Subordinated Security Agreement,
This
instrument and the rights and obligations evidenced hereby are subordinate in
the manner and to the extent set forth in that certain Subordination and
Intercreditor Agreement (the “Intercreditor Agreement”)
dated as of even date herewith, among ▇▇▇▇▇ Fargo Preferred Capital,
Inc., as agent for the Subordinated Creditors referred to therein, Bank of
Montreal, as agent for the Senior Creditors referred to therein, and World
Acceptance Corporation, to the Senior Debt described in the Intercreditor
Agreement, and each holder of this instrument, by its acceptance hereof, shall
be bound by the provisions of the Intercreditor Agreement.
Pledge
and Indenture of Trust
Dated as
of September 17, 2010
Between
World
Acceptance Corporation
and
▇▇▇▇▇
Fargo Preferred Capital, Inc.,
as
Collateral Agent
Table
of Contents
|
Section
|
Heading
|
Page
|
|
Section
1.
|
Interpretation
of Agreement; Definitions.
|
1
|
|
Section
1.1
|
Definitions
|
1
|
|
Section
2.
|
Granting
Clauses.
|
6
|
|
Section
2.1
|
Equipment
|
6
|
|
Section
2.2
|
Receivables
|
6
|
|
Section
2.3
|
Pledged
Collateral
|
6
|
|
Section
2.4
|
General
Intangibles
|
6
|
|
Section
2.5
|
Investment
Property
|
6
|
|
Section
2.6
|
Records
and Cabinets
|
7
|
|
Section
2.7
|
Partnership
Interests
|
7
|
|
Section
2.8
|
Additional
Property
|
7
|
|
Section
2.9
|
Deposit
Accounts
|
7
|
|
Section
2.10
|
Other
Proceeds and Products
|
7
|
|
Section
3.
|
Covenants,
Representations and Warranties of the Borrower.
|
8
|
|
Section
3.1
|
Location
of Collateral
|
8
|
|
Section
3.2
|
Warranty
of Title
|
8
|
|
Section
3.3
|
No
Alienation of Collateral
|
8
|
|
Section
3.4
|
Removal
of Collateral
|
9
|
|
Section
3.5
|
Compliance
with Leases
|
9
|
|
Section
3.6
|
Protection
of Collateral
|
9
|
|
Section
3.7
|
Further
Assurances
|
10
|
|
Section
3.8
|
Maintenance
of Lien; Recording; Opinions of Counsel
|
10
|
|
Section
3.9
|
Guaranty
and Security Agreement Supplements
|
11
|
|
Section
3.10
|
Deposit
Accounts
|
11
|
|
Section
4.
|
Special
Provisions Relating to Receivables.
|
12
|
|
Section
4.1
|
Representations
and Warranties
|
12
|
|
Section
4.2
|
Receivable
Schedules
|
13
|
|
Section
4.3
|
Collection
of Receivables
|
13
|
|
Section
4.4
|
Power
of Attorney
|
15
|
|
Section
5.
|
Special
Provisions Relating to Pledged Collateral.
|
15
|
|
Section
5.1
|
Delivery
of Pledged Collateral; Transfer to Agent.
|
15
|
|
Section
5.2
|
Voting
Power; Payments.
|
16
|
|
Section
5.3
|
Covenants
of the Borrower
|
17
|
-i-
|
Section
6.
|
Application
of Certain Moneys.
|
18
|
|
Section
6.1
|
Application
if no Default or Event of Default Exists
|
18
|
|
Section
6.2
|
Application
if a Default or an Event of Default Exists
|
18
|
|
Section
7.
|
Defaults
and Remedies.
|
18
|
|
Section
7.1
|
Events
of Default
|
18
|
|
Section
7.2
|
Agent’s
Rights
|
18
|
|
Section
7.3
|
Waiver
by Borrower
|
19
|
|
Section
7.4
|
Effect
of Sale
|
19
|
|
Section
7.5
|
Application
of Sale and Other Proceeds
|
20
|
|
Section
7.6
|
Discontinuance
of Remedies
|
20
|
|
Section
7.7
|
Cumulative
Remedies
|
20
|
|
Section
8.
|
The
Agent.
|
20
|
|
Section
8.1
|
Duties
of Agent
|
20
|
|
Section
8.2
|
Agent’s
Liability
|
21
|
|
Section
8.3
|
No
Responsibility of Agent for Recitals
|
22
|
|
Section
8.4
|
Certain
Limitations on Agent’s Rights to Compensation and
Indemnification
|
23
|
|
Section
8.5
|
Status
of Moneys Received
|
23
|
|
Section
8.6
|
Resignation
of Agent
|
23
|
|
Section
8.7
|
Removal
of Agent
|
24
|
|
Section
8.8
|
Appointment
of Successor Agent
|
24
|
|
Section
8.9
|
Succession
of Successor Agent
|
24
|
|
Section
8.10
|
Eligibility
of Agent
|
25
|
|
Section
8.11
|
Successor
Agent by Merger
|
25
|
|
Section
8.12
|
Co-Trustees
|
25
|
|
Section
8.13
|
Compensation
and Reimbursement
|
26
|
|
Section
9.
|
Supplements;
Waivers.
|
26
|
|
Section
9.1
|
Supplemental
Security Agreements Without Secured Lender Consent
|
26
|
|
Section
9.2
|
Waivers
and Consents by Lenders; Supplemental Security Agreements with Lenders’
Consent
|
27
|
|
Section
9.3
|
Notice
of Supplements
|
27
|
|
Section
9.4
|
Opinion
of Counsel Conclusive as to Supplements
|
27
|
|
Section
10.
|
Miscellaneous.
|
27
|
|
Section
10.1
|
Successors
and Assigns
|
27
|
|
Section
10.2
|
Severability
|
27
|
|
Section
10.3
|
Communications
|
27
|
|
Section
10.4
|
Release
|
28
|
|
Section
10.5
|
Counterparts
|
29
|
|
Section
10.6
|
Governing
Law
|
29
|
|
Section
10.7
|
Headings
|
29
|
-ii-
Attachments
to Security Agreement, Pledge and Indenture of Trust:
|
Schedule
I
|
—
|
Description
of Pledged Shares
|
|
Schedule
II
|
—
|
Description
of Partnership Interest
|
|
Schedule
III
|
—
|
Locations
of the Borrower’s Offices and Facilities
|
|
Schedule
IV
|
|
Concentration
Accounts
|
|
Exhibit
A
|
—
|
Form
of Subordinated Subsidiary Security Agreement
|
|
Exhibit
B
|
—
|
Form
of Subordinated Subsidiary Guaranty
Agreement
|
-iii-
Pledge
and Indenture of Trust
Subordinated
Security Agreement, Pledge and Indenture of Trust (this “Agreement”) dated as of
September 17, 2010, between World
Acceptance Corporation, a
South Carolina corporation (the “Borrower”), and ▇▇▇▇▇
Fargo Preferred Capital, Inc., as collateral agent (the “Collateral
Agent”). The post office addresses of the Borrower and the
Collateral Agent are set forth in §10.3.
Recitals:
A. The
capitalized terms used in this Agreement shall have the respective meanings
specified in §1.1 unless
otherwise herein defined or the context hereof shall otherwise
require.
B. The
Borrower is authorized by law, and deems it necessary from time to time, to
borrow money for its proper purposes and to secure the same as hereinafter
provided, and to that end, in the exercise of said authority, has duly
authorized the execution and delivery of this Agreement providing for the
securing of certain obligations of the Borrower hereunder, all as hereinafter
provided.
C. The
Borrower has authorized borrowings and other extensions of credit pursuant to
the Credit Agreement.
D. All
acts and proceedings required by law and by the Articles of Incorporation and
By-Laws of the Borrower, to constitute this Agreement a valid and binding
agreement for the uses and purposes herein set forth, in accordance with its
terms, have been done and taken, and the execution and delivery of this
Agreement has been in all respects duly authorized.
Section
1. Interpretation
of Agreement; Definitions.
Section
1.1 Definitions. Except
as otherwise provided in this Section 1, all capitalized terms used herein
without definition shall have the same meanings herein as such terms have in the
Credit Agreement. Unless the context otherwise requires, the terms
hereinafter set forth when used herein shall have the following meanings and the
following definitions shall be equally applicable to both the singular and
plural forms of any of the terms herein defined:
“Account Debtor” shall mean
any Person who is or may become obligated to the Borrower under or on account of
a Receivable.
“Administrative Agent” shall
have the same meaning herein as such term is defined in the Credit
Agreement.
“Affiliate” shall have the
same meaning herein as such term is defined in the Credit
Agreement.
“Base Rate” shall have the
same meaning herein as such term is defined in the Credit
Agreement.
“Borrower” shall mean World
Acceptance Corporation, a South Carolina corporation, and any Person which
succeeds to all, or substantially all of the assets and business of World
Acceptance Corporation.
“Closing Date” shall mean
September 17, 2010.
“Collateral” as used herein
shall mean any and all property from time to time subject to the security
interest granted hereby.
“Collateral Agent” means the
Person named above as the “Collateral Agent” in the first paragraph of this
Agreement until a successor Collateral Agent shall have become such pursuant to
the applicable provisions of this Agreement, and thereafter “Collateral Agent” shall mean
such successor Collateral Agent.
“Credit Agreement” shall mean
that certain Subordinated Credit Agreement dated as of September 17, 2010
among the Borrower, the Administrative Agent and the Lenders, as the same may
from time to time be amended, restated, modified, supplemented or waived
pursuant to the terms thereof.
“Default” shall mean any
event or condition, the occurrence of which would, with the lapse of time or the
giving of notice, or both, constitute an Event of Default.
“Event of Default” shall have
the meaning specified in §7.1.
“GAAP” shall have the same
meaning herein as such term is defined in the Credit Agreement.
“Governing Documents” shall
mean collectively the charter instruments, by-laws, partnership agreements,
operating agreements and other similar documents prescribing the internal
governance of each Restricted Subsidiary.
“Indebtedness for Borrowed
Money” shall have the same meaning herein as such term is defined in the
Credit Agreement.
“Insurance Subsidiary” shall
have the same meaning herein as such term is defined in the Credit
Agreement.
“Investment Property” shall
have the meaning specified in §2.5.
“Lenders” shall have the same
meaning herein as such term is defined in the Credit Agreement.
-2-
“Lien” shall mean any
interest in property securing an obligation owed to a Person, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest arising from a mortgage, security agreement,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes. The term “Lien” includes reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other similar title exceptions and encumbrances,
including but not limited to mechanics’, materialmen’s, warehousemen’s,
carriers’ and other similar encumbrances, affecting property. For the
purposes of this Agreement, a Person shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the property has been retained
by or vested in some other Person for security purposes.
“Moody’s” shall mean ▇▇▇▇▇’▇
Investors Service, Inc.
“Partnership Interests” shall
have the meaning specified in §2.7.
“Person” shall mean an
individual, partnership, corporation, limited liability company, trust or
unincorporated organization, and a government agency or political subdivision
thereof.
“Pledged Collateral” shall
mean and include:
(a)the Pledged Shares;
(b)all shares, Securities, moneys, or
other property distributed as a dividend on any shares of capital stock or other
Pledged Collateral (including the Pledged Shares) at any time pledged hereunder
or a distribution or return of capital upon or in respect of any such capital
stock or other Pledged Collateral or any part thereof, or resulting from a
split-up, revision, reclassification or other like change of any such capital
stock or other Pledged Collateral, and any subscription warrants, rights or
options issued to the holders of, or otherwise in respect of, any such capital
stock or other Pledged Collateral; and
(c)in the event of any consolidation or
merger in which the issuer of any Pledged Collateral is not the surviving
entity, or in the event of any sale, lease, transfer or other disposition of all
or substantially all of the assets of such issuer;
(i)all shares of each class of the capital
stock or other Security of the successor entity formed by or resulting from such
consolidation or merger, or of the corporation to which such sale, lease,
transfer or other disposition shall have been made, and
(ii)all other Securities, money or
property,
distributed
or distributable in any such event in respect of any of the Pledged Collateral
in connection with such consideration, merger, sale, lease, transfer or other
disposition.
-3-
“Pledged Shares” shall mean
all of the capital stock, partnership interests, membership interests and other
equity interests owned by the Borrower (as more specifically set forth on
Schedule I hereto) or hereafter acquired, including, without limitation,
(a) all rights, authority, powers and privileges of the Borrower as a
shareholder or holder of any partnership interest, membership interest or other
equity interest of any entity, whether now existing or hereafter arising under
the Governing Documents or at law or otherwise, and the rights of the Borrower
under such Governing Documents to acquire additional shares of stock or
partnership interests, membership interests or other equity interests or to
acquire the shares of stock, partnership interest, membership interest or other
equity interest of other shareholders, partners, members or other holders of
equity interests, and (b) all other instruments owned or held by, or
otherwise established in favor of, the Borrower in the nature of capital stock
of, partnership interest, membership interest or any other equity interest in
any entity, of any and every type, class and series.
“Receivables” shall mean all
accounts receivable, receivables, contract rights, controls, instruments, notes,
drafts, bills, acceptances, documents, chattel paper, general intangibles and
all other forms of obligations owing to a Person, including, without limitation,
all Accounts, Instruments (including Promissory Notes), Documents, Chattel Paper
(including tangible and electronic Chattel Paper), Letter of Credit Rights,
Supporting Obligations, General Intangibles (including Payments Intangibles), as
defined in the Uniform Commercial Code as in effect in the State of South
Carolina.
“Required Lenders” shall have
the same meaning herein as such term is defined in the Credit
Agreement.
“Restricted Subsidiary” shall
have the same meaning herein as such term is defined in the Credit
Agreement.
“S&P” shall mean Standard
& Poor’s Ratings Services Group, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc.
“Secured Creditors” shall
mean, collectively, the Collateral Agent, Administrative Agent and the Lenders,
and each individually a “Secured Creditor”.
“Secured Indebtedness” shall
mean the “Obligations,” as such term is defined in the Credit Agreement, in each
case whether now existing or hereafter arising, due or to become due, direct or
indirect, absolute or contingent, and howsoever evidenced, held or
acquired.
“Security” shall have the
same meaning as in Section 2(a)(1) of the Securities Act of 1933, as
amended.
“subsidiary” shall mean, as
to any particular parent entity, any corporation, partnership, limited liability
company or other entity of which more than 50% (by number of votes or other
decision making authority) of the Voting Stock shall be owned by such parent
and/or one or more corporations, partnerships, limited liability companies or
other entities which are themselves subsidiaries of such parent
entity. The term “Subsidiary” shall mean a
subsidiary, directly or indirectly, of the Borrower.
-4-
“Subsidiary Guaranty Agreement”
shall mean the Subordinated Guaranty Agreement dated as of
September 17, 2010 of each Restricted Subsidiary existing on such date and
each other Restricted Subsidiary which has executed a Guaranty Supplement in the
form of Exhibit A thereto pursuant to the terms thereof and §3.9 (or in such other form
agreed to by the Administrative Agent), in each case, for the benefit of the
Collateral Agent, as the same may from time to time be amended, restated,
modified, supplemented or waived pursuant to the terms thereof.
“Subsidiary Security
Agreement” shall mean the Subordinated Security Agreement, Pledge and
Indenture of Trust dated as of September 17, 2010 between each Restricted
Subsidiary existing on the Closing Date and the Collateral Agent, as
supplemented from time to time by a security agreement supplement between a
Restricted Subsidiary and the Collateral Agent delivered pursuant to the terms
thereof and §3.9, in
each such case, substantially in the form of Exhibit A to the Subsidiary
Security Agreement, as the same may from time to time be amended, restated,
modified, supplemented or waived pursuant to the terms thereof.
“Underlying Collateral” shall
mean, with respect to any Receivable of the Borrower, all of its rights with
respect to any collateral granted by the Account Debtor in connection with any
Receivable owing by it to the Borrower.
“Uniform Commercial Code” as
used herein with reference to any collateral shall mean the Uniform Commercial
Code as enacted in the jurisdiction applicable to such Collateral, as amended
from time to time, and any successor statute(s) thereto.
“Voting Stock” shall mean
Securities or other equity interests of any class or classes, the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar
functions).
Section 1.2.
Accounting
Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
Section 1.3.
Directly or
Indirectly. Where any provision in this Agreement refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether the action in question is
taken directly or indirectly by such Person.
-5-
Section
2. Granting
Clauses.
The
Borrower in consideration of the premises and other good and valuable
consideration, receipt whereof is hereby acknowledged, and intending to be
legally bound, and in order to secure the payment of all Secured Indebtedness
and the performance and observance of all the covenants and conditions contained
in the this Agreement, the Credit Agreement, the Subsidiary Guaranty Agreements,
the Subsidiary Security Agreement, and the other Loan Documents entered into
from time to time in connection therewith does, on and after the Grant Date,
hereby mortgage, grant, convey, warrant, assign, pledge and hypothecate unto the
Collateral Agent, its successors in trust and assigns, forever, and grants to
the Collateral Agent, its successors in trust and assigns, forever, a continuing
security interest in, automatically and without any further action, on and after
the Grant Date, all and singular the following described properties, rights,
interests and privileges, together with the proceeds thereof, now or hereafter
owned by the Borrower (hereinafter sometimes referred to as the “Collateral”):
Section
2.1 Equipment. All
building materials, building equipment, machinery, fixtures, apparatus,
furniture and equipment and other personal property (other than motor vehicles
and accessions to motor vehicles) of every kind and nature whatsoever located,
including without limitation: all air conditioning, ventilating,
plumbing, heating, lighting and electrical systems and apparatus; all
communications equipment and intercom systems and apparatus; all typewriters,
computers and other office machines and equipment, furniture, furnishings; all
sprinkler equipment and apparatus, all elevators and escalators; and all
machinery, equipment, engines, boilers, tools, fixtures, furniture, carpeting,
tables and chairs, together with all accessories, parts and appurtenances
appertaining or attached thereto, whether now owned or hereafter acquired, and
all substitutions, renewals, or replacements of and additions, improvements,
accessions and accumulations to any and all thereof, together with all the
rents, income, revenues, issues, proceeds, profits and avails arising therefrom
or in connection therewith;
Section
2.2 Receivables. All
Receivables, whether now existing or hereafter arising, and however evidenced or
acquired, or in which the Borrower now has or hereafter acquires any rights and
all rights of the Borrower to any Underlying Collateral granted by an Account
Debtor in connection with any Receivable owing by it to the
Borrower;
Section
2.3 Pledged
Collateral. All Pledged Collateral;
Section
2.4 General
Intangibles. All General intangibles of the Borrower,
including, without limitation, tax refunds, rights with respect to trademarks,
service marks, trade names, patents, copyrights, trade-secrets information and
rights to prevent others from doing acts that constitute unfair competition with
or misappropriation of property of the Borrower including, without limitation,
any sums (net of expenses) that the Borrower may receive arising out of any
claim for infringement of its rights in any patent, copyright, trademark, trade
name, trade secret or other proprietary right and all rights of the Borrower
under contracts to enjoy performance by others or to be entitled to enjoy rights
granted by others, including, without limitation, any licenses (to the extent
permitted by law);
Section
2.5 Investment
Property. All Investment Property, whether now owned or
existing or hereafter created, acquired or arising, or in which the Borrower now
has or hereafter acquires any rights (the term “Investment Property” means
and includes all investment property and any other securities (whether
certificated or uncertificated), security entitlements, securities accounts,
commodity contracts and commodity accounts, including all substitutions and
additions thereto, all dividends, distributions and sums distributable or
payable from, upon, or in respect of such property, and all rights and
privileges incident to such property, but excludes the Pledged
Collateral);
-6-
Section
2.6 Records and
Cabinets. All supporting evidence and documents relating to
any of the above-described property, including without limitation, written
applications, credit information, account cards, payment records,
correspondence, delivery and installation certificates, invoice copies, delivery
receipts, notes and other evidences of indebtedness, insurance certificates and
the like, together with all books of account, data processing records, computer
software and licenses to use the same, ledgers and cabinets in which the same
are reflected or maintained, all whether now existing or hereafter
arising;
Section
2.7 Partnership
Interests. (i) All right, title and interest of the
Borrower, whether now owned or hereafter acquired, in all partnerships or
limited liability companies, including, but not limited to, those set forth on
Schedule II hereto (collectively, the “Partnerships”),
(ii) any and all payments or distributions of whatever kind or character
and whether in cash or other property, at any time made, owing or payable to the
Borrower in respect of or on account of its present or hereafter acquired
interest in the Partnerships, whether due or to become due and whether
representing profits, distributions pursuant to complete or partial liquidation
or dissolution, repayment of capital contributions or otherwise, and the right
to receive, receipt for, use and enjoy all such payments and distributions, and
all proceeds thereof, in every case whether now arising or hereafter acquired or
arising, and (iii) all proceeds of any of the foregoing (all of the
foregoing rights, interests, properties and privileges assigned in and in which
a security interest is granted pursuant to this §2.7 being hereafter
collectively called the “Partnership
Interests”);
Section
2.8 Additional
Property. All property and rights, if any, which are by the
express provisions of this Agreement required to be subjected to the lien hereof
and any additional property and rights that may from time to time hereafter, by
writing of any kind, be subjected to the lien hereof by the Borrower or by
anyone acting at the direction or as an agent of the Borrower; and
Section
2.9 Deposit
Accounts. All Deposit Accounts, as such term is defined in the
Uniform Commercial Code; and
Section
2.10 Other Proceeds and
Products. All proceeds and products of the foregoing and all
insurance of the foregoing and proceeds thereof, whether now existing or
hereafter arising;
provided that, in the case of
a lien and security interest on the voting stock or other similar voting equity
interests of a corporation, limited liability company, partnership or other
entity which is a “controlled foreign corporation” as defined under
Section 957 of the Internal Revenue Code (herein, a “Foreign Company”), if
granting a security interest of more than 65% of the total combined voting stock
or other voting equity interests of any such Foreign Company would cause adverse
tax consequences to the Borrower, then such lien and security interest on the
voting stock or other voting equity interests shall be limited to 65% of the
total combined voting stock or other voting equity interests of such Foreign
Company.
-7-
On
and after the Grant Date, to Have and to Hold the
Collateral, With Power of Sale and right of entry and possession,
unto the Collateral Agent, its successors and assigns, forever; in
Trust Nevertheless, upon the terms and trust herein set forth, for the
equal and proportionate benefit, security and protection of all present and
future Secured Creditors; provided always, however,
that these presents are upon the express condition that if the Borrower shall
irrevocably pay or cause to be irrevocably paid all the Secured Indebtedness and
all obligations to extend Secured Indebtedness have expired or otherwise
terminated, then these presents and the estate hereby granted and conveyed shall
cease and this Agreement shall become null and void; otherwise this Agreement
shall remain in full force and effect.
Section
3. Covenants,
Representations and Warranties of the Borrower.
The
Borrower hereby covenants with, and represents and warrants to, the Collateral
Agent and for the benefit of the Secured Creditors from time to time
that:
Section
3.1 Location of
Collateral. The Collateral (other than the Underlying
Collateral and the Pledged Collateral) and the books and records relating
thereto are in the Borrower’s possession at the offices and facilities owned or
leased by the Borrower set forth in Schedule III hereto. Not
less than ten days before the opening of any additional business location which
would require the filing of an additional financing statement in accordance with
the Uniform Commercial Code in order to perfect the security interest of the
Collateral Agent in the Collateral, any change in the business location where
the Collateral and the books and records relating thereto are located and/or
maintained which would require the filing of an additional financing statement
in accordance with the Uniform Commercial Code in order to perfect the security
interest of the Collateral Agent in the Receivables or any other Collateral, the
Borrower will deliver to the Collateral Agent a supplement hereto amending
Schedule III to include such business location, and on and after the Grant Date,
evidence of the filing of financing statements or other notices of the security
interest hereof and an opinion of the Borrower’s counsel responsive to the
requirements of §3.8
hereof. On the written request of the Collateral Agent or the
Administrative Agent, the Borrower will deliver to the Collateral Agent a
supplement hereto amending Schedule III to include any additional business
locations not previously reflected in a supplement hereto.
Section
3.2 Warranty of
Title. The Borrower is the lawful owner of the Collateral
(other than the Underlying Collateral) and has the sole right and lawful
authority to deliver this Agreement. The Collateral (other than the
Underlying Collateral) and every part thereof is, on the Closing Date, free and
clear of all Liens, except the Liens permitted by Section 8.11 of the
Credit Agreement, and on and after the Grant Date, the Liens of this Agreement
and will be free and clear of all Liens, except the other Liens of and, on and
after the Grant Date, the Liens of this Agreement and the character described in
Section 8.11 of the Credit Agreement and on and after the Grant Date, the
Liens of this Agreement, and the Borrower will, on and after the Grant Date,
warrant and defend the Collateral (other than the Underlying Collateral) against
any claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Collateral Agent.
Section
3.3 No Alienation of
Collateral. Except as permitted by the provisions of
Section 8.13 of the Credit Agreement, the Borrower will not, without the
Collateral Agent’s prior written consent, sell, assign, mortgage, lease or
otherwise dispose of the Collateral or any interest therein.
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Section
3.4 Removal of
Collateral. The Borrower will not remove the Collateral and/or
the books and records relating thereto from the locations set forth in
Schedule III hereto (i) without complying with §3.1 hereof or (ii) without
the Collateral Agent’s prior written consent (provided that the Borrower may
move items of Collateral among such locations). The Borrower will at
all times allow the Collateral Agent, the Lenders and their representatives free
access to, and right of inspection of, the Collateral.
Section
3.5 Compliance with
Leases. The Borrower will comply with the terms and conditions
of any leases covering the premises wherein the Collateral is located and any
orders, ordinances, laws or statutes of any city, state or other governmental
entity, department or agency having jurisdiction with respect to such premises
or the conduct of business thereon unless the failure to so comply will not,
individually or in the aggregate, have a material adverse effect on such
Collateral or impair the rights or interests of the Borrower or the rights or
interests of the Collateral Agent on and after the Grant Date
therein.
Section
3.6 Protection of
Collateral. At any time and from time to time, on and after
the Grant Date, any Lender may, at its option, or the Collateral Agent may, at
the direction of the Administrative Agent, discharge any taxes, or other Liens
at any time levied or placed on the Collateral which are due and unpaid and (A)
which are not being contested in good faith by appropriate actions or
proceedings which will prevent the forfeiture or sale of the Collateral or any
material interference with the use thereof or (B) for which the Borrower has not
set aside on its books, reserves adequate in accordance with GAAP with respect
thereto, and such parties may pay for the maintenance and preservation of the
Collateral, including the purchasing of insurance therefor to the extent
required to be maintained by the Borrower pursuant to Section 8.2 of the
Credit Agreement and not so maintained, and the Borrower will immediately
reimburse the Collateral Agent or such Secured Creditor on demand for any
payment made or any expense incurred by the Collateral Agent or such Secured
Creditor pursuant to the foregoing authority with interest at a rate per annum
equal to the higher of (i) 10.5% and (ii) the Base Rate plus
2%. All such expenses and payments shall have the benefit of and be
secured by the security interest herein granted on and after the Grant Date, and
the Collateral Agent is authorized to charge any depository account of the
Borrower maintained with the Collateral Agent or any Secured Creditor for the
amount of such expenses and payments.
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Section
3.7 Further
Assurances. The Borrower agrees to, on and after the Grant
Date, execute and deliver to the Collateral Agent such further agreements and
assignments or other instruments and to do all such other things as the
Collateral Agent may deem necessary or appropriate to assure the Collateral
Agent its security interest hereunder, including such financing statement or
statements or amendments thereof or supplements thereto or other instruments as
the Collateral Agent may from time to time reasonably require to perfect, and
continue the perfection of, the security interest in the Collateral contemplated
by this Agreement. The Borrower hereby agrees that, to the extent
permitted by applicable law, a carbon, photographic or other reproduction of
this Agreement or any such financing statement is sufficient for filing as a
financing statement by the Collateral Agent on and after the Grant Date without
notice thereof to the Borrower wherever the Collateral Agent in its sole
discretion desires to file the same. The Borrower hereby authorizes
the Collateral Agent to file on and after the Grant Date any and all financing
statements covering the Collateral or any part thereof as the Collateral Agent
may require. On and after the Grant Date, the Collateral Agent shall,
when an Event of Default shall have occurred and be continuing, or at such other
time pursuant to §4 or
§5, have the right to take
physical possession of any and all of the Collateral and to maintain such
possession on the Borrower’s premises or, if possible, to remove the Collateral
or any part thereof to such other places as the Collateral Agent may
desire. If, on or after the Grant Date, the Collateral Agent
exercises its right to take possession of the Collateral, the Borrower shall,
upon the Collateral Agent’s demand, if possible, assemble the Collateral and
make it available to the Collateral Agent at a place designated by the
Collateral Agent. The Borrower shall at its expense perform any and
all other steps reasonably requested by the Collateral Agent on and after the
Grant Date to preserve and protect the subordinated security interest hereby
granted in the Collateral. If any Collateral is in the possession or
control of any of the Borrower’s agents or processors while a Default or an
Event of Default shall have occurred and be continuing, the Borrower agrees at
any time on and after the Grant Date (i) to notify such agents or
processors in writing of the Collateral Agent’s security interest therein, and
(ii) upon the Collateral Agent’s request instruct them to hold all such
Collateral for the Collateral Agent’s account and subject to the Collateral
Agent’s instructions. The Borrower agrees to ▇▇▇▇ its books and
records on the Grant Date to reflect the security interest of the Collateral
Agent in the Collateral.
Section
3.8 Maintenance of Lien; Recording;
Opinions of Counsel. (a) The Borrower will, on and after
the Grant Date, at its expense, take all necessary action to maintain and
preserve the perfected lien of this Agreement (including, without limitation,
the filing of all financing statements or similar notices thereof if and to the
extent permitted or required by applicable law) so long as the Secured Creditors
have any commitment to extend Secured Indebtedness to the Borrower and
thereafter so long as any Secured Indebtedness remains outstanding.
(b) The
Borrower will, forthwith after the execution and delivery of this Agreement and
on and after the Grant Date, and thereafter from time to time, cause this
Agreement (and all financing statements, continuation statements or similar
notices thereof if and to the extent permitted or required by applicable law) to
be filed, registered and recorded in such manner and in such places as may be
required by law in order to publish notice of and fully to protect the
subordinated of the Collateral Agent in and to the Collateral; and from time to
time will perform or cause to be performed any other act as provided by law and
will execute or cause to be executed any and all further instruments that may be
required for such publication and protection or requested by the Administrative
Agent. With respect to any Investment Property held by a securities
intermediary, commodity intermediary, or other financial intermediary of any
kind, at the Collateral Agent’s request on and after the Grant Date, acting at
the direction of the Administrative Agent, the Borrower shall execute and
deliver, and shall cause any such intermediary to execute and deliver, an
agreement among the Borrower, the Collateral Agent and such intermediary in form
and substance reasonably satisfactory to the Administrative Agent which
provides, among other things, for the intermediary’s agreement that, upon notice
by the Collateral Agent that an Event of Default has occurred and is continuing,
it shall comply with entitlement orders, and apply any value distributed on
account of any Investment Property maintained in an account with such
intermediary, as directed by the Collateral Agent without further consent of the
Borrower.
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(c) The
Borrower agrees at its own expense to, on and after the Grant Date, furnish to
the Collateral Agent promptly after the execution and delivery of any supplement
or amendment hereto or any continuation statement, an opinion of counsel
satisfactory to the Collateral Agent (who may be independent counsel to the
Borrower) stating that in the opinion of such counsel, such supplement or
amendment to this Agreement (or a financing statement, continuation statement or
similar notice thereof if and to the extent required by applicable law) or such
continuation statement, as the case may be, has been properly recorded or filed
for record in all public offices in which such recording or filing is necessary
to perfect the Lien provided by this Agreement as a valid Lien and security
interest in the Collateral.
Section
3.9 Guaranty and Security Agreement
Supplements. The Borrower hereby covenants and agrees that, on
and after the Grant Date, within 30 days after any Person becomes a Restricted
Subsidiary, it will, following payment in full of the Revolving Obligations and
subject to the terms of the Intercreditor Agreement, (i) deliver all of the
certificates or other instruments evidencing the capital stock, partnership
interests, membership interests or other equity interests of such Restricted
Subsidiary (except the Borrower will transfer and deliver only 65% of the Voting
Stock of any Foreign Company, including the Insurance Subsidiary) and all other
items constituting Pledged Collateral, with all such certificates or other
instruments duly endorsed in blank or accompanied by an assignment or
assignments sufficient to transfer title thereto, to the Collateral Agent to be
held in pledge pursuant to the terms hereof as part of the Pledged Collateral,
together with an amended Schedule I and, if applicable, Schedule II,
hereto or to the Subsidiary Security Agreement, as the case may be, describing
such additional Pledged Shares and, if applicable, Partnership Interests, and
(ii) cause such Restricted Subsidiary (other than the Insurance Subsidiary)
to enter into a Guaranty Supplement to each Subsidiary Guaranty Agreement
substantially in the form of Exhibit A thereto and a supplement to the
Subsidiary Security Agreement substantially in the form of Exhibit A
thereto, together with such items described in §3.8 hereof as the Collateral
Agent or the Administrative Agent may reasonably request.
Section
3.10 Deposit
Accounts. The Borrower may maintain one or more local deposit
accounts for the deposit of checks and the making of disbursements in the
ordinary course of business (“Local Accounts”) and one or
more concentration accounts into which the Borrower sweeps or periodically
transfers collections from the Subsidiary Local Accounts in the ordinary course
of business (“Concentration
Accounts”). All Concentration Accounts of the Borrower as of
September 17, 2010, are listed and identified (by account number and depository
institution) on Schedule IV attached hereto and made a part
hereof. The Borrower shall promptly notify the Collateral Agent of
any other Concentration Account opened or maintained by the Borrower after the
date hereof, and shall submit to the Collateral Agent a supplement to
Schedule IV to reflect such additional accounts (provided the Borrower’s
failure to do so shall not impair the Collateral Agent’s security interest
therein). So long as no Event of Default has occurred and is
continuing, the Collateral Agent’s security interest in the Local Accounts need
not be perfected. With respect to any Concentration Account
maintained by a depository institution other than the Collateral Agent, and as a
condition to the establishment and maintenance of any such Concentration
Account, on and after the Grant Date, the Borrower and such depository
institution shall have executed and delivered to the Collateral Agent an account
control agreement in form and substance satisfactory to the Collateral Agent
which provides, among other things, for the depository institution’s agreement
that it will comply with instructions originated by the Collateral Agent
directing the disposition of the funds in the Concentration Account(s) at such
depository institution without further consent by the Borrower, following
payment in full of the Revolving Obligations and subject to the terms of the
Intercreditor Agreement.
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Section
4. Special
Provisions Relating to Receivables.
Section
4.1 Representations and
Warranties. The Borrower shall be deemed to have warranted as
to each of its Receivables that:
(a) Such
Receivable and all papers and documents relating thereto are genuine and in all
respects what they purport to be;
(b) Such
Receivable is legal, valid and subsisting;
(c) The
amount of such Receivable represented as owing is the correct amount actually
and unconditionally owing, is not disputed and is not subject to any set-offs,
credits, deductions or countercharges;
(d) Such
Receivable has been created, and is, in all respects in compliance with
applicable state and federal lending laws and will continue to be in compliance
with such laws;
(e) The
Borrower has no knowledge or reason to know of any fact which would impair the
collectibility of such Receivable;
(f) All
of the Borrower’s procedures, requirements and conditions and all federal and
state laws applicable to the making of the loans related to such Receivable and
the creation of such Receivable have been complied with;
(g) To
the best knowledge of the Borrower, the Account Debtor on such Receivable and
other obligors had legal capacity to enter into the transactions related to such
Receivable;
(h) The
form and content of each document related to such Receivable, the security
related thereto, and the transactions from which it arose comply fully with any
and all applicable laws, ordinances, rules and regulations, federal, state
and/or local, with respect to the extension of credit and charging of interest,
including without limitation, as applicable, the Federal Consumer Credit
Protection Act, the Federal Fair Credit Reporting Act, the Federal Trade
Commission Act, the Federal Equal Credit Opportunity Act and all federal, state
and local laws related to licensing, usury, truth in lending, real estate
settlement procedures, consumer protection, equal credit opportunity, fair debt
collection, unfair and deceptive trade practices, rescission rights and
disclosures, and with all rules and regulations thereunder, all as amended, and
any disclosures required with respect to such Receivable were and will continue
to be made properly and in a timely manner;
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(i) To
the best knowledge of the Borrower, such Receivable and all facts, statements or
obligations contained or implicit in any application for credit or financial
statement of the Account Debtor or other obligor submitted to the Borrower,
including without limitation, the description of any Underlying Collateral
securing such Receivable and the amount owing from the Account Debtor or other
obligor, and the signatures of the parties are genuine, correct, true and
complete;
(j) The
Borrower has extended no credit of any kind or in any manner to the Account
Debtor or other obligors in connection with the transactions from which such
Receivable arose other than as indicated on and evidenced by the Borrower’s
files related to such Receivable;
(k) To
the best knowledge of the Borrower, each security agreement, UCC filing, title
retention instruments and other document and instrument, if any, which is
security for such Receivable contains a correct and sufficient description of
any Underlying Collateral covered thereby and each lien or security interest
which secures such Receivable is and will continue to be valid;
(l) Before
extending credit to the Account Debtor or other obligor on such Receivable, the
Borrower has made an adequate credit investigation of the Account Debtor or
other obligor and has determined that the risk of extending such credit is
satisfactory and in accordance with the standards historically observed by the
Borrower in the conduct of its business;
(m) Any
and all policies of insurance related to the property securing any obligation of
the Account Debtor in connection with such Receivable and any credit life
insurance, credit disability insurance, or credit unemployment insurance are in
full force and effect in accordance with the terms of all agreements between the
Borrower and the Account Debtor; and
(n) As
to such Receivable, the Borrower was duly authorized to do business and in good
standing in the jurisdiction in which such Receivable was originated and was
duly licensed to originate such Receivable in such jurisdiction.
Section
4.2 Receivable
Schedules. The Borrower shall provide the Collateral Agent
with such other relevant information as the Collateral Agent may request from
time to time.
Section
4.3 Collection of
Receivables. (a) Unless and until a Default or an
Event of Default shall have occurred and be continuing and the Borrower shall
have received written notice from the Collateral Agent at any time on or after
the Grant Date not to collect the Receivables, the Borrower shall make
collection of all Receivables of the Borrower and may use the same to carry on
its business in accordance with sound business practice and otherwise subject to
the terms hereof.
(b) At
any time while a Default or an Event of Default shall have occurred and be
continuing, and following payment in full of the Revolving Obligations and
subject to the terms of the Intercreditor Agreement, in the event the Collateral
Agent requests the Borrower to do so at any time on and after the Grant
Date:
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(i) All
instruments and chattel paper at any time constituting part of the Receivables
of the Borrower (including any postdated checks) shall, upon receipt by the
Borrower and to the extent permitted by law, be immediately endorsed to and
deposited with the Collateral Agent in the same form as received by the
Borrower; and/or
(ii) The
Borrower shall, to the extent permitted by law, instruct all account debtors to
remit all payments in respect of Receivables of the Borrower to a lockbox to be
maintained at the main post office, Chicago, Illinois, or such other single
location as the Collateral Agent may reasonably designate, under the sole
custody and control of the Collateral Agent.
(c) Except
as otherwise directed by the Collateral Agent, the Borrower shall, on and after
the Grant Date and following payment in full of the Revolving Obligations and
subject to the terms of the Intercreditor Agreement, place the following legend
conspicuously, on the face of each document, instrument, chattel paper and other
writing evidencing the Receivables created on or after the Closing
Date: “A
Security Interest in this document has been granted to ▇▇▇▇▇ Fargo Preferred
Capital, Inc., as Collateral Agent and Secured Party, pursuant to a Subordinated
Security Agreement, Pledge and Indenture of Trust.” At any
time while a Default or an Event of Default shall have occurred and be
continuing, the Collateral Agent or its designee may, on and after the Grant
Date, notify the Borrower’s customers or account debtors at any time that
Receivables of the Borrower have been assigned to the Collateral Agent or of the
Collateral Agent’s security interest therein and either in its own name, that of
the Borrower or both, following payment in full of the Revolving Obligations and
subject to the terms of the Intercreditor Agreement, demand, collect (including
without limitation through a lockbox analogous to that described in §4.3(b)(ii) hereof), receive,
receipt for, ▇▇▇ for, compound and give acquittance for any or all amounts due
or to become due on such Receivables, and in the Collateral Agent’s discretion
file any claim or take any other action or proceeding which the Collateral Agent
may deem necessary or appropriate to protect and realize upon the security
interest of the Collateral Agent in such Receivables.
(d) In
the event the Collateral Agent has exercised any or all of its rights under
§§4.3(b) or (c) hereof, the Collateral
Agent may, at any time while a Default or an Event of Default shall have
occurred and be continuing, cause, on and after the Grant Date, all instruments,
chattel paper, moneys or other proceeds received by the Collateral Agent to be
deposited, handled and administered in and through a remittance
account. If a Default or an Event of Default has occurred and is
continuing to the knowledge of the Collateral Agent, all amounts received by the
Collateral Agent pursuant to the Granting Clauses hereof and all amounts held in
any remittance account referred to above in this paragraph shall, on and after
the Grant Date, be held by the Collateral Agent for application in the manner
provided for in §7 in
respect of proceeds and avails of the Collateral.
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Section
4.4 Power of
Attorney. Upon the occurrence and during the continuance of a
Default or an Event of Default, following payment in full of the Revolving
Obligations and subject to the terms of the Intercreditor Agreement, in addition
to any other powers of attorney granted herein, the Borrower appoints the
Collateral Agent, its nominee, or any other Person whom the Collateral Agent may
designate as the Borrower’s attorney-in-fact, with full power at any time and
from time to time to, on and after the Grant Date, endorse the Borrower’s name
on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into the Collateral Agent’s possession, upon
the occurrence and during the continuance of a Default or an Event of Default,
following payment in full of the Revolving Obligations, to sign the Borrower’s
name on any invoice or ▇▇▇▇ of lading relating to any Collateral of the
Borrower, on drafts against customers, on schedules and assignments of
Collateral of the Borrower, on notices of assignment, and other public records,
on verification of accounts and on notices to customers, to notify the post
office authorities to change the address for delivery of the Borrower’s mail to
an address designated by the Collateral Agent, to receive, open and dispose of
all mail addressed to the Borrower, to send requests for verification of
Receivables of the Borrower to customers or account debtors, and to do all
things necessary to carry out this Agreement. The Borrower ratifies
and approves all acts of any such attorney and agrees that neither the
Collateral Agent nor any such attorney will be liable for any acts or omissions
nor for any error of judgment or mistake of fact or law other than their willful
misconduct or gross negligence. The foregoing power of attorney,
being coupled with an interest, is irrevocable until the Secured Indebtedness is
fully and irrevocably paid and satisfied and all obligations to extend credit
under the Credit Agreement have expired or otherwise terminated. The
Collateral Agent may, on and after the Grant Date, file one or more financing
statements disclosing its security interest in any or all of the Collateral
without the Borrower’s signature appearing thereon. The Borrower also
hereby grants the Collateral Agent a power of attorney to execute, on and after
the Grant Date, any such financing statement, or amendments and supplements to
financing statements on behalf of the Borrower with notice thereof to the
Borrower, which power of attorney is coupled with an interest and irrevocable
until the Secured Indebtedness is fully paid and satisfied.
Section
5. Special
Provisions Relating to Pledged Collateral.
Section
5.1 Delivery of Pledged Collateral;
Transfer to Collateral Agent. Following payment in full of the Revolving
Obligations and subject to the terms of the Intercreditor Agreement, all
instruments and certificates representing or evidencing the Pledged Collateral
shall, on and after the Grant Date, be delivered to and held by or on behalf of
the Collateral Agent for the ratable benefit of the Secured Creditors pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
undated, all in form and substance satisfactory to the Collateral
Agent. The Collateral Agent shall have the right, on and after the
Grant Date, subject to applicable law, at any time in its discretion after the
occurrence of an Event of Default following payment in full of the Revolving
Obligations and subject to the terms of the Intercreditor Agreement, to transfer
to or to register in the name of the Collateral Agent or any of its nominees any
or all of such Pledged Collateral. Promptly after any such transfer
or registration, the Collateral Agent shall give notice thereof to the Borrower,
but the failure to give such notice shall not affect any of the rights or
remedies of the Collateral Agent hereunder. The Collateral Agent
shall have the right at any time to exchange instruments or certificates
representing or evidencing such Pledged Collateral for instruments or
certificates of smaller or larger denominations, subject to the terms
thereof.
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Section
5.2 Voting
Power; Payments.
(a) Voting Power. So
long as an Event of Default shall not have occurred and be continuing, the
Borrower shall have the right to exercise any and all voting or other consensual
rights pertaining to the Pledged Collateral or any part thereof for all purposes
not inconsistent with the terms of this Agreement and the Credit Agreement, and
the Borrower agrees that it will not, on and after the Grant Date, exercise any
such rights in any manner which is inconsistent with the terms of this Agreement
and the Credit Agreement; provided, however, that the
Borrower shall not exercise or shall refrain from exercising any such right if
such action would have a material adverse affect on the value of the Pledged
Collateral or any part thereof; the Collateral Agent (1) shall have no
right to exercise such voting rights as are reserved in this §5.2(a) to the Borrower and
(2) shall execute and deliver to the Borrower or cause to be executed and
delivered to the Borrower all such proxies, powers of attorney, and other
orders, and all such instruments, without recourse, as the Borrower may
reasonably request in writing for the purpose of enabling the Borrower to
exercise the voting rights which it is entitled to exercise under this §5.2(a).
(b) Payments on
Default. So long as no Default or Event of Default shall have
occurred and be continuing, the Borrower shall have the right to receive and
retain all cash distributions and payments made in respect of the Pledged
Collateral to the extent such payments (1) may be legally declared and paid
under applicable law and (2) are not prohibited by the applicable
provisions hereof and of the Credit Agreement; provided, however, that, on
and after the Grant Date, following payment in full of the Revolving Obligations
and subject to the terms of the Intercreditor Agreement, any and
all
(i) dividends
and distributions paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,
(ii) dividends
and other distributions paid or payable in cash in respect of any Pledged
Collateral in connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or paid-in-surplus,
and
(iii) cash
paid, payable or otherwise distributed in redemption of, or in exchange for, any
Pledged Collateral;
shall be
forthwith delivered to the Collateral Agent to hold as, and such amounts so
delivered shall be, Pledged Collateral and shall, if received by the Collateral
Agent, be received in trust for the benefit of the Collateral Agent, be
segregated from the other property or funds of the Borrower and be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same form as so
received (with all appropriate powers, authorizations, orders and
documents).
(c) Voting Rights after an
Event of Default and Receipt of Distributions after a Default or an Event of
Default. Upon the occurrence and during the continuance of an
Event of Default, all rights of the Borrower to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to clause (a) above and, upon the occurrence and
during the continuance of a Default or an Event of Default, all rights of the
Borrower to receive the dividends and other distributions which it would
otherwise be entitled to receive and retain pursuant to clause (b) above, in
each such case, shall cease during the period and continuance of such Default or
Event of Default, as the case may be, and all such rights shall thereupon, on
and after the Grant Date and following payment in full of the Revolving
Obligations and subject to the terms of the Intercreditor Agreement, become
vested in the Collateral Agent, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual rights, as
directed in writing by the Administrative Agent pursuant to §8.1 hereof, and to receive
and hold as Pledged Collateral such distributions and dividends.
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Section
5.3 Covenants of the
Borrower. The Borrower hereby covenants and agrees on and
after the Grant Date as follows:
(a) Issuance of Additional Shares of
Stock. The Borrower will not vote to enable or otherwise cause
any Restricted Subsidiary to issue any shares of stock or other Securities in
addition to, or to issue other securities of any nature in exchange or
substitution for, the Pledged Collateral (except to qualify directors) unless
such stock or other securities may be issued under the relevant provisions
hereof, are pledged to the Collateral Agent for the ratable benefit of the
Secured Creditors as part of the Pledged Collateral and the Borrower represents
to the Collateral Agent and the Secured Creditors that (i) the Borrower has good
and marketable title to such stock or other Security, free and clear of any Lien
other than the Lien hereof and Liens permitted by Section 8.11 of the Credit
Agreement and (ii) such stock or other Security has been duly authorized,
validly issued and is fully paid and non-assessable.
(b) Regulatory
Consent. The Borrower will use its best efforts to obtain
consent of any regulatory authority, Federal, state or local, if any, having
jurisdiction over any license, franchise or other authorization granted by any
governmental unit or authority, which consent may be required in connection with
the transfer of the Pledged Collateral, and will cooperate fully with the
Collateral Agent in effecting any such transfer, including, without limitation,
the execution and delivery of all applications, certificates and other documents
that may be required to obtain the consent and approval or authorization of or
registration or qualification with, any governmental authority, and
specifically, without limitation, any application for consent to assignment of
license or transfer of control necessary or appropriate under the rules and
regulations of any governmental authority for approval of (1) any sale or sales
of property constituting Pledged Collateral by or on behalf of the Collateral
Agent or (2) any assumption by the Collateral Agent of voting rights or
management rights in the Pledged Collateral, effected in accordance with the
terms of this Agreement.
(c) Additional Pledged
Collateral. If any of the Pledged Collateral, including,
without limitation, any shares, notes, obligations, Securities, instruments,
property or (except to the extent otherwise provided in clauses (b) and (c) in
the definition of Pledged Collateral) moneys, distributions or other payments of
every kind and variety referred to in clauses (a) through (c) in the definition
of Pledged Collateral are received by the Borrower, the Borrower agrees,
following payment in full of the Revolving Obligations and subject to the terms
of the Intercreditor Agreement, forthwith to transfer and deliver the same (with
the certificates or other instruments or documents evidencing or documenting any
such shares, notes, obligations, interests, instruments, or other Securities
duly endorsed in blank or accompanied by an assignment or assignments sufficient
to transfer title thereto), to the Collateral Agent to be held in pledge
pursuant to the terms of this Agreement, as part of the Pledged
Collateral.
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(d) Schedule of Pledged
Collateral. The Borrower will furnish to the Collateral Agent
from time to time statements and schedules further identifying and describing
the Pledged Collateral and such other reports in connection with the Pledged
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
Section
6. Application
of Certain Moneys.
Section
6.1 Application if no Default or Event
of Default Exists. So long as no Default or Event of Default
shall have occurred and be continuing, subject to the Borrower’s contractual
obligations to other parties (including, without limitation, the Credit
Agreement), the Borrower shall be allowed to receive and apply the Collateral
and to carry on its business in accordance with sound business
practices.
Section
6.2 Application if a Default or an Event
of Default Exists. Following payment in full of the Revolving
Obligations and subject to the terms of the Intercreditor Agreement, if a
Default or an Event of Default has occurred and is continuing, all amounts which
constitute Collateral shall on and after the Grant Date be paid over to the
Collateral Agent for application in the manner provided in §7 in respect of proceeds and
avails of the Collateral.
Section
7. Defaults
and Remedies.
Section
7.1 Events of
Default. An “Event of Default” under the Credit Agreement
shall constitute an Event of Default hereunder.
Section
7.2 Collateral Agent’s
Rights. The Borrower agrees that when any Event of Default has
occurred and is continuing, the Collateral Agent may, on and after the Grant
Date and following payment in full of the Revolving Obligations and subject to
the terms of the Intercreditor Agreement, the provisions of §8.1, without limitation of
all other rights and remedies available herein, in the Subsidiary Security
Agreement, at law or in equity in such event, exercise any one or more or all,
and in any order, of the remedies hereinafter set forth, it being expressly
understood that no remedy herein conferred is intended to be exclusive of any
other remedy or remedies; but each and every remedy shall be cumulative and
shall be in addition to every other remedy given herein or now or hereafter
existing at law or in equity or by statute:
(a) The
Collateral Agent personally, or by agents or attorneys, shall have the right
(subject to compliance with any applicable mandatory legal requirements) to
enter into and upon the premises of the Borrower and take possession of all or
any part of the Collateral and to exclude the Borrower wholly therefrom, and
having and holding the same may use, operate, manage and control the Collateral
and collect and receive all earnings, revenues, issues, proceeds and income of
the Collateral and every part thereof and may maintain, repair and renew the
Collateral and make replacements, alterations, additions and improvements
thereto or remove and dispose of any portion of the Collateral and may otherwise
exercise any and all of the rights and powers of the Borrower in respect
thereof.
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(b) The
Collateral Agent may, if at the time such action may be lawful and always
subject to compliance with any mandatory legal requirements, either with or
without taking possession, and either before or after taking possession, and
without instituting any legal proceedings whatsoever, and having first given
notice of such sale by registered mail to the Borrower at least ten days prior
to the date of such sale, and any other notice which may be required by law,
sell and dispose of the Collateral, or any part thereof, or interest therein, at
public auction to the highest bidder, in one lot as an entirety or in separate
lots, and either for cash or on credit and on such terms as the Collateral Agent
may determine, and at any place (whether or not it be the location of the
Collateral or any part thereof) designated in the notice above referred
to. Any such sale or sales may be adjourned from time to time by
announcement at the time and place appointed for such sale or sales, or for any
such adjourned sale or sales, without further notice, and the Collateral Agent
or the Secured Creditors, or of any interest therein, may bid and become the
purchaser at any such sale.
(c) The
Collateral Agent may proceed to protect and enforce this Agreement and the
Secured Indebtedness or any part thereof by suit or suits or proceedings in
equity, at law or in bankruptcy, and whether for the specific performance of any
covenant or agreement herein contained or in execution or aid of any power
herein granted; or for foreclosure hereunder, or for the appointment of a
receiver or receivers for the Collateral or any part thereof, or for the
recovery of judgment for the Secured Indebtedness or for the enforcement of any
other proper, legal or equitable remedy available under applicable
law.
Section
7.3 Waiver by
Borrower. To the extent now or at any time hereafter
enforceable under applicable law, the Borrower covenants that it will not at any
time on or after the Grant Date insist upon or plead, or in any manner
whatsoever claim or take any benefit or advantage of, any stay or extension law
now or at any time hereafter in force, nor claim, take nor insist upon any
benefit or advantage of or from any law now or hereafter in force providing for
the valuation or appraisement of the Collateral or any part thereof, prior to
any sale or sales thereof to be made pursuant to any provision herein contained,
or to the decree, judgment or order of any court of competent jurisdiction; nor,
after such sale or sales, claim or exercise any right under any statute now or
hereafter made or enacted by any state or otherwise to redeem the property so
sold or any part thereof, and hereby expressly waives for itself and on behalf
of each and every Person, except decree or judgment creditors of the Borrower
acquiring any interest in or title to the Collateral or any part thereof
subsequent to the date of this Agreement, all benefit and advantage of any such
law or laws, and covenants that it will not invoke or utilize any such law or
laws or otherwise hinder, delay or impede the execution of any power herein
granted and delegated to the Collateral Agent, but will suffer and permit the
execution of every such power as though no such law or laws had been made or
enacted.
Section
7.4 Effect of
Sale. Any sale, whether under any power of sale hereby given
or by virtue of judicial proceedings, shall operate to divest all right, title,
interest, claim and demand whatsoever, either at law or in equity, of the
Borrower in and to the property sold and shall be a perpetual bar, both at law
and in equity, against the Borrower, its successors and assigns, and against any
and all persons claiming the property sold or any part thereof under, by or
through the Borrower, its successors or assigns.
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Section
7.5 Application of Sale and Other
Proceeds. Subject to the terms of the Intercreditor Agreement,
the proceeds and avails of the Collateral at any time received by the Collateral
Agent on and after the Grant Date during the existence of any Event of Default
shall, when received by the Collateral Agent in cash or its equivalent, be paid
over to the Administrative Agent to be applied in reduction of, or held as
collateral security for, the Secured Indebtedness in accordance with the terms
of the Credit Agreement. The Borrower shall remain liable to the
Secured Creditors for any deficiency. Any surplus remaining after the
full payment and satisfaction of the Secured Indebtedness shall be returned to
the Borrower or to whomsoever the Collateral Agent reasonably determines is
lawfully entitled thereto.
The
proceeds and/or avails of the Collateral shall be applied as set forth above
notwithstanding the time or order of advance of any funds secured by any such
Collateral or any other priority provided by law or otherwise. By
accepting the benefits of this Agreement, each of the Secured Creditors agrees
that it will not initiate or prosecute, or encourage any other person to
initiate or prosecute, any claim, action or other proceeding challenging the
enforceability of the claims of the Secured Creditors or challenging the
enforceability of any liens or security interests in assets securing the Secured
Indebtedness or any part thereof and the other obligations and liabilities
relating thereto, in each case, created or incurred in accordance with the terms
of this Agreement and the Subsidiary Security Agreement.
Section
7.6 Discontinuance of
Remedies. In case the Collateral Agent shall have proceeded to
enforce any right under this Agreement by foreclosure, sale, entry or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely, then and in every such case the Borrower,
the Collateral Agent and the Secured Creditors shall be restored to their former
positions and rights hereunder with respect to the property subject to the lien
and security interest created under this Agreement.
Section
7.7 Cumulative
Remedies. No delay or omission of the Collateral Agent or of
any Secured Creditor to exercise any right or power arising from any default,
shall exhaust or impair any such right or power or prevent its exercise during
the continuance of such default. No waiver by the Collateral Agent or
of any Secured Creditor of any such default, whether such waiver be full or
partial, shall extend to or be taken to affect any subsequent default, or to
impair the rights resulting therefrom except as may be otherwise provided
therein. No remedy hereunder is intended to be exclusive of any other
remedy but each and every remedy shall be cumulative and in addition to any and
every other remedy given hereunder or otherwise existing; nor shall the giving,
taking or enforcement of any other or additional security, collateral or
guaranty for the payment of the Secured Indebtedness operate to prejudice, waive
or affect the security of this Agreement or any rights, powers or remedies
hereunder, nor shall the Collateral Agent or any Secured Creditor be required to
first look to, enforce or exhaust such other or additional security, collateral
or guaranties.
Section
8. The
Collateral Agent.
The
Collateral Agent accepts the trusts hereunder and agrees to perform the same,
but only upon the terms and conditions hereof, including the following, to all
of which the Borrower and the respective Secured Creditors at any time
outstanding by their acceptance thereof agree:
Section
8.1 Duties of Collateral
Agent. (a) The Collateral Agent undertakes
(i) except while an Event of Default actually known to the Collateral Agent
shall have occurred and be continuing, to perform such duties and only such
duties as are specifically set forth in this Agreement, or in any direction
given pursuant to this Agreement, and (ii) while an Event of Default
actually known to the Collateral Agent shall have occurred and be continuing,
subject to §8.1(b), to
exercise such of the rights and powers as are vested in it by this Agreement and
permitted by applicable law. The Collateral Agent upon receipt of
instruments or notices furnished to the Collateral Agent pursuant to the
provisions of this Agreement shall furnish copies of the same to the
Administrative Agent for distribution to the Lenders.
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(b) In
the event that the Collateral Agent shall have actual knowledge of an Event of
Default, the Collateral Agent shall give prompt written notice of such Event of
Default to the Administrative Agent. Subject to the terms of §8.2(h), in accordance with
written instructions received from the Administrative Agent, the Collateral
Agent shall take such action or refrain from taking such action as the
Collateral Agent shall be directed in writing by the Administrative
Agent. If the Collateral Agent shall not have received written
instructions as above provided within twenty (20) days after mailing notice of
such Event of Default to the Lenders, the Collateral Agent may, subject to
instructions received pursuant to the preceding sentence, take such action, or
refrain from taking such action, but shall be under no duty to take or refrain
from taking any action, with respect to such Event of Default, as it shall
determine advisable in the best interests of the Secured Creditors.
(c) The
Collateral Agent shall not have any duty or obligation to manage, control, use,
sell, dispose of or otherwise deal with the Collateral, or, to otherwise take or
refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement or expressly
provided in written instructions received pursuant to this
Agreement.
(d) Except
if it is herein otherwise expressly provided that no such request is required,
the Collateral Agent shall not be under any obligation to take any action which
is discretionary with the Collateral Agent or otherwise requires judgment to be
made by the Collateral Agent under the provisions hereof, except on written
request by the Administrative Agent.
Section
8.2 Collateral Agent’s
Liability. No provision of this Agreement (except to the
extent provided in §8.13 hereof) shall be construed to relieve the Collateral
Agent from liability for its own gross negligence or willful misconduct, except
that:
(a) unless
an Event of Default actually known to the Collateral Agent shall have occurred
and be continuing, the Collateral Agent shall not be liable except for the
performance of such duties as are specifically set forth in this Agreement and
no implied covenants or obligations shall be read into this Agreement against
the Collateral Agent but the duties and obligations of the Collateral Agent
shall be determined solely by the express provisions of this Agreement;
and
(b) in
the absence of bad faith on the part of the Collateral Agent, the Collateral
Agent may rely upon the authenticity of, and the truth of the statements and the
correctness of the opinions expressed in, and shall be protected in acting upon,
any resolution, officer’s certificate, opinion of counsel (which counsel shall
be independent of the Borrower, any Affiliate thereof and the Lenders), Note,
request, notice, consent, waiver, order, signature guaranty, notarial seal,
stamp, acknowledgment, verification, appraisal, report, stock certificate, or
other paper or document believed by the Collateral Agent to be genuine and to
have been signed, affixed or presented by the proper party or parties;
and
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(c) in
the absence of bad faith on the part of the Collateral Agent, whenever the
Collateral Agent, or any of its agents, representatives, experts or counsel
(which counsel shall be independent of the Borrower, any Affiliate thereof and
the Secured Creditors), shall consider it necessary or desirable that any matter
be proved or established, such matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by an officer’s certificate; provided, however, that the Collateral
Agent, or such agent, representative, expert or counsel, may require such
further and additional evidence and make such further investigation as it or
they may consider reasonable; and
(d) the
Collateral Agent may consult with counsel (which counsel shall be independent of
the Borrower, any Affiliate thereof and the Secured Creditors) and the advice or
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered hereunder in good faith and in
accordance with such advice or opinion of counsel; and
(e) the
Collateral Agent shall not be liable with respect to any action taken or omitted
to be taken by it in good faith in accordance with any direction or request of
the Lenders or the requisite portion thereof as expressly provided herein;
and
(f) the
Collateral Agent shall not be liable for any error of judgment made in good
faith by an officer of the Collateral Agent; and
(g) the
Collateral Agent shall not be deemed to have knowledge of any Default or Event
of Default unless and until an officer of the Corporate Trust Department of the
Collateral Agent who customarily handles corporate trusts or such other Person
employed by the Collateral Agent who has primary responsibility for the
transactions contemplated hereby shall have actual knowledge thereof or the
Collateral Agent shall have received written advice thereof from the
Administrative Agent or any Lender; and
(h) whether
or not an Event of Default shall have occurred, the Collateral Agent shall not
be under any obligation to take or refrain from taking any action under this
Agreement which may tend to involve it in any expense or liability, the payment
of which within a reasonable time is not, in its reasonable opinion, assured to
it by the security afforded to it by the terms of this Agreement, unless and
until it is requested in writing so to do by one or more Secured Creditors
hereunder and furnished, from time to time as it may require, with reasonable
security and indemnity.
Section
8.3 No Responsibility of Collateral
Agent for Recitals. The recitals and statements contained
herein and in the Loan Documents shall be taken as the recitals and statements
of the Borrower, and the Collateral Agent assumes no responsibility for the
correctness of the same, nor shall the Collateral Agent have any responsibility
for or any liability with respect to any disclosure, warranty, representation or
concealment or failure to disclose in connection with the offering,
solicitation, sale or distribution of the Secured Indebtedness by the Borrower
or by any other Person.
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The
Collateral Agent makes no representation as to the validity or sufficiency of
this Agreement, the security hereby or thereby afforded, the title of the
Borrower to or the existence of the Collateral or the descriptions thereof, or
the filing or recording or registering of this Agreement or any other
document.
The
Collateral Agent shall not be concerned with or accountable to any Person for
the use or application of any deposited moneys which shall be released or
withdrawn in accordance with the provisions of this Agreement or of any property
or Securities or the proceeds thereof which shall be released from the lien and
security interest hereof in accordance with the provisions of this
Agreement.
Section
8.4 Certain Limitations on Collateral
Agent’s Rights to Compensation and Indemnification. Except to
the extent otherwise expressly provided herein and in the Credit Agreement, the
Collateral Agent shall have no right against any Secured Creditor for the
payment of compensation for its services hereunder or any expenses or
disbursements incurred in connection with the exercise and performance of its
powers and duties hereunder or any indemnification against liabilities which it
may incur in the exercise and performance of such powers and duties but on the
contrary, shall look solely to the Borrower for such payment and indemnification
which the Borrower hereby agrees to make, and the Collateral Agent shall have no
lien on or security interest in the Collateral as security for such
compensation, expenses, disbursements and indemnification except to the extent
provided for in §7.5 and in the Credit Agreement.
Section
8.5 Status of Moneys
Received. (a) All moneys received by the Collateral
Agent shall, together with any interest thereon, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
(except as herein otherwise provided with respect to the funds referred to in
paragraph (b) of this Section) need not be segregated in any manner from any
other moneys, except to the extent required by law, and may be deposited by the
Collateral Agent under such general conditions as may be prescribed by law in
the Collateral Agent’s general banking department, and the Collateral Agent
shall be under no liability for interest (other than any interest accrued
pursuant to clause (b) of this §8.5) on any moneys received
by it hereunder.
(b) At
the Borrower’s written request, so long as no Event of Default has occurred and
is continuing, the Collateral Agent shall invest and reinvest any funds from
time to time held by the Collateral Agent in direct obligations of the United
States of America or obligations for which the full faith and credit of the
United States is pledged to provide for the payment of principal and interest,
maturing not more than 90 days from the date of such investment.
Section
8.6 Resignation of Collateral
Agent. The Collateral Agent may resign without cause and be
discharged from the trusts created hereby by delivering notice thereof, by
registered or certified mail postage prepaid to the Borrower and the
Administrative Agent. Such resignation shall take effect immediately
upon the appointment of a successor Collateral Agent as provided in §§8.8 and 8.9.
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Section
8.7 Removal of Collateral
Agent. The Collateral Agent may be removed at any time, for or
without cause, by an instrument or instruments in writing executed by the
Administrative Agent and delivered to the Collateral Agent with a copy to the
Borrower, specifying the removal and the date when it shall take effect
provided, however, that no such removal shall be effective hereunder unless and
until a successor Collateral Agent shall have been appointed and shall have
accepted such appointment as provided in §§8.8 and 8.9.
Section
8.8 Appointment of Successor Collateral
Agent. In case at any time the Collateral Agent shall resign
or be removed or become incapable of acting, a successor Collateral Agent may be
appointed by the Administrative Agent (acting at the request or with the consent
of the Required Lenders), by an instrument or instruments in writing executed by
the Administrative Agent and filed with such successor Collateral Agent and the
Borrower.
Until a
successor Collateral Agent shall be so appointed by the Administrative
Agent, the Borrower shall appoint a successor Collateral Agent to fill
such vacancy, by an instrument in writing executed by the Borrower and delivered
to the successor Collateral Agent. If all or substantially all of the
Collateral shall be in the possession of one or more receivers, trustees,
liquidators or assignees for the benefit of creditors, then such receivers,
trustees, custodians, liquidators or assignees may, by an instrument in writing
delivered to the successor Collateral Agent, appoint a successor Collateral
Agent. Promptly after any such appointment, the Borrower, or any such
receivers, trustees, custodians, liquidators or assignees, as the case may be,
shall give notice thereof by first class mail postage prepaid to the Administrative
Agent.
Any
successor Collateral Agent so appointed by the Borrower, or such receivers,
trustees, custodians, liquidators or assignees, shall immediately and without
further act be superseded by a successor Collateral Agent appointed by the Administrative
Agent.
If a
successor Collateral Agent shall not be appointed pursuant to this Section
within thirty days after notice of the resignation or removal of the retiring
Collateral Agent, the Administrative
Agent or such retiring Collateral Agent (unless the retiring Collateral
Agent is being removed) may apply to any court of competent jurisdiction to
appoint a successor Collateral Agent, and such court may thereupon, after such
notice, if any, as it may consider proper, appoint a successor Collateral
Agent.
Section
8.9 Succession of Successor Collateral
Agent. Any successor Collateral Agent appointed hereunder
shall execute, acknowledge and deliver to the Borrower, the Administrative
Agent, and the predecessor Collateral Agent an instrument accepting such
appointment, and thereupon such successor Collateral Agent, without any further
act, deed, conveyance or transfer, shall, on and after the Grant Date, become
vested with the title to the Collateral, and with all the rights, powers,
trusts, duties and obligations of the predecessor Collateral Agent in the trust
hereunder, with like effect as if originally named as Collateral Agent
herein.
Upon the
request of any such successor Collateral Agent, however, the Borrower and the
predecessor Collateral Agent shall execute and deliver such instruments of
conveyance and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Collateral Agent its interest in the Collateral and all such rights, powers,
trusts, duties and obligations of the predecessor Collateral Agent hereunder,
and the predecessor Collateral Agent shall also assign and deliver to the
successor Collateral Agent any property subject to the lien and security
interest of this Agreement which may then be in its possession.
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Section
8.10 Eligibility of Collateral
Agent. The Collateral Agent shall be a state or national bank
or trust company in good standing, organized under the laws of the United States
of America or of any state thereof, having a capital, surplus and undivided
profits aggregating at least $500,000,000 and whose certificates of deposit are
accorded a rating of A or better by S&P and ▇▇▇▇▇’▇ or, if S&P and
▇▇▇▇▇’▇ are no longer rating such banks, then by any other nationally recognized
credit rating agency of similar standing or a guaranty of its obligations
hereunder from such a bank or trust company or holding company in good standing,
organized under the laws of the United States of America or of any State
thereof, having a capital, surplus and undivided profits aggregating at least
$500,000,000 and whose certificates of deposit are accorded a rating of A or
better by S&P and ▇▇▇▇▇’▇ or, if S&P and ▇▇▇▇▇’▇ are no longer rating
such banks, then by any other nationally recognized credit rating agency of
similar standing, if there be such a bank or trust company willing and able to
accept such trust upon reasonable and customary terms.
In case
the Collateral Agent shall cease to be eligible in accordance with the
provisions of this Section, the Collateral Agent shall resign immediately in the
manner and with the effect specified in §8.6.
Section
8.11 Successor Collateral Agent by
Merger. Any corporation into which the Collateral Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Collateral Agent shall be a party, or
any state or national bank or trust company in any manner succeeding to the
corporate trust business of the Collateral Agent as a whole or substantially as
a whole, if eligible as provided in §8.10, shall be the successor
of the Collateral Agent hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything to the
contrary contained herein notwithstanding.
Section
8.12 Co-Trustees. At
any time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Collateral may at the time be located, the Borrower and
the Collateral Agent jointly shall have power and shall execute and deliver all
instruments, on and after the Grant Date, to appoint one or more persons
approved by the Collateral Agent, to act as co-trustee, or co-trustees, jointly
with the Collateral Agent, or separate trustee or separate trustees, of all or
any part of the Collateral, and to vest in such person or persons in such
capacity, such interest in the Collateral or any part thereof, and such rights,
powers, duties, trusts or obligations as the Borrower and the Collateral Agent
may consider necessary or desirable. If the Borrower shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default shall have occurred and be continuing, the
Collateral Agent alone shall have power to make such appointment if the
Collateral Agent reasonably believes such appointment is necessary or desirable
to carry out the transactions contemplated hereby.
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Section
8.13 Compensation and
Reimbursement. The Borrower agrees:
(a) to
pay to the Collateral Agent all of its out-of-pocket expenses in connection with
the preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of its special counsel;
(b) to
pay to the Collateral Agent from time to time reasonable compensation for all
services rendered by it hereunder;
(c) except
as otherwise expressly provided herein, to reimburse the Collateral Agent upon
its request for all reasonable expenses, disbursements and advances incurred or
made by the Collateral Agent in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its gross negligence or willful misconduct; and
(d) to
indemnify the Collateral Agent for, and to hold it harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
its part, arising out of or in connection with the acceptance or administration
of the Agreement, including, but not limited to, the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder, and any loss,
liability, expense or claim arising out of its possession, management, control,
use or operation of the Collateral.
Section
9. Supplements;
Waivers.
Section
9.1 Supplemental Security Agreements
Without Secured Creditor Consent. The Borrower and the
Collateral Agent from time to time and at any time, subject to the restrictions
in this Agreement contained, may enter into an agreement or agreements
supplemental hereto, which thereafter shall form a part hereof, for any one or
more or all of the following purposes:
(a) to
add to the covenants and agreements to be observed by, and to surrender any
right or power reserved to or conferred upon the Borrower;
(b) on
and after the Grant Date, to subject to the lien and security interest of this
Agreement additional property hereafter acquired by the Borrower and intended to
be subjected to the lien and security interest of this Agreement and to correct
and amplify the description of any property subject to the lien and security
interest of this Agreement; and
(c) to
permit the qualification of this Agreement under the Trust Indenture Act of
1939, as amended, or any similar Federal statute hereafter in effect, except
that nothing herein contained shall permit or authorize the inclusion of the
provisions referred to in Section 316(a)(2) of said Trust Indenture Act of
1939 or any corresponding provision in any similar Federal statute hereafter in
effect;
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and the
Borrower covenants to perform all requirements of any such supplemental
agreement. No restriction or obligation imposed upon the Borrower
may, except as otherwise provided in this Agreement, be waived or modified by
any such supplemental agreement.
Section
9.2 Waivers and Consents by Secured
Creditors; Supplemental Security Agreements with Secured
Creditors’Consent. Upon the waiver or consent of the
Administrative Agent (acting at the direction or with the consent of the
Required Lenders under the Credit Agreement), the Borrower and the Collateral
Agent may enter into an agreement or agreements supplemental hereto for the
purpose of waiving, adding, changing or eliminating any provisions of this
Agreement or of any agreement supplemental hereto or modifying in any manner the
rights and obligations of the Secured Creditors and the Borrower.
Section
9.3 Notice of
Supplements. Promptly after the execution by the Borrower and
the Collateral Agent of any supplemental agreement pursuant to the provisions of
§9.1 or §9.2 the Borrower shall
deliver a conformed copy thereof, mailed first-class postage prepaid, to the
Administrative Agent at its address set forth in the Credit
Agreement. Any failure of the Borrower to give such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental agreement.
Section
9.4 Opinion of Counsel Conclusive as to
Supplements. The Collateral Agent is hereby authorized to join
with the Borrower in the execution of any such supplemental indenture or
agreement authorized or permitted by the terms of this Agreement and to make the
further agreements and stipulations which may be therein contained, and the
Collateral Agent may receive an opinion of independent counsel selected by the
Collateral Agent as conclusive evidence that any supplemental agreement executed
pursuant to the provisions of this §9 complies with the
requirements of this §9.
Section
10. Miscellaneous.
Section
10.1 Successors and
Assigns. Whenever any of the parties hereto is referred to
such reference shall be deemed to include the successors and assigns of such
party; and all the covenants, promises and agreements in this Agreement
contained by or on behalf of the Borrower or by or on behalf of the Collateral
Agent shall bind and inure to the benefit of the respective successors and
assigns of such parties whether so expressed or not.
Section
10.2 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.
Section
10.3 Communications. All
communications provided for herein shall be in
writing. Communications to the Borrower or the Collateral Agent shall
be deemed to have been given (unless otherwise required by the specific
provisions hereof in respect of any matter) when addressed and delivered in
person, or five days after being deposited in the U.S. mail, postage prepaid, by
registered or certified mail, by courier, or by overnight express mail, as
follows:
-27-
If to the
Borrower:
World
Acceptance Corporation
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief
Financial Officer
If to the
Collateral Agent:
▇▇▇▇▇
Fargo Preferred Capital, Inc.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Street, ▇▇▇
▇▇▇▇▇
▇▇▇ ▇
▇▇▇▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Senior Vice President
or to the
Borrower or the Collateral Agent at such other address as the Borrower or the
Collateral Agent may designate by notice duly given in accordance with this
Section to the other. Communications to any Secured Creditor shall be
deemed to have been given (unless otherwise provided for by the specific
provisions hereof in respect of any matter) when delivered personally or five
days after being deposited in the U.S. mail, postage prepaid by registered or
certified mail or by courier or by overnight express mail, addressed to such
Secured Creditor at its address set forth in the Credit Agreement.
Section
10.4 Release. The
Collateral Agent shall release fully or partially, as the case may be, the Lien
granted by this Agreement under and only under the following
circumstances:
(a) Upon
the written request of the Borrower and the presentation of satisfactory
evidence that all Secured Indebtedness has been irrevocably fully paid or
discharged and all obligations of the Secured Creditors to extend Secured
Indebtedness to the Borrower have terminated or otherwise expired, the
Collateral Agent shall release the Lien and security interest of this Agreement
by proper instrument or instruments;
(b) So
long as no Default or Event of Default then exists, upon the sale or other
disposition of any assets of the Borrower and its Restricted Subsidiaries which
the Chief Financial Officer of the Borrower certifies to the Collateral Agent,
the Administrative Agent and the Lenders in writing does not constitute a
“substantial part” of the assets of the Borrower and its Restricted Subsidiaries
(as defined in Section 8.13 of the Credit Agreement), the Collateral Agent
shall, upon the written direction of the Borrower and without the consent of the
Secured Creditors (unless the Collateral Agent has been notified in writing by
the Administrative Agent or any Lender prior to such release that the
Administrative Agent or such Lender in good faith believes that the conditions
set forth above have not been satisfied, in which case no such release shall be
issued), release the Lien of this Agreement on such assets by proper instrument
or instruments. If any such sale or other disposition of assets
constituting less than a “substantial part” of the assets of the Borrower and
its Restricted Subsidiaries pursuant to this §10.4(b) results in the sale or
other disposition of the capital stock or other equity interest in a Restricted
Subsidiary, the Subsidiary Guaranty Agreement with respect to, and only with
respect to, such Restricted Subsidiary shall automatically be released and the
Collateral Agent, the Administrative Agent and the Lenders agree to execute and
deliver such further instruments and do such further acts as the Borrower may
deem necessary or proper to carry out more effectively the
foregoing;
-28-
(c) Upon
the sale or other disposition by the Borrower of a “substantial part” of the
assets of the Borrower and its Restricted Subsidiaries (as defined in
Section 8.13 of the Credit Agreement) after the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall, upon the written
direction of the Borrower and the written consent of the Administrative Agent,
release the Lien of this Agreement on such assets by proper instrument or
instruments, provided,
that, (i) such sale or other disposition is not to an Affiliate,
(ii) the sale price for such assets is determined by the Borrower in good
faith to be reasonable, as evidenced by a resolution of the board of directors
of the Borrower, (iii) the proceeds of any such sale or other disposition
are applied to the satisfaction of Secured Indebtedness and, if such application
results in the prepayment of any obligations under the Credit Agreement, such
application permanently reduces the amount of the commitment under the Credit
Agreement (unless the Administrative Agent agree otherwise), (iv) the
Administrative Agent and the Lenders shall have received written notice of such
sale or other disposition at least ten days prior to the date of such sale or
other disposition and (v) the Collateral Agent, the Administrative Agent
and the Lenders receive a certificate of the Chief Financial Officer of the
Borrower certifying to each of the foregoing. If any such sale or
other disposition of assets of the Borrower and its Restricted Subsidiaries
pursuant to this §10.4(c) results in the sale
or other disposition of the capital stock or other equity interest in a
Restricted Subsidiary, the Subsidiary Guaranty Agreement with respect to, and
only with respect to, such Restricted Subsidiary shall automatically be released
and the Collateral Agent, the Administrative Agent and the Lenders agree to
execute and deliver such further instruments and do such further acts as the
Borrower may deem necessary or proper to carry out more effectively the
foregoing;
(d) Upon
the sale or other disposition of the Collateral or any part thereof pursuant to
and in accordance with §7.2, the Collateral Agent
shall release the Lien of this Agreement on the Collateral or such part, as the
case may be, by proper instrument or instruments; and
(e) With
the prior written consent of the Administrative Agent and each Lender, the
Collateral Agent shall release the Lien of this Agreement or on any assets
covered by this Agreement by proper instrument or instruments.
Section
10.5 Counterparts. This
Agreement may be executed, acknowledged and delivered in any number of
counterparts, each of such counterparts constituting an original but all
together only one Agreement. Execution by facsimile or PDF shall bind
the parties hereto.
Section
10.6 Governing
Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Iowa.
Section
10.7 Headings. Any
headings or captions preceding the text of the several sections hereof are
intended solely for convenience of reference and shall not constitute a part of
this Agreement nor shall they affect its meaning, construction or
effect.
[Signature
Page Follows]
-29-
In
Witness Whereof, the Borrower and Collateral Agent have caused this
Subordinated Security Agreement, Pledge and Indenture of Trust to be executed,
and the Collateral Agent in evidence of its acceptance of the trusts hereby
created, has caused this Agreement to be executed as of the date and year first
above written.
|
World
Acceptance Corporation
|
||
|
By
|
||
|
Name:
|
A.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
|
|
|
Title:
|
Chief
Executive Officer
|
|
|
▇▇▇▇▇
Fargo Preferred Capital, Inc., as Collateral
Agent
|
||
|
By
|
||
|
Name:
|
||
|
Title:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Senior Vice
President
|
|
[SIGNATURE
PAGE TO SUBORDINATED SECURITY AGREEMENT]
Schedule
I
Description
of Pledged Shares
|
Subsidiary
|
Description
|
Number of
Shares
|
Stock
Certificate
No.
|
|||
|
WAC
Insurance Company, Ltd.
|
Common,
$1 par
|
325*
|
1
|
|||
|
WFC
of South Carolina, Inc.
|
Common,
$.01 par
|
10,000
|
1
|
|||
|
World
Acceptance Corporation of Alabama
|
Common,
$.01 par
|
1,000
|
1
|
|||
|
World
Acceptance Corporation of Missouri
|
Common,
$.01 par
|
1,000
|
1
|
|||
|
World
Finance Corporation of Georgia
|
Common,
$1 par
|
25,000
25,000
|
1
2
|
|||
|
World
Finance Corporation of Illinois
|
Common,
$.01 par
|
1,000
|
1
|
|||
|
World
Finance Corporation of Louisiana
|
Common,
no par
|
25
|
1
|
|||
|
World
Finance Corporation of New Mexico
|
Common,
$.01 par
|
1,000
|
3
|
|||
|
World
Finance Corporation of South Carolina
|
Common,
$1 par
|
3,750
|
1
|
|||
|
World
Finance Corporation of Tennessee
|
Common,
$.01 par
|
1,000
|
1
|
|||
|
World
Finance Corporation of Texas
|
Class A
Common, $1 par
|
125,000
|
A-1
|
|||
|
Class
B Common, par
|
5,802
|
B-2
|
||||
|
WFC
Services, Inc., a Tennessee corporation**
|
No
par
|
1,000
|
1
|
|||
|
World
Finance Corporation of Kentucky
|
No
par
|
1,000
|
1
|
|||
|
World
Finance Corporation of Colorado
|
Common,
no par
|
1,000
|
1
|
|||
|
WFC
Services, Inc., a South Carolina corporation
|
No
par
|
1,000
|
1
|
|||
|
World
Acceptance Corporation de México, S. de ▇.▇.
de C.V.
|
Membership
interest
|
N/A***
|
uncertificated
interest
|
|||
|
Servicios
World Acceptance Corporation de México, S. de ▇.▇.
de C.V.
|
Membership
interest
|
N/A***
|
uncertificated
interest
|
|||
|
World
Finance Corporation of Wisconsin
|
[_________]
|
[____]
|
[______]****
|
|
*
|
Pledged
shares constitute 65% of the outstanding voting
stock.
|
|
**
|
WFC
Services, Inc., a Tennessee corporation, is dormant and
inactive.
|
|
***
|
Pledged
membership interests constitute 65% of interests owned by World Acceptance
Corporation.
|
S-1
Schedule
II
Partnership
Interests
None.
Schedule
III
Location
of Offices
World
Acceptance Corporation
See
attached.
[SIGNATURE
PAGE TO SUBORDINATED SECURITY AGREEMENT]
S-1
Schedule
IV
Concentration
Accounts
|
Account
Number
|
Depository
Institution
|
|
71005681
|
Carolina
First Bank
|
[SIGNATURE
PAGE TO SUBORDINATED SECURITY AGREEMENT]
S-1