any reissues,
reexaminations 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 make, use,
sell, offer to sell or import any invention covered in whole or in part
by a Patent, including, without limitation, those listed in SCHEDULE 6,
and all renewals and extensions thereof.
"PLEDGED NOTES": all promissory notes listed on SCHEDULE 2,
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than
promissory notes issued in connection with extensions of trade credit
by any Grantor in the ordinary course of business).
"PLEDGED STOCK": the shares of Capital Stock listed on
SCHEDULE 2, together with any other shares, stock certificates, options
or rights of any nature whatsoever in respect of the Capital Stock of
any Person that may be issued or granted to, or held by, any Grantor
while this Agreement is in effect; PROVIDED that in no event shall more
than 65% of the total outstanding Foreign Subsidiary Voting Stock of
any Foreign Subsidiary be required to be pledged hereunder.
"PRIME RATE": the rate of interest established from time to
time by Bank of America, N.A. as its prime rate.
"PROCEEDS": all "proceeds" as such term is defined in Section
9-306(1) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"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
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whether or not it has been earned by performance (including, without
limitation, any Account).
"SECURITIES ACT": the Securities Act of 1933, as amended.
"SUBSIDIARY": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Parent.
"TRADEMARKS": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names,
service marks, logos, words, terms, names, symbols and devices and all
combinations thereof, and other source or business identifiers, and all
goodwill of the business connected with the use thereof and symbolized
thereby, 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, those listed in SCHEDULE 6, and
(ii) the right to obtain all renewals and extensions thereof.
"TRADEMARK LICENSE": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, those listed in SCHEDULE 6,
and all renewals and extensions thereof.
"VEHICLES": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title
law of any state and, in any event including, without limitation, the
vehicles listed on SCHEDULE 7 and all tires and other appurtenances to
any of the foregoing.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
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SECTION 2. GUARANTEE
2.1 GUARANTEE. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Lender and its
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(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 Lender hereunder.
(d) 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.
(e) No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the Lender
from the Borrower, any of the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to 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 the Borrower
Obligations are paid in full.
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 Lender, and each Guarantor shall remain
liable to the Lender for the full amount guaranteed by such Guarantor hereunder.
2.3 NO SUBROGATION. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Lender, no Guarantor shall be entitled to be subrogated to any of the rights
of the Lender against the Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by the Lender for
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the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Lender by the Borrower on account of the Borrower
Obligations are paid in full. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Lender, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Lender in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Lender, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Lender may
determine.
2.4 AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Lender may be rescinded by the Lender and any of the
Borrower Obligations continued, and the Borrower Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Lender, and the Credit
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented,
restated or terminated, in whole or in part, as the Lender may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Lender for the payment of the Borrower Obligations may be
sold, exchanged, waived, surrendered or released. The Lender shall have no
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Borrower Obligations or for the guarantee contained in this
Section 2 or any property subject thereto.
2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the Lender
upon the guarantee contained in this Section 2 or acceptance of the guarantee
contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this
Section 2; and all dealings between the Borrower and any of the Guarantors, on
the one hand, and the Lender, 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 and unconditional guarantee of
payment without regard to (a) the validity or enforceability of the Credit
Agreement or any other Loan Document, any of the Borrower Obligations or any
other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Lender, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by the Borrower or any other
Person against the Lender, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower or such
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Guarantor) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Borrower for the Borrower Obligations, or of such
Guarantor under the guarantee contained in this Section 2, in bankruptcy or in
any other instance. When making any demand hereunder or otherwise pursuing its
rights and remedies hereunder against any Guarantor, the Lender may, but shall
be under no obligation to, make a similar demand on or otherwise pursue such
rights and remedies as it may have against the Borrower, any other Guarantor or
any other Person or against any collateral security or guarantee for the
Borrower Obligations or any right of offset with respect thereto, and any
failure by the Lender to make any such demand, to pursue such other rights or
remedies or to collect any payments from the Borrower, any other Guarantor or
any other Person or to realize upon any such collateral security or guarantee or
to exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Lender against any
Guarantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
2.6 REINSTATEMENT. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Lender without set-off or counterclaim in Dollars
at the office of the Lender located at c/o Harman International Industries, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Lender, and
hereby grants to the Lender, 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 Deposit Accounts;
(d) all Documents;
(e) all Equipment;
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(f) all Fixtures;
(g) all General Intangibles;
(h) all Goods;
(i) all Instruments;
(j) all Intellectual Property;
(k) all Inventory;
(l) all Investment Property;
(m) all Vehicles;
(n) all books and records, including, without limitation, all
computer disks, computer tapes and other computer records, pertaining
to the Collateral;
(o) all other property of any kind or character, tangible or
intangible, not otherwise described above, except for the Excluded Real
Property; and
(p) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into the Credit Agreement and to
induce the Lender to make the extensions of credit to the Borrower thereunder,
each Grantor hereby represents and warrants to the Lender that:
4.1 TITLE; NO OTHER LIENS. Except for the security interest
granted to the Lender 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 such as have
been filed in favor of the Lender pursuant to this Agreement or as are permitted
by the Credit Agreement.
4.2 PERFECTED FIRST PRIORITY LIENS. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on SCHEDULE 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the Lender in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Lender 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 unrecorded Liens permitted
by the Credit Agreement which have priority over the Liens on the Collateral by
operation of law.
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4.3 CHIEF EXECUTIVE OFFICE. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on SCHEDULE 4.
4.4 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.
4.5 FARM PRODUCTS. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
4.6 INVESTMENT PROPERTY. (a) The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each Issuer owned by such Grantor
or, in the case of Foreign Subsidiary Voting Stock, if less, 65% of the
outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and
has good and marketable title to, the Investment Property pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any
other Person, except the security interest created by this Agreement.
4.7 RECEIVABLES. (a) No amount payable to such Grantor under
or in connection with any Receivable is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Lender.
(b) None of the obligors on any Receivables is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Lender from
time to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.8 INTELLECTUAL PROPERTY. (a) SCHEDULE 6 lists all
Intellectual Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all 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 Intellectual Property is the subject of any licensing or franchise
agreement.
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(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.
(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 Intellectual Property or such Grantor's ownership
interest therein or (ii) which, if adversely determined, would have a material
adverse effect on the value of any Intellectual Property.
4.9 VEHICLES. SCHEDULE 7 is a complete and correct list of all
Vehicles owned by such Grantor on the date hereof.
4.10 PARENT REPRESENTATIONS. In the case of the Parent:
(a) The Parent (i) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (ii) has
the corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (iii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (iv) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects or property
of the Parent and its Subsidiaries taken as a whole.
(b) The Parent has the corporate power and authority, and the
legal right, to make, deliver and perform the Loan Documents to which it is a
party and has taken all necessary corporate action to authorize the execution,
delivery and performance of the Loan Documents to which it is a party. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of the Loan Documents to which the Parent is a party. This Agreement has been,
and each other Loan Document to which it is a party will be, duly executed and
delivered on behalf of the Parent. This Agreement constitutes, and each other
Loan Document to which it is a party when executed and delivered will
constitute, a legal, valid and binding obligation of the Parent enforceable
against the Parent in accordance with its terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of the Loan
Documents to which the Parent is a party will not violate any Requirement of Law
or Contractual Obligation of the Parent or of any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any of its
or their respective properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation (other than pursuant to this Agreement).
(d) No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the knowledge of the
Parent, threatened by or against
11
the Parent or any of its Subsidiaries or against any of its or their respective
properties or revenues with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby.
(e) The Parent has good record and marketable title in fee
simple to, or a valid leasehold interest in, all its real property, and good
title to, or a valid leasehold interest in, all its other property, and none of
such property is subject to any Lien of any nature whatsoever except the
Excluded Real Property.
(f) The Parent has filed or caused to be filed all tax returns
which, to the knowledge of the Parent, are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any the amount or validity of which are currently being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Parent); no tax Lien has been filed,
and, to the knowledge of the Parent, no claim is being asserted, with respect to
any such tax, fee or other charge.
(g) The balance sheets of the Parent as at December 31, 1998
and December 31, 1999 and the related statements of income and of cash flows for
the fiscal years ended on each such date, reported on by Deloitte & Touche LLP,
copies of which have heretofore been furnished to the Lender, are complete and
correct and present fairly the financial condition of the Parent as at such
dates, and the results of its operations and its cash flow for the fiscal years
then ended. The unaudited balance sheet of the Parent as at March 31, 2000 and
the related unaudited statement of income and of cash flow for the three-month
period ended on such date, certified by the President or Chief Financial Officer
of Parent, copies of which have heretofore been furnished to the Lender, are
complete and correct and present fairly the financial condition of the Parent as
at such date, and the results of its operations and its cash flow for the
three-month period then ended (subject to normal year-end audit adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants, and as
disclosed therein). At the date of the most recent balance sheet referred to
above, the Parent had no material contingent liability or liability for taxes,
or any long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other financial derivative, which is not reflected in the
foregoing statements or in the notes thereto. During the period from December
31, 1999, to and including the date hereof there has been no sale, transfer or
other disposition by the Parent of any material part of its business or property
and no purchase or other acquisition of any business or property (including any
Capital Stock of any other Person) material in relation to the financial
condition of the Parent at December 31, 1999 (except as contemplated by the
Asset Sale Agreement).
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Lender that, from
and after the date of this Agreement until the Obligations shall have been paid
in full:
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5.1 DELIVERY OF INSTRUMENTS, CERTIFICATED SECURITIES AND
CHATTEL PAPER. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument, Certificated Security
or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall
be immediately delivered to the Lender, duly indorsed in a manner satisfactory
to the Lender, to be held as Collateral pursuant to this Agreement.
5.2 MAINTENANCE OF INSURANCE. (a) 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 Lender and (ii)
insuring such Grantor and the Lender 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 Lender.
(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 Lender of written notice
thereof, (ii) name the Lender as insured party or loss payee, (iii) if
reasonably requested by the Lender, include a breach of warranty clause and (iv)
be reasonably satisfactory in all other respects to the Lender.
(c) The Borrower shall deliver to the Lender a report of a
reputable insurance broker with respect to such insurance substantially
concurrently with each delivery of the Borrower's audited annual financial
statements and such supplemental reports with respect thereto as the Lender may
from time to time reasonably request.
5.3 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.
5.4 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall defend such security interest and the
priority thereof against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Lender from time to time
statements and schedules further identifying and describing the assets and
property of such Grantor and such other reports in connection therewith as the
Lender may reasonably request, all in reasonable detail.
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(c) At any time and from time to time, upon the written
request of the Lender, 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 Lender may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted, including,
without limitation, (i) filing any financing 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, Deposit Accounts and any other relevant
Collateral, taking any actions necessary to enable the Lender to obtain
"control" (within the meaning of the applicable Uniform Commercial Code) with
respect thereto.
5.5 CHANGES IN LOCATIONS, NAME, ETC. Such Grantor will not,
except upon 15 days' prior written notice to the Lender and delivery to the
Lender of (a) all additional executed financing statements and other documents
reasonably requested by the Lender to maintain the validity, perfection and
priority of the security interests provided for herein and (b) if applicable, a
written supplement to SCHEDULE 5 showing any additional location at which
Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on SCHEDULE 5;
(ii) change its jurisdiction of organization or the location
of its chief executive office or sole place of business from that referred to in
Section 4.3; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Lender in connection with
this Agreement would become misleading.
5.6 NOTICES. Such Grantor will advise the Lender 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 Lender to exercise any of its remedies
hereunder;
(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;
and
(c) the occurrence of any Default or Event of Default.
5.7 INVESTMENT PROPERTY. (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 Lender, hold the same in trust for the Lender and
deliver
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the same forthwith to the Lender in the exact form received, duly indorsed by
such Grantor to the Lender, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Lender so requests, signature guaranteed, to be held by the Lender, subject
to the terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Investment Property upon the liquidation or
dissolution of any Issuer shall be paid over to the Lender 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 Investment
Property or any property shall be distributed upon or with respect to the
Investment Property pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Lender, be delivered to the Lender to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Lender, hold such money or property in trust for the
Lender, segregated from other funds of such Grantor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Lender, 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 Investment Property 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 Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Lender to sell, assign or transfer any of the
Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement relating
to the Investment Property issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Lender promptly in
writing of the occurrence of any of the events described in Section 5.7(a) with
respect to the Investment Property issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, MUTATIS MUTANDIS, with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Investment Property issued by it.
5.8 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 Lender 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.
15
5.9 INTELLECTUAL PROPERTY. (a) Such Grantor (either itself or
through licensees approved by the Lender) 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 the 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 Lender shall obtain a
perfected security interest in such ▇▇▇▇ pursuant to this Agreement, and (v) not
(and not permit any licensee or sublicensee approved by the Lender 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 approved
by the Lender) 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 approved
by the Lender) (i) will employ each material Copyright and (ii) will not (and
will not permit any licensee or sublicensee thereof approved by the Lender to)
do any act or knowingly omit to do any act whereby any material portion of the
Copyrights may become invalidated or otherwise impaired. Such Grantor will not
(either itself or through licensees approved by the Lender) do any act whereby
any material portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees approved
by the Lender) will not do any act that knowingly uses any material Intellectual
Property to infringe the intellectual property rights of any other Person.
(e) Such Grantor will notify the Lender 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 approved by the Lender, 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 other country or any political subdivision
thereof, such Grantor shall report such filing to the Lender within five
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Lender, such Grantor shall execute and deliver, and
have recorded, any and all agreements, instruments, documents, and papers as the
Lender may request to evidence the Lender's security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.
16
(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 other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the 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 Lender
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.
5.10 VEHICLES. (a) No Vehicle shall be removed from the state
which has issued the certificate of title or ownership, as the case may be,
therefor for a period in excess of four (4) months.
(b) Within 30 days after the date hereof, and, with respect to
any Vehicles acquired by such Grantor subsequent to the date hereof, within 30
days after the date of acquisition thereof, all applications for certificates of
title or ownership, as the case may be, indicating the Lender's first priority
security interest in the Vehicle covered by such certificate, and any other
necessary documentation, shall be filed in each office in each jurisdiction
which the Lender shall deem advisable to perfect its security interests in the
Vehicles.
5.11 NOTATION OF SECURITY INTERESTS ON BOOKS AND RECORDS. Each
Grantor shall cause the security interest granted by it hereunder to at all
times be noted on its books and records.
5.12 LANDLORD AND WAREHOUSEMAN WAIVERS. Upon the request of
the Lender, each Grantor shall deliver to the Lender waivers of contractual and
statutory landlord's, landlord's mortgagee's and warehouseman's Liens in form
and substance satisfactory to the Lender under each lease, warehouse agreement
or similar agreement to which such Grantor is a party. If any Collateral is at
any time in the possession or control of any warehouseman, bailee or any of the
agents or processors of any Grantor, such Grantor shall notify such
warehouseman, bailee, agent or processor of the security interests created
hereby and to hold all such Collateral for the Lender's account subject to the
Lender's instructions.
5.13 FINANCIAL STATEMENTS. The Parent shall furnish to the
Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Parent, a copy of the audited
consolidated balance sheet of the Parent and its consolidated Subsidiaries as at
the end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on without a "going concern" or like
qualification
17
or exception, or qualification arising out of the scope of the audit, by
Deloitte & Touche LLP or other independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Parent, the unaudited consolidated balance sheet of the Parent and
its consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a the chief financial officer of the Parent as being fairly stated
in all material respects (subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45
days after the end of each month occurring during each fiscal year of the Parent
(other than the third, sixth, ninth and twelfth such month), the unaudited
consolidated balance sheets of the Parent and its Subsidiaries as at the end of
such month and the related unaudited consolidated statements of income and of
cash flows for such month and the portion of the fiscal year through the end of
such month, setting forth in each case in comparative form the figures for the
previous year, certified by the chief financial officer of the Parent as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.14 MANDATORY PREPAYMENT. If the Parent or any of its
Subsidiaries (other than the Borrower or any of its Subsidiaries as to which
Section 3.3(b) of the Credit Agreement is applicable) (i) receives Net Cash
Proceeds from the issuance or incurrence of any Indebtedness (other than
Indebtedness not in excess of $100,000 in the aggregate), (ii) receives Net Cash
Proceeds from the issuance of Capital Stock or from any capital contribution
(other than capital contributions by the Borrower to its Subsidiaries), (iii)
sells, assigns, transfers, leases or otherwise disposes of any of its assets
(other assets having a value not to exceed $100,000 in the aggregate), or (iv)
has assets other than the Excluded Real Property that become the subject of a
Casualty Event, then no later than two Business Days after receipt of the Net
Cash Proceeds therefrom, the Notes shall be prepaid by an amount equal to 100%
of such Net Cash Proceeds in accordance with Section 3.3(c) of the Credit
Agreement. Notwithstanding anything to the contrary contained in this Section
5.14, this Section shall not apply to the exercise by C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ of
options to purchase up to 671,500 shares of Common Stock, par value $0.10 of the
Parent, which options existed as of the date hereof.
SECTION 6. REMEDIAL PROVISIONS
6.1 CERTAIN MATTERS RELATING TO RECEIVABLES. (a) The Lender
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 Lender may require in
connection with such test verifications. At any time
18
and from time to time, upon the Lender's request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Lender to furnish to the Lender reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Receivables.
(b) The Lender hereby authorizes each Grantor to collect such
Grantor's Receivables, subject to the Lender's direction and control, and the
Lender may curtail or terminate said authority at any time after the occurrence
and during the continuance of an Event of Default, PROVIDED that all times after
the date hereof all Receivables of the Borrower shall be deposited by the
Borrower, immediately upon receipt, into the Lockbox Account on the terms and
conditions contained in the Lockbox Agreement. If required by the Lender 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 Lender if required, in
a Collateral Account maintained under the sole dominion and control of the
Lender, subject to withdrawal by the Lender only as provided in Section 6.5, and
(ii) until so turned over, shall be held by such Grantor in trust for the
Lender, 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 Lender's request, each Grantor shall deliver to the
Lender 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 Lender 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 Lender's satisfaction
the existence, amount and terms of any Receivables.
(b) Upon the request of the Lender 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 Lender and that payments in respect thereof shall be made directly to the
Lender.
(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. The Lender shall have no 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 Lender of any payment relating thereto, nor
shall the 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.
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6.3 PLEDGED STOCK. (a) Unless an Event of Default shall have
occurred and be continuing and the Lender shall have given notice to the
relevant Grantor of the Lender'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, in the Lender's
reasonable judgment, would 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 Lender shall give notice of its intent to exercise such rights to the
relevant Grantor or Grantors, (i) the Lender shall have the right to receive any
and all cash dividends, payments or other Proceeds paid in respect of the
Investment Property and make application thereof to the Obligations in such
order as the Lender may determine, and (ii) any or all of the Investment
Property shall be registered in the name of the Lender or its nominee, and the
Lender or its nominee may thereafter exercise (x) all voting, corporate and
other rights pertaining to such Investment Property at any meeting of
shareholders of the relevant Issuer or Issuers or otherwise and (y) any and all
rights of conversion, exchange and subscription and any other rights, privileges
or options pertaining to such Investment Property as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Investment Property upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by any Grantor or
the Lender of any right, privilege or option pertaining to such Investment
Property, and in connection therewith, the right to deposit and deliver any and
all of the Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Lender may determine), all without liability except to account for property
actually received by it, but the Lender shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer
of any Investment Property pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Lender in writing that (x) states that
an Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Lender.
6.4 PROCEEDS TO BE TURNED OVER TO LENDER. In addition to the
rights of the Lender specified in Section 6.1 with respect to payments of
Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, checks and other near-cash items
shall be held by such Grantor in trust for the Lender, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Lender in the exact form received by such Grantor (duly
indorsed by such Grantor to the Lender, if required). All Proceeds received by
the Lender hereunder shall be held by the Lender
20
in a Collateral Account maintained under its sole dominion and control. All
Proceeds while held by the Lender in a Collateral Account (or by such Grantor in
trust for the Lender) 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 Lender, or, if an Event of Default shall
have occurred and be continuing, at any time at the Lender's election, the
Lender may apply all or any part of Proceeds held in any Collateral Account in
payment of the Obligations in such order as the Lender may elect, and any part
of such funds which the Lender elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from time to time by
the Lender 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 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 Lender may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable law.
Without limiting the generality of the foregoing, the Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, 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 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 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 Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at such Grantor's premises or elsewhere. The Lender shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Lender may elect,
and only after such application and after the payment by the Lender of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Lender 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 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 days before such sale
or other disposition. The Lender shall have
21
the right to enter the real property leased or owned by each Grantor for the
purpose of exercising any of the foregoing rights or remedies. Each Grantor
waives all rights of marshaling, valuation and appraisal with respect to the
Collateral or any part thereof. For the purpose of enabling the Lender, during
the existence of an Event of Default, to exercise rights and remedies hereunder
at such time as the Lender will be lawfully entitled to exercise such rights and
remedies, and for no other purpose, each Grantor hereby grants to the Lender an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to such Grantor), until the Obligations are paid in full, to
use, assign, license or sublicense any of the Intellectual Property now owned or
hereafter acquired by such Grantor, wherever the same may be located, including
in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the
compilation or printout thereof.
6.7 REGISTRATION RIGHTS. (a) If the Lender shall determine to
exercise its right to sell any or all of the Pledged Stock pursuant to Section
6.6, and if in the opinion of the Lender it is necessary or advisable to have
the Pledged Stock, or that portion thereof to be sold, registered under the
provisions of the Securities Act, the relevant Grantor will cause the Issuer
thereof to (i) execute and deliver, and cause the directors and officers of such
Issuer to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts as may be, in the opinion of the Lender,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Lender, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Lender shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of Section 11(a)
of the Securities Act.
(b) Each Grantor recognizes that the Lender 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 Lender 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.
(c) Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the
22
covenants contained in this Section 6.7 will cause irreparable injury to the
Lender, that the Lender has 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 under the Credit Agreement.
6.8 WAIVER; DEFICIENCY. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
New York UCC. 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 Lender to collect such deficiency.
SECTION 7. THE LENDER
7.1 LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC. (a) Each
Grantor hereby irrevocably constitutes and appoints the Lender 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
Lender 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 deemed appropriate by the Lender 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 Lender may request to evidence the Lender's
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
(v) (1) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the
23
Lender or as the Lender shall direct; (2) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising
out of any Collateral; (3) sign and 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; (4) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any
portion thereof and to enforce any other right in respect of any
Collateral; (5) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral; (6) settle, compromise or
adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Lender may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with
the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Lender shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Lender were the
absolute owner thereof for all purposes, and do, at the Lender's option
and such Grantor's expense, at any time, or from time to time, all acts
and things which the Lender deems necessary to protect, preserve or
realize upon the Collateral and the Lender's 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
Lender 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 Lender, 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 Lender 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 Prime Rate in effect from time to time
plus three percent (3%), from the date of payment by the Lender to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Lender 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 LENDER. The Lender'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 Lender deals with similar property for
its own account. Neither the Lender nor any of its 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
24
dispose of any Collateral upon the request of any Grantor or any other Person or
to take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Lender hereunder are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither it nor any of its 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 STATEMENTS. Pursuant to Section
9-402 of the New York UCC and any other applicable law, each Grantor authorizes
the Lender 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 Lender determines
appropriate to perfect the security interests of the Lender under this
Agreement. 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.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS IN WRITING. None of the terms or provisions of
this Agreement may be waived, amended, supplemented, restated or otherwise
modified except pursuant to a written agreement executed by the affected Grantor
and the Lender; PROVIDED, HOWEVER, that any provision of this Agreement imposing
obligations on any Grantor may be waived by the Lender in a written instrument
executed by the Lender.
8.2 NOTICES. All notices, requests and demands to or upon the
Lender or any Grantor hereunder shall be effected in the manner provided for in
subsection 9.2 of the Credit Agreement; PROVIDED, HOWEVER, 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. The
Lender shall not 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
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 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 Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. (a) Each Guarantor
agrees to pay or reimburse the Lender for all its costs and expenses incurred in
collecting against such Guarantor under the guarantee contained in Section 2 or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Guarantor is a party, including, without
limitation, the fees and disbursements of counsel (including the allocated fees
and expenses of in-house counsel) to each Lender.
25
(b) Each Guarantor agrees to pay, and to save the Lender
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Lender
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 9.5 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment
of the Obligations and all other amounts payable under the Credit Agreement and
the other Loan Documents.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Lender and its successors and assigns; PROVIDED, HOWEVER, that no Grantor
may assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Lender.
8.6 SET-OFF. Each Grantor hereby irrevocably authorizes the
Lender at any time and from time to time while an Event of Default pursuant to
Section 8.1 of the Credit Agreement shall have occurred and be continuing,
without notice to such Grantor or any other Grantor, any such notice being
expressly waived by each Grantor, to set-off and appropriate and apply any and
all deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the Lender may
elect, against and on account of the obligations and liabilities of such Grantor
to the Lender hereunder and claims of every nature and description of the Lender
against such Grantor, in any currency, whether arising hereunder, under the
Credit Agreement, any other Loan Document or otherwise, as the Lender may elect,
whether or not the Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The Lender
shall notify such Grantor promptly of any such set-off and the application made
by the Lender of the proceeds thereof; PROVIDED, HOWEVER, that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of the Lender under this Section 8.6 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which the
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.
26
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 FINAL AGREEMENT OF THE GRANTORS AND THE LENDER WITH RESPECT TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
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 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 Lender 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 any special, exemplary, punitive or consequential damages.
8.13 ACKNOWLEDGMENTS. 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) the Lender does not have 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,
27
and the relationship between the Grantors, on the one hand, and the Lender, 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 Grantors and the Lender.
8.14 ADDITIONAL GRANTORS AND SECURITY. (a) Each Subsidiary of
the Borrower that is required to become a party to this Agreement pursuant to
subsection 6.10(b) 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.
(b) With respect to any Person that, subsequent to the Closing
Date, becomes a Subsidiary of the Parent (other than the Borrower and its
Subsidiaries which are governed by Section 6.10 of the Credit Agreement or an
Excluded Foreign Subsidiary), the Parent shall cause such Subsidiary to promptly
(and in any event within twenty days after such Person becomes such a Subsidiary
of the Parent): (i) execute and deliver to and for the benefit of the Lender an
Assumption Agreement in the form of Annex 1 hereto, upon execution and delivery
of which Assumption Agreement such Subsidiary shall become a Grantor for all
purposes of this Agreement; (ii) deliver to the Lender the certificates
representing the Capital Stock of such Subsidiary which is owned by the Parent
or other Subsidiary of the Parent (other than the Borrower or any Subsidiary of
Borrower), together with undated stock powers executed and delivered in blank by
a duly authorized officer of the Parent or such Subsidiary, as the case may be;
(iii) execute and deliver to the Lender such Security Documents (including
Mortgages and financing statements) as may be required by the Lender to create
and perfect Liens in favor of the Lender on all present and future property of
such Subsidiary; (iv) execute and deliver such documents and certificates as the
Lender or its counsel may request relating to the organization, existence and
good standing of such Subsidiary, the authorization of the transactions
contemplated hereby and by the other Loan Documents relating to such Subsidiary,
and any other legal matters relating to such Subsidiary and the Loan Documents
to which it is or is to become a party (including, if requested by the Lender,
satisfactory environmental reports or assessments with respect to each parcel of
real property covered by a Mortgage), all in form and substance satisfactory to
the Lender and its counsel; (v) in the case of a Mortgage, deliver to the Lender
such surveys, title insurance policies, environmental assessments, and other
documents as the Lender may request, all in form and substance satisfactory to
the Lender; and (vi) if requested by the Lender, deliver to the Lender legal
opinions relating to the matters described in clauses (i), (ii), (iii) and (iv)
immediately preceding, which opinions shall be in form and substance, and from
counsel, satisfactory to the Lender.
(c) With respect to any assets acquired after the Closing Date
by the Parent or any of its Subsidiaries (other than (w) any such assets of the
Borrower or any of its Subsidiaries which are governed by Section 6.10 of the
Credit Agreement, (x) leased real property, (y) any property described in
paragraph (b) above, or (z) property acquired by an Excluded Foreign
Subsidiary), the Parent shall or shall cause such Subsidiary of Parent, as the
case may be, to promptly (and in any event within twenty days after the
acquisition thereof): (i) execute and deliver to the Lender such amendments to
the relevant Security Documents or such other documents (including Mortgages) as
the Lender shall deem necessary or advisable to grant to
28
and for the benefit of the Lender a Lien on such assets; (ii) take all actions
necessary or advisable to cause such Lien to be duly perfected in accordance
with all applicable Requirements of Law as contemplated by such Security
Documents, including the filing of financing statements in such jurisdictions as
may be requested by the Lender; (iii) in the case of a Mortgage, deliver to the
Lender such surveys, policies and other documents as the Lender may request, all
in form and substance satisfactory to the Lender; and (iv) if requested by the
Lender, deliver to the Lender legal opinions relating to the matters described
in clauses (i) and (ii) immediately preceding, which opinions shall be in form
and substance, and from counsel, satisfactory to the Lender.
(d) With respect to any new Excluded Foreign Subsidiary
created or acquired after the Closing Date by the Parent or any of its
Subsidiaries (other than any such assets of the Borrower and its Subsidiaries
which are governed by Section 6.10 of the Credit Agreement), the Parent shall,
and shall cause its Subsidiaries to, promptly (i) execute and deliver to the
Lender such amendments to the Guarantee and Collateral Agreement as the Lender
deems necessary or advisable to grant to the Lender, a perfected first priority
security interest in the Capital Stock of such new Subsidiary that is owned by
the Parent or any of its Subsidiaries (provided that in no event shall more than
65% of the total outstanding Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Lender the certificates
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the Parent or such
Subsidiary, as the case may be, and take such other action as may be necessary
or, in the opinion of the Lender, desirable to perfect the Lender's security
interest therein, and (iii) if requested by the Lender, deliver to the Lender
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the Lender.
8.15 RELEASES. At such time as the Notes and the other
Obligations shall have been paid in full, 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 Lender 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 Lender shall deliver to such Grantor any Collateral
held by the Lender hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
29
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
CRL SYSTEMS, INC.,
a Nevada corporation
/s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President and Chairman
of the Board
CIRCUIT RESEARCH LABS, INC.,
an Arizona corporation
/s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, President and Chairman
of the Board
30
SCHEDULE 1
NOTICE ADDRESSES OF GUARANTORS
if to Circuit Research Labs, Inc.:
Circuit Research Labs, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
if to CRL Systems, Inc.:
CRL Systems, Inc.
c/o Circuit Research Labs, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
SCHEDULE 2
DESCRIPTION OF INVESTMENT PROPERTY
PLEDGED STOCK:*
Issuer Class of Stock Stock Certificate No. No. of Shares
----------------- -------------- --------------------- -------------
CRL Systems, Inc. Common 1 2,500
PLEDGED NOTES:
Issuer Payee Principal Amount
----------------- --------------------- ----------------
NONE N/A N/A
----------
* Stock is assumed to be common stock unless otherwise indicated.
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
CRL SYSTEMS, INC.
Secretary of State, Arizona
Secretary of State, California
Secretary of State, Nevada
County Clerk, ▇▇▇▇▇ County, Nevada
CIRCUIT RESEARCH LABS, INC.
Secretary of State, California
Secretary of State, Arizona
County Clerk, Maricopa County, Arizona
PATENT, TRADEMARK AND COPYRIGHT FILINGS
PATENTS: CRL SYSTEMS, INC.
United States
PATENTS: CIRCUIT RESEARCH LABS, INC.
United States
TRADEMARKS: CRL SYSTEMS, INC.
United States
Canada
Chile
European Community
Australia
Brazil
France
Germany
Hong Kong
Japan
India
Singapore
Taiwan
Thailand
United Kingdom
TRADEMARKS: CIRCUIT RESEARCH LABS, INC.
United States
COPYRIGHTS: CRL SYSTEMS, INC.
United States
COPYRIGHTS: CIRCUIT RESEARCH LABS, INC.
United States
ACTIONS WITH RESPECT TO PLEDGED STOCK AND PLEDGED NOTES
1. Delivery of original Certificates representing Pledged Stock and stock
powers signed in blank to the Lender.
OTHER ACTIONS
1. Delivery by CRL Systems, Inc., of executed originals of each of the (i)
Patent Security Agreement, (ii) Copyright Security Agreement and (iii)
Trademark Security Agreement, each between CRL Systems, Inc. and Lender
and dated as of even date herewith.
2. Delivery by Circuit Research Labs, Inc., of executed originals of each
of the (i) Patent Security Agreement, (ii) Copyright Security Agreement
and (iii) Trademark Security Agreement, each between Circuit Research
Labs, Inc. and Lender and dated as of even date herewith.
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
GRANTOR LOCATION
------- --------
Circuit Research Labs, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇
CRL Systems, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇
SCHEDULE 5
LOCATION OF INVENTORY AND EQUIPMENT
GRANTOR LOCATION
------- --------
Circuit Research Labs, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇
CRL Systems, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 6
COPYRIGHTS AND COPYRIGHT LICENSES
CRL SYSTEMS, INC.
---------------------------------------- ------------------------------------- -------------------------------------
TITLE REGISTRATION NUMBER EFFECTIVE DATE
---------------------------------------- ------------------------------------- -------------------------------------
Optimod - FM 8200 TX 4199358 May 8, 1996
Digital 1996 Brochure
---------------------------------------- ------------------------------------- -------------------------------------
Optimod - FM 8200 TX 4199359 May 8, 1996
Digital 1992 Brochure
---------------------------------------- ------------------------------------- -------------------------------------
CIRCUIT RESEARCH LABS, INC.
---------------------------------------- ------------------------------------- -------------------------------------
TITLE REGISTRATION NUMBER EFFECTIVE DATE
---------------------------------------- ------------------------------------- -------------------------------------
AM4 Stereo Matrix System TX 145685 June 14, 1983
SMP 900 Instructions
---------------------------------------- ------------------------------------- -------------------------------------
SSM Dynafex Noise Reduction System MW 1361 July 28, 1986
---------------------------------------- ------------------------------------- -------------------------------------
PATENTS AND PATENT LICENSES
CRL SYSTEMS, INC.
------------------------------ ---------------------------- --------------------------- ----------------------------
PATENT NO./ COUNTRY TITLE ISSUED/FILED
SERIAL NO.
------------------------------ ---------------------------- --------------------------- ----------------------------
4,412,100 United States Multiband Signal Processor October 25, 1983
------------------------------ ---------------------------- --------------------------- ----------------------------
4,460,871 United States Multiband Cross-Coupled July 17, 1984
Compressor with Overshoot
Protection Circuit
------------------------------ ---------------------------- --------------------------- ----------------------------
4,495,643 United States Audio Peak Limiter Using January 22, 1985
▇▇▇▇▇▇▇
------------------------------ ---------------------------- --------------------------- ----------------------------
4,525,857 United States Crossover Network June 25, 1985
------------------------------ ---------------------------- --------------------------- ----------------------------
4,674,122 United States Encoding for the FMX June 16, 1987
Compounding System
------------------------------ ---------------------------- --------------------------- ----------------------------
4,837,824 United States Stereophonic Image June 6, 1989
Widening Circuit
------------------------------ ---------------------------- --------------------------- ----------------------------
------------------------------ ---------------------------- --------------------------- ----------------------------
4,888,789 United States Adjustable Equalizer for December 19, 1989
Compensation for High
Frequency Rollout -
Typical AM Receivers
------------------------------ ---------------------------- --------------------------- ----------------------------
5,050,217 United States Dynamic Noise Reduction September 17, 1991
and Spectal Restoration
System
------------------------------ ---------------------------- --------------------------- ----------------------------
5,168,526 United States Distortion Cancellation December 1, 1992
Circuit Fee Audio Peak
Limiting
------------------------------ ---------------------------- --------------------------- ----------------------------
5,282,252 United States Audio Equalizer Providing January 25, 1994
Reciprocal Equalization
Plus Indefinite Depth
Notch
------------------------------ ---------------------------- --------------------------- ----------------------------
5,444,788 United States Audio Compressor August 22, 1995
Combining Feedback and
Feedforwarding Sidechain
Processing
------------------------------ ---------------------------- --------------------------- ----------------------------
5,574,791 United States Combined DeEsser and High November 12, 1996
Frequency Enhancer Using
Single Pair of Level
Detectors
------------------------------ ---------------------------- --------------------------- ----------------------------
5,737, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Multi-Band Audio April 7, 1998
Compressor with Look
Ahead Clipper
------------------------------ ---------------------------- --------------------------- ----------------------------
D398,289 United States Control Board September 15, 1998
------------------------------ ---------------------------- --------------------------- ----------------------------
D401,774 United States Stand September 1, 1998
------------------------------ ---------------------------- --------------------------- ----------------------------
D414,770 United States Processor October 5, 1999
------------------------------ ---------------------------- --------------------------- ----------------------------
08/984,448 United States (application)
------------------------------ ---------------------------- --------------------------- ----------------------------
29/069,255 United States (application)
------------------------------ ---------------------------- --------------------------- ----------------------------
CIRCUIT RESEARCH LABS, INC.
------------------------------ ---------------------------- --------------------------- ----------------------------
PATENT NO./SERIAL NO. COUNTRY TITLE ISSUED/FILED
------------------------------ ---------------------------- --------------------------- ----------------------------
4,398,158 United States Dynamic Range Expander August 9, 1983; Assigned
to Circuit Research Labs,
Inc. September 27, 1985
------------------------------ ---------------------------- --------------------------- ----------------------------
4,350,845 United States Reverberation Apparatus September 21, 1982;
Assigned to Circuit
Research Labs, Inc.
September 27, 1985
------------------------------ ---------------------------- --------------------------- ----------------------------
TRADEMARKS AND TRADEMARK LICENSES
CRL SYSTEMS, INC.
------------------------------ ---------------------------- --------------------------- ----------------------------
COUNTRY ▇▇▇▇ REGISTRATION/SERIAL NO. REGISTERED/FILED
------------------------------ ---------------------------- --------------------------- ----------------------------
United States ▇▇▇▇▇ 1,791,387 December 31, 1969
------------------------------ ---------------------------- --------------------------- ----------------------------
Canada ▇▇▇▇▇ 441364 March 31, 1995
------------------------------ ---------------------------- --------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ June 4, 1999
------------------------------ ---------------------------- --------------------------- ----------------------------
European Community ▇▇▇▇▇ 166504 October 8, 1998
------------------------------ ---------------------------- --------------------------- ----------------------------
United States OPTIMOD 1,253,703 April 5, 1975
------------------------------ ---------------------------- --------------------------- ----------------------------
Australia OPTIMOD 8506607 March 4, 1989
------------------------------ ---------------------------- --------------------------- ----------------------------
Brazil OPTIMOD 814882846
------------------------------ ---------------------------- --------------------------- ----------------------------
Canada OPTIMOD TMA 368016 April 20, 1990
------------------------------ ---------------------------- --------------------------- ----------------------------
Chile OPTIMOD 541675 June 4, 1999
------------------------------ ---------------------------- --------------------------- ----------------------------
European Community OPTIMOD 166504 October 8, 1998
------------------------------ ---------------------------- --------------------------- ----------------------------
France OPTIMOD 1520234 March 21, 1989
------------------------------ ---------------------------- --------------------------- ----------------------------
Germany OPTIMOD 1190774
------------------------------ ---------------------------- --------------------------- ----------------------------
Hong Kong OPTIMOD 3037/97 May 1, 1997
------------------------------ ---------------------------- --------------------------- ----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ January 1996
------------------------------ ---------------------------- --------------------------- ----------------------------
Japan OPTIMOD 2429825 June 30, 1992
------------------------------ ---------------------------- --------------------------- ----------------------------
Singapore OPTIMOD 1084/96 January 30, 1996
------------------------------ ---------------------------- --------------------------- ----------------------------
Taiwan OPTIMOD 85008503 January 1996
------------------------------ ---------------------------- --------------------------- ----------------------------
Thailand OPTIMOD 333792/Khor 66414 January 1997
------------------------------ ---------------------------- --------------------------- ----------------------------
------------------------------ ---------------------------- --------------------------- ----------------------------
United Kingdom OPTIMOD 1377339 March 14, 1989
------------------------------ ---------------------------- --------------------------- ----------------------------
United States AUDICY 2,168,571 June 23, 1998
------------------------------ ---------------------------- --------------------------- ----------------------------
Australia AUDICY 740988 February 19, 1998
------------------------------ ---------------------------- --------------------------- ----------------------------
European Community AUDICY 594804
------------------------------ ---------------------------- --------------------------- ----------------------------
Japan AUDICY Unknown
------------------------------ ---------------------------- --------------------------- ----------------------------
United States TIME FIT 2,000,400 September 10, 1996
------------------------------ ---------------------------- --------------------------- ----------------------------
United States DSE 1,994,960 August 20, 1996
------------------------------ ---------------------------- --------------------------- ----------------------------
CIRCUIT RESEARCH LABS, INC.
------------------------------ ---------------------------- --------------------------- ----------------------------
COUNTRY/FILING ▇▇▇▇ REGISTRATION/ REGISTERED/FILED
SERIAL NO.
------------------------------ ---------------------------- --------------------------- ----------------------------
United States MILLENNIUM 75-754856 Pending
------------------------------ ---------------------------- --------------------------- ----------------------------
United States DYNAFEX 1,670,137 July 1, 1982
------------------------------ ---------------------------- --------------------------- ----------------------------
United States CRL Systems 1,342,151 August 5, 1977
------------------------------ ---------------------------- --------------------------- ----------------------------
United States CRL 1,300,233 August 5, 1977
------------------------------ ---------------------------- --------------------------- ----------------------------
SCHEDULE 7
VEHICLES
None.
ACKNOWLEDGMENT AND CONSENT*
The undersigned hereby acknowledges receipt of a copy of the
Guarantee
and Collateral Agreement dated as of _______, 2000 (the "AGREEMENT"), made by
the Grantors parties thereto for the benefit of ▇▇▇▇▇, Inc., as Lender. The
undersigned agrees for the benefit of the Lender as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Lender hereunder promptly in writing
of the occurrence of any of the events described in Section 5.7(a) of the
Agreement.
3. The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
pursuant to Section 6.3(c) or 6.7 of the Agreement.
[NAME OF ISSUER]
By
---------------------------------
Name:
Title:
Address for Notices:
-------------------------------------
-------------------------------------
-------------------------------------
Fax:
----------
* This consent is necessary only with respect to any Issuer which is not
also a Grantor. This consent may be modified or eliminated with respect
to any Issuer that is not controlled by a Grantor.
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 2000, made
by ______________________________, a ______________ (the "ADDITIONAL GRANTOR"),
in favor of ▇▇▇▇▇, INC., a Delaware corporation, a party to the Credit Agreement
referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in such Credit Agreement.
PRELIMINARY STATEMENTS
A. CRL Systems, Inc., a Nevada corporation (the "BORROWER"), and the
Lender have entered into a Credit Agreement, dated as of _______, 2000 (as
amended, supplemented, restated or otherwise modified from time to time, the
"CREDIT AGREEMENT").
B. In connection with the Credit Agreement, the Borrower and certain of
its Affiliates (other than the Additional Grantor) have entered into the
Guarantee and Collateral Agreement, dated as of _______, 2000 (as amended,
supplemented, restated or otherwise modified from time to time, the "GUARANTEE
AND COLLATERAL AGREEMENT") in favor of the Lender.
C. Section 6.10 of the Credit Agreement (in the case of Subsidiaries of
the Borrower) or Section 8.14(b) of the Guarantee and Collateral Agreement (in
the case of Subsidiaries of the Parent other than the Borrower and its
Subsidiaries), as the case may be, requires the Additional Grantor to become a
party to the Guarantee and Collateral Agreement.
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 8.14 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. The information set forth in Annex 1-A hereto is hereby
added to the information set forth in the Schedules 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.
[ADDITIONAL GRANTOR]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Annex 1-A to
Assumption Agreement
SUPPLEMENT TO SCHEDULE 1
SUPPLEMENT TO SCHEDULE 2
SUPPLEMENT TO SCHEDULE 3
SUPPLEMENT TO SCHEDULE 4
SUPPLEMENT TO SCHEDULE 5
SUPPLEMENT TO SCHEDULE 6
SUPPLEMENT TO SCHEDULE 7