EXHIBIT 10.26
SECURITY AGREEMENT
(GUARANTORS)
This SECURITY AGREEMENT (this "Agreement"), is entered into as of
October 7, 2003, is executed and delivered by and among each of the undersigned
Affiliates of ▇▇▇▇▇▇ RESPIRATORY CARE INC., a California corporation
("Borrower") (each such Affiliate individually a "Guarantor", and individually
and collectively, jointly and severally, the "Guarantors") and MW POST ADVISORY
GROUP, LLC, a Delaware limited liability company, as administrative agent for
the Lenders (in such capacity, together with its successors and assigns, if any,
in such capacity, "Agent"), in light of the following:
WHEREAS, Borrower, the Lenders (such Lenders, together with Agent,
individually and collectively, jointly and severally, the "Lender Group"), and
Agent are entering into that certain Loan and Security Agreement of even date
herewith (as amended, restated, modified, renewed or extended from time to time,
the "Loan Agreement");
WHEREAS, each Guarantor has executed that certain General Continuing
Guaranty, of even date herewith, in favor of Agent (the "Guaranty"), respecting
the Obligations of Borrower owing to the Lender Group under the Loan Agreement;
WHEREAS, each Guarantor desires to secure its obligations under the
Loan Documents to which it is party (including the Guaranty) by granting to
Agent, for the benefit of the Lender Group, security interests in the Collateral
as set forth herein; and
WHEREAS, each Guarantor is an Affiliate of Borrower, and will benefit
by virtue of the financial accommodations from the Lender Group to Borrower.
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and each intending
to be bound hereby, Agent and each Guarantor agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. Definitions. All capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement. As used in this Agreement, the following terms shall have the
following definitions:
"Account" means any "account" (as that term is defined in the Code),
and any and all supporting obligations in respect thereof.
"Additional Documents" has the meaning set forth in Section 2.4(c) of
this Agreement.
"Agent" has the meaning set forth in the preamble to this Agreement.
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"Agent's Liens" means the Liens granted by a Guarantor to Agent under
this Agreement or the other Loan Documents to which such Guarantor is a party.
"Agreement" means this Security Agreement and any extensions, riders,
supplements, notes, amendments, or modifications to or in connection with this
Security Agreement.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.
Section 101, et seq.), as amended, and any successor statute.
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Code" means the California Uniform Commercial Code as in effect from
time to time.
"Collateral" means, with respect to each Guarantor, all of such
Guarantor's now owned or hereafter acquired right, title, and interest in and to
each of the following: all of its Accounts; all of its Commercial Tort Claims;
all of its Books; all of its Deposit Accounts; Real Property; all of its
Equipment; all of its General Intangibles; all of its Inventory; all of its
Investment Property (including all securities and Securities Accounts); all of
its Negotiable Collateral; any money or other assets of such Guarantor which now
or hereafter come into the possession, custody, or control of Agent; and the
proceeds and products, whether tangible or intangible, of any of the foregoing,
including proceeds of insurance covering any or all of the Collateral, and any
and all Accounts, Commercial Tort Claims, Books, Deposit Accounts, Real
Property, Equipment, General Intangibles, Inventory, Investment Property,
Negotiable Collateral, money, or other tangible or intangible property resulting
from the sale, exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the proceeds thereof,
but excluding the Excluded Collateral.
"Commercial Tort Claim Assignment" has the meaning set forth in
Section 2.4(b) of this Agreement.
"Commercial Tort Claims" means a commercial tort claim (as that term
is defined in the Code).
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower or a Guarantor, Agent,
and the applicable securities intermediary (with respect to a Securities
Account) or bank (with respect to a Deposit Account) in form and substance
satisfactory to Agent.
"Equipment" means "equipment" (as that term is defined in the Code),
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), tools, parts, and goods (other than
consumer goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.
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"Excluded Collateral" shall have the meaning ascribed to such term in
the Loan Agreement.
"Guarantor" and "Guarantors" have the meanings ascribed to such terms
in the preamble to this Agreement.
"Guarantor's Books" means the applicable Guarantor's now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).
"General Intangibles" means "general intangibles" (as that term is
defined in the Code).
"Guaranty" has the meaning set forth in the recitals to this
Agreement.
"Inventory" means "inventory" (as that term is defined in the Code).
"Investment Property" means "investment property" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"Lender Group" has the meaning set forth in the recitals to this
Agreement.
"Lenders" means, individually and collectively, each of the lenders
identified on the signature pages of the Loan Agreement, and any other person
made a party thereto in accordance with the provisions of Section 14 thereof
(together with their respective successors and assigns).
"Loan Agreement" has the meaning set forth in the recitals to this
Agreement.
"Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
"Secured Obligations" means the Guarantied Obligations, as defined in
the Guaranty.
"Voidable Transfer" has the meaning set forth in Section 11.8 to this
Agreement.
1.2. Code. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.3. Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise
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indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Section, subsection, clause, schedule, and exhibit references are to
this Agreement unless otherwise specified. Any reference in this Agreement or in
any of the other Loan Documents to this Agreement or any of the other Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable. In the event of a direct conflict between the terms
and provisions of this Agreement and the Loan Agreement, it is the intention of
the parties hereto that both such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of the Loan Agreement shall control and
govern; provided, however, that the inclusion herein of additional obligations
on the part of each Guarantor and supplemental rights and remedies in favor of
Agent, in each case in respect of the Collateral, shall not be deemed a conflict
with the Loan Agreement.
1.4. Schedules and Exhibits. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. CREATION OF SECURITY INTEREST.
2.1. Grant of Security Interest. Each Guarantor hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising Collateral to secure prompt repayment of any and all of the
Secured Obligations in accordance with the terms and conditions of the Loan
Documents and to secure prompt performance by each Guarantor of each such
Guarantor's covenants and duties under the Loan Documents. Agent's Liens in and
to the Collateral shall attach to all Collateral without further act on the part
of Agent or any Guarantor. Anything contained in this Agreement or any other
Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, no Guarantor has any authority, express or implied, to dispose of
any item or portion of the Collateral.
2.2. Negotiable Collateral. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Agent determines that perfection or priority of Agent's
security interest is dependent on or enhanced by possession, the applicable
Guarantor, promptly upon the request of Agent, shall endorse and deliver
physical possession of such Negotiable Collateral to Agent.
2.3. Collection of Accounts, General Intangibles, Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
any Guarantor that such Guarantor's Accounts, chattel paper, or General
Intangibles have been assigned to Agent or that Agent has a security interest
therein, or (b) collect such Guarantor's Accounts, chattel paper, or General
Intangibles directly and charge the collection costs and expenses to the Loan
Account. Each Guarantor agrees that it will hold in trust for Agent, as Agent's
trustee, any Collections that
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it receives and promptly will deliver such Collections to Agent in their
original form as received by the applicable Guarantor.
2.4. Filing of Financing Statements; Commercial Tort Claims;
Delivery of Additional Documentation Required.
(a) Each Guarantor authorizes Agent to file any financing statement
necessary or desirable to effectuate the transactions contemplated herein and by
the other Loan Documents, and any continuation statement or amendment with
respect thereto, in any appropriate filing office without the signature of such
Guarantor where permitted by applicable law. Each Guarantor hereby ratifies the
filing of any financing statement filed without the signature of such Guarantor
prior to the date hereof.
(b) If any Guarantor acquires any Commercial Tort Claim after the
date hereof, such Guarantor shall promptly (but in any event within 10 days
after a financial officer of Guarantor having knowledge thereof) deliver to
Agent a written description of such Commercial Tort Claim and shall, upon
request of Agent, promptly deliver a written agreement, in form and substance
satisfactory to Agent, pursuant to which such Guarantor to the extent not
prohibited by law, grants a security interest in such Commercial Tort Claim to
Agent, as security for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent each Guarantor shall
execute and deliver to Agent, any and all financing statements, original
financing statements in lieu of continuation statements, fixture filings,
security agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Agent may request in its Permitted Discretion,
in form and substance satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in the assets of such Guarantor
(whether now owned or hereafter arising or acquired, tangible or intangible,
real or personal), to create and perfect Liens in favor of Agent in any owned
Real Property acquired by any Guarantor after the Closing Date, and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents. To the maximum extent permitted by applicable law, if any
Guarantor has not executed any Additional Document Agent is entitled to obtain
hereunder after Agent has made an appropriate request therefor, each Guarantor
authorizes Agent to execute any such Additional Documents in such Guarantor's
name and authorizes Agent to file such executed Additional Documents in any
appropriate filing office. In addition, on such periodic basis as Agent shall
require, each Guarantor shall (i) provide Agent with a report of all new
patents, trademarks, or copyrights (or applications therefor) acquired or
generated by such Guarantor during the prior period, (ii) cause all material
patents, copyrights and trademarks acquired or generated by such Guarantor that
are not already the subject of a registration with the appropriate filing office
(or an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Guarantor's ownership thereof, and (iii) cause to be prepared, executed,
and delivered to Agent supplemental schedules to the
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applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder.
2.5. Power of Attorney. Each Guarantor hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Guarantor's true and lawful attorney, with
power to: (a) if such Guarantor refuses to, or fails timely to execute and
deliver any of the documents described in Section 2.4, sign the name of such
Guarantor on any of the documents described in Section 2.4; (b) at any time that
an Event of Default has occurred and is continuing, sign such Guarantor's name
on any invoice or ▇▇▇▇ of lading relating to the Collateral, drafts against
Account Debtors, or notices to Account Debtors; (c) send requests for
verification of such Guarantor's Accounts; (d) endorse such Guarantor's name on
any of its payment items (including all of its Collections) that may come into
Agent's possession; (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Guarantor's policies
of insurance and make all determinations and decisions with respect to such
policies of insurance; and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting such
Guarantor's Accounts, chattel paper, or General Intangibles directly with
Account Debtors, for amounts and upon terms that Agent determines to be
reasonable, and Agent may cause to be executed and delivered any documents and
releases that Agent determines to be necessary. The appointment of Agent as each
Guarantor's attorney, and each and every one of Agent's rights and powers, being
coupled with an interest, is irrevocable until all of the Secured Obligations
have been fully and finally repaid and performed and the Lender Group's
obligation to extend credit under the Loan Agreement is terminated. The Agent
acknowledges that the exercise of the powers granted in this Section 2.5 may at
some times be subject to the provisions of the Intercreditor Agreement.
2.6. Right to Inspect. Agent and each Lender (through any of
their respective officers, employees, or agents) shall have the right, from time
to time hereafter to inspect the Books and make copies or abstracts thereof and
to check, test, and appraise the Collateral, or any portion thereof, in order to
verify Guarantor's financial condition or the amount, quality, value, condition
of, or any other matter relating to, the Collateral; provided that so long as no
Event of Default has occurred, (a) Guarantor shall not be required to pay for
more than 2 inspections/audits of the Collateral per year and (b) appraisals of
the Collateral shall be conducted no more frequently than once per year.
2.7. Control Agreements. Each Guarantor agrees that it will not,
and will not permit its Subsidiaries, if any, to, transfer assets out of any of
their Deposit Accounts or Securities Accounts; provided, however, that so long
as no Event of Default has occurred that is continuing or would result
therefrom, each Guarantor and its respective Subsidiaries, if any, may use such
assets (and the proceeds thereof) to the extent not prohibited by this Agreement
or the other Loan Documents and, if the transfer is to another bank or
securities intermediary, so long as such Guarantor (or its Subsidiary, as
applicable), Agent, and the substitute bank or securities intermediary have
entered into a Control Agreement if required by Section 7.12 of the Loan
Agreement. Each Guarantor agrees that it will and will cause its Subsidiaries,
if any, to take any
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or all reasonable steps that Agent requests to obtain control in accordance with
Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect to any of its
or their Securities Accounts, Deposit Accounts, electronic chattel paper,
Investment Property, and letter-of-credit rights. No arrangement contemplated
hereby or by any Control Agreement in respect of any Securities Accounts or
other Investment Property shall be modified by any Guarantor without the prior
written consent of Agent. Upon the occurrence and during the continuance of an
Event of Default, Agent may notify any bank or securities intermediary to
liquidate the applicable Deposit Account or Securities Account or any related
Investment Property maintained or held thereby and remit the proceeds thereof to
the Agent's Account.
3. REPRESENTATIONS AND WARRANTIES.
Each Guarantor makes the representations and warranties which are set
forth in Section 5 of the Loan Agreement as if such Guarantor were a party
thereto and to the extent the same are applicable to such Guarantor.
4. AFFIRMATIVE COVENANTS.
Each Guarantor shall comply with each of the affirmative covenants
which are set forth in Section 6 of the Loan Agreement as if such Guarantor were
a party thereto and to the extent the same are applicable to such Guarantor.
5. NEGATIVE COVENANTS.
Each Guarantor shall comply with each of the negative covenants which
are set forth in Section 7 of the Loan Agreement as if such Guarantor were a
party thereto and to the extent the same are applicable to such Guarantor.
6. AGENT'S RIGHTS AND REMEDIES.
6.1. Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, the security hereby constituted shall become
enforceable and, in addition to all other rights and remedies available to Agent
as provided hereafter, Agent may, without notice of its election and without
demand, do any one or more of the following, subject to the terms of the
Intercreditor Agreement, all of which are authorized by each Guarantor:
(a) Proceed directly and at once, without notice, against any
Guarantor to collect and recover the full amount or any portion of the Secured
Obligations, without first proceeding against Borrower, or against any security
or collateral for the Secured Obligations;
(b) Without notice to any Guarantor and regardless of the acceptance
of any security or collateral for the payment hereof, appropriate and apply
toward the payment of the Secured Obligations (i) any indebtedness due or to
become due from Agent to any Guarantor and
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(ii) any moneys, credits or other property belonging to a Guarantor at any time
held by or coming into the possession of Agent;
(c) Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein and in the Guaranty or otherwise
available to it, all the rights and remedies available to it at law (including
those of a secured party under the Code) or in equity;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms that Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;
(e) Cause each Guarantor to hold all returned Inventory in trust for
Agent, segregate all returned Inventory from all other property of such
Guarantor or in such Guarantor's possession and conspicuously label said
returned Inventory as the property of Agent for the benefit thereof;
(f) Without notice or demand upon any Guarantor, make such payments
and do such acts as Agent considers necessary or reasonable to protect its
security interest in the Collateral. Each Guarantor agrees to assemble the
Collateral if Agent so requires, and to make the Collateral available to Agent
as Agent may designate. Each Guarantor authorizes Agent to enter the premises
where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Agent's determination appears to conflict
with the Agent's Liens in and to the Collateral and to pay all expenses incurred
in connection therewith. With respect to any of the Guarantors' owned premises,
each Guarantor hereby grants Agent a license to enter into possession of such
premises and to occupy the same, without charge, for up to one hundred twenty
(120) days to exercise any of Agent's rights or remedies provided herein, at
law, in equity, or otherwise;
(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Agent is hereby granted a license or other right to use, without
charge, each Guarantor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
completing production of advertising for sale and selling any Collateral, and
each Guarantor's rights under all licenses and all franchise agreements shall
inure to Agent's benefit;
(h) Sell all or any part of the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including a Guarantor's
premises) as Agent determines is commercially reasonable. It is not necessary
that the Collateral be present at any such sale;
(i) Agent shall give notice of the disposition of the Collateral as
follows:
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(i) Agent shall give the applicable Guarantor a notice in
writing of the time and place of public sale, or, if the sale is
a private sale or some other disposition other than a public sale
is to be made of the Collateral, then the time on or after which
the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to the applicable Guarantor as provided in
Section 9, at least ten (10) days before the earliest time of
disposition set forth in the notice; no notice needs to be given
prior to the disposition of any portion of the Collateral that is
perishable or threatens to decline speedily in value or that is
of a type customarily sold on a recognized market;
(j) Agent, on behalf of the Lender Group, may credit bid and purchase
at any public sale;
(k) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
or keeper without the requirement of prior notice or a hearing;
(l) Agent, on behalf of the Lender Group, shall have all other rights
and remedies available at law or in equity or pursuant to any other Loan
Document; and
(m) Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by the Guarantors. Any excess will be
returned, without interest and subject to the rights of third Persons, by Agent
to the applicable Guarantor.
6.2. Remedies Cumulative. Agent's rights and remedies under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Agent shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Agent
of one right or remedy shall be deemed an election, and no waiver by any member
of the Lender Group of any Event of Default on a Guarantor's part shall be
deemed a continuing waiver. No delay by any member of the Lender Group shall
constitute a waiver, election, or acquiescence by it.
7. TAXES AND EXPENSES REGARDING THE COLLATERAL. If any Guarantor
fails to pay any monies (whether taxes, rents, assessments, insurance premiums,
or, in the case of leased properties or assets, rents or other amounts payable
under such leases) due to third Persons, or fails to make any deposits or
furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to any Guarantor, may do any or all of the following: (a) make payment of
the same or any part thereof; (b) set up such reserves in the Loan Account as
Agent deems necessary to protect the Lender Group from the exposure created by
such failure; or (c) in the case of the failure to comply with Section 6.8 of
the Loan Agreement, obtain and maintain
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insurance policies insuring each Guarantor's ownership and use of the
Collateral, and take any action with respect to such policies as Agent deems
prudent. Any amounts paid or deposited by Agent shall constitute Lender Group
Expenses, shall immediately become additional Secured Obligations, shall bear
interest at the applicable rate described in the Loan Agreement, and shall be
secured by the Collateral. Any payments made by Agent shall not constitute an
agreement by Agent, or any member of the Lender Group, to make similar payments
in the future or a waiver by the Lender Group, or Agent on behalf thereof, of
any Event of Default under this Agreement. Agent need not inquire as to, or
contest the validity of, any such expense, tax, security interest, encumbrance,
or lien and the receipt of the usual official notice for the payment thereof
shall be conclusive evidence that the same was validly due and owing. Agent
shall use its best efforts to provide notice to the applicable Guarantor of any
action taken by it under this Section 7.
8. WAIVERS; INDEMNIFICATION.
8.1. Demand; Protest; Etc. Except as otherwise specifically and
explicitly set forth in this Agreement, the Loan Agreement, or the other Loan
Documents, and to the extent permitted by law, each Guarantor waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group, or Agent on behalf
thereof, on which such Guarantor may in any way be liable.
8.2. Lender Group's Liability for Collateral. So long as the
Lender Group complies with its obligations, if any, under the Code and no
willful misconduct or gross negligence occurs, Agent shall not in any way or
manner be liable or responsible for: (a) the safekeeping of the Collateral; (b)
any loss or damage thereto occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other Person. All risk
of loss, damage, or destruction of the Collateral shall be borne by the
Guarantors.
8.3. Indemnification. Each Guarantor agrees to defend, indemnify,
save, and hold the Agent-Related Persons, the Lender-Related Persons with
respect to each Lender, and each Participant (each an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them: (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
(including any restructuring or workout with respect hereto) of this Agreement,
any of the other Loan Documents, or the transactions contemplated hereby or
thereby or the monitoring of each Guarantor's compliance with the terms of the
Loan Documents, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any
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act, omission, event, or circumstance in any manner related thereto (all of the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, no Guarantor shall have any obligation to any
Indemnified Person under this Section 8.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Secured Obligations. If any Indemnified Person makes any
payment to any other Indemnified Person with respect to an Indemnified Liability
as to which any Guarantor was required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by such Guarantor with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON (OTHER THAN TO THE EXTENT IT IS FINALLY DETERMINED TO HAVE RESULTED
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PERSON).
9. NOTICES. All notices and other communications hereunder to Agent
shall be in writing and shall be mailed, sent or delivered in accordance with
the Loan Agreement and all notices and other communications hereunder to a
Guarantor shall be in writing and shall be mailed, sent or delivered in care of
Borrower in accordance with the Loan Agreement.
10. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE CALIFORNIA STATE COURTS AND FEDERAL COURTS LOCATED IN THE
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH
GUARANTOR AND AGENT WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT SUCH PARTY MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 10.
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EACH GUARANTOR AND AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH GUARANTOR AND AGENT REPRESENT THAT EACH SUCH PARTY HAS
REVIEWED THIS WAIVER AND EACH SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
11. GENERAL PROVISIONS.
11.1. Effectiveness. This Agreement shall be binding and deemed
effective when executed by each Guarantor and accepted and executed by Agent.
11.2. Successors and Assigns. This Agreement shall be binding
upon each Guarantor and its successors and assigns and shall inure to the
benefit of the successors and assigns of each member of the Lender Group;
provided, however, no Guarantor shall assign this Agreement or delegate any of
its duties hereunder without Agent's prior written consent and any assignment by
a Guarantor without Agent's consent shall be absolutely void. In the event of
any assignment or other transfer of rights by any member of the Lender Group,
the rights and benefits herein conferred upon each member of the Lender Group
shall automatically extend to and be vested in such assignee or other
transferee. Subject to the provisions of the Loan Agreement, Agent may assign
this Agreement and its rights and duties hereunder and no consent or approval by
any Guarantor is required in connection with any such assignment
11.3. Section Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.
11.4. Interpretation. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any member of the
Lender Group or any Guarantor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all parties
hereto.
11.5. Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable under applicable law shall be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
11.6. Amendments in Writing. This Agreement can only be amended
by a writing signed by Agent and each Guarantor.
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11.7. Counterparts; Telefacsimile Execution. This Agreement may
be executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
11.8. Revival and Reinstatement of Obligations. If the incurrence
or payment of the Secured Obligations by a Guarantor or the transfer by a
Guarantor to Agent of any property of a Guarantor should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, and other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if Agent is required to repay or restore, in whole or
in part, any such Voidable Transfer, or elects to do so upon the advice of its
counsel, then, as to any such Voidable Transfer, or the amount thereof that
Agent is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys' fees of Agent related thereto, the liability of each of
the Guarantors automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.
11.9. Termination. Upon the indefeasible final payment in full of
the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, this Agreement shall
terminate, and Agent shall execute and deliver such documents and instruments
and take such further action reasonably requested by Guarantors, at Guarantors'
expense, as shall be necessary to evidence termination of the security interests
granted by Guarantors to Agent for the benefit of the Lender Group.
[Signature page follows]
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IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Agreement as of the date first above written.
RIVER HOLDING CORP.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
IH HOLDINGS LLC,
a Delaware limited liability company
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
MW POST ADVISORY GROUP, LLC,
a Delaware limited liability company,
as Agent
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ Post
Title: Chief Executive Officer
Signature Page
Security Agreement (Guarantors)
