Exhibit 10.2
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SECURITY AGREEMENT
DATED AS OF NOVEMBER 19, 2004
AMONG
▇▇▇▇▇, INC.
AND
THE OTHER PARTIES HERETO,
as Grantors,
and
LASALLE BANK NATIONAL ASSOCIATION,
as the Administrative Agent
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SECURITY AGREEMENT
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THIS SECURITY AGREEMENT dated as of November , 2004 (this
"Agreement") is entered into among ▇▇▇▇▇, INC. (the "Parent") and
each other Person signatory hereto as a Grantor (together with
any other Person that becomes a party hereto as provided herein,
and including the Parent, the "Grantors") in favor of LASALLE
BANK NATIONAL ASSOCIATION, as the Administrative Agent for all
the Lenders party to the Credit Agreement (as hereafter defined).
The Lenders have severally agreed to extend credit to the
Parent and the other Grantors pursuant to the Credit Agreement.
The Parent is affiliated with each other Grantor. The Parent and
the other Grantors are engaged in interrelated businesses, and
each Grantor will derive substantial direct and indirect benefit
from extensions of credit under the Credit Agreement. It is a
condition precedent to each Lender's obligation to extend credit
under the Credit Agreement that the Grantors shall have executed
and delivered this Agreement to the Administrative Agent for the
ratable benefit of all the Lenders.
In consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to extend credit thereunder,
each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1 DEFINITIONS.
1.1 Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement, and the following
terms are used herein as defined in the UCC: Accounts,
Certificated Security, Commercial Tort Claims, Deposit Accounts,
Documents, Electronic Chattel Paper, Equipment, Farm Products,
Goods, Health Care Insurance Receivables, Instruments, Inventory,
Leases, Letter-of-Credit Rights, Money, Payment Intangibles,
Supporting Obligations, and Tangible Chattel Paper.
1.2 When used herein the following terms shall
have the following meanings:
Assigned Agreements means (i) the Agreement and Plan of
Merger, dated as of June 25, 2004, by and among the Parent, its
wholly-owned subsidiary, Midlothian Holdings LLC, a Delaware
limited liability company ("Merger Sub") and Centrum Acquisition,
Inc., a Delaware corporation (the "Target"), as amended by the
First Amendment to Agreement and Plan of Merger, dated as of
August 23, 2004, among the Parent, Merger Sub and the Target,
(ii) the Indemnity Agreement dated as of June 25, 2004 by and
among ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
Merger Sub and the Parent, (iii) the First Amendment Agreement
dated as of June 25, 2004 by and among ▇▇▇▇ ▇▇▇▇▇▇, an individual
and resident of the State of Nevada, Ayes ▇▇▇▇ ▇▇▇▇▇▇, an
individual and wife of ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, and individual
and resident of the State of Nevada, the Target, the Parent and
the Merger Sub; (iv) Stock Pledge and Escrow Agreement, dated as
of the date hereof, by and among the Parent, Midlothian, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ and JPMorgan
Chase Bank, N.A., as escrow agent, and (v) Escrow Agreement,
dated as of the date hereof, by
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and among Parent, Merger Sub, the Target, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ Amndani and ▇▇▇▇ ▇▇▇▇▇▇▇ and JPMorgan Chase Bank, N.A., as
escrow agent.
Agreement has the meaning set forth in the preamble hereto.
Chattel Paper means all "chattel paper" as such term is
defined in Section 9-102(a)(11) of the UCC and, in any event,
including with respect to any Grantor, all Electronic Chattel
Paper and Tangible Chattel Paper.
Collateral means (a) all of the personal property now owned
or at any time hereafter acquired by any Grantor or in which any
Grantor now has or at any time in the future may acquire any
right, title or interest, including all of each Grantor's
Accounts, Chattel Paper, Commercial Tort Claims, Deposit
Accounts, Documents, Equipment, Fixtures, General Intangibles,
Health Care Insurance Receivables, Farm Products, Goods,
Instruments, Intellectual Property, Inventory, Investment
Property, Leases, Letter-of-Credit Rights, Money, Supporting
Obligations and Identified Claims and Pledged Equity, (b) all
books and records pertaining to any of the foregoing, (c) all
Proceeds and products of any of the foregoing, and (d) all
collateral security and guaranties given by any Person with
respect to any of the foregoing. 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.
Contract Rights means all of the Grantors' rights and
remedies with respect to the Assigned Agreements.
Copyrights means 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 those listed on Schedule 5, all
registrations and recordings thereof, and all applications in
connection therewith, including all registrations, recordings and
applications in the United States Copyright Office, and the right
to obtain all renewals of any of the foregoing.
Copyright Licenses means all written agreements naming any
Grantor as licensor or licensee, including those listed on
Schedule 5, granting any right under any Copyright, including the
grant of rights to manufacture, distribute, exploit and sell
materials derived from any Copyright.
Credit Agreement means the Credit Agreement of even date
herewith among the Parent, the other Grantors, the Lenders and
the Administrative Agent, as amended, supplemented, restated or
otherwise modified from time to time.
Excluded Property means (a) any permit, lease, license,
contract or other agreement held by any Grantor or any contract
or agreement to which any Grantor is a party (including any
rights thereunder) that validly prohibits the creation by such
Grantor of a security interest therein or under the terms of
which the creation of a security interest therein shall
constitute or result (i) in the abandonment, invalidation or
unenforceability of any right, title or interest of any Grantor
therein or (ii) in a breach or termination pursuant to the terms
of, or a default under, any such lease, license, contract,
property rights or agreement (other than any such permit, lease,
license, contract or other agreement, the terms of which
prohibiting creation of a security interest or
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having the result described in clauses (i) and (ii) above would
be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408
or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable law (including
the Bankruptcy Code) or principles of equity); provided, however,
that any such Grantor shall make its best efforts to receive the
consent of such contracting party for the assignment of any
material permit, lease, license, contract or other agreement to
the Administrative Agent, upon the request of the Administrative
Agent; (b) any permit, lease, license, contract or other
agreement held by any Grantor to the extent that any requirement
of law applicable thereto prohibits the creation of a security
interest therein (other than any such permit, lease, license,
contract or other agreement, to the extent that any requirement
of law applicable thereto prohibiting the creation of a security
interest therein would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any
successor provision or provisions) of any relevant jurisdiction
or any other applicable law (including the Bankruptcy Code) or
principles of equity); (c) Equipment owned by any Grantor on the
date hereof or hereafter acquired that is subject to a Lien
securing a purchase money obligation or obligation under a
Capital Lease permitted to be incurred pursuant to the provisions
of the Credit Agreement if the contract or other agreement in
which such Lien is granted (or the documentation providing for
such purchase money obligation or obligation under a Capital
Lease) validly prohibits the creation of any other Lien on such
Equipment; and (d) equity interests in foreign Subsidiaries;
provided, however, that in each case described in clauses (a),
(b) and (c) of this definition, such property shall constitute
"Excluded Property" only to the extent and for so long as such
permit, lease, license, contract or other agreement or
Requirement of Law applicable thereto validly prohibits the
creation of a Lien on such property in favor of either
Administrative Agent and, upon the termination of such
prohibition (howsoever occurring), such property shall cease to
constitute "Excluded Property."
Fixtures means all of the following, whether now owned or
hereafter acquired by a Grantor: plant fixtures; business
fixtures; other fixtures and storage facilities, wherever
located; and all additions and accessories thereto and
replacements therefor.
General Intangibles means all "general intangibles" as such
term is defined in Section 9-102(a)(42) of the UCC and, in any
event, including with respect to any Grantor, all Payment
Intangibles, all contracts and Contract Rights (including all
Assigned Agreements and Target Undertakings), 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 from time to time may be
amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of such Grantor to receive moneys due
and to become due to it thereunder or in connection therewith,
(b) all rights of such Grantor to damages arising thereunder and
(c) all rights of such Grantor to perform and to exercise all
remedies thereunder; provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such
Grantor of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become due
under any such Payment Intangible, contract, agreement,
instrument or indenture.
Grantor has the meaning set forth in the preamble hereto.
Identified Claims means the Commercial Tort Claims described
on Schedule 7 as such schedule shall be supplemented from time to
time.
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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 the Copyrights, the
Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses, and all rights to ▇▇▇ at
law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages
therefrom.
Intercompany Note means any promissory note evidencing loans
made by any Grantor to any other Grantor.
Investment Property means the collective reference to (a)
all "investment property" as such term is defined in Section 9-
102(a)(49) of the UCC (other than the equity interest of any
foreign Subsidiary excluded from the definition of Pledged
Equity), (b) all "financial assets" as such term is defined in
Section 8-102(a)(9) of the UCC, and (c) whether or not
constituting "investment property" as so defined, all Pledged
Notes and all Pledged Equity.
Issuers means the collective reference to each issuer of any
Investment Property.
Paid in Full means (a) the payment in full in cash and
performance of all Secured Obligations, (b) the termination of
all Commitments and (c) either (i) the cancellation and return to
the Administrative Agent of all Letters of Credit or (ii) the
cash collateralization of all Letters of Credit in accordance
with the Credit Agreement.
Parent has the meaning set forth in the preamble hereto.
Patents means (a) 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 any of the foregoing referred to in Schedule
5, (b) all applications for letters patent of the United States
or any other country and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing
referred to in Schedule 5, and (c) all rights to obtain any
reissues or extensions of the foregoing.
Patent Licenses means all agreements, whether written or
oral, providing for the grant by or to any Grantor of any right
to manufacture, use or sell any invention covered in whole or in
part by a Patent, including any of the foregoing referred to in
Schedule 5.
Payments has the meaning set forth in Section 2.2 hereto.
Pledged Equity means the equity interests listed on Schedule
1, together with any other equity interests, certificates,
options 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;
provided that in no event shall any equity interests of any
foreign Subsidiary be included in the definition of Pledged
Equity.
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Pledged Notes means all promissory notes listed on Schedule
1, 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).
Pro Rata Share has the meaning ascribed to such term in sub-
part (c) of the definition of "Pro Rata Share" set forth in the
Credit Agreement.
Proceeds means all "proceeds" as such term is defined in
Section 9-102(a)(64) of the UCC and, in any event, shall include
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 any Accounts).
Secured Obligations means, individually, with respect to
each Grantor, all Obligations of such Grantor, and collectively,
with respect to all Grantors, all Obligations of all Grantors.
Securities Act means the Securities Act of 1933, as amended.
Target Undertakings means, collectively, all
representations, warranties, covenants and agreements in favor of
any Grantor, and all indemnifications for the benefit of any
Grantor relating thereto, pursuant to the Assigned Agreements.
Trademarks means (a) all trademarks, trade names, corporate
names, the company names, business names, fictitious business
names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State
thereof or any other country or any political subdivision
thereof, or otherwise, and all common-law rights related thereto,
including any of the foregoing referred to in Schedule 5, and (b)
the right to obtain all renewals thereof.
Trademark Licenses means, collectively, each agreement,
whether written or oral, providing for the grant by or to any
Grantor of any right to use any Trademark, including any of the
foregoing referred to in Schedule 5.
UCC means the Uniform Commercial Code as in effect on the
date hereof and from time to time in the State of Illinois,
provided that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of the
security interests in any Collateral or the availability of any
remedy hereunder is governed by the Uniform Commercial Code as in
effect on or after the date hereof in any other jurisdiction,
"UCC" means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or
availability of such remedy.
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SECTION 2 GRANT OF SECURITY INTEREST.
2.1 Grant. Each Grantor hereby assigns and
transfers to the Administrative Agent, and hereby grants to the
Administrative Agent, for the ratable benefit of the Lenders and
(to the extent provided herein) their Affiliates, a continuing
security interest in all of its Collateral, as collateral
security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor's Obligations.
Notwithstanding anything to the contrary contained in
this Section 2, the security interest created by this Agreement
shall not extend to any Excluded Property. The Grantors shall
from time to time at the request of the Administrative Agent give
written notice to the Administrative Agent identifying in
reasonable detail the Excluded Property (and stating in such
notice that such property constitutes "Excluded Property") and
shall provide to the Administrative Agent such other information
regarding the Excluded Property as the Administrative Agent may
reasonably request and (ii) from and after the Closing Date, no
Grantor shall permit to become effective in any document
creating, governing or providing for any permit, lease or
license, a provision that would prohibit the creation of a Lien
on such permit, lease or license in favor of the Administrative
Agent unless such Grantor believes, in its reasonable judgment,
that such prohibition is usual and customary in transactions of
such type and is otherwise permitted by the Credit Agreement.
2.2 Collateral Assignment of Rights under the
Assigned Agreements. Each Grantor hereby irrevocably authorizes
and empowers the Administrative Agent or its agents, in their
sole discretion, to assert, either directly or on behalf of any
Grantor, at any time that an Event of Default is in existence,
any claims any Grantor may from time to time have against a party
with which such Grantor has a contractual relationship pursuant
to an Assigned Agreement (a "Contracting Party") with respect to
any and all of the Contract Rights or with respect to any and all
payments or other obligations due from such Contracting Party or
any of its affiliates to the Parent under or pursuant to the
Assigned Agreement ("Payments"), and to receive and collect any
damages, awards and other monies resulting therefrom and to apply
the same on account of the Secured Obligations. After the
occurrence of any Event of Default, the Administrative Agent may
provide notice to any Contracting Party that all Payments shall
be made to or at the direction of the Administrative Agent for so
long as such Event of Default shall be continuing; provided,
however, that upon a termination or waiver of such Event of
Default the Administrative Agent shall promptly notify the
Contracting Party that all Payments shall, from that point
forward, be made to the Grantor. Each Grantor hereby irrevocably
makes, constitutes and appoints the Administrative Agent (and all
officers, employees, or agents designated by the Administrative
Agent) as such Grantor's true and lawful attorney (and agent-in-
fact) for the purpose of enabling the Administrative Agent or its
agents to assert and collect such claims and to apply such monies
in the manner set forth hereinabove.
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 Co-
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Borrowers thereunder, each Grantor jointly and severally hereby
represents and warrants to the Administrative Agent and each
Lender that:
3.1 Title; No Other Liens. Except for Permitted
Liens, the Grantors own 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 filings evidencing Permitted Liens and filings for which
termination statements have been delivered to the Administrative
Agent.
3.2 Perfected First Priority Liens. The security
interests granted pursuant to this Agreement (a) upon completion
of the filings and other actions specified on Schedule 2 (which,
in the case of all filings and other documents referred to on
Schedule 2, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected
security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for each Grantor's Obligations, enforceable
in accordance with the terms hereof against all creditors of each
Grantor and any Persons purporting to purchase any Collateral
from each Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for Permitted
Liens for which priority is accorded under applicable law. The
filings and other actions specified on Schedule 2 constitute all
of the filings and other actions necessary to perfect all
security interests granted hereunder.
3.3 Grantor Information. On the date hereof,
sets forth (a) each Grantor's jurisdiction of organization, (b)
the location of each Grantor's chief executive office, (c) each
Grantor's exact legal name as it appears on its organizational
documents and (d) each Grantor's organizational identification
number (to the extent a Grantor is organized in a jurisdiction
which assigns such numbers) and federal employer identification
number.
3.4 Collateral Locations. On the date hereof,
Schedule 4 sets forth (a) each place of business of each Grantor
(including its chief executive office), (b) all locations where
all Inventory and the Equipment owned by each Grantor is kept,
except with respect to Inventory and Equipment with a fair market
value of less than $50,000 (in the aggregate for all Grantors)
which may be located at other locations and (c) whether each such
Collateral location and place of business (including each
Grantor's chief executive office) is owned or leased (and if
leased, specifies the complete name and notice address of each
lessor). No Collateral is located outside the United States or
in the possession of any lessor, bailee, warehouseman or
consignee, except as indicated on Schedule 4.
3.5 Certain Property. None of the Collateral
constitutes, or is the Proceeds of, (a) Farm Products, (b) Health
Care Insurance Receivables or (c) vessels, aircraft or any other
property subject to any certificate of title or other
registration statute of the United States, any State or other
jurisdiction, except for personal vehicles owned by the Grantors
and used by employees of the Grantors in the ordinary course of
business with an aggregate fair market value of less than $50,000
(in the aggregate for all Grantors).
3.6 Investment Property. (a) The Pledged Equity
pledged by each Grantor hereunder constitute all the issued and
outstanding equity interests of each Issuer owned by such
Grantor.
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(b) All of the Pledged Equity has been duly and
validly issued and is fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the
legal, valid and binding obligation of the obligor with respect
thereto, enforceable in accordance with its terms (subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing).
(d) Schedule 1 lists all Investment Property
owned by each Grantor. Each 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
Permitted Liens.
3.7 Receivables. (a) No material 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) No obligor on any Receivable is a
governmental authority.
(c) The amounts represented by such Grantor to
the Lenders from time to time as owing to such Grantor in respect
of the Receivables (to the extent such representations are
required by any of the Loan Documents) will at all such times be
accurate.
3.8 Intellectual Property. (a) Schedule 5 lists
all Intellectual Property owned by such Grantor in its own name
on the date hereof.
(b) On the date hereof, all material Intellectual
Property owned by any Grantor is valid, subsisting, unexpired and
enforceable and has not been abandoned.
(c) Except as set forth in Schedule 5, none of
the material Intellectual Property is the subject of any
licensing or franchise agreement pursuant to which such Grantor
is the licensor or franchisor.
(d) Each Grantor owns and possesses or has a
license or other right to use all Intellectual Property as is
necessary for the conduct of the businesses of such Grantor,
without any infringement upon rights of others which could
reasonably be expected to have a Material Adverse Effect.
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3.9 Depositary and Other Accounts. All
depositary and other accounts maintained by each Grantor are
described on Schedule 6 hereto, which description includes for
each such account the name of the Grantor maintaining such
account, the name, address, telephone and fax numbers of the
financial institution at which such account is maintained, the
account number and the account officer, if any, of such account.
Section 4 COVENANTS.
Each Grantor covenants and agrees with the
Administrative Agent and the Lenders that, from and after the
date of this Agreement until the Secured Obligations shall have
been Paid in Full:
4.1 Delivery of Instruments, Certificated
Securities and Chattel Paper. If any amount payable under or in
connection with any of the Collateral shall be or become
evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper
shall be immediately delivered to the Administrative Agent, duly
indorsed in a manner reasonably satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this
Agreement. In the event that an Unmatured Event of Default or
Event of Default shall have occurred and be continuing, upon the
request of the Administrative Agent, any Instrument, Certificated
Security or Chattel Paper not theretofore delivered to the
Administrative Agent and at such time being held by any Grantor
shall be immediately delivered to the Administrative Agent, duly
indorsed in a manner reasonably satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this
Agreement.
4.2 Maintenance of Perfected Security Interest;
Further Documentation. (a) Such Grantor shall maintain the
security interest created by this Agreement as a perfected
security interest having at least the priority described in
Section 3.2 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the
Administrative Agent and the Lenders from time to time statements
and schedules further identifying and describing the assets and
property 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, 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 (i) filing any financing or
continuation statements under the UCC (or other similar laws) in
effect in any jurisdiction with respect to the security interests
created hereby and (ii) in the case of Investment Property and
any other relevant Collateral, taking any actions necessary to
enable the Administrative Agent to obtain "control" (within the
meaning of the applicable UCC) with respect thereto and (iii) if
requested by the Administrative Agent, delivering, to the extent
permitted by law, any original motor vehicle certificates of
title received by such Grantor from the applicable secretary of
state or other governmental authority after information
reflecting the Administrative Agent's security interest has been
recorded therein.
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4.3 Changes in Locations, Name, etc. Such
Grantor shall not, except upon 30 days' prior written notice to
the Administrative Agent and delivery to the Administrative Agent
of (a) all additional financing statements and other documents
reasonably requested by the Administrative Agent as to the
validity, perfection and priority of the security interests
provided for herein and (b) if applicable, a written supplement
to Schedule 4 showing any additional location at which Inventory
or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to
be kept at a location other than those listed on Schedule 4;
provided, that up to $50,000 (in the aggregate for all Grantors)
in fair market value of any such Inventory and Equipment may be
kept at other locations;
(ii) change its jurisdiction of organization or
the location of its chief executive office from that specified on
Schedule 3 or in any subsequent notice delivered pursuant to this
Section 4.3; or
(iii) change its name, identity or corporate
structure.
4.4 Notices. Such Grantor will advise the
Administrative Agent and the Lenders 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 Liens created hereby.
4.5 Investment Property. (a) If such Grantor
shall become entitled to receive or shall receive any
certificate, option or rights in respect of the equity interests
of any Issuer, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any of the Pledged Equity, or
otherwise in respect thereof, such Grantor shall accept the same
as the agent of the Administrative Agent and the Lenders, hold
the same in trust for the Administrative Agent and the Lenders
and deliver the same forthwith to the Administrative Agent in the
exact form received, duly indorsed by such Grantor to the
Administrative Agent, if required, together with an undated
instrument of transfer covering such certificate duly executed in
blank by such Grantor and with, if the Administrative Agent
reasonably requests, signature guarantied, to be held by the
Administrative Agent, subject to the terms hereof, as additional
Collateral for the Secured Obligations. Upon the occurrence and
during the continuance of an Event of Default, (i) 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 for the Secured Obligations, and (ii) 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 Lien
in favor of the Administrative Agent, be delivered to
10
the Administrative Agent to be held by it hereunder as additional
Collateral for the Secured Obligations. Upon the occurrence and
during the continuance of an Event of Default, 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 Lenders, segregated from other funds of such Grantor, as
additional Collateral for the Secured 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
or interests convertible into or granting the right to purchase
or exchange for any equity interests of any nature of any Issuer,
except, in each case, as permitted by the Credit Agreement, (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) other than, with respect to
Investment Property not constituting Pledged Equity or Pledged
Notes, any such action which is not prohibited 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 Permitted Liens, or (iv) enter into
any agreement or undertaking restricting the right or ability of
such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof,
except, with respect to such Investment Property, shareholders'
agreements entered into by such Grantor with respect to Persons
in which such Grantor maintains an ownership interest of 50% or
less.
(c) In the case of each Grantor which is an
Issuer, such Issuer agrees that (i) it will be bound by the terms
of this Agreement relating to the Investment Property issued by
it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events
described in Section 4.5(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 such Grantor with respect to all actions that
may be required of it pursuant to Section 5.3(c) or 5.7 regarding
the Investment Property issued by it.
4.6 Receivables. (a) Other than in the ordinary
course of business consistent with its past practice and in
amounts which are not material to such Grantor, in addition to
its requirements under the Credit Agreement, such Grantor will
not (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less
than the full amount thereof, (iii) release, wholly or partially,
any Person liable for the payment of any Receivable, (iv) allow
any credit or discount whatsoever on any Receivable or (v) amend,
supplement or modify any Receivable in any manner that could
adversely affect the value thereof.
(b) Such Grantor will deliver to the
Administrative Agent a copy of each material demand, notice or
document received by it that questions or calls into doubt the
validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables for all Grantors.
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4.7 Intellectual Property. (a) Such Grantor
(either itself or through licensees) will (i) continue to use
each Trademark material to its business in order to maintain such
Trademark in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past or improve 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, (iv)
not adopt or use any ▇▇▇▇ which is confusingly similar or a
colorable imitation of such Trademark unless the Administrative
Agent, for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such ▇▇▇▇ pursuant to this
Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any
act whereby such Trademark may become invalidated or
unenforceable in any way.
(b) Such Grantor (either itself or through
licensees) will not do any act, or omit to do any act, whereby
any Patent material to its business may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through
licensees) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any
act whereby any material portion of such Copyrights may become
invalidated or otherwise unenforceable. Such Grantor will not
(either itself or through licensees) do any act whereby any
material portion of such Copyrights may fall into the public
domain.
(d) Such Grantor (either itself or through
licensees) will not do any act that knowingly uses any
Intellectual Property material to its business to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative
Agent and the Lenders immediately if it knows, or has reason to
know, that any application or registration relating to any
material Intellectual Property may become forfeited, abandoned
or dedicated to the public, or of any adverse determination or
development (including the institution of, or any such
determination or development in, any proceeding before 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 a Patent or an application for the registration
of a Trademark with the United States Patent and Trademark
Office, or file an application for the registration of a
Copyright with 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 concurrently with the next delivery of
financial statements of the Parent pursuant to Section 10.1 of
the Credit Agreement. Upon the request of the Administrative
Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative
Agent's and the Lenders' security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby.
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(g) Such Grantor will take all reasonable and
necessary steps to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each
registration of all material Intellectual Property owned by it,
as commercially reasonable.
(h) In the event that any material Intellectual
Property is infringed upon or 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, to
the extent, in its reasonable judgment, such Grantor determines
it appropriate under the circumstances, ▇▇▇ for infringement,
misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
(i) Upon the occurrence and during the
continuance of an Event of Default, Administrative Agent is
hereby granted a license to use, without charge, any Intellectual
Property, as it pertains to any Collateral, in completing,
advertising for sale, and selling any Collateral and Grantor's
rights under all licenses and all franchise agreements shall
insure to the Administrative Agent's benefit.
4.8 Target Undertakings.
(a) Each Grantor shall keep the Administrative
Agent informed of all circumstances bearing upon any potential
claim under or with respect to the Assigned Agreements and the
Target Undertakings and such Grantor shall not, without the prior
written consent of the Administrative Agent, (i) waive any of its
rights or remedies under any Assigned Agreement with respect to
any of the Target Undertakings in excess of $50,000, (ii) settle,
compromise or offset any amount payable by the Target to such
Grantor under any Assigned Agreement in excess of $50,000 or
(iii) amend or otherwise modify any Assigned Agreement in any
manner which is adverse to the interests of the Administrative
Agent or any Lender.
(b) Each Grantor shall perform and observe all
the terms and conditions of each Assigned Agreement to be
performed by it, maintain each Assigned Agreement in full force
and effect, enforce each Assigned Agreement in accordance with
its terms and take all such action to such end as may from time
to time be reasonably requested by the Administrative Agent.
(c) Anything herein to the contrary
notwithstanding, (i) each applicable Grantor shall remain liable
under each Assigned Agreement to the extent set forth therein to
perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (ii) the
exercise by the Administrative Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or
obligations under any Assigned Agreement and (iii) neither the
Administrative Agent nor any other Lender shall have any
obligation or liability under any Assigned Agreement by reason of
this Agreement, nor shall the Administrative Agent or any other
Lender be obligated to perform any of the obligations or duties
of any Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
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4.9 Depositary and Other Deposit Accounts.
(a) No Grantor maintains any depositary or other
deposit accounts (the "Deposit Accounts") with any bank (the
"Deposit Account Banks") other than those listed in Schedule 6.
Each Grantor hereby authorizes each Deposit Account Bank to
provide the Administrative Agent with such information with
respect to the Deposit Accounts as the Administrative Agent may
from time to time reasonably request, and each Grantor hereby
consents to such information being provided to the Administrative
Agent. Each Grantor will cause each Deposit Account Bank to
enter into a bank agency or other similar agreement with the
Administrative Agent and such Grantor, in the form attached
hereto as Annex I (a "Deposit Account Control Agreement") and
otherwise in substance satisfactory to the Administrative Agent,
in order to give the Administrative Agent "control" (as defined
in the UCC) of such account. Each Grantor shall direct all
Account Debtors to make all payments on the Accounts directly to
a the applicable Deposit Account maintained with the applicable
Deposit Account Bank.
(b) No Grantor shall open any depositary or other
deposit accounts unless (i) such Grantor shall have given the
Administrative Agent 10 days' prior written notice of its
intention to open any such new deposit accounts; (ii) such
Grantor shall deliver to the Administrative Agent a revised
version of Schedule 6, showing any changes thereto within 5 days
of any such change; and (iii) shall cause such Grantor to enter
into a Deposit Account Control Agreement in the form attached
hereto as Annex I and otherwise satisfactory to the
Administrative Agent. No Grantor shall close any Deposit
Account maintained with a Deposit Account Bank without the prior
written consent of the Administrative Agent.
(c) If any Grantor or any director, officer,
employee, agent of such Grantor, or any other Person acting for
or in concert with such Grantor shall receive any monies, checks,
notes, drafts or other payments relating to or as proceeds of
Accounts or other Collateral, such Grantor and each such Person
shall receive all such items in trust for, and as the sole and
exclusive property of, the Administrative Agent and the Lenders
and, promptly upon receipt thereof, shall remit the same (or
cause the same to be remitted) in kind to a Deposit Account.
(d) So long as no Event of Default shall have
occurred and be continuing, the Grantors may draw checks on, and
otherwise withdraw amounts from a Deposit Account maintained with
a Deposit Account Bank in such amounts as may be required in the
ordinary course of business or as permitted under the Credit
Agreement, including, without limitation, to pay or prepay Debt
(as defined in the Credit Agreement) outstanding under the Loan
Documents (as defined in the Credit Agreement). If an Event of
Default shall have occurred and be continuing, the Administrative
Agent may, at any time and without notice to, or consent from,
any Grantor, order any Deposit Account Bank, pursuant to a
Deposit Account Control Agreement, to transfer, or direct the
transfer of, funds from any Deposit Account maintained at such
Deposit Account Bank to satisfy the Grantors' obligations under
the Loan Documents (as defined in the Credit Agreement).
(e) For the purpose of this section, each Grantor
irrevocably hereby makes, constitutes and appoints the
Administrative Agent (and all Persons designated by the
Administrative Agent for that purpose) as such Grantor's true and
lawful attorney and agent-in-
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fact (i) to endorse such Grantor's name upon said items of
payment and/or proceeds of Collateral and upon any Chattel Paper,
document, Instrument, invoice or similar document or agreement
relating to any Account of the such Grantor or goods pertaining
thereto; (ii) to take control in any manner of any item of
payment or proceeds thereof; and (iii) to have access to any lock
box or postal box into which any of such Grantor's mail is
deposited, and open and process all mail addressed to the such
Grantor and deposited therein.
4.10 Other Matters.
(a) If any Grantor shall cause to be delivered
Inventory or other property in excess of $50,000 in fair market
value to any bailee after the Closing Date, such Grantor shall
use reasonable efforts to cause such bailee to sign a Collateral
Access Agreement. Such requirement may be waived at the option
of the Administrative Agent. If any Grantor shall lease any real
property or facilities and the value of property of such Grantor
located at such leased real property is in excess of $50,000 in
fair market value after the Closing Date, such Grantor shall use
reasonable efforts to cause the landlord in respect of such
leased property or facilities to sign a Collateral Access
Agreement. Such requirement may be waived at the option of the
Administrative Agent.
(b) Each Grantor authorizes the Administrative
Agent to, at any time and from time to time, file financing
statements, continuation statements, and amendments thereto that
describe the Collateral as "all assets" of each Grantor, or words
of similar effect, and which contain any other information
required pursuant to the UCC for the sufficiency of filing office
acceptance of any financing statement, continuation statement, or
amendment, and each Grantor agrees to furnish any such
information to the Administrative Agent promptly upon request.
Any such financing statement, continuation statement, or
amendment may be signed by the Administrative Agent on behalf of
any Grantor and may be filed at any time in any jurisdiction.
(c) Each Grantor shall, at any time and from time
and to time, take such steps as the Administrative Agent may
reasonably request for the Administrative Agent (i) to obtain an
acknowledgement, in form and substance reasonably satisfactory to
the Administrative Agent, of any bailee having possession of any
of the Collateral, stating that the bailee holds such Collateral
for the Administrative Agent, (ii) to obtain "control" of any
letter-of-credit rights, or electronic chattel paper (as such
terms are defined by the UCC with corresponding provisions
thereof defining what constitutes "control" for such items of
Collateral), with any agreements establishing control to be in
form and substance reasonably satisfactory to the Administrative
Agent, and (iii) otherwise to insure the continued perfection and
priority of the Administrative Agent's security interest in any
of the Collateral and of the preservation of its rights therein.
If any Grantor shall at any time, acquire a "commercial tort
claim" (as such term is defined in the UCC) in excess of $50,000,
such Grantor shall promptly notify the Administrative Agent
thereof in writing and supplement Schedule 7, therein providing a
reasonable description and summary thereof, and upon delivery
thereof to the Administrative Agent, such Grantor shall be deemed
to thereby grant to the Administrative Agent (and such Grantor
hereby grants to the Administrative Agent) a security interest
and lien in and to such commercial tort claim and all proceeds
thereof, all upon the terms of and governed by this Agreement.
15
(d) Without limiting the generality of the
foregoing, if any Grantor at any time holds or acquires an
interest in any electronic chattel paper or any "transferable
record", as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in
16 of the Uniform Electronic Transactions Act as in
effect in any relevant jurisdiction, such Grantor shall promptly
notify the Administrative Agent thereof and, at the request of
the Administrative Agent, shall take such action as the
Administrative Agent may reasonably request to vest in the
Administrative Agent "control" under Section 9-105 of the UCC of
such electronic chattel paper or control under Section 201 of the
federal Electronic Signatures in Global and National Commerce Act
or, as the case may be, 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such
transferable record. The Administrative Agent agrees with the
Grantors that the Administrative Agent will arrange, pursuant to
procedures satisfactory to the Administrative Agent and so long
as such procedures will not result in the Administrative Agent's
loss of control, for the Grantors to make alterations to the
electronic chattel paper or transferable record permitted under
Section 9-105 of the UCC or, as the case may be, Section 201 of
the federal Electronic Signatures in Global and National Commerce
Act or 16 of the Uniform Electronic Transactions Act
for a party in control to make without loss of control, unless an
Event of Default has occurred and is continuing or would occur
after taking into account any action by any Grantor with respect
to such electronic chattel paper or transferable record.
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 and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, agings and
test verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes
each Grantor to collect such Grantor's Receivables, and the
Administrative Agent may curtail or terminate such 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 2
Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative
Agent if required, in a collateral account maintained under the
sole dominion and control of the Administrative Agent, subject to
withdrawal by the Administrative Agent for the account of the
Lenders only as provided in Section 5.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables
shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
16
(c) At any time and from time to time after the
occurrence and during the continuance of an Event of 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 all original
orders, invoices and shipping receipts.
(d) Each Grantor hereby irrevocably authorizes
and empowers the Administrative Agent, in the Administrative
Agent's sole discretion, at any time after the occurrence and
during the continuance of an Event of Default, to assert, either
directly or on behalf of such Grantor, any claim such Grantor may
from time to time have against the sellers under or with respect
to the Assigned Agreements and to receive and collect any and all
damages, awards and other monies resulting therefrom and to apply
the same to the Obligations. Each Grantor hereby irrevocably
makes, constitutes and appoints the Administrative Agent as its
true and lawful attorney in fact for the purpose of enabling the
Administrative Agent to assert and collect such claims and to
apply such monies in the manner set forth above, which
appointment, being coupled with an interest, is irrevocable.
5.2 Communications with Obligors; Grantors Remain
Liable. (a) The Administrative Agent in its own name or in the
name of others may at any time after the occurrence and during
the continuance of an Event of Default communicate with obligors
under the Receivables to verify with them to the Administrative
Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Administrative Agent
at any time after the occurrence and during the continuance of an
Event of Default, each Grantor shall notify obligors on the
Receivables that the Receivables have been assigned to the
Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the
Administrative Agent.
(c) Anything herein to the contrary
notwithstanding, each Grantor shall remain liable in respect of
each of the Receivables to observe and perform all the conditions
and obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall
have any obligation or liability under any Receivable (or any
agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating thereto, nor shall the
Administrative Agent or any Lender be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant
to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to
present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any
time or times.
(d) For the purpose of enabling the
Administrative Agent to exercise rights and remedies under this
Agreement, each Grantor hereby grants to the Administrative
Agent, for the benefit of the Administrative Agent and the
Lenders, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor)
to use, license or
17
sublicense any Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located,
and including in such license access to all media in which any of
the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout
thereof.
5.3 Investment Property. (a) Unless an Event of
Default shall have occurred and be continuing and the
Administrative Agent shall have given notice to the relevant
Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 5.3(b), each Grantor
shall be permitted to receive all cash dividends and
distributions paid in respect of the Pledged Equity and all
payments made in respect of the Pledged Notes, to the extent
permitted in the Credit Agreement, and to exercise all voting and
other rights with respect to the Investment Property; provided,
that no vote shall be cast or other right exercised or action
taken which could impair the Collateral or which would be
inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be
continuing and the Administrative Agent shall give notice of its
intent to exercise such rights to the relevant Grantor or
Grantors, (i) the Administrative Agent shall have the right to
receive any and all cash dividends and 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 and other
rights pertaining to such Investment Property at any meeting of
holders of the equity interests 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 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 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, without any other or
further instructions from such Grantor, and each Grantor agrees
that each Issuer shall be fully protected in so complying and
(ii) unless otherwise expressly permitted hereby, pay any
dividends, distributions or other payments with respect to the
Investment Property directly to the Administrative Agent.
18
5.4 Proceeds to be Turned Over to Administrative
Agent. In addition to the rights of the Administrative Agent and
the Lenders specified in Section 5.1 with respect to payments of
Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by any Grantor consisting of
cash, checks and other cash equivalent items shall be held by
such Grantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the
Administrative Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent
hereunder shall be held by the Administrative Agent in a
collateral account maintained under its sole dominion and
control. All Proceeds, while held by the Administrative Agent in
any collateral account (or by such Grantor in trust for the
Administrative Agent and the Lenders) established pursuant
hereto, shall continue to be held as collateral security for the
Secured Obligations and shall not constitute payment thereof
until applied as provided in Section 5.5.
5.5 Application of Proceeds. At such intervals
as may be agreed upon by the Parent and the Administrative Agent,
or, if an Event of Default shall have occurred and be continuing,
at any time at the Administrative Agent's election, the
Administrative Agent may apply all or any part of Proceeds from
the sale of, or other realization upon, all or any part of the
Collateral in payment of the Secured Obligations in such order as
the Administrative Agent shall determine in its discretion. Any
part of such funds which the Administrative Agent elects not so
to apply and deems not required as collateral security for the
Secured Obligations shall be paid over from time to time by the
Administrative Agent to the applicable Grantor or to whomsoever
may be lawfully entitled to receive the same. Any balance of
such Proceeds remaining after the Secured Obligations shall have
been Paid in Full shall be paid over to the applicable Grantor or
to whomsoever may be lawfully entitled to receive the same. In
the absence of a specific determination by the Administrative
Agent, the Proceeds from the sale of, or other realization upon,
all or any part of the Collateral in payment of the Secured
Obligations shall be applied in the following order:
FIRST, to the payment of all fees, costs, expenses and
indemnities of the Administrative Agent (in its capacity as
such), including Attorney Costs, and any other Secured
Obligations owing to the Administrative Agent in respect of
sums advanced by the Administrative Agent to preserve the
Collateral or to preserve its security interest in the
Collateral, until paid in full;
SECOND, to the payment of all fees, costs, expenses and
indemnities of the Lenders, in its Pro-Rata Share, until
paid in full;
THIRD, to the payment of all of the Secured Obligations
in respect of the Swing Line Loans to the Swing Line Lender,
until paid in full;
FOURTH, to the payment of all of the Secured
Obligations (other than Bank Product Obligations and Hedging
Obligations) consisting of accrued and unpaid interest owing
to any Lender, in its Pro-Rata Share, until paid in full;
19
FIFTH, to the payment of all Secured Obligations (other
than Bank Product Obligations and Hedging Obligations)
consisting of principal owing to any Lender, in its Pro-Rata
Share, until paid in full;
SIXTH, to the payment of the Administrative Agent an
amount equal to all Secured Obligations in respect of
outstanding Letters of Credit to be held as cash collateral
in respect of such obligations;
SEVENTH, to the payment of all Bank Products
Obligations and Hedging Obligations owing to any Lender or
its Affiliates, in its Pro-Rata Share, until paid in full;
EIGHTH, to the payment of all other Secured Obligations
owing to each Lender, in its Pro-Rata Share, until paid in
full; and
NINTH, to the payment of any remaining Proceeds, if
any, to whomever may be lawfully entitled to receive such
amounts.
5.6 UCC and Other Remedies. If an Event of
Default shall occur and be continuing, the Administrative Agent,
on behalf of the Lenders, may exercise, in addition to all other
rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to
the Secured Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law. Without
limiting the generality of the foregoing, the Administrative
Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any
Grantor or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give options to purchase, or
otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange,
broker's board or office of the Administrative Agent or any
Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on
credit or for future delivery with assumption of any credit risk.
The Administrative Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole
or any part of the Collateral so sold, free of any right or
equity of redemption in any Grantor, which right or equity is
hereby waived and released. Each Grantor further agrees, at the
Administrative Agent's request, to assemble the Collateral and
make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall
apply the 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 Lenders hereunder, including Attorney Costs to the
payment in whole or in part of the Secured 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, need the
Administrative Agent account for the surplus, if any, to any
Grantor. To the extent permitted by applicable law, each Grantor
waives all
20
claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
5.7 Registration Rights. (a) If the
Administrative Agent shall determine to exercise its right to
sell any or all of the Pledged Equity pursuant to Section 5.6,
and if in the opinion of the Administrative Agent it is necessary
or advisable to have the Pledged Equity, or that portion thereof
to be sold, registered under the provisions of the Securities
Act, the relevant Grantor will cause the Issuer thereof to (i)
execute and deliver, and cause the directors and officers of such
Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or
advisable to register the Pledged Equity, 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 Equity, 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 Equity, by reason of certain prohibitions
contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which
will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a
view to the distribution or resale thereof. Each Grantor
acknowledges and agrees that any such private sale may result in
prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Administrative Agent shall
be under no obligation to delay a sale of any of the Pledged
Equity for the period of time necessary to permit the Issuer
thereof to register such securities or other interests 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
Equity pursuant to this Section 5.7 valid and binding and in
compliance with applicable law. 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
Lenders, that the Administrative Agent and the Lenders 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
21
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 Waiver; Deficiency. Each Grantor waives and
agrees not to assert any rights or privileges which it may
acquire under Section 9-626 of the UCC. Each Grantor shall
remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the
Secured Obligations in full and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to
collect such deficiency.
SECTION 6 THE ADMINISTRATIVE AGENT.
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, 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 and at the expense of such Grantor, without
notice to or assent by such Grantor, to do any or all of the
following:
(i) in the name of such Grantor or its own name,
or otherwise, take possession of and indorse and collect any
checks, drafts, notes, acceptances or other instruments for
the payment of moneys due under any Receivable or with
respect to any other Collateral and file any claim or take
any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the 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 security interest in such
Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented
thereby;
(iii) discharge Liens levied or placed on or
threatened against the Collateral, and effect any repairs or
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) (1) direct any party liable for any payment
under any of the Collateral to make payment of any and all
moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall
direct; (2) ask or demand for, collect, and receive payment
of and receipt for, any and all moneys, claims and other
22
amounts due or to become due at any time in respect of or
arising out of any Collateral; (3) sign and indorse any
invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection
with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or
proceeding brought against such Grantor with respect to any
Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark,
throughout the world for such term or terms, on such
conditions, and in such manner, as the Administrative Agent
shall in its sole discretion determine; (8) vote any right
or interest with respect to any Investment Property; (9)
order good standing certificates and conduct lien searches
in respect of such jurisdictions or offices as the
Administrative Agent may deem appropriate; and (10)
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 security interests therein and to
effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
Anything in this Section 6.1(a) to the contrary
notwithstanding, the Administrative Agent agrees that it will not
exercise any rights under the power of attorney provided for in
this Section 6.1(a) unless an Event of Default shall have
occurred and be continuing.
(b) If any Grantor fails to perform or comply
with any of its agreements contained herein, the Administrative
Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance,
with such agreement.
(c) Each Grantor hereby ratifies all that such
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 Duty of Administrative Agent. The
Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its
possession shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own
account. Neither the Administrative Agent or any Lender nor any
of their respective officers, directors, employees or agents
shall be liable for any 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 Lenders hereunder are solely to protect the
Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Administrative
Agent or any Lender to exercise any such powers.
23
The Administrative Agent and the Lenders shall be accountable
only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to
any Grantor for any act or failure to act hereunder.
6.3 Authority of Administrative Agent. Each
Grantor acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any
action taken by the Administrative Agent or the exercise or non-
exercise by the Administrative Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit
Agreement and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the
Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the
Lenders with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 7 MISCELLANEOUS.
7.1 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 15.1 of
the Credit Agreement.
7.2 Notices. All notices, requests and demands
to or upon the Administrative Agent or any Grantor hereunder
shall be addressed to the Parent and effected in the manner
provided for in Section 15.3 of the Credit Agreement and each
Grantor hereby appoints the Parent as its agent to receive
notices hereunder.
7.3 Indemnification by Grantors. THE GRANTORS,
JOINTLY AND SEVERALLY, HEREBY AGREE TO INDEMNIFY, EXONERATE AND
HOLD EACH LENDER PARTY FREE AND HARMLESS FROM AND AGAINST ANY AND
ALL INDEMNIFIED LIABILITIES, INCURRED BY THE LENDER PARTIES OR
ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A)
ANY TENDER OFFER, MERGER, PURCHASE OF EQUITY INTERESTS, PURCHASE
OF ASSETS (INCLUDING THE RELATED TRANSACTIONS) OR OTHER SIMILAR
TRANSACTION FINANCED OR PROPOSED TO BE FINANCED IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE
LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION, DISCHARGE,
TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY ANY GRANTOR, (C) ANY
VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO CONDITIONS AT
ANY PROPERTY OWNED OR LEASED BY ANY GRANTOR OR THE OPERATIONS
CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION
OF OFFSITE LOCATIONS AT WHICH ANY LOAN PARTY OR THEIR RESPECTIVE
PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED
OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY,
PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT BY
24
ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL,
NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION. IF
AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE
UNENFORCEABLE FOR ANY REASON, EACH GRANTOR HEREBY AGREES TO MAKE
THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH
OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER
APPLICABLE LAW. ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION 7.3
SHALL SURVIVE REPAYMENT OF ALL (AND SHALL BE) SECURED OBLIGATIONS
(AND TERMINATION OF ALL COMMITMENTS UNDER THE CREDIT AGREEMENT),
ANY FORECLOSURE UNDER, OR ANY MODIFICATION, RELEASE OR DISCHARGE
OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF
THIS AGREEMENT.
7.4 Enforcement Expenses. (a) Each Grantor
agrees, on a joint and several basis, to pay or reimburse on
demand the Administrative Agent for all reasonable out-of-pocket
costs and expenses (including Attorney Costs) incurred in
enforcing or preserving any rights under this Agreement and the
other Loan Documents.
(b) Each Grantor agrees to pay, and to save the
Administrative Agent and the Lenders 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) The agreements in this Section 7.4 shall
survive repayment of all (and shall be) Secured Obligations (and
termination of all commitments under the Credit Agreement), any
foreclosure under, or any modification, release or discharge of,
any or all of the Collateral Documents and termination of this
Agreement.
7.5 Captions. Section captions used in this
Agreement are for convenience only and shall not affect the
construction of this Agreement.
7.6 Nature of Remedies. All Secured Obligations
of each Grantor and rights of the Administrative Agent and the
Lenders expressed herein or in any other Loan Document shall be
in addition to and not in limitation of those provided by
applicable law. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
7.7 Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts and each such counterpart shall be
deemed to be an original, but all such counterparts shall
together constitute but one and the same Agreement. Receipt by
telecopy of any executed signature page to this
25
Agreement or any other Loan Document shall constitute effective
delivery of such signature page.
7.8 Severability. The illegality or
unenforceability of any provision of this Agreement or any
instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement
required hereunder.
7.9 Entire Agreement. This Agreement, together
with the other Loan Documents, embodies the entire agreement and
understanding among the parties hereto and supersedes all prior
or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and
thereof and any prior arrangements made with respect to the
payment by any Grantor of (or any indemnification for) any fees,
costs or expenses payable to or incurred (or to be incurred) by
or on behalf of the Administrative Agent or the Lenders.
7.10 Successors; Assigns. This Agreement shall be
binding upon Grantors, the Lenders and the Administrative Agent
and their respective successors and assigns, and shall inure to
the benefit of Grantors, Lenders and the Administrative Agent and
the successors and assigns of the Lenders and the Administrative
Agent. No other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan
Documents. No Grantor may assign or transfer any of its rights
or Obligations under this Agreement without the prior written
consent of the Administrative Agent.
7.11 Governing Law. THIS AGREEMENT SHALL BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
7.12 Forum Selection; Consent to Jurisdiction.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.
EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS BY REGISTERED MAIL, RETURN RECEIPT CONFIRMING DELIVERY
REQUIRED, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. EACH GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
26
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
7.13 Waiver of Jury Trial. EACH GRANTOR, THE
ADMINISTRATIVE AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
7.14 Set-off. Each Grantor agrees that the
Administrative Agent and each Lender have all rights of set-off
and bankers' lien provided by applicable law, and in addition
thereto, each Grantor agrees that at any time any Event of
Default exists, the Administrative Agent and each Lender may
apply to the payment of any Secured Obligations, whether or not
then due, any and all balances, credits, deposits, accounts or
moneys of such Grantor then or thereafter with the Administrative
Agent or such Lender.
7.15 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
Lender 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 Lenders, on the other hand, in
connection herewith or therewith is solely that of debtor
and creditor; and
(c) no joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the
transactions contemplated hereby among the Lenders or among
the Grantors and the Lenders.
7.16 Additional Grantors. Each Loan Party that is
required to become a party to this Agreement pursuant to Section
10.10 of the Credit Agreement shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such
Loan Party of a joinder agreement in the form of Annex II hereto.
7.17 Releases. (a) At such time as the Secured
Obligations have been Paid in Full, the Collateral shall be
released from the Liens created hereby, and this Agreement and
all obligations (other than those expressly stated to survive
such termination) of the 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 Grantors any Collateral
held by the Administrative Agent hereunder, and execute and
deliver to the Grantors such documents as the Grantors shall
reasonably request to evidence such termination and release.
27
(b) If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Grantor in a
transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such
Grantor, shall execute and deliver to such Grantor all releases
or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral. At the
request and sole expense of the Parent, a Grantor (other than the
Parent) shall be released from its obligations hereunder in the
event that all the equity interests of such Grantor shall be
sold, transferred or otherwise disposed of in a transaction
permitted by the Credit Agreement; provided that the Parent shall
have delivered to the Administrative Agent, with reasonable
notice prior to the date of the proposed release, a written
request for release identifying the relevant 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 Parent stating
that such transaction is in compliance with the Credit Agreement
and the other Loan Documents.
7.18 Obligations and Liens Absolute and
Unconditional. Each Grantor understands and agrees that the
obligations of each Grantor under this Agreement shall be
construed as a continuing, absolute and unconditional without
regard to (a) the validity or enforceability of any Loan
Document, any of the Secured Obligations or any other collateral
security therefor or guaranty or right of offset with respect
thereto at any time or from time to time held by the
Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by any
Grantor or any other Person against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of any Grantor) which constitutes,
or might be construed to constitute, an equitable or legal
discharge of any Grantor for the Secured Obligations, in
bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder
against any Grantor, the Administrative Agent or any Lender may,
but shall be under no obligation to, make a similar demand on or
otherwise pursue such rights and remedies as it may have against
any other Grantor or any other Person or against any collateral
security or guaranty for the Secured Obligations or any right of
offset with respect thereto, and any failure by the
Administrative Agent or any Lender to make any such demand, to
pursue such other rights or remedies or to collect any payments
from any other Grantor or any other Person or to realize upon any
such collateral security or guaranty or to exercise any such
right of offset, or any release of any other Grantor or any other
Person or any such collateral security, guaranty or right of
offset, shall not relieve any Grantor of any obligation or
liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter
of law, of the Administrative Agent or any Lender against any
Grantor. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
7.19 Reinstatement. This Agreement shall remain
in full force and effect and continue to be effective should any
petition be filed by or against Grantor or any Issuer for
liquidation or reorganization, should Grantor or any Issuer
become insolvent or make an assignment for the benefit of
creditors or should a receiver or trustee be appointed for all or
any significant part of Grantor's or and Issuer's assets, and
shall continue to be effective or be reinstated, as the case may
be, if at any time payment and performance of the Secured
Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as
28
a "voidable preference", "fraudulent conveyance", or otherwise,
all as though such payment or performance had not been made. In
the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Secured Obligations shall be
reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
[signature pages follow]
29
Each of the undersigned has caused this Security
Agreement to be duly executed and delivered as of the date first
above written.
LASALLE BANK NATIONAL ASSOCIATION,
as Agent
By:
------------------------------
Title:
---------------------------
30
▇▇▇▇▇, Inc.
▇▇▇▇▇ Business Forms of Kansas, Inc.
▇▇▇▇▇▇▇▇ Tool and Machine Co.
Admore, Inc.
PFC Products, Inc.
Ennis Acquisitions, Inc.
Northstar Computer Forms, Inc.
General Financial Supply, Inc.
Calibrated Forms Co. Inc.
Crabar/GBF, Inc.
Royal Business Forms, Inc.
Midlothian Holdings LLC (to be renamed Alstyle Apparel LLC)
A and G, Inc.
Alstyle Ensenada LLC
Alstyle Hermosilla LLC
The Great Pumpkin, Inc.
▇▇▇▇▇ USA, LLC
By:
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of each
American Forms I, ▇.▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇ I, L.P.
Texas EBF, ▇.▇.
▇▇▇▇▇ Sales, ▇.▇.
▇▇▇▇▇ Management, L.P.
By: ▇▇▇▇▇, Inc., the sole general partner of each
By:
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
SCHEDULE 1
INVESTMENT PROPERTY
A. PLEDGED EQUITY
Grantor Issuer Pledged Percentage Certificate
(owner of Equity of Issuer (Indicate
Record of Description No.)
such Pledged
Equity)
B. PLEDGED NOTES
Grantor (owner of Issuer Pledged Notes
Record of such Pledged Description
Notes)
C. OTHER INVESTMENT PROPERTY
Grantor Investment Property Description
SCHEDULE 2
FILINGS AND PERFECTION
GRANTOR FILING REQUIREMENT FILING OFFICE
OR OTHER ACTION
SCHEDULE 3
GRANTOR INFORMATION
GRANTOR STATE OF FEIN CHIEF Organizational
(exact legal ORGANIZATION EXECUTIVE ID
name) OFFICE
SCHEDULE 4
A. COLLATERAL LOCATIONS
GRANTOR COLLATERAL COLLATERAL OWNER/LESSOR
LOCATION (IF LEASED)
OR PLACE OF BUSINESS
(INCLUDING CHIEF
EXECUTIVE OFFICE)
B. COLLATERAL IN POSSESSION OF LESSOR,
BAILEE, CONSIGNEE OR WAREHOUSEMAN
GRANTOR COLLATERAL LESSOR/BAILEE/CONSIGNEE/WAREHOUSE
MAN
SCHEDULE 5
INTELLECTUAL PROPERTY
Patents and Patent Licenses
Grantor Patent Patent Date Date
Number Application Patent Patent
Number Issued Applied
Trademarks and Trademark Licenses
Grantor Trademark Trademark Trademark Date of Date of
Number Application Registration Application Registration
Number Number
Copyrights
Grantor Copyright Copyright Copyright Copyright
Title Application Registration Application
Number Number
SCHEDULE 6
DEPOSITARY AND OTHER DEPOSIT ACCOUNTS
GRANTOR FINANCIAL ACCOUNT ACCOUNT CONTACT
INSTITUTION NAME NUMBER INFORMATION
SCHEDULE 7
COMMERCIAL TORT CLAIMS
ANNEX I
FORM OF DEPOSIT ACCOUNT CONTROL AGREEMENT
November , 2004
[Bank]
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Ladies and Gentlemen:
1. ---------------- ("Bank") is advised that LaSalle
Bank National Association, as agent ("Agent") for itself and
various other Lenders ("Lenders") is making, or may in the future
make, loans to [Borrower], a --------- [corporation /limited
liability company/limited partnership] ("Borrower"), with a place
of business at --------------------------, which loans are
secured by substantially all of the assets of Borrower including,
without limitation, the deposit accounts listed on Exhibit A
hereto.
2. Borrower and Bank hereby confirm to Agent that the
deposit accounts listed on Exhibit A constitute all of the
deposit accounts of Borrower at Bank (the "Bank Accounts"). By
its signature below Bank hereby acknowledges the security
interest of Lenders in such Bank Accounts and agrees that it will
comply with all instructions from Agent directing disposition of
the funds in the Bank Accounts without further direction from
Borrower. Prior to written notice from Agent directing the
disposition of such funds, which notice shall not be given by
Agent unless an Event of Default exists under the documents
evidencing the loans to Borrower by Lenders, Borrower may direct
and Bank shall follow the direction of Borrower with respect to
the Bank Accounts. Bank further represents, warrants and
covenants that it has not agreed and will not agree to comply
with the instructions of any other party directing disposition of
the funds in the Bank Accounts. All fees, costs, charges and
expenses related to the Bank Accounts shall be payable by
Borrower and in no event shall Agent or any Lender be charged
therefor. Bank hereby agrees, with knowledge that Lenders'
financing of Borrower will be in reliance hereon, that it will
not exercise or claim any right of setoff, deduction, banker's
lien or any other claim against any deposits made in the Bank
Accounts; provided, that Bank may exercise such setoff,
deduction, banker's lien and other claims solely with respect to
fees, service charges and expenses related to the administration
of such Bank Accounts.
3. Bank shall be fully protected in acting only on
any order or direction by Agent respecting the Bank Accounts
without making any inquiry whatsoever as to Agent's right or
authority to give such order or direction or as to the
application of any payment made pursuant thereto.
4. This Agreement may not be terminated nor may the
Bank Account be closed until sixty (60) days following actual
receipt by Agent of written notice of the proposed termination or
closing. Any additional deposit accounts opened by Borrower at
Bank shall also constitute Bank Accounts subject to the terms
hereof.
[Add signature page.]
ANNEX II
FORM OF JOINDER TO SECURITY AGREEMENT
This JOINDER AGREEMENT (this "Agreement") dated as of [
] is executed by the undersigned for the benefit of LaSalle Bank
National Association, as the Administrative Agent (the
"Administrative Agent") in connection with that certain Security
Agreement dated as of [ ] among the Grantors party thereto
and the Administrative Agent (as amended, restated, supplemented
or modified from time to time, the "Security Agreement").
Capitalized terms not otherwise defined herein are being used
herein as defined in the Security Agreement.
Each Person signatory hereto is required to execute this
Agreement pursuant to Section 7.16 of the Security Agreement.
In consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, each signatory hereby agrees as follows:
1. Each such Person assumes all the obligations of a
Grantor under the Security Agreement and a Co-Borrower under the
terms of the Credit Agreement and agrees that such person or
entity is a Grantor and bound as a Grantor under the terms of
the Security Agreement and as a Co-Borrower under the terms of
the Credit Agreement, as if it had been an original signatory to
such agreements. In furtherance of the foregoing, such Person
hereby assigns, pledges and grants to the Administrative Agent a
security interest in all of its right, title and interest in and
to the Collateral owned thereby to secure the Secured
Obligations.
2. Schedules 1, 2, 3, 4, 5, 6 and 7 of the Security
Agreement are hereby amended to add the information relating to
each such Person set out on Schedules 1, 2, 3, 4, 5, 6 and 7
respectively, hereof. Each such Person hereby makes to the
Administrative Agent the representations and warranties set forth
in the Security Agreement applicable to such Person and the
applicable Collateral and confirms that such representations and
warranties are true and correct after giving effect to such
amendment to such Schedules.
3. In furtherance of its obligations under Section 4.2 of
the Security Agreement, each such Person agrees to deliver to the
Administrative Agent appropriately complete UCC financing
statements naming such person or entity as debtor and the
Administrative Agent as secured party, and describing its
Collateral and such other documentation as the Administrative
Agent (or its successors or assigns) may require to evidence,
protect and perfect the Liens created by the Security Agreement,
as modified hereby. Each such Person acknowledges the
authorizations given to the Administrative Agent under the
Section 4.10(b) of the Security Agreement and otherwise.
4. Each such Person's address for notices under the
Security Agreement shall be the address of the Parent set forth
in the Credit Agreement and each such Person hereby appoints the
Parent as its agent to receive notices hereunder.
5. This Agreement shall be deemed to be part of, and a
modification to, the Security Agreement and shall be governed by
all the terms and provisions of the Security Agreement,
with respect to the modifications intended to be made to such
agreement, which terms are incorporated herein by reference, are
ratified and confirmed and shall continue in full force and
effect as valid and binding agreements of each such person or
entity enforceable against such person or entity. Each such
Person hereby waives notice of the Administrative Agent's
acceptance of this Agreement. Each such Person will deliver an
executed original of this Agreement to the Administrative Agent.
[add signature block for each new Grantor]