EXHIBIT 10.2
Execution Version
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SECURITY AND GUARANTEE AGREEMENT
dated as of
October 12, 2006,
among
NATIONAL COAL CORP.
NATIONAL COAL CORPORATION,
NC TRANSPORTATION INC.
and
NC RAILROAD, INC.
and each other Subsidiary of National Coal Corp.
as may from time to time become a party hereto
as Grantors
and
GUGGENHEIM CORPORATE FUNDING, LLC
as Administrative Agent
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS..............................................2
1.1 Certain Defined Terms; New York UCC Definitions..................2
1.2 Rules of Interpretation..........................................8
SECTION 2. SECURITY INTEREST........................................9
2.1 Grant of Security Interest.......................................9
2.2 Security for Obligations........................................11
2.3 Transfer of Collateral..........................................11
2.4 Bailees.........................................................11
SECTION 3. REPRESENTATIONS AND WARRANTIES..........................11
3.1 Representations in Perfection Certificate.......................12
3.2 Title; No Other Liens...........................................12
3.3 Perfected First Priority Liens..................................12
3.4 Jurisdiction of Organization; Chief Executive Office............12
3.5 Inventory and Equipment.........................................12
3.6 Farm Products...................................................12
3.7 Investment Property.............................................13
3.8 Receivables.....................................................13
3.9 Intellectual Property...........................................13
3.10 Deposit Accounts and Securities Accounts........................14
3.11 Benefit to Holdings and each Subsidiary Grantor.................14
3.12 Consents........................................................14
SECTION 4. COVENANTS...............................................15
4.1 Covenants in Credit Agreement...................................15
4.2 Delivery of Instruments, Certificated Securities and
Chattel Paper................................................15
4.3 Maintenance of Insurance........................................15
4.4 Payment of Obligations..........................................16
4.5 Maintenance of Perfected Security Interest; Further
Documentation................................................16
4.6 Changes in Locations, Name, etc.................................17
4.7 Notices.........................................................17
4.8 Investment Property.............................................17
4.9 Receivables.....................................................19
4.10 Intellectual Property...........................................19
4.11 Deposit Accounts................................................21
4.12 New Accounts....................................................21
4.13 Commercial Tort Claims..........................................21
SECTION 5. REMEDIAL PROVISIONS.....................................22
5.1 Certain Matters Relating to Receivables.........................22
5.2 Communications with Obligors; Grantors Remain Liable............22
5.3 Pledged Stock...................................................23
5.4 Proceeds To Be Turned Over to Administrative Agent..............25
5.5 Application of Proceeds.........................................25
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TABLE OF CONTENTS
(continued)
PAGE
5.6 Code and Other Remedies.........................................25
5.7 Registration Rights.............................................27
5.8 Deficiency......................................................28
5.9 Non-Judicial Enforcement........................................28
SECTION 6. THE SECURED PARTY.......................................28
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.....28
6.2 Administrative Agent's Appointment as Agent.....................30
6.3 Duty of the Administrative Agent................................31
6.4 Execution of Financing Statements...............................32
6.5 Authority of the Administrative Agent...........................32
SECTION 7. SUBORDINATION OF INDEBTEDNESS...........................33
7.1 Subordination of All Grantor Claims.............................33
7.2 Claims in Bankruptcy............................................33
7.3 Payments Held in Trust..........................................33
7.4 Liens Subordinate...............................................34
7.5 Notation of Records.............................................34
SECTION 8. MISCELLANEOUS...........................................34
8.1 Amendments in Writing...........................................34
8.2 Notices.........................................................34
8.3 No Waiver by Course of Conduct; Cumulative Remedies.............34
8.4 Enforcement Expenses; Indemnification...........................35
8.5 Successors and Assigns..........................................35
8.6 Set-Off.........................................................35
8.7 Counterparts....................................................36
8.8 Severability....................................................36
8.9 Section Headings................................................36
8.10 Integration.....................................................36
8.11 GOVERNING LAW...................................................36
8.12 Submission To Jurisdiction; Waivers.............................37
8.13 Acknowledgements................................................37
8.14 WAIVER OF JURY TRIAL............................................38
8.15 Additional Grantors.............................................38
8.16 Releases........................................................38
SECTION 9. GUARANTEE...............................................39
9.1 Guarantee.......................................................39
9.2 Right of Contribution...........................................40
9.3 Subrogation.....................................................41
9.4 Amendments, etc. with respect to the Obligations................41
9.5 Guarantee Absolute and Unconditional............................42
9.6 Reinstatement...................................................44
9.7 Payments........................................................45
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SCHEDULES
Schedule I Notice Addresses
ANNEXES
Annex I Form of Assumption Agreement for Additional Grantors
Annex II Form of Deposit Account Control Agreement
Annex III Form of Securities Account Control Agreement
Annex IV Form of Perfection Certificate
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SECURITY AND GUARANTEE AGREEMENT
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY,THE LIEN AND SECURITY
INTEREST GRANTED TO THE SECURED PARTY PURSUANT TO THIS AGREEMENT AND THE
EXERCISE OF ANY RIGHT OR REMEDY BY THE SECURED PARTY HEREUNDER WILL BE SUBJECT
TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT (AS DEFINED BELOW) IN
ACCORDANCE WITH THE TERMS THEREOF. IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE TERMS OF THE
INTERCREDITOR AGREEMENT SHALL GOVERN.
THIS SECURITY AND GUARANTEE AGREEMENT (this "AGREEMENT"), dated as of
October 12, 2006, is made by NATIONAL COAL CORPORATION, a Tennessee corporation,
(the "COMPANY"), NATIONAL COAL CORP., a Florida corporation ("HOLDINGS") and
each of the undersigned direct and indirect subsidiaries of Holdings (each of
the undersigned subsidiaries being a "INITIAL SUBSIDIARY GRANTOR" and,
collectively, the "INITIAL SUBSIDIARY GRANTORS"), and each other Person that may
become an additional Grantor hereunder as provided in SECTION 8.15 hereof (any
such Person, an "ADDITIONAL SUBSIDIARY GRANTOR" and, collectively with the
Initial Subsidiary Grantors, the "SUBSIDIARY GRANTORS"; Holdings, the Subsidiary
Grantors and the Company are collectively referred to herein as the "Grantors"),
in favor of GUGGENHEIM CORPORATE FUNDING, LLC, in its capacity as administrative
agent for the banks and other financial institutions from time to time party
thereto (the "LENDERS") (in such capacity, together with its successors and
assigns, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
A. Pursuant to that certain Credit Agreement dated as of October
12, 2006 (as such Credit Agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT")
among the Administrative Agent, as agent for the Secured Parties (as defined
below), the Company, as borrower (the "BORROWER"), Holdings and the Subsidiary
Grantors, the Lenders have severally agreed to make extensions of credit to the
Borrower upon the terms and subject to the conditions set forth therein.
Capitalized terms used in this Agreement without definition have the respective
meanings assigned such terms in the Credit Agreement.
B. On Closing Date and until the occurrence of the discharge of
the Obligations, the Liens granted to the Collateral Agent (as defined in the
Indenture) for the benefit of the Holders (as defined in the Indenture) pursuant
to the Indenture dated December 29, 2005 among Holdings, the guarantors party
thereto and ▇▇▇▇▇ Fargo Bank, National Association, a national banking
association, as trustee (the "NOTE TRUSTEE") in connection with the issuance of
the Senior Secured Notes shall be subordinated to the Liens created in respect
of the Obligations pursuant to an Intercreditor Agreement substantially in the
form of Exhibit H to the Indenture, among the Administrative Agent, the Note
Trustee, Holdings, the Company and the Subsidiary Grantors (as amended, amended
and restated, supplemented or otherwise modified from time to time, the
"INTERCREDITOR AGREEMENT").
NOW, THEREFORE, in consideration of the premises and in order to induce
(a) the Lenders to make their respective extensions of credit to the Borrower
hereunder, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby agrees with the
Administrative Agent as follows:
SECTION 1. DEFINITIONS.
1.1 CERTAIN DEFINED TERMS; NEW YORK UCC DEFINITIONS. For purposes
of this Agreement, the following terms shall have the respective meanings given
to them below. All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement,
and the following terms are used herein as defined in the New York UCC:
Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit
Account, Documents, Equipment, Farm Products, Goods, Instruments, Inventory,
Letter of Credit Rights, Securities Account, Securities Intermediary and
Supporting Obligations.
The following terms shall have the following meanings:
"ACCOUNT COLLATERAL" each Grantor's right, title and interest, whether
now existing or hereafter acquired or arising, in, to and under, each Deposit
Account and Securities Account (including any successor accounts to any such
accounts) and all amounts, investments and any other property (including, but
not limited to, Checks, securities, financial assets, investment property,
security entitlements and instruments) at any time deposited in or credited to
any such account and all security entitlements with respect thereto, including
all income or gain earned thereon and any Proceeds thereof.
"AGREEMENT" means this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"BOOKS AND RECORDS" means all books, records and other written,
electronic or other documentation in whatever form maintained now or hereafter
by or for the Company in connection with, and relating to, the ownership of, or
evidencing or containing information relating to, the Collateral.
"BORROWER CREDIT AGREEMENT OBLIGATIONS": means "Obligations" as defined
in the Credit Agreement.
"BORROWER HEDGE AGREEMENT OBLIGATIONS" means the collective reference
to all obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in any
Specified Hedge Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
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the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to any Qualified Counterparty, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, any
Specified Hedge Agreement or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
relevant Qualified Counterparty that are required to be paid by the Borrower
pursuant to the terms of any Specified Hedge Agreement).
"BORROWER OBLIGATIONS": the collective reference to (i) the Borrower
Credit Agreement Obligations, (ii) the Borrower Hedge Agreement Obligations, but
only to the extent that, and only so long as, the Borrower Credit Agreement
Obligations are secured and guaranteed pursuant hereto, and (iii) all other
obligations and liabilities of the Borrower, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Secured Parties that are required to be paid by
the Borrower pursuant to the terms of this Agreement).
"CHECKS" means checks and other instruments and other payment
instructions deposited into any Deposit Account or Securities Account.
"COLLATERAL" has the meaning set forth in SECTION 2.1.
"COLLATERAL ACCOUNT" means any collateral account established by the
Administrative Agent as provided in SECTION 5.1 or 5.4.
"COMPUTER HARDWARE AND SOFTWARE" means all rights (including rights as
licensee and lessee) with respect to (i) computer and other electronic data
processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disc drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware; (ii) all software and all software programs
designed for use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system software,
utilities and application programs in any form (service code and object code in
magnetic tape, disc or hard copy format or any other listings whatsoever); (iii)
any firmware associated with any of the foregoing; (iv) any documentation for
hardware, software and firmware described in clauses (i), (ii) and (iii) above,
including flow charts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes; and all rights with respect thereto,
including any and all licenses, options, warrants, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing.
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"CONTRACTS" means all contracts, agreements, instruments and indentures
in any form (including, without limitation, any interest rate protection
agreements, Hedge Agreements, licensing agreements and any partnership
agreements, joint venture agreements and limited liability company agreements),
and portions thereof, to which any Grantor is a party or under which any Grantor
or any property of any Grantor is subject, as the same may from time to time be
amended, supplemented, waived or otherwise modified, including, without
limitation, (i) all rights of any Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of any Grantor
to damages arising thereunder, (iii) all rights of any Grantor to perform and to
exercise all remedies thereunder, (iv) any and all rights to receive and compel
performance under any or all Contracts and (v) any and all other rights,
interests and claims now existing or in the future arising in connection with
any or all Contracts.
"COPYRIGHT LICENSES" means any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in the
Perfection Certificate), granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"COPYRIGHTS" means (I) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in the Perfection Certificate), all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (II) the right to obtain
all renewals thereof.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means a Deposit Account Control
Agreement, in substantially the form set forth on ANNEX II attached hereto or
otherwise reasonably acceptable to the Administrative Agent, by and among a
Grantor, the Administrative Agent and a depositary institution.
"DOMAIN NAMES" means all Internet domain names and associated URL
addresses in or to which any Grantor now or hereafter has any right, title or
interest.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"FILINGS" means the filing or recording of (i) the financing statements
as set forth in the Perfection Certificate by the Grantors or their agents, (ii)
this Agreement or a notice thereof with respect to Intellectual Property as set
forth in the Perfection Certificate and (iii) any filings after the date hereof
in any other jurisdiction as may be necessary under any requirement of law.
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"GENERAL INTANGIBLES" means all "general intangibles" as such term is
defined in Section 9-102(a)(42) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements, instruments
and indentures in any form, and portions thereof, to which such Grantor is a
party or under which such Grantor has any right, title or interest or to which
such Grantor or any property of such Grantor is subject, as the same may from
time to time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of such Grantor
to damages arising thereunder and (iii) all rights of such Grantor to perform
and to exercise all remedies thereunder.
"GRANTOR CLAIMS" means indebtedness owing to a Grantor by another
Grantor.
"GUARANTOR HEDGE AGREEMENT OBLIGATIONS": the collective reference to
all obligations and liabilities of a Guarantor (including, without limitation,
interest accruing at the then applicable rate provided in any Specified Hedge
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such Guarantor,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Qualified Counterparty, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified
Hedge Agreement or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the relevant Qualified
Counterparty that are required to be paid by such Guarantor pursuant to the
terms of any Specified Hedge Agreement).
"GUARANTOR OBLIGATIONS": with respect to any Guarantor, the collective
reference to (i) any Guarantor Hedge Agreement Obligations of such Guarantor,
but only to the extent that, and only so long as, the other Obligations of such
Guarantor are secured and guaranteed pursuant hereto, and (ii) all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including, without limitation, Section 9) or any other Loan
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Administrative Agent or to any Secured Party that are required
to be paid by such Guarantor pursuant to the terms of this Agreement or any
other Loan Document).
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"GUARANTORS" means the collective reference to each Grantor other than
the Borrower.
"INDENTURE" has the meaning set forth in the recitals hereto.
"INTELLECTUAL PROPERTY" means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Domain Names,
the Patents, the Patent Licenses, the Trade Secrets, the Trade Secret Licenses,
the Trademarks and the Trademark Licenses and all rights to ▇▇▇ at law or equity
or otherwise recover for any and all past, present and future infringements,
misappropriations, dilutions or other impairments thereof and all income,
royalties, damages and other payments now and hereafter due and/or payable with
respect thereto (including, without limitation, payments under all licenses
entered into in connection therewith, and damages and payments for past, present
or future infringements, misappropriations, dilutions or other impairments
thereof).
"INTERCOMPANY NOTE" means any promissory note evidencing loans made by
any Grantor to the Company or any of its Subsidiaries.
"INTERCREDITOR AGREEMENT" has the meaning set forth in the recitals
hereto.
"INVESTMENT PROPERTY" means the collective reference to (A) all
"investment property" as such term is defined in Section 9-102(a)(49) of the New
York UCC and (B) whether or not constituting "investment property" as so
defined, all Pledged Notes and all Pledged Stock.
"ISSUERS" means the collective reference to each issuer of any
Investment Property.
"NEW YORK UCC" means the Uniform Commercial Code as from time to time
in effect in the State of New York.
"PATENT LICENSE" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, have
manufactured, use or sell or import any invention covered in whole or in part by
a Patent, including, without limitation, any of the foregoing referred to in the
Perfection Certificate.
"PATENTS" means (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without limitation,
any of the foregoing referred to in the Perfection Certificate, (ii) all
applications for letters patent of the United States or any other country and
all provisionals, divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in the
Perfection Certificate, and (iii) all rights to obtain any reissues or
extensions of the foregoing.
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"PERFECTION CERTIFICATE" means a perfection certificate delivered by
the Company to the Administrative Agent on the date hereof, in substantially the
form set forth on ANNEX IV attached hereto.
"PERMITTED LIENS" means Liens permitted by Section 6.3 of the Credit
Agreement.
"PLEDGED NOTES" means all promissory notes listed on the Perfection
Certificate, all Intercompany Notes at any time issued to any Grantor and all
other promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor in the
ordinary course of business).
"PLEDGED SECURITIES" means the Pledged Notes and the Pledged Stock.
"PLEDGED STOCK" means the Equity Interests listed on the Perfection
Certificate, together with any other shares, stock certificates, options,
interests or rights of any nature whatsoever in respect of the Equity Interests
of any Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect.
"PROCEEDS" means all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"RECEIVABLE" means any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"RELEASE DATE" means the earlier to occur of (i) the date upon which
all Obligations then due and owing shall have been paid in full in cash (other
than Borrower Hedge Agreement Obligations and Guarantor Hedge Agreement
Obligations), or (ii) as to Holdings or any Subsidiary Grantor, as applicable,
the date upon which all the capital stock or substantially all the assets of
Holdings or such Subsidiary Grantor shall have been sold or otherwise disposed
of in accordance with the terms of the Credit Agreement.
"SECURITIES ACCOUNT CONTROL AGREEMENT" means a Securities Account
Control Agreement, in substantially the form set forth on ANNEX III attached
hereto or otherwise reasonably acceptable to the Administrative Agent, by and
among a Grantor, the Administrative Agent and a Securities Intermediary.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TRADE SECRETS" means all trade secrets, including, without
limitation, know-how, processes, formulae, compositions, designs, and
confidential business and technical information, and all rights of any kind
whatsoever accruing thereunder or pertaining thereto.
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"TRADE SECRET LICENSES" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trade
Secret, including without limitation, any of the foregoing referred to in the
Perfection Certificate.
"TRADEMARK LICENSE" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in the
Perfection Certificate.
"TRADEMARKS" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, domain names, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in the Perfection Certificate, and (ii) the right to obtain all
renewals thereof.
1.2 RULES OF INTERPRETATION. As used herein, and any certificate
or other document made or delivered pursuant hereto:
(a) the words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without
limitation";
(b) the word "incur" shall be construed to mean incur,
create, issue, assume, become liable in respect of or
suffer to exist (and the words "incurred" and
"incurrence" shall have correlative meanings);
(c) the words "asset" and "property" shall be construed
to have the same meaning and effect and to refer to
any and all tangible and intangible assets and
properties, including cash, equity interests,
securities, vessels, equipment, revenues, accounts,
leasehold interests and contract rights;
(d) the words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and
clause, subsection, Section, Schedule and Exhibit
references are to this Agreement unless otherwise
specified;
(e) the meanings given to terms defined herein shall be
equally applicable to both the singular and plural
forms of such terms;
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(f) the expressions "payment in full", "paid in full" and
any other similar terms or phrases when used herein
with respect to the Obligations shall mean the
payment in full, in immediately available funds, of
all the Obligations (other than Borrower Hedge
Agreement Obligations and Guarantor Hedge Agreement
Obligations);
(g) in any computation of periods of time from a
specified date to a later specified date, the word
"from" means "from and including" and the words "to"
and "until" each means "to but excluding" and the
word "through" means "to and including";
(h) references to agreements or other contractual
obligations shall, unless otherwise specified, be
deemed to refer to such agreements or contractual
obligations as amended, supplemented, restated or
otherwise modified from time to time (subject to any
applicable restrictions herein); and
(i) where the context requires, terms relating to the
Collateral or any part thereof, when used in relation
to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof;
SECTION 2. SECURITY INTEREST.
2.1 GRANT OF SECURITY INTEREST. Each Grantor hereby pledges,
assigns and transfers to the Administrative Agent, for its benefit and the
ratable benefit of the Secured Parties, and hereby grants to the Administrative
Agent for its benefit and the ratable benefit of the Secured Parties, a security
interest in, all of the following property now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"COLLATERAL"):
(a) all Accounts;
(b) all Account Collateral;
(c) all Books and Records;
(d) all Chattel Paper;
(e) all Commercial Tort Claims (including, without
limitation, those set forth in the Perfection
Certificate);
(f) all Computer Hardware and Software;
(g) all Contracts;
(h) all Documents;
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(i) all Equipment;
(j) all General Intangibles;
(k) all Goods;
(l) all Instruments;
(m) all Intellectual Property;
(n) all Inventory;
(o) all Investment Property;
(p) all Letter of Credit Rights;
(q) all plant fixtures, business fixtures and other
fixtures and storage and office facilities, and all
accessions thereto and products thereof;
(r) all other personal property to the extent not
otherwise described above; and
(s) to the extent not otherwise included, all Proceeds,
Supporting Obligations and products of any and all of
the foregoing and all collateral security and
guarantees given by any Person with respect to any of
the foregoing.
Notwithstanding the foregoing, the Collateral shall expressly exclude
certificates of deposit and similar instruments, whether held on the date of
this Agreement or acquired in the future, used by Holdings or any of its
Subsidiaries for the sole purpose of enabling Holdings or any Subsidiary
Guarantor to purchase or post reclamation, surety, or similar bonds PROVIDED
that (i) the cash designated for the purchase of such certificates of deposits
and similar instruments shall be deposited in a specially designated account and
shall constitute Collateral while it is held in such an account, (ii) such cash
shall be released from the Collateral automatically upon its withdrawal from
such account for the purpose of the purchase of such certificates of deposits
and similar instruments for so long as such certificates of deposits and similar
instruments are issued in the name of Holdings or such Subsidiary and (iii) upon
the termination or expiration, and release of such certificates of deposits and
similar instruments, such cash shall once again constitute Collateral.
Each item of Collateral listed in this SECTION 2.1 that is defined in
Articles 8 or 9 of the New York UCC and that is not otherwise defined herein
shall have the meaning set forth in the New York UCC, it being the intention of
the Grantors that the description of the Collateral set forth above be construed
to include the broadest possible range of assets, except for assets expressly
excluded pursuant to the immediately preceding paragraph.
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2.2 SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral assigned by each Grantor is collateral security for, the prompt
payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including without
limitation the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code), of all
Obligations of such Grantor.
2.3 TRANSFER OF COLLATERAL. Subject to the Intercreditor
Agreement, all certificates and instruments representing or evidencing the
Pledged Securities shall be delivered to and held pursuant hereto by the
Administrative Agent or a Person designated by the Administrative Agent 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 accompanied by
any required transfer tax stamps to effect the pledge of the Pledged Securities
to the Administrative Agent. Subject to the Intercreditor Agreement, the
Administrative Agent shall have the right, at any time in its discretion and
without notice, to transfer to or to register in the name of the Administrative
Agent or any of its nominees any or all of the Pledged Securities. In addition,
subject to the Intercreditor Agreement, the Administrative Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Pledged Securities for certificates or instruments of smaller or
larger denominations.
2.4 BAILEES. Any Person (other than the Administrative Agent) at
any time and from time to time holding all or any portion of the Collateral
shall be deemed to, and shall, hold the Collateral as pledge holder and bailee
and agent for perfection for, the Administrative Agent. At any time and from
time to time during the continuance of an Event of Default, the Administrative
Agent may give notice to any such Person holding all or any portion of the
Collateral that such Person is holding the Collateral as the bailee of and agent
for perfection for, and as pledge holder for, the Administrative Agent, and
request such Person's written acknowledgment thereof. Without limiting the
generality of the foregoing, during the continuance of an Event of Default, each
Grantor will join with the Administrative Agent upon the Administrative Agent's
request in notifying any Person who has possession of any Collateral of the
Administrative Agent's security interest therein and requesting an
acknowledgment from such Person that it is holding the Collateral for the
benefit of the Administrative Agent and the Secured Parties.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each Secured Party that:
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3.1 REPRESENTATIONS IN PERFECTION CERTIFICATE. The representations
and warranties of such Grantor set forth in the Perfection Certificate as they
relate to such Grantor or to the Loan Documents to which such Grantor is a
party, each of which is hereby incorporated herein by reference, are true and
correct, and the Administrative Agent and each Secured Party shall be entitled
to rely on each of them as if they were fully set forth herein.
3.2 TITLE; NO OTHER LIENS. Except for Permitted Liens, such
Grantor owns each item of the Collateral free and clear of any and all Liens or
claims of others. No financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except (i) such as have been filed in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, pursuant to this Agreement and (ii) as
are permitted by the Credit Agreement.
3.3 PERFECTED FIRST PRIORITY LIENS. Upon completion of the Filings
and other actions specified on the Perfection Certificate (which, in the case of
all Filings and other documents referred to on said Perfection Certificate, have
been delivered to the Administrative Agent in completed and duly executed form)
(or, in the case of (x) all Deposit Accounts, Securities Accounts and the
Collateral Account, the obtaining and maintenance of "control" (as described in
the Code), (y) in the case of Commercial Tort Claims, the taking of the actions
required by SECTION 4.13 herein and (z) in the case of Letter of Credit Rights,
the taking of the actions required by SECTION 4.5(C) hereof), the security
interests granted pursuant to this Agreement (1) will constitute valid perfected
security interests in all of the Collateral, to the extent that a security
interest may be perfected by Filings, in favor of the Administrative Agent, for
the ratable benefit of the Secured Parties as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and are (2) prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted Liens.
3.4 JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE. On the
date hereof, such Grantor's jurisdiction of organization, identification number
from the jurisdiction of organization (if any), and the location of such
Grantor's chief executive office or sole place of business or principal
residence, as the case may be, are specified on the Perfection Certificate.
3.5 INVENTORY AND EQUIPMENT. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on the
Perfection Certificate.
3.6 FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
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3.7 INVESTMENT PROPERTY.
(a) The shares of Pledged Stock pledged by such Grantor
hereunder constitute all the issued and outstanding
Equity Interests of each Issuer owned by such
Grantor.
(b) All the shares of the Pledged Stock have been duly
and validly issued and are fully paid and
nonassessable.
(c) Such Grantor is the record and beneficial owner of,
and has good and marketable title to, the Investment
Property pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other
Person, except for Permitted Liens.
3.8 RECEIVABLES.
(a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been
delivered to the Administrative Agent.
(b) None of the obligors on any Receivables is a
Governmental Authority.
(c) The amounts represented by such Grantor to the
Secured Parties from time to time as owing to such
Grantor in respect of the Receivables will at such
times be accurate in all material respects.
3.9 INTELLECTUAL PROPERTY.
(a) The Perfection Certificate lists all registrations
and applications for Intellectual Property and trade
names (whether or not subject to an application or
registration) that are owned by such Grantor in its
own name on the date hereof.
(b) On the date hereof, all material Intellectual
Property owned or used by such Grantor is valid,
subsisting, unexpired and enforceable, has not been
abandoned and does not infringe the intellectual
property rights of any other Person.
(c) Except as set forth in the Perfection Certificate, on
the date hereof, none of the Intellectual Property
owned or used by such Grantor is the subject of any
licensing or franchise agreement pursuant to which
such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by
any Governmental Authority which would limit, cancel
or question the validity of, or such Grantor's rights
in, any Intellectual Property in any respect that
could reasonably be expected to have a material
adverse effect.
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(e) No action or proceeding is pending, or, to the
knowledge of such Grantor, threatened, on the date
hereof (i) seeking to limit, cancel or question the
validity of any Intellectual Property or such
Grantor's ownership interest therein, or (ii) which,
if adversely determined, would have a material
adverse effect on the value of any Intellectual
Property.
3.10 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Each Grantor is the
record and beneficial owner of, and has good title to, the Deposit Accounts and
Securities Accounts pledged by it hereunder, free of any and all Liens or
options in favor or, or claims of, any other Person, except the Liens created by
this Agreement, rights of setoff of any depository bank or securities
intermediary and Liens created by any Senior Secured Note Document. As of the
date hereof, all Deposit Accounts and Securities Accounts held by a Grantor
(other than those maintained with the Administrative Agent) are subject to a
Deposit Account Control Agreement and a Securities Account Control Agreement, as
applicable.
3.11 BENEFIT TO HOLDINGS AND EACH SUBSIDIARY GRANTOR. The Loan
Parties are members of an affiliated group of companies that includes Holdings,
the Company and each Subsidiary Grantor, and the Loan Parties are engaged in
related businesses. Each Subsidiary Grantor and the Company is a Subsidiary of
Holdings and its obligations pursuant to this Agreement reasonably may be
expected to benefit, directly or indirectly, it; and it has determined that this
Agreement is necessary and convenient to the conduct, promotion and attainment
of the business of Holdings, such Subsidiary Grantor and the Company.
3.12 CONSENTS. Except as set forth in the Perfection Certificate,
no consent of any party (other than a Grantor) to any Copyright License, Patent
License, Trade Secret License or Trademark License constituting Collateral or
any obligor in respect of any material Account constituting Collateral or which
owes in the aggregate a material portion of all the Accounts constituting
Collateral is required, or purports to be required, to be obtained by or on
behalf of any Grantor in connection with the execution, delivery and performance
of this Agreement that has not been obtained. Each Copyright License, Patent
License, Trade Secret License, Trademark License and Account constituting
Collateral is in full force and effect and constitutes a valid and legally
enforceable obligation of the Grantor party thereto and (to the knowledge of
such Grantor) each other party thereto except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditor's rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law)
and except to the extent the failure of any such Copyright License, Patent
License, Trade Secret License, Trademark License or Account constituting
Collateral to be in full force and effect or valid or legally enforceable could
14
not be reasonably expected, in the aggregate, to have a material adverse effect
on the value of the Collateral. Except as set forth on the Perfection
Certificate, no consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Copyright Licenses, Patent Licenses, Trade Secret Licenses, Trademark Licenses
and Accounts constituting Collateral by any party thereto other than those which
have been duly obtained, made or performed and are in full force and effect and
those the failure of which to make or obtain could not be reasonably expected,
in the aggregate, to have a material adverse effect on the value of the
Collateral. Except as set forth on the Perfection Certificate, no Grantor nor
(to the knowledge of any Grantor) any other party to any Copyright License,
Patent License, Trade Secret License or Trademark License or Account
constituting Collateral is in default in the performance or observance of any of
the terms thereof, except for such defaults as could not reasonably be expected,
in the aggregate, to have a material adverse effect on the value of the
Collateral.
SECTION 4. COVENANTS.
Each Grantor covenants and agrees with the Administrative Agent and the
Secured Parties that, from and after the date of this Agreement until the
Release Date:
4.1 COVENANTS IN CREDIT AGREEMENT. In the case of each Grantor,
such Grantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Grantor or any of its Subsidiaries.
4.2 DELIVERY OF INSTRUMENTS, CERTIFICATED SECURITIES AND CHATTEL
PAPER. If any amount payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper shall be promptly
delivered to the Administrative Agent (subject to the terms of the Intercreditor
Agreement), duly indorsed in a manner satisfactory to the Administrative Agent,
to be held as Collateral pursuant to this Agreement.
4.3 MAINTENANCE OF INSURANCE.
(a) Such Grantor will maintain, with financially sound
and reputable companies, insurance policies in
accordance with Section 5.5 of the Credit Agreement.
(b) All such insurance shall (i) provide that no
cancellation, material reduction in amount or
material change in coverage thereof shall be
effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof, (ii)
name the Administrative Agent as insured party and,
loss payee as its interests may appear, (iii) if
reasonably requested by the Administrative Agent,
include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to the
Administrative Agent.
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(c) The Company shall deliver to the Administrative Agent
a report of a reputable insurance broker with respect
to such insurance substantially concurrently with
each delivery of the Company's annual financial
statements pursuant to Section 5.1(a) of the Credit
Agreement and such supplemental reports with respect
thereto as the Administrative Agent may from time to
time reasonably request.
4.4 PAYMENT OF OBLIGATIONS. Such Grantor will pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if the amount or validity
thereof is currently being contested in good faith by appropriate proceedings,
reserves in conformity with GAAP with respect thereto have been provided on the
books of such Grantor and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of any material portion of the Collateral
or any interest therein.
4.5 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION.
(a) Other than as permitted by this Agreement or the
Credit Agreement, such Grantor shall maintain the
security interest created by this Agreement as a
perfected security interest having at least the
priority described in SECTION 3.3 and shall defend
such security interest against the claims and demands
of all Persons whomsoever including without
limitation, completing the Filings and filing any
financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in
effect in any jurisdiction with respect to the
security interests created hereby.
(b) Such Grantor will furnish to the Administrative Agent
from time to time statements and schedules further
identifying and describing the Collateral of such
Grantor and such other reports in connection
therewith as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole
expense of such Grantor, subject to the Intercreditor
Agreement, such Grantor will promptly and duly
execute and deliver, and have recorded, such further
instruments and documents and take such further
actions as the Administrative Agent may reasonably
request for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights
and powers herein granted, including, without
limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or
16
other similar laws) in effect in any jurisdiction
with respect to the security interests created
hereby, (ii) in the case of Investment Property,
Letter-of-Credit Rights and any other relevant
Collateral, taking any actions reasonably necessary
to enable the Administrative Agent to obtain
"control" (within the meaning of the applicable
Uniform Commercial Code) with respect thereto, and
(iii) in the case of any item of Equipment that is
covered by a certificate of title under a statute of
any jurisdiction under the law of which indication of
a security interest on such certificate is required
as a condition of perfection thereof, at the request
of the Administrative Agent, execute and file with
the registrar of motor vehicles or other appropriate
authority in such jurisdiction an application or
other document requesting the notation or other
indication of the security interest created hereunder
on such certificate of title, and within 30 days
after the end of each calendar quarter, deliver to
the Administrative Agent copies of all such
certificates of title issued during such calendar
quarter indicating the security interest created
hereunder in the items of Equipment covered thereby.
4.6 CHANGES IN LOCATIONS, NAME, ETC. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of copies of all filed additional financing statements,
and other documents (in each case, properly executed) reasonably requested by
the Administrative Agent, to maintain the validity, perfection and priority of
the security interests provided for herein:
(a) change its jurisdiction of organization or the
location of its chief executive office or sole place
of business from that referred to in SECTION 3.4; or
(b) change its name.
4.7 NOTICES. Such Grantor will advise the Administrative Agent
promptly, in reasonable detail, of:
(a) any Lien (other than Permitted Liens) on any of the
Collateral which would adversely affect the ability
of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) the occurrence of any other event which could
reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on
the security interests created hereby.
4.8 INVESTMENT PROPERTY.
(a) If such Grantor shall become entitled to receive or
shall receive any certificate (including, without
limitation, any certificate representing a dividend
or a distribution in connection with any
reclassification, increase or reduction of capital or
any certificate issued in connection with any
reorganization), option or rights in respect of the
Equity Interests of any Issuer, whether in addition
17
to, in substitution of, as a conversion of, or in
exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Administrative
Agent and the Secured Parties, hold the same in trust
for the Administrative Agent and the Secured Parties
and deliver the same forthwith to the Administrative
Agent in the exact form received, duly indorsed by
such Grantor to the Administrative Agent, together
with an undated stock power covering such certificate
duly executed in blank by such Grantor and with
signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as
additional collateral security for the Obligations.
Any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent
to be held by it hereunder as additional collateral
security for the Obligations, and in case any
distribution of capital shall be made on or in
respect of the Investment Property or any property
shall be distributed upon or with respect to the
Investment Property pursuant to the recapitalization
or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property
so distributed shall, unless otherwise subject to a
perfected security interest in favor of the
Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations.
If any sums of money or property so paid or
distributed in respect of the Investment Property
shall be received by such Grantor, such Grantor
shall, until such money or property is paid or
delivered to the Administrative Agent, hold such
money or property in trust for the Administrative
Agent and the Secured Parties, segregated from other
funds of such Grantor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the
Administrative Agent, such Grantor will not (i) vote
to enable, or take any other action to permit, any
Issuer to issue any Equity Interests of any nature or
to issue any other securities convertible into or
granting the right to purchase or exchange for any
Equity Interests of any nature of any Issuer, (ii)
sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the
Investment Property or Proceeds thereof (except
pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest
therein, except for the security interests created by
this Agreement or (iv) enter into any agreement or
undertaking that restricts the right or ability of
such Grantor or the Administrative Agent to sell,
assign or transfer any of the Investment Property or
Proceeds thereof.
(c) In the case of each Grantor that is an Issuer, such
Issuer agrees that (i) it will be bound by the terms
of this Agreement relating to the Investment Property
issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will
notify the Administrative Agent promptly in writing
18
of the occurrence of any of the events described in
SECTION 4.8(A) with respect to the Investment
Property issued by it and (iii) the terms of SECTIONS
5.3(C) and 5.7 shall apply to it, mutatis mutandis,
with respect to all actions that may be required of
it pursuant to SECTION 5.3(C) or 5.7 with respect to
the Investment Property issued by it.
4.9 RECEIVABLES.
(a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will
not, without prior written consent from the
Administrative Agent (such consent to be provided at
the Administrative Agent's sole discretion), (i)
grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable
for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or
discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner
that could adversely affect the value thereof.
(b) Such Grantor will deliver to the Administrative Agent
a copy of each material demand, notice or document
received by it that questions or calls into doubt the
validity or enforceability of more than 5% of the
aggregate amount of the then outstanding Receivables.
4.10 INTELLECTUAL PROPERTY.
(a) Except as otherwise permitted under the Credit
Agreement, such Grantor (either itself or through
licensees) will (i) continue to use each material
Trademark in order to maintain such Trademark in full
force free from any claim of abandonment for non-use,
(ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use
such Trademark with the appropriate notice of
registration and all other notices and legends
required by applicable law and (iv) not (and not
permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any
way.
(b) Except as otherwise permitted under the Credit
Agreement, such Grantor (either itself or through
licensees) will not do any act, or omit to do any
act, whereby any material Patent owned or used by
such Grantor may become forfeited, abandoned or
dedicated to the public.
(c) Except as otherwise permitted under the Credit
Agreement, such Grantor (either itself or through
licensees) (i) will employ each material Copyright
and (ii) will not (and will not permit any licensee
or sublicensee thereof to) do any act or knowingly
omit to do any act whereby any material portion of
the Copyrights may become invalidated or otherwise
impaired. Such Grantor will not (either itself or
19
through licensees) do any act whereby any material
portion of the Copyrights may fall into the public
domain.
(d) Such Grantor (either itself or through licensees)
will not do any act that knowingly uses any material
Intellectual Property owned or used by such Grantor
to infringe the intellectual property rights of any
other Person.
(e) Such Grantor will notify the Administrative Agent
immediately if it knows, or has reason to know, that
any application or registration relating to any
material Intellectual Property may become forfeited,
abandoned or dedicated to the public, or of any
adverse determination or development (including,
without limitation, the institution of, or any such
determination or development in, any proceeding in
the United States Patent and Trademark Office, the
United States Copyright Office or any court or
tribunal in any country) regarding such Grantor's
ownership of, or the validity of, any material
Intellectual Property or such Grantor's right to
register the same or to own and maintain the same.
(f) Whenever such Grantor, either by itself or through
any agent, employee, licensee or designee, shall file
an application for the registration of any
Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright
Office or any similar office or agency in any other
country or any political subdivision thereof, such
Grantor shall report such filing to the
Administrative Agent within five Business Days after
the last day of the fiscal quarter in which such
filing occurs and will notify the Administrative
Agent of any acquisition by such Grantor of any
exclusive rights under a material Copyright License,
Patent License, Trade Secret License or Trademark
License within five Business Days after the last day
of the fiscal quarter in which such agreement shall
have become effective. Such Grantor shall execute and
deliver, and have recorded, any and all agreements,
instruments, documents, and papers necessary to
evidence the Administrative Agent's and the Secured
Parties' security interest in any Copyright, Patent
or Trademark and the goodwill and general intangibles
of such Grantor relating thereto or represented
thereby; PROVIDED, if, in the reasonable judgment of
such Grantor, after due inquiry, so evidencing such
interest would result in the grant of a Trademark
registration or Copyright registration in the name of
the Administrative Agent, such Grantor shall give
written notice to the Administrative Agent as soon as
reasonably practicable and the filing shall instead
be undertaken as soon as practicable but in no case
later than immediately following the grant of the
applicable Trademark registration or Copyright
registration, as the case may be.
(g) Except as otherwise permitted under the Credit
Agreement, such Grantor will take all reasonable and
necessary steps, including, without limitation, in
any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office
or any similar office or agency in any other country
20
or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant
registration) and to maintain each registration of
the material Intellectual Property, including,
without limitation, filing of applications for
renewal, affidavits of use and affidavits of
incontestability.
(h) In the event that any material Intellectual Property
is infringed, misappropriated or diluted by a third
party, such Grantor shall (i) take such actions as
such Grantor shall reasonably deem appropriate under
the circumstances to protect such Intellectual
Property and (ii) if such Intellectual Property is of
material economic value, promptly notify the
Administrative Agent after it learns thereof and ▇▇▇
for infringement, misappropriation or dilution, to
seek injunctive relief where appropriate and to seek
to recover any and all damages for such infringement,
misappropriation or dilution.
(i) such Grantor will take all reasonable and necessary
steps to preserve and protect the secrecy of all
material Trade Secrets of such Grantor.
4.11 DEPOSIT ACCOUNTS. No Grantors shall deposit or in any way
transfer any money into any account listed in Schedule 11 of the Perfection
Certificate as an account used exclusively for payroll purposes, except to the
extent required to pay such Grantor's employees' wages, or as otherwise required
by law.
4.12 NEW ACCOUNTS. No Grantors shall open any new Deposit Account
or Security Account unless such account is subject to a Deposit Account Control
Agreement or Securities Account Control Agreement, as applicable, or such
Deposit Account or Securities Account is maintained with the Administrative
Agent. All such Deposit Account Control Agreements and Securities Account
Control Agreements shall be in substantially the same form as ANNEX II and ANNEX
III, as applicable, or in such other form as the Administrative Agent shall
reasonably approve, and the Grantors shall deliver true, correct and complete
and fully executed copies of the same to the Administrative Agent. This SECTION
4.12 will not apply to one or more such new Deposit Accounts and Securities
Accounts containing cash in the amount of (or in the case of any Securities
Accounts, Investment Property having a fair market value of) no more than
$25,000 in the aggregate with all other such new Deposit Accounts and Securities
Accounts.
4.13 COMMERCIAL TORT CLAIMS. If any Grantor shall at any time hold
or acquire, or otherwise become plaintiff or claimant in respect of, any
Commercial Tort Claim, such Grantor will (a) promptly notify the Administrative
Agent thereof, including a reasonably detailed description of such Commercial
Tort Claim, and (b) if in excess of $20,000, grant to the Administrative Agent a
security interest therein and in the Proceeds thereof, all upon the terms of
this Agreement, pursuant to one or more written supplements in form and
substance reasonably satisfactory to the Administrative Agent.
21
SECTION 5. REMEDIAL PROVISIONS.
5.1 CERTAIN MATTERS RELATING TO RECEIVABLES.
(a) At any time and from time to time after the
occurrence and during the continuance of an Event of
Default, the Administrative Agent shall have the
right to make test verifications of the Receivables
in any manner and through any medium that it
reasonably considers advisable, and each Grantor
shall furnish all such assistance and information as
the Administrative Agent may require in connection
with such test verifications. At any time and from
time to time after the occurrence and during the
continuance of an Event of Default, upon the
Administrative Agent's request, at the expense of the
relevant Grantor, such Grantor shall cause
independent public accountants or others satisfactory
to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations,
aging and test verifications of, and trial balances
for, the Receivables.
(b) The Administrative Agent hereby authorizes each
Grantor to collect such Grantor's Receivables, and
the Administrative Agent (subject to the
Intercreditor Agreement), may curtail or terminate
said authority at any time after the occurrence and
during the continuance of an Event of Default. If
required by the Administrative Agent at any time
after the occurrence and during the continuance of an
Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith
(and, in any event, within two Business Days)
deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Administrative
Agent if required, in a Collateral Account maintained
under the sole dominion and control of the
Administrative Agent (subject to the terms of the
Intercreditor Agreement), subject to withdrawal by
the Administrative Agent for the account of the
Secured Parties only as provided in SECTION 5.5 and
in accordance with the Intercreditor Agreement, and
(ii) until so turned over, shall be held by such
Grantor in trust for the Administrative Agent and the
Secured Parties, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Receivables
shall be accompanied by a report identifying in
reasonable detail the nature and source of the
payments included in the deposit.
(c) During the continuance of a Default, at the
Administrative Agent's request, each Grantor shall
deliver to the Administrative Agent all original and
other documents evidencing, and relating to, the
agreements and transactions which gave rise to the
Receivables, including, without limitation, all
orders, invoices and shipping receipts.
5.2 COMMUNICATIONS WITH OBLIGORS; GRANTORS REMAIN LIABLE.
(a) At any time and from time to time after the
occurrence and during the continuance of an Event of
Default, the Administrative Agent in its own name or
22
in the name of others may at any time communicate
with obligors under the Receivables to verify with
them to the Administrative Agent's satisfaction the
existence, amount and terms of any Receivables.
(b) Upon the written request of the Administrative Agent
at any time after the occurrence and during the
continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables that the
Receivables have been assigned to the Administrative
Agent for the ratable benefit of the Secured Parties
and that payments in respect thereof shall be made
directly to the Administrative Agent (subject to the
Intercreditor Agreement).
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the
Receivables to observe and perform all the conditions
and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the
Administrative Agent nor any Secured Party shall have
any obligation or liability under any Receivable (or
any agreement giving rise thereto), by reason of or
arising out of this Agreement or the receipt by the
Administrative Agent or any Secured Party of any
payment relating thereto, nor shall the
Administrative Agent or any Secured Party be
obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) to
make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to
take any action to enforce any performance or to
collect the payment of any amounts which may have
been assigned to it or to which it may be entitled at
any time or times.
5.3 PLEDGED STOCK.
(a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have
given written notice to the relevant Grantor of the
Administrative Agent's intent to exercise its
corresponding rights pursuant to SECTION 5.3(B), each
Grantor shall be permitted to receive all cash
dividends paid in respect of the Pledged Stock and
all payments made in respect of the Pledged Notes, in
each case paid in the normal course of business of
the relevant Issuer and consistent with past
practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate
or other organizational rights with respect to the
Investment Property; PROVIDED, HOWEVER, that no vote
shall be cast or corporate or other organizational
right exercised or other action taken that, in the
Administrative Agent's reasonable judgment, would
impair the Collateral or which would be inconsistent
with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other
Loan Document.
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(b) If an Event of Default shall occur and be continuing
and the Administrative Agent elects to exercise one
of the following remedies, the Administrative Agent
shall give written notice of its intent to exercise
such rights to the relevant Grantor or Grantors,
subject to the Intercreditor Agreement, (i) the
Administrative Agent shall have the right to receive
any and all cash dividends, distributions, payments
or other Proceeds paid in respect of the Investment
Property and make application thereof to the
Obligations in such order as the Administrative Agent
may determine, and (ii) any or all of the Investment
Property shall be registered in the name of the
Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights
pertaining to such Investment Property at any meeting
of shareholders (or other equivalent body) of the
relevant Issuer or Issuers or otherwise and (y) any
and all rights of conversion, exchange and
subscription and any other rights, privileges or
options pertaining to such Investment Property as if
it were the absolute owner thereof (including,
without limitation, the right to exchange at its
discretion any and all of the Investment Property
upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the
corporate or other organizational structure of any
Issuer, or upon the exercise by any Grantor or the
Administrative Agent of any right, privilege or
option pertaining to such Investment Property, and in
connection therewith, the right to deposit and
deliver any and all of the Investment Property with
any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and
conditions as the Administrative Agent may
determine), all without liability except to account
for property actually received by it, but the
Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure
to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each
Issuer of any Investment Property pledged by such
Grantor hereunder to (i) comply with any instruction
received by it from the Administrative Agent in
writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement and, to
the extent applicable, the Intercreditor Agreement,
without any other or further instructions from such
Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii)
unless otherwise expressly permitted hereby, and
subject to the Intercreditor Agreement, pay any
dividends or other payments with respect to the
Investment Property directly to the Administrative
Agent.
(d) After the occurrence and during the continuation of
an Event of Default, if the Issuer of any Pledged
Stock or Pledged Notes is the subject of bankruptcy,
insolvency, receivership, custodianship or other
proceedings under the supervision of any Governmental
Authority, then all rights of the Grantor in respect
thereof to exercise the voting and other consensual
24
rights which such Grantor would otherwise be entitled
to exercise with respect to the Pledged Stock or
Pledged Notes issued by such Issuer shall cease, and
all such rights shall thereupon become vested in the
Administrative Agent (subject to the Intercreditor
Agreement) who shall thereupon have the sole right to
exercise such voting and other consensual rights, but
the Administrative Agent shall have no duty to
exercise any such voting or other consensual rights
and shall not be responsible for any failure to do so
or delay in so doing.
5.4 PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE AGENT. In
addition to the rights of the Administrative Agent and the Secured Parties
specified in SECTION 5.1 with respect to payments of Receivables and SECTION 5.3
with respect to payments in respect of Investment Property, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and cash equivalents shall be held by such Grantor in
trust for the Administrative Agent and the Secured Parties, segregated from
other funds of such Grantor, and shall, forthwith upon receipt by such Grantor,
be turned over to the Administrative Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Administrative Agent). All
Proceeds received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Grantor in trust for the Administrative Agent and the
Secured Parties) shall continue to be held as collateral security for all the
obligations and shall not constitute payment thereof until applied as provided
in SECTION 5.5.
5.5 APPLICATION OF PROCEEDS. At any time that an Event of Default
shall have occurred and be continuing, subject to the Intercreditor Agreement,
the Administrative Agent may apply all or any part of the Proceeds of any
collection or sale of the Collateral, and any Collateral consisting of cash,
whether or not held in any Collateral Account and any proceeds of the guarantee
set forth in Section 9, in payment of the Obligations in the order set forth in
Section 2.12(e) of the Credit Agreement.
5.6 CODE AND OTHER REMEDIES.
(a) If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Secured
Parties, may exercise, subject to the Intercreditor
Agreement, in addition to all other rights and
remedies granted to them in this Agreement, the
Credit Agreement and the other Loan Documents and in
any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights
and remedies of a secured party under the New York
UCC or any other applicable law or otherwise
available at law or in equity. Without limiting the
generality of the foregoing, the Administrative
Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any
kind (except any notice required by law referred to
below) to or upon any Grantor or any other Person
(all and each of which demands, defenses,
25
advertisements and notices are hereby waived), may in
such circumstances, subject to the Intercreditor
Agreement, forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option
or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any
exchange, broker's board or office of the
Administrative Agent or any Secured Party or
elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery
without assumption of any credit risk. The
Administrative Agent or any Secured Party shall have
the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity
of redemption in any Grantor, which right or equity
is hereby waived and released. Each Grantor further
agrees, at the Administrative Agent's request, to
assemble the Collateral and make it available to the
Administrative Agent at places which the
Administrative Agent shall reasonably select, whether
at such Grantor's premises or elsewhere. Upon any
such sale or transfer, the Administrative Agent shall
have the right to deliver, assign and transfer to the
purchaser or transferee thereof the Collateral so
sold or transferred. The Administrative Agent shall
apply the net proceeds of any action taken by it
pursuant to this SECTION 5.6, after deducting all
reasonable costs and expenses of every kind incurred
in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the
Administrative Agent and the Secured Parties
hereunder, including, without limitation, attorneys'
fees and disbursements, to the payment in whole or in
part of the Obligations, in such order as the
Administrative Agent may elect, and only after such
application and after the payment by the
Administrative Agent of any other amount required by
any provision of law, including, without limitation,
Section 9-615(a)(3) of the New York UCC, need the
Administrative Agent account for the surplus, if any,
to any Grantor. To the extent permitted by applicable
law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative
Agent or any Secured Party arising out of the
exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
(b) In the event that the Administrative Agent elects not
to sell the Collateral, the Administrative Agent
retains its rights to dispose of or utilize the
Collateral or any part or parts thereof in any manner
authorized or permitted by law or in equity, and to
apply the proceeds of the same towards payment of the
Obligations. Each and every method of disposition of
the Collateral described in this Agreement shall
constitute disposition in a commercially reasonable
manner.
26
(c) The Administrative Agent will not submit an "Notice
of Exclusive Control" under a Deposit Account Control
Agreement or a Securities Account Control Agreement,
as applicable, unless an Event of Default has
occurred and is continuing.
(d) The Administrative Agent may appoint any Person as
agent to perform any act or acts necessary or
incident to any sale or transfer of the Collateral.
5.7 REGISTRATION RIGHTS.
(a) If the Administrative Agent shall determine to
exercise its right to sell any or all of the Pledged
Stock pursuant to SECTION 5.6, and if in the opinion
of the Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions
of the Securities Act, the relevant Grantor will
cause the Issuer thereof to (i) execute and deliver,
and use its best efforts to cause the directors and
officers of such Issuer to execute and deliver, all
such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of
the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof
to be sold, under the provisions of the Securities
Act, (ii) use its best efforts to cause the
registration statement relating thereto to become
effective and to remain effective for a period of one
year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to
the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all
in conformity with the requirements of the Securities
Act and the rules and regulations of the Securities
and Exchange Commission applicable thereto. Each
Grantor agrees to cause such Issuer to comply with
the provisions of the securities or "Blue Sky" laws
of any and all jurisdictions which the Administrative
Agent shall designate and to make available to its
security holders, as soon as practicable, an earnings
statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the
Securities Act.
(b) Each Grantor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all
the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged
to agree, among other things, to acquire such
securities for their own account for investment and
not with a view to the distribution or resale
thereof. Each Grantor acknowledges and agrees that
any such private sale may result in prices and other
terms less favorable than if such sale were a public
sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have
27
been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the
period of time necessary to permit the Issuer thereof
to register such securities for public sale under the
Securities Act, or under applicable state securities
laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or
cause to be done all such other acts as may be
necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this SECTION
5.7 valid and binding and in compliance with any and
all other applicable laws. Each Grantor further
agrees that a breach of any of the covenants
contained in this SECTION 5.7 will cause irreparable
injury to the Administrative Agent and the Secured
Parties, that the Administrative Agent and the
Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that
each and every covenant contained in this SECTION 5.7
shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees
not to assert any defenses against an action for
specific performance of such covenants except for a
defense that no Event of Default has occurred under
the Credit Agreement.
5.8 DEFICIENCY. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Secured Party to collect
such deficiency.
5.9 NON-JUDICIAL ENFORCEMENT. The Administrative Agent may enforce
its rights hereunder without prior judicial process or judicial hearing, and to
the extent permitted by law, each Grantor expressly waives any and all legal
rights which might otherwise require the Administrative Agent to enforce its
rights by judicial process.
SECTION 6. THE SECURED PARTY.
6.1 ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC.
(a) Each Grantor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or
agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor
or in its own name, for the purpose of carrying out
the terms of this Agreement, subject to the
Intercreditor Agreement, to take any and all
appropriate action and to execute any and all
documents and instruments which may be necessary or
desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of
the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf
of such Grantor, without notice to or assent by such
Grantor, subject to the Intercreditor Agreement, to
do any or all of the following:
28
(i) in the name of such Grantor or its own name,
or otherwise, take possession of and indorse
and collect any checks, drafts, notes,
acceptances or other instruments for the
payment of moneys due under any Receivable
or with respect to any other Collateral and
file any claim or take any other action or
proceeding in any court of law or equity or
otherwise deemed appropriate by the
Administrative Agent for the purpose of
collecting any and all such moneys due under
any Receivable or with respect to any other
Collateral whenever payable;
(ii) in the case of any Intellectual Property,
execute and deliver, and have recorded, any
and all agreements, instruments, documents
and papers as the Administrative Agent may
request to evidence the Administrative
Agent's and the Secured Parties' security
interest in such Intellectual Property and
the goodwill and general intangibles of such
Grantor relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or
placed on or threatened against the
Collateral, effect any repairs or any
insurance called for by the terms of this
Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale
provided for in SECTION 5.6 or 5.7, any
indorsements, assignments or other
instruments of conveyance or transfer with
respect to the Collateral; and
(v) direct any party liable for any payment
under any of the Collateral to make payment
of any and all moneys due or to become due
thereunder directly to the Administrative
Agent or as the Administrative Agent shall
direct; ask or demand for, collect, and
receive payment of and receipt for, any and
all moneys, claims and other amounts due or
to become due at any time in respect of or
arising out of any Collateral; sign and
indorse any invoices, freight or express
bills, bills of lading, storage or warehouse
receipts, drafts against debtors,
assignments, verifications, notices and
other documents in connection with any of
the Collateral; commence and prosecute any
suits, actions or proceedings at law or in
equity in any court of competent
jurisdiction to collect the Collateral or
any portion thereof and to enforce any other
right in respect of any Collateral; defend
any suit, action or proceeding brought
against such Grantor with respect to any
Collateral; settle, compromise or adjust any
such suit, action or proceeding and, in
connection therewith, give such discharges
or releases as the Administrative Agent may
deem appropriate; assign any Copyright,
Patent, Domain Name, Trade Secret or
Trademark (along with the goodwill of the
business to which any such Copyright,
Patent, Domain Name, Trade Secret or
Trademark pertains), throughout the world
29
for such term or terms, on such conditions,
and in such manner, as the Administrative
Agent shall in its sole discretion
determine; and generally, sell, transfer,
pledge and make any agreement with respect
to or otherwise deal with any of the
Collateral as fully and completely as though
the Administrative Agent were the absolute
owner thereof for all purposes, and do, at
the Administrative Agent's option and such
Grantor's expense, at any time, or from time
to time, all acts and things which the
Administrative Agent deems necessary to
protect, preserve or realize upon the
Collateral and the Administrative Agent's
and the Secured Parties' security interests
therein and to effect the intent of this
Agreement, all as fully and effectively as
such Grantor might do.
(b) Anything in this SECTION 6.1 to the contrary
notwithstanding, the Administrative Agent agrees that
it will not exercise any rights under the power of
attorney provided for in this SECTION 6.1 unless an
Event of Default shall have occurred and be
continuing.
(c) If any Grantor fails to perform or comply with any of
its agreements contained herein, the Administrative
Agent, at its option, but without any obligation so
to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(d) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in
this SECTION 6.1, together with interest thereon at a
rate per annum equal to the highest rate per annum at
which interest would then be payable on past due
principal or interest on the Term Loans, from the
date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be
payable by such Grantor to the Administrative Agent
on demand.
(e) Each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue
hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is
terminated and the security interests created hereby
are released.
6.2 ADMINISTRATIVE AGENT'S APPOINTMENT AS AGENT.
(a) The Administrative Agent shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including without limitation
the release or substitution of Collateral), solely in
accordance with this Agreement, the Intercreditor Agreement
and the Credit Agreement; PROVIDED that Administrative Agent
shall, subject to the terms of the Intercreditor Agreement,
exercise, or refrain from exercising, any remedies provided
30
for in SECTION 5.6 in accordance with the instructions of
Lenders representing more than 50% of the aggregate amount of
the Obligations.
(b) Written notice of resignation by the Administrative Agent
pursuant to Section 8.9 of the Credit Agreement shall also
constitute notice of resignation as the Administrative Agent
under this Agreement; removal of the Administrative Agent
pursuant to Section 8.9 of the Credit Agreement shall also
constitute removal as the Administrative Agent under this
Agreement; and appointment of a successor Administrative Agent
pursuant to Section 9.9 of the Credit Agreement shall also
constitute appointment of a successor Administrative Agent
under this Agreement. Upon the acceptance of any appointment
as the Administrative Agent under Section 8.9 of the Credit
Agreement by a successor Administrative Agent, that successor
Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring or removed Administrative Agent under this
Agreement, and the retiring or removed Administrative Agent
under this Agreement shall promptly (i) transfer to such
successor Administrative Agent all sums, securities and other
items of Collateral held hereunder, together with all records
and other documents necessary or appropriate in connection
with the performance of the duties of the successor
Administrative Agent under this Agreement, and (ii) execute
and deliver to such successor Administrative Agent such
amendments to financing statements, and take such other
actions, as may be necessary or appropriate in connection with
the assignment to such successor Administrative Agent of the
security interests created hereunder, whereupon such retiring
or removed Administrative Agent shall be discharged from its
duties and obligations under this Agreement. After any
retiring or removed Administrative Agent's resignation or
removal hereunder as the Administrative Agent, the provisions
of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while
it was Administrative Agent hereunder.
6.3 DUTY OF THE ADMINISTRATIVE AGENT. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. None of the
Administrative Agent, the Secured Parties or any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Secured Parties hereunder are
solely to protect the Administrative Agent's and the Secured Parties' interests
in the Collateral and shall not impose any duty upon the Administrative Agent or
any Secured Party to exercise any such powers. The Administrative Agent and the
Secured Parties shall be accountable only for amounts that they actually receive
31
as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct. To the fullest extent permitted by applicable law, the
Administrative Agent shall be under no duty whatsoever to make or give any
presentment, notice of dishonor, protest, demand for performance, notice of
non-performance, notice of intent to accelerate, notice of acceleration, or
other notice or demand in connection with any Collateral or the Obligations, or
to take any steps necessary to preserve any rights against any Grantor or other
Person or ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not it has or is deemed to have knowledge of such matters. Each
Grantor, to the extent permitted by applicable law, waives any right of
marshaling in respect of any and all Collateral, and waives any right to require
the Administrative Agent or any Secured Party to proceed against any Grantor or
other Person, exhaust any Collateral or enforce any other remedy which the
Administrative Agent or any Secured Party now has or may hereafter have against
each Grantor, any Grantor or other Person.
6.4 EXECUTION OF FINANCING STATEMENTS. Pursuant to any applicable
law, each Grantor authorizes the Administrative Agent to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Administrative Agent reasonably determines appropriate to
perfect the security interests of the Administrative Agent under this Agreement.
Each Grantor authorizes the Administrative Agent to use the collateral
description "all assets" or "all personal property" in any such financing
statements. Each Grantor hereby ratifies and authorizes the filing by the
Administrative Agent of any financing statement with respect to the Collateral
made prior to the date hereof. Nothing in this SECTION 6.4 shall relieve the
Grantor from its obligation to make the Filings or file any continuation
statements.
6.5 AUTHORITY OF THE ADMINISTRATIVE AGENT. Each Grantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Secured Parties, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Administrative Agent and the Grantors, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
32
SECTION 7. SUBORDINATION OF INDEBTEDNESS.
7.1 SUBORDINATION OF ALL GRANTOR CLAIMS. As used herein, the term
"GRANTOR CLAIMS" shall mean all debts and obligations of the Company or any
other Grantor to any Grantor, whether such debts and obligations now exist or
are hereafter incurred or arise, or whether the obligation of the debtor thereon
be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or obligations be evidenced by
note, contract, open account, or otherwise, and irrespective of the Person or
Persons in whose favor such debts or obligations may, at their inception, have
been, or may hereafter be created, or the manner in which they have been or may
hereafter be acquired by. After and during the continuation of an Event of
Default, no Grantor shall receive or collect, directly or indirectly, from any
obligor in respect thereof any amount upon the Grantor Claims unless otherwise
consented to by the Administrative Agent.
7.2 CLAIMS IN BANKRUPTCY. Subject to the Intercreditor Agreement,
in the event of receivership, bankruptcy, reorganization, arrangement, debtor's
relief or other insolvency proceedings involving any Grantor, the Administrative
Agent on behalf of itself and the Secured Parties shall have the right to prove
their claim in any proceeding, so as to establish their rights hereunder and
receive directly from the receiver, trustee or other court custodian, dividends
and payments that would otherwise be payable upon Grantor Claims. Each Grantor
hereby assigns such dividends and payments to the Administrative Agent for the
benefit of the Administrative Agent and the Secured Parties for application
against the Obligations in the manner determined by the Administrative Agent.
Should the Administrative Agent or any Secured Party receive, for application
upon the Obligations, any such dividend or payment that is otherwise payable to
any Grantor, and that, as between such Grantor and the applicable Administrative
Agent or Secured Party, shall constitute a credit upon the Grantor Claims, then
upon payment in full of the Obligations, the intended recipient shall become
subrogated to the rights of the Administrative Agent and the Secured Parties to
the extent that such payments to the Administrative Agent and the Secured
Parties on the Grantor Claims have contributed toward the liquidation of the
Obligations, and such subrogation shall be with respect to that proportion of
the Obligations that would have been unpaid if the Administrative Agent and the
Secured Parties had not received dividends or payments upon the Grantor Claims.
7.3 PAYMENTS HELD IN TRUST. In the event that notwithstanding
SECTION 7.1 and SECTION 7.2 any Grantor should receive any funds, payments,
claims or distributions which are prohibited by such Sections, then it agrees:
(a) to hold in trust for the Administrative Agent and the Secured Parties an
amount equal to the amount of all funds, payments, claims or distributions so
received, and (b) that it shall have absolutely no dominion over the amount of
such funds, payments, claims or distributions except to pay them promptly to the
Administrative Agent (subject to the Intercreditor Agreement), for the benefit
of the Administrative Agent and the Secured Parties; and each Grantor covenants
promptly to pay the same to the Administrative Agent (subject to the
Intercreditor Agreement).
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7.4 LIENS SUBORDINATE. Each Grantor agrees that, until the Release
Date, any Liens securing payment of the Grantor Claims shall be and remain
inferior and subordinate to any Liens securing payment of the Obligations,
regardless of whether such encumbrances in favor of such Grantor, the
Administrative Agent or Secured Party presently exist or are hereafter created
or attach. Without the prior written consent of the Administrative Agent, no
Grantor, during the period in which any of the Obligations are outstanding shall
(a) exercise or enforce any creditor's right it may have against any debtor in
respect of the Grantor Claims, or (b) foreclose, repossess, sequester or
otherwise take steps or institute any action or proceeding (judicial or
otherwise, including without limitation the commencement of or joinder in any
liquidation, bankruptcy, rearrangement, debtor's relief or insolvency
proceeding) to enforce any Lien held by it.
7.5 NOTATION OF RECORDS. All promissory notes and all accounts
receivable ledgers or other evidence of the Grantor Claims accepted by or held
by any Grantor shall contain a specific written notice thereon that the
indebtedness evidenced thereby is subordinated under the terms of this
Agreement.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 9.1 of the Credit Agreement.
8.2 NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 9.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon Holdings or any Subsidiary Grantor shall be
addressed to Holdings and such Subsidiary Grantor at its notice address set
forth on SCHEDULE I hereto.
8.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES. Neither
the Administrative Agent nor any Secured Party shall by any act (except by a
written instrument pursuant to SECTION 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent or
any Secured Party of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Administrative Agent or
such Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
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8.4 ENFORCEMENT EXPENSES; INDEMNIFICATION.
(a) Holdings and each Subsidiary Grantor agrees to pay or
reimburse each of the Administrative Agent and each
Secured Party for all its costs and expenses incurred
in enforcing or preserving any rights under this
Agreement and the other Loan Documents to which
Holdings and such Subsidiary Grantor is a party,
including, without limitation, the reasonable fees
and disbursements of counsel (including the allocated
fees and expenses of in-house counsel) to the
Administrative Agent and each Secured Party.
(b) Holdings and each Subsidiary Grantor agrees to pay,
and to save the Administrative Agent and the Secured
Parties harmless from, any and all liabilities with
respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with
respect to any of the Collateral or in connection
with any of the transactions contemplated by this
Agreement.
(c) Holdings and each Subsidiary Grantor agrees to pay,
and to save the Administrative Agent and the Secured
Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of
any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and
administration of this Agreement to the extent the
Company would be required to do so pursuant to
Section 8.7 of the Credit Agreement.
(d) The agreements in this SECTION 8.4 shall survive
repayment of the Obligations and all other amounts
payable under the Credit Agreement and the other Loan
Documents and shall survive, as to a Administrative
Agent, the resignation or removal of such
Administrative Agent.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Secured Parties and their successors and permitted
assigns; provided that no Grantor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent.
8.6 SET-OFF. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Secured Party at any time and from time to time
while an Event of Default shall have occurred and be continuing, subject to the
Intercreditor Agreement, without notice to such Grantor or any other Grantor,
any such notice being expressly waived by each Grantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
35
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the
Administrative Agent or such Secured Party to or for the credit or the account
of such Grantor, or any part thereof in such amounts as the Administrative Agent
or such Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to the Administrative Agent or such Secured Party
hereunder and claims of every nature and description of the Administrative Agent
or such Secured Party against such Grantor, in any currency, whether arising
hereunder, under the Credit Agreement, any other Loan Document or otherwise, as
the Administrative Agent or such Secured Party may elect, whether or not the
Administrative Agent or any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Secured Party shall notify such
Grantor promptly of any such set-off and the application made by the
Administrative Agent or such Secured Party of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Administrative Agent and each Secured
Party under this SECTION 8.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Secured Party may have.
8.7 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 SECTION HEADINGS. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 INTEGRATION. This Agreement, the Credit Agreement and the
other Loan Documents represent the agreement of the Grantors, the Administrative
Agent and the Secured Parties with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent or any Secured Party relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the
Credit Agreement or the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
36
8.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Grantor hereby
irrevocably and unconditionally:
(a) submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of
the United States District Court of the Southern
District of New York, and any appellate court from
any thereof, in any action or proceeding arising out
of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and
determined in such New York State or, to the extent
permitted by law, in such Federal court;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that
it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof
by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such
Grantor at its address referred to in SECTION 8.2 or
at such other address of which the Administrative
Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner
permitted by law or shall limit the right to ▇▇▇ in
any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any
legal action or proceeding any special, exemplary,
punitive or consequential damages.
8.13 ACKNOWLEDGEMENTS. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the
other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Secured
Party has any fiduciary relationship with or duty to
any Grantor arising out of or in connection with this
Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand,
and the Administrative Agent and the Secured Parties,
on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
37
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Secured
Parties or among the Grantors and the Secured
Parties.
8.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
8.15 ADDITIONAL GRANTORS. Each Subsidiary of Holdings that is
required to become a party to this Agreement pursuant to Section 5.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of ANNEX I hereto.
8.16 RELEASES.
(a) After the Release Date, the Collateral shall be
released from the Liens created hereby, and this
Agreement and all obligations (other than those
expressly stated to survive such termination) of the
Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or
performance of any act by any party, and all rights
to the Collateral shall revert to the Grantors. At
the request and sole expense of any Grantor following
any such termination, the Administrative Agent shall
deliver to the such Grantor any Collateral held by
the Administrative Agent hereunder, and execute and
deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such
termination.
(b) If any of the Collateral or any Mortgaged Property
(as defined in any Mortgage) shall be sold,
transferred or otherwise disposed of by any Grantor
in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and
sole expense of such Grantor, shall execute and
deliver to such Grantor, without any representation
or warranty by the Administrative Agent, all releases
or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such
Collateral or Mortgaged Property. At the request and
sole expense of the Company, Holdings and a
38
Subsidiary Grantor shall be released from its
obligations hereunder in the event that all the
Equity Interests of Holdings and such Subsidiary
Grantor shall be sold, transferred or otherwise
disposed of in a transaction permitted by the Credit
Agreement; PROVIDED that the Company shall have
delivered to the Administrative Agent, at least ten
Business Days prior to the date of the proposed
release, a written request for release identifying
the relevant Subsidiary Grantor and the terms of the
sale or other disposition in reasonable detail,
including the price thereof and any expenses in
connection therewith, together with a certification
by the Company stating that such transaction is in
compliance with the Credit Agreement and the other
Loan Documents.
SECTION 9. GUARANTEE
9.1 GUARANTEE. (a) (i) The Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantee to the Administrative
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations (other than, in the case of each
Guarantor, Obligations arising pursuant to clause (ii) of this Section 9.1(a) in
respect of Guarantor Hedge Agreement Obligations in respect of which such
Guarantor is a primary obligor).
(ii) The Borrower hereby unconditionally and
irrevocably guarantees to the Administrative
Agent, for the ratable benefit of the
Secured Parties and their respective
successors, endorsees, transferees and
assigns, the prompt and complete payment and
performance by each Guarantor when due
(whether at stated maturity, by acceleration
or otherwise) of the Guarantor Hedge
Agreement Obligations of such Guarantor.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, (i) the maximum liability
of each Guarantor hereunder and under the other Loan
Documents shall in no event exceed the amount which
can be guaranteed by such Guarantor under applicable
federal and state laws relating to fraudulent
conveyances or transfers or the insolvency of debtors
(after giving effect to the right of contribution
established in Section 9) and (ii) the maximum
liability of the Borrower under this Section 9.1
shall in no event exceed the amount which can be
guaranteed by the Borrower under applicable federal
and state laws relating to fraudulent conveyances or
transfers or the insolvency of debtors (after giving
effect to the right of contribution established in
Section 9.2).
39
(c) (i) Each Guarantor agrees that the Obligations may at
any time and from time to time exceed the amount of
the liability of such Guarantor hereunder without
impairing the guarantee of such Guarantor contained
in this Section 9 or affecting the rights and
remedies of the Administrative Agent or any Secured
Party hereunder.
(ii) The Borrower agrees that the Guarantor Hedge
Agreement Obligations may at any time and
from time to time exceed the amount of the
liability of the Borrower under this Section
9 without impairing the guarantee of the
Borrower contained in this Section 9 or
affecting the rights and remedies of the
Administrative Agent or any Secured Party
hereunder.
(d) Subject to Section 8.14 hereof, the guarantee
contained in this Section 9.1 shall remain in full
force and effect until all the Obligations (other
than Obligations arising under Section 9.1(a)(ii)
hereof) and the obligations of each Guarantor under
the guarantee contained in this Section 9(other than
Guarantor Obligations in respect of Obligations
arising under Section 9.1(a)(ii) hereof) shall have
been satisfied by full and final payment in cash and
the Term Loan Commitments shall be terminated,
notwithstanding that from time to time during the
term of the Credit Agreement the Borrower may be free
from any Obligations and any or all of the Guarantors
may be free from their respective Guarantor Hedge
Agreement Obligations.
(e) No payment made by the Borrower, any of the
Guarantors, any other guarantor or any other Person
or received or collected by the Administrative Agent
or any Secured Party from the Borrower, any of the
Guarantors, any other guarantor or any other Person
by virtue of any action or proceeding or any set-off
or appropriation or application at any time or from
time to time in reduction of or in payment of the
Obligations or the Guarantor Hedge Agreement
Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of the
Borrower or any Guarantor under this Section 9 which
shall, notwithstanding any such payment (other than
any payment made by the Borrower or such Guarantor in
respect of the Obligations or the Guarantor Hedge
Agreement Obligations or any payment received or
collected from the Borrower or such Guarantor in
respect of the Obligations or the Guarantor Hedge
Agreement Obligations), remain liable for the
Obligations and the Guarantor Hedge Agreement
Obligations up to the maximum liability of the
Borrower or such Guarantor hereunder until the
Obligations and the Guarantor Hedge Agreement
Obligations are fully and finally paid in cash and
the Term Loan Commitments are terminated.
9.2 RIGHT OF CONTRIBUTION. (a) Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder or the Guarantor Hedge Agreement Obligations, such
Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such
payment.
40
(b) The Borrower and each Guarantor agrees that to the
extent that the Borrower or any Guarantor shall have
paid more than its proportionate share of any payment
made hereunder in respect of any Guarantor Hedge
Agreement Obligation of any other Guarantor, the
Borrower or such Guarantor, as the case may be, shall
be entitled to seek and receive contribution from and
against the Borrower and any other Guarantor which
has not paid its proportionate share of such payment.
(c) The Borrower's and each Guarantor's right of
contribution under this Section 9.2 shall be subject
to the terms and conditions of Section 9.3. The
provisions of this Section 9.2 shall in no respect
limit the obligations and liabilities of the Borrower
or any Guarantor to the Administrative Agent and the
Secured Parties, and the Borrower and each Guarantor
shall remain liable to the Administrative Agent and
the Secured Parties for the full amount guaranteed by
the Borrower or such Guarantor hereunder.
9.3 SUBROGATION. Notwithstanding any payment made by the Borrower
or any Guarantor hereunder or any set-off or application of funds of the
Borrower or any Guarantor by the Administrative Agent or any Secured Party,
neither the Borrower nor any Guarantor shall be entitled to be subrogated to any
of the rights of the Administrative Agent or any Secured Party against the
Borrower or any other Guarantor or any collateral security or guarantee or right
of offset held by the Administrative Agent or any Secured Party for the payment
of the Obligations or the Guarantor Hedge Agreement Obligations, nor shall the
Borrower or any Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other Guarantor in respect of payments
made by the Borrower or such Guarantor hereunder, until all amounts owing to the
Administrative Agent and the Secured Parties by the Borrower on account of the
Obligations are fully and finally paid in cash and the Term Loan Commitments are
terminated. If any amount shall be paid to the Borrower or any Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been fully and finally paid in cash, such amount shall be held by the
Borrower or such Guarantor in trust for the Administrative Agent and the Secured
Parties, segregated from other funds of the Borrower or such Guarantor, and
shall, forthwith upon receipt by the Borrower or such Guarantor, be turned over
to the Administrative Agent in the exact form received by the Borrower or such
Guarantor (duly indorsed by the Borrower or such Guarantor to the Administrative
Agent, if required), to be applied against the Obligations or the Guarantor
Hedge Agreement Obligations, whether matured or unmatured, in accordance with
the terms of the Intercreditor Agreement.
9.4 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. The Borrower
and each Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Borrower or any Guarantor and
41
without notice to or further assent by the Borrower or any Guarantor, any demand
for payment of any of the Obligations or Guarantor Hedge Agreement Obligations
made by the Administrative Agent or any Secured Party may be rescinded by the
Administrative Agent or such Secured Party and any of the Obligations or
Guarantor Hedge Agreement Obligations continued, and the Obligations or
Guarantor Hedge Agreement Obligations, or the liability of any other Person upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Secured Party (with
the consent of such of the Borrower and the Guarantor as shall be required
thereunder), and the Specified Hedge Agreements, the Credit Agreement and the
other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required Lenders or all
Lenders, as the case may be) may (with the consent of such of the Borrower and
the Guarantor as shall be required thereunder) deem advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
the Administrative Agent or any Secured Party for the payment of the Obligations
or Guarantor Hedge Agreement Obligations may (with the consent of such of the
Borrower and the Guarantor as shall be required thereunder) be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any
Secured Party shall, except to the extent set forth in, and for the benefit of
the parties to, the agreements and instruments governing such Lien or guarantee,
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or Guarantor Hedge Agreement
Obligations or for the guarantees contained in this Section 9.4 or any property
subject thereto.
9.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. (a) Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations (other than any notice with respect to any Guarantor Hedge
Agreement Obligation with respect to which such Guarantor is a primary obligor
and to which it is entitled pursuant to the applicable Specified Hedge
Agreement) and notice of or proof of reliance by the Administrative Agent or any
Secured Party upon the guarantee contained in this Section 9 or acceptance of
the guarantee contained in this Section 9; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 9; and all dealings between the Borrower and any of the
Guarantors, on the one hand, and the Administrative Agent and the Secured
Parties, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 9.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Obligations (other than any diligence, presentment, protest,
demand or notice with respect to any Guarantor Hedge Agreement Obligation with
respect to which such Guarantor is a primary obligor and to which it is entitled
42
pursuant to the applicable Specified Hedge Agreement). Each Guarantor
understands and agrees that the guarantee of such Guarantor contained in this
Section 9 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Obligations or any
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Secured Party, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower or any other Person against the Administrative Agent or any Secured
Party, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of such Guarantor under the guarantee of such Guarantor
contained in this Section 9, in bankruptcy or in any other instance. When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Guarantor, the Administrative Agent or any Secured Party may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Obligations or any right of offset with respect thereto, and any failure
by the Administrative Agent or any Secured Party to make any such demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability under this Section 9, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Administrative Agent or any Secured Party against any
Guarantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
(b) The Borrower waives any and all notice of the
creation, renewal, extension or accrual of any of the
Guarantor Hedge Agreement Obligations and notice of
or proof of reliance by the Administrative Agent or
any Secured Party upon the guarantee by the Borrower
contained in this Section 9 or acceptance of the
guarantee by the Borrower contained in this Section
9; the Guarantor Hedge Agreement Obligations, and any
of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the
guarantee by the Borrower contained in this Section
9; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the
Administrative Agent and the Secured Parties, on the
other hand, with respect to any Guarantor Hedge
Agreement Obligation likewise shall be conclusively
presumed to have been had or consummated in reliance
upon the guarantee by the Borrower contained in this
Section 9. The Borrower waives diligence,
presentment, protest, demand for payment and notice
43
of default or nonpayment to or upon the Borrower with
respect to the Guarantor Hedge Agreement Obligations.
The Borrower understands and agrees that the
guarantee by the Borrower contained in this Section 9
shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Guarantor
Hedge Agreement Obligations or any other collateral
security therefor or guarantee or right of offset
with respect thereto at any time or from time to time
held by the Administrative Agent or any Secured
Party, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance)
which may at any time be available to or be asserted
by any Person against the Administrative Agent or any
Secured Party, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of
the Borrower or any Guarantor) which constitutes, or
might be construed to constitute, an equitable or
legal discharge of the applicable Guarantor for the
applicable Guarantor Hedge Agreement Obligations, or
of the Borrower under its guarantee contained in this
Section 9, in bankruptcy or in any other instance.
When making any demand under this Section 9 or
otherwise pursuing its rights and remedies under this
Section 9 against the Borrower, the Administrative
Agent or any Secured Party may, but shall be under no
obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have
against any Guarantor or any other Person or against
any collateral security or guarantee for the
Guarantor Hedge Agreement Obligations or any right of
offset with respect thereto, and any failure by the
Administrative Agent or any Secured Party to make any
such demand, to pursue such other rights or remedies
or to collect any payments from any Guarantor or any
other Person or to realize upon any such collateral
security or guarantee or to exercise any such right
of offset, or any release of any Guarantor or any
other Person or any such collateral security,
guarantee or right of offset, shall not relieve the
Borrower of any obligation or liability under this
Section 9, and shall not impair or affect the rights
and remedies, whether express, implied or available
as a matter of law, of the Administrative Agent or
any Secured Party against the Borrower under this
Section 9. For the purposes hereof "demand" shall
include the commencement and continuance of any legal
proceedings.
9.6 REINSTATEMENT. The guarantee contained in this Section 9 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations or Guarantor Hedge
Agreement Obligations is rescinded or must otherwise be restored or returned by
the Administrative Agent or any Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or any Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or any Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
44
9.7 PAYMENTS. The Borrower and each Guarantor hereby guarantees
that payments by it hereunder will be paid to the Administrative Agent without
set-off or counterclaim (i) in the case of obligations in respect of Obligations
arising under the Credit Agreement or any other Loan Document in Dollars at the
Payment Office specified in the Credit Agreement and (ii) in the case of
obligations in respect of any Borrower Hedge Agreement Obligations or any
Guarantor Hedge Agreement Obligations, in the currency and at the place
specified in the applicable Specified Hedge Agreement.
45
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered as of the date first above written.
GUGGENHEIM CORPORATE FUNDING, LLC, as
Administrative Agent
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
NATIONAL COAL CORP.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
NATIONAL COAL CORPORATION
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
NC TRANSPORTATION, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: General Counsel
NC RAILROAD, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
46
SCHEDULE I
NOTICE ADDRESSES OF GRANTORS
To all Grantors at:
National Coal Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Markiles LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Annex I to
SECURITY AGREEMENT
ASSUMPTION AGREEMENT, dated as of ___, 20[ ], made by ____________, a
______________ (the "ADDITIONAL GRANTOR"), in favor of GUGGENHEIM CORPORATE
FUNDING, LLC, as the Administrative Agent under the Credit Agreement referred to
below (together with its successors and assigns, the "ADMINISTRATIVE AGENT").
All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, National Coal Corporation (the "COMPANY"), National Coal Corp.
("HOLDINGS"), certain subsidiaries of Holdings, the Lenders and the
Administrative Agent have entered into the Credit Agreement, dated as of October
12, 2006 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT");
WHEREAS, in connection with the Credit Agreement, the Company, Holdings
and certain of its Subsidiaries (other than the Additional Grantor) have entered
into the Security and Guarantee Agreement, dated as of October 12, 2006 (as
amended, supplemented or otherwise modified from time to time, the "SECURITY
AGREEMENT") in favor of the Administrative Agent and the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to become
a party to the Security Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Security Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. SECURITY AGREEMENT. By executing and delivering this
Assumption Agreement, the Additional Grantor, as provided in Section 8.15 of the
Security Agreement, hereby becomes a party to the Security Agreement as a
Grantor thereunder with the same force and effect as if originally named therein
as a Grantor and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor thereunder. The
information set forth in ANNEX 1-A hereto is hereby added to the information set
forth in the Perfection Certificate. The Additional Grantor hereby represents
and warrants that each of the representations and warranties contained in
Section 3 of the Security Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
------------------------------------------
Name:
Title:
2
Annex II to
SECURITY AGREEMENT
DEPOSIT ACCOUNT CONTROL AGREEMENT, dated as of [__________, 200_],
between GUGGENHEIM CORPORATE FUNDING, LLC, as the Administrative Agent under the
Credit Agreement referred to below (together with its successors and assigns,
the "ADMINISTRATIVE AGENT"), [APPLICABLE GRANTOR] (the "DEPOSITOR") and [Name of
Bank] (the "BANK").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, [the Depositor], National Coal Corporation (the "COMPANY"),
National Coal Corp. ("HOLDINGS"), certain subsidiaries of Holdings, the Lenders
and the Administrative Agent have entered into the Credit Agreement, dated as of
October 12, 2006 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT");
WHEREAS, in connection with the Credit Agreement, the Depositor, [EACH
OTHER GRANTOR] have entered into the Security and Guarantee Agreement, dated as
of October 12, 2006 (as amended, supplemented or otherwise modified from time to
time, the "SECURITY AGREEMENT") in favor of the Administrative Agent and the
Lenders;
WHEREAS, pursuant to the Security Agreement, the Depositor granted to
the Administrative Agent and the Lenders, a security interest in certain
collateral, including but not limited to all right, title or interest of the
Depositor in deposit account number [_________] maintained by the Bank (the
"ACCOUNT"); and
WHEREAS, the Administrative Agent, the Depositor and the Bank have
agreed to execute and deliver this Deposit Account Control Agreement in order to
perfect the security interest of the Administrative Agent in the Account;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. THE ACCOUNT. All parties agree that the Account is a
"deposit account" within the meaning of Article 9 of the Uniform Commercial Code
of the State of New York (the "UCC"). The Bank has not and will not agree with
any third party to comply with instructions or other directions concerning the
Account or the disposition of funds in the Account originated by such third
party without the prior written consent of the Administrative Agent and the
Depositor.
SECTION 2. SUBORDINATION OF SECURITY INTEREST. The Bank hereby
subordinates all security interests, encumbrances, claims and rights of setoff
it may have, now or in the future, against the Account or any funds in the
Account other than
in connection with the payment of the Bank's customary fees and charges pursuant
to its agreement with the Depositor.
SECTION 3. CONTROL. The Bank will comply with instructions originated
by the Administrative Agent directing disposition of the funds in the Account
without further consent by the Depositor. The Bank may comply with instructions
directing the disposition of funds in the Account originated by the Depositor or
its authorized representatives until such time as the Administrative Agent
delivers a notice to the Bank that the Administrative Agent is thereby
exercising exclusive control over the Account. Such notice is referred to herein
as the "Notice of Exclusive Control." After the Bank receives a Notice of
Exclusive Control, it will cease complying with instructions concerning the
Account or funds on deposit therein originated by the Depositor or its
representatives.
SECTION 4. STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS. The
Bank will send copies of all statements concerning the Account to each of the
Depositor and the Administrative Agent at the address set forth in SECTION 13
below. Upon receipt of written notice of any lien, encumbrance or adverse claim
against the Account or any funds credited thereto, the Bank will make reasonable
efforts promptly to notify the Administrative Agent and the Depositor thereof.
SECTION 5. LIMITED RESPONSIBILITY OF THE BANK. Except for acting on the
Depositor's instructions in violation of SECTION 3 above, the Bank shall have no
responsibility or liability to the Administrative Agent for complying with
instructions concerning the Account from the Depositor or the Depositor's
authorized representatives which are received by the Bank before the Bank
receives a Notice of Exclusive Control. The Bank shall have no responsibility or
liability to the Depositor for complying with a Notice of Exclusive Control or
complying with instructions concerning the Account originated by the
Administrative Agent, and shall have no responsibility to investigate the
appropriateness of any such instruction or Notice of Exclusive Control, even if
the Depositor notifies the Bank that the Administrative Agent is not legally
entitled to originate any such instruction or Notice of Exclusive Control.
SECTION 6. INDEMNIFICATION OF THE BANK. The Depositor hereby agrees to
indemnify and hold harmless the Bank, its directors, officers, agents and
employees against any and all claims, causes of action, liabilities, lawsuits,
demands and damages, including without limitation, any and all court costs and
reasonable attorney's fees, in any way related to or arising out of or in
connection with this Agreement or any action taken or not taken pursuant hereto,
except to the extent caused by the Bank's gross negligence or willful
misconduct.
SECTION 7. OTHER AGREEMENTS. In the event of a conflict between this
Agreement and any other agreement between the Bank and the Depositor, the terms
of this Agreement will prevail; PROVIDED, HOWEVER, that this Agreement shall not
alter or affect any mandatory arbitration provision currently in effect between
the Bank and the Depositor pursuant to a separate agreement.
2
SECTION 8. TERMINATION. This Agreement shall continue in effect until
the Administrative Agent has notified the Bank in writing that this Agreement,
or its security interest in the Account, is terminated. Upon receipt of such
notice the obligations of the Bank hereunder with respect to the operation and
maintenance of the Account after the receipt of such notice shall terminate, the
Administrative Agent shall have no further right to originate instructions
concerning the Account and any previous Notice of Exclusive Control delivered by
the Administrative Agent shall be deemed to be of no further force and effect.
SECTION 9. COMPLETE AGREEMENT. This Agreement and the instructions and
notices required or permitted to be executed and delivered hereunder set forth
the entire agreement of the parties with respect to the subject matter hereof,
and, subject to SECTION 8 above, supersede any prior agreement and
contemporaneous oral agreements of the parties concerning its subject matter.
SECTION 10. AMENDMENTS. No amendment, modification or (except as
otherwise specified in SECTION 8 above) termination of this Agreement, nor any
assignment of any rights hereunder (except to the extent contemplated under
SECTION 13 below), shall be binding on any party hereto unless it is in writing
and is signed by each of the parties hereto, and any attempt to so amend,
modify, terminate or assign except pursuant to such a writing shall be null and
void. No waiver of any rights hereunder shall be binding on any party hereto
unless such waiver is in writing and signed by the party against whom
enforcement is sought.
SECTION 11. SEVERABILITY. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
SECTION 12. SUCCESSORS. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
corporate successors or heirs and personal representatives. This Agreement may
be assigned by the Administrative Agent to any successor of the Administrative
Agent under its security agreement with the Depositor, provided that written
notice thereof is given by the Administrative Agent to the Bank.
SECTION 13. NOTICES. All notices, requests and demands to or upon the
Administrative Agent or the Depositor shall be effected in the manner provided
for in Section 9.2 of the Credit Agreement; PROVIDED that any such notice,
request or demand to or upon the Bank shall be addressed to the Bank at its
notice address set forth on SCHEDULE 1.
3
SECTION 14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or
more counterparts.
SECTION 15. CHOICE OF LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of [ ]. The parties agree that
New York is the "bank's jurisdiction" for purposes of the UCC.
4
SIGNATURES:
GUGGENHEIM CORPORATE FUNDING, LLC, as
Administrative Agent
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
[Applicable Grantor]
By:
-------------------------------------
Name:
Title:
[BANK]
By:
-------------------------------------
Name:
Title:
5
SCHEDULE 1
NOTICE ADDRESS OF THE BANK
Annex III to
SECURITY AGREEMENT
FORM OF
SECURITIES ACCOUNT CONTROL AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT, dated as of [__________, 200_],
between GUGGENHEIM CORPORATE FUNDING, LLC, as the Administrative Agent under the
Credit Agreement referred to below (together with its successors and assigns,
the "ADMINISTRATIVE AGENT"), [APPLICABLE GRANTOR] (the "DEPOSITOR") and [Name of
Bank] (the "BANK").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, [the Depositor], National Coal Corporation, ("BORROWER"),
National Coal Corp. ("HOLDINGS"), certain subsidiaries of Holdings, the Lenders
and the Administrative Agent and the Administrative Agent have entered into the
Credit Agreement, dated as of October 12, 2006 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT");
WHEREAS, in connection with the Credit Agreement, the Depositor, [EACH
OTHER GRANTOR] have entered into the Security and Guarantee Agreement, dated as
of October 12, 2006 (as amended, supplemented or otherwise modified from time to
time, the "SECURITY AGREEMENT") in favor of the Administrative Agent and the
Lenders;
WHEREAS, pursuant to the Security Agreement, the Depositor granted to
the Administrative Agent and the Lenders, a security interest in certain
collateral, including but not limited to all right, title or interest of the
Depositor in account number [_________] maintained by the Bank (the "ACCOUNT");
and
WHEREAS, the Administrative Agent, the Depositor and the Bank have
agreed to execute and deliver this Securities Account Control Agreement in order
to perfect the security interest of the Administrative Agent in the Account;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. THE ACCOUNT. The Bank hereby represents and warrants to the
Administrative Agent and the Depositor that (A) the Account has been established
in the name of the Depositor as recited above, and (B) except for the claims and
interest of the Administrative Agent and the Depositor in the Account (subject
to any claim in favor of the Bank permitted under SECTION 2), the Bank does not
know of any claim to or interest in the Account. All parties agree that the
Account is a "securities account" within the meaning of Article 8 of the Uniform
Commercial Code as in effect from time to time in the State of New York (the
"UCC") and that all property held by the Bank in the Account will be treated as
financial assets under the UCC.
SECTION 2. PRIORITY OF SECURITY INTEREST. The Bank hereby acknowledges
the security interest granted to the Administrative Agent by the Depositor. The
Bank hereby confirms that the Account is a cash account and that it will not
advance any margin or other credit to the Depositor nor hypothecate any
securities carried in the Account except in connection with the settlement of
trading activity permitted to be conducted by the Depositor hereunder. The Bank
hereby subordinates all liens, encumbrances, claims and rights of setoff it may
have, now or in the future, against the Account or any property carried in the
Account or any free credit balance in the Account other than in connection with
activities in which the Depositor is permitted to engage hereunder, including
the payment of the Bank's customary fees, commissions and other charges pursuant
to its agreement with the Depositor and for payment or delivery of financial
assets purchased or sold for or from the Account.
SECTION 3. CONTROL. The Bank will comply with entitlement orders
originated by the Administrative Agent concerning the Account without further
consent by the Depositor. Except as otherwise provided in SECTION 4 below, the
Bank shall also comply with entitlement orders and other instructions concerning
the Account originated by the Depositor, or the Depositor's authorized
representatives, until such time as the Administrative Agent delivers a written
notice to the Bank that the Administrative Agent is thereby exercising exclusive
control over the Account. Such notice is referred to herein as the "Notice of
Exclusive Control." Until the Bank receives a Notice of Exclusive Control, the
Bank may distribute to the Depositor all interest and regular cash dividends on
property in the Account. After the Bank receives a Notice of Exclusive Control
and has had a reasonable opportunity to comply, it will cease complying with
entitlement orders or other instructions concerning the Account originated by
the Depositor or its representatives and cease distributing interest and
dividends on property in the Account to the Depositor. The Bank shall be
entitled to rely upon any entitlement order or Notice of Exclusive Control that
it reasonably believes to be from the Administrative Agent. Until it receives a
Notice of Exclusive Control, the Bank shall be entitled to continue to act on
such instructions from the Depositor as are delivered in form satisfactory to
the Bank. The Bank has not agreed and will not agree with any third party that
the Bank will comply with entitlement orders concerning the Account originated
by such third party without the prior written consent of the Administrative
Agent and the Depositor.
SECTION 4. NO WITHDRAWALS. Notwithstanding the provisions of SECTION 3
above, the Bank shall not comply with any entitlement order from the Depositor
requiring a free delivery of any financial assets from the Account nor deliver
any such financial assets to the Depositor nor pay any free credit balance or
other amount owing from the Bank to the Depositor with respect to the Account,
except for the distribution of interest or dividends permitted under SECTION 3
above, without the prior written consent of the Administrative Agent.
SECTION 5. STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS. The
Bank will send copies of all statements and confirmations concerning the Account
to each of the Depositor and the Administrative Agent at the address set forth
in SECTION 14 below. Upon receipt of written notice of any lien, encumbrance or
adverse claim against the Account or in any financial asset carried therein, the
Bank will make reasonable efforts promptly to notify the Administrative Agent
and the Depositor thereof.
2
SECTION 6. LIMITED RESPONSIBILITY OF THE BANK. Except for permitting a
withdrawal or payment in violation of SECTIONS 3 or 4 above or advancing margin
or other credit to the Depositor in violation of SECTION 2 above, the Bank shall
have no responsibility or liability to the Administrative Agent for complying
with entitlement orders concerning the Account from the Depositor or the
Depositor's authorized representatives which are received by the Bank before the
Bank receives a Notice of Exclusive Control and has had reasonable opportunity
to act on it. The Bank shall have no responsibility or liability to the
Depositor for complying with a Notice of Exclusive Control or complying with
entitlement orders concerning the Account originated by the Administrative
Agent, and shall have no responsibility to investigate the appropriateness of
any such entitlement order or Notice of Exclusive Control, even if the Depositor
notifies the Bank that the Administrative Agent is not legally entitled to
originate any such entitlement order or Notice of Exclusive Control. This
Agreement does not create any obligation or duty of the Bank other than those
expressly set forth herein.
SECTION 7. INDEMNIFICATION OF THE BANK. The Depositor hereby agrees to
indemnify and hold harmless the Bank, its directors, officers, agents and
employees against any and all claims, causes of action, liabilities, lawsuits,
demands and damages, including without limitation, any and all court costs and
reasonable attorney's fees, in any way related to or arising out of or in
connection with this Agreement or any action taken or not taken pursuant hereto,
except to the extent caused by the Bank's gross negligence or willful
misconduct.
SECTION 8. OTHER AGREEMENT. In the event of a conflict between this
Agreement and any other agreement between the Bank and the Depositor, the terms
of this Agreement will prevail; PROVIDED, HOWEVER, that this Agreement shall not
alter or affect any mandatory arbitration provision currently in effect between
the Bank and the Depositor pursuant to a separate agreement.
SECTION 9. TERMINATION. This Agreement shall continue in effect until
the Administrative Agent has notified the Bank in writing that this Agreement,
or its security interest in the Account, is terminated. Upon receipt of such
notice the obligations of the Bank under SECTIONS 2, 3, 4 and 5 above with
respect to the operation and maintenance of the Account after the receipt of
such notice shall terminate, the Administrative Agent shall have no further
right to originate entitlement orders concerning the Account and any previous
Notice of Exclusive Control delivered by the Administrative Agent shall be
deemed to be of no further force and effect.
SECTION 10. COMPLETE AGREEMENT. This Agreement and the instructions and
notices required or permitted to be executed and delivered hereunder set forth
the entire agreement of the parties with respect to the subject matter hereof,
and, subject to SECTION 8 above supersede any prior agreement and
contemporaneous oral agreements of the parties concerning its subject matter.
3
SECTION 11. AMENDMENTS. No amendment, modification or (except as
otherwise specified in SECTION 9 above) termination of this Agreement, nor any
assignment of any rights hereunder (except to the extent contemplated under
SECTION 13 below), shall be binding on any party hereto unless it is in writing
and is signed by each of the parties hereto, and any attempt to so amend,
modify, terminate or assign except pursuant to such a writing shall be null and
void. No waiver of any rights hereunder shall be binding on any party hereto
unless such waiver is in writing and signed by the party against whom
enforcement is sought.
SECTION 12. SEVERABILITY. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of this Agreement,
other than those provisions held invalid or unenforceable, shall be construed in
all respects as if such invalid or unenforceable term or provision were omitted.
SECTION 13. SUCCESSORS. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
corporate successors or heirs and personal representatives. This Agreement may
be assigned by the Administrative Agent to any successor of the Administrative
Agent under its security agreement with the Depositor, provided that written
notice thereof is given by the Administrative Agent to the Bank.
SECTION 14. NOTICES. All notices, requests and demands to or upon the
Administrative Agent or the Depositor shall be effected in the manner provided
for in Section 9.2 of the Credit Agreement; PROVIDED that any such notice,
request or demand to or upon the Bank shall be addressed to the Bank at its
notice address set forth on SCHEDULE 1.
SECTION 15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or
more counterparts.
SECTION 16. CHOICE OF LAW. Regardless of any provision in any other
agreement relating to the Account, the parties hereto agree that, subject to
SECTION 8 of this Agreement, the establishment and maintenance of the Account,
and all interests, duties and obligations with respect to the Account, shall be
governed by the law of the State of New York.
4
SIGNATURES:
GUGGENHEIM CORPORATE FUNDING, LLC, as
Administrative Agent
By:
-------------------------------------
Name:
Title:
[APPLICABLE GRANTOR]
By:
-------------------------------------
Name:
Title:
[BANK]
By:
-------------------------------------
Name:
Title:
5
SCHEDULE 1
NOTICE ADDRESS OF THE BANK
Annex IV to
SECURITY AGREEMENT
FORM OF
PERFECTION CERTIFICATE