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EXHIBIT 10.20
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of July 18, 1997
is executed by CCA PRISON REALTY TRUST, a Maryland real estate investment trust
("CCA REIT"), and any Subsidiary of CCA REIT that is joined as Borrower pursuant
to the terms of the Credit Agreement hereinafter referred to (collectively, the
"Grantors"), in favor of FIRST UNION NATIONAL BANK OF TENNESSEE, a national
banking association organized under the laws of the United States, as
administrative agent (the "Administrative Agent") for the benefit of itself and
the financial institutions (the "Lenders") as are, or may from time to time
become, parties to the Credit Agreement referred to below.
STATEMENT OF PURPOSE
Pursuant to the Credit Agreement of even date (as amended, restated or
otherwise modified the "Credit Agreement"), by and among the Grantors, as
Borrowers, the Lenders party thereto, the Administrative Agent and SouthTrust
Bank, N.A., as Co-Agent, such Lenders have agreed to extend certain credit
facilities to the Borrowers.
The extensions of credit provided for under the Credit Agreement have
been and will be made for the purposes of, among other things, financing
certain acquisitions of certain Correctional Facilities as described in the
Credit Agreement, and funding ongoing working capital and general corporate
requirements, and paying approved fees and expenses related to the transactions
contemplated in the Credit Agreement.
In order to induce the Lenders and the Administrative Agent to enter
into the Credit Agreement, and as a condition to the making of any extensions of
credit thereunder, the Lenders require that the Grantors grant a continuing
security interest in and to the "Collateral" (as hereinafter defined) to secure
the "Secured Obligations" (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein, when used in this Agreement including its preamble and
recitals, shall have the respective meanings provided for in the Credit
Agreement. The following additional terms, when used in this Agreement, shall
have the following meanings:
"Account Debtor" means any Person who is or may become obligated to any
Grantor under, with respect to, or on account of, an Account.
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"Accounts" means all "accounts" (as defined in the UCC) now or
hereafter owned or acquired by any Grantor or in which any Grantor now or
hereafter has or acquires any right or interest, and, in any event, shall also
include, without limitation, all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness owing to any Grantor
arising from the sale, lease, consignment or exchange of goods or other property
by it or property to be sold, leased, consigned or exchanged, or the performance
of services by it, or to be performed, and all of such Grantor's rights to any
goods, services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit) and all monies due to
or to become due to such Grantor under all contracts for the sale, lease,
consignment or exchange of goods or other property or the performance of
services by it (whether or not yet earned by performance on the part of such
Grantor), in each case whether now in existence or hereafter arising or
acquired, including, without limitation, the right to receive the proceeds of
such contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.
"Accounts Aging Report" means a detailed aged trial balance of all
Accounts existing as of a specified date, specifying the names, addresses, face
value and dates of invoices of each Account Debtor obligated on any Accounts so
listed, delivered pursuant to Section 4(b)(vi) hereof.
"Collateral" shall have the meaning given thereto in Section 2(a)
hereof.
"Collateral Account" means a cash collateral account established by the
Grantors with the Administrative Agent, in the name and under the exclusive
dominion and control of the Administrative Agent, pursuant to Section 6.
"Copyright License" means any written agreement now or hereafter in
existence granting to any Grantor any right to use any Copyright.
"Copyrights" means, collectively, all of the following of any Grantor:
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations and copyright applications, including without
limitation any thereof referred to on Schedule II hereto; (b) all renewals of
any of the foregoing; (c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing or with respect to any
of the foregoing, including, without limitation, damages or payments for past or
future infringements of any of the foregoing; (d) the right to ▇▇▇ for past,
present and future infringements of any of the foregoing; and (e) all rights
corresponding to any of the foregoing throughout the world.
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"Documents" means all "documents" (as defined in the UCC) or other
receipts of any Grantor covering, evidencing or representing goods.
"Equipment" means all "equipment" (as defined in the UCC) of any
Grantor and all other machinery, equipment and goods (other than Inventory) of
any Grantor used or bought for use primarily in the business of such Grantor,
including all accessions, additions, attachments, improvements, substitutions
and replacements thereto and therefor.
"Financing Statements" shall mean the Uniform Commercial Code Form
UCC-1 Financing Statements executed by the Grantor with respect to the
Collateral and to be filed in the jurisdictions set forth in the Perfection
Certificate.
"Fixtures" shall mean all "fixtures" (as defined in the UCC) of any
Grantor.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) of any Grantor, including without limitation, all rights to
indemnification, and all rights, title and interest which any Grantor may now or
hereafter have in or under all contracts (other than contracts described in the
definition of Accounts), agreements (including without limitation, all
agreements executed by the Grantor in connection with or relating to any
acquisition permitted under the Credit Agreement), permits, licenses, causes of
action, franchises, tax refund claims, customer lists, Intellectual Property,
license royalties, goodwill, trade secrets, data bases, business records, and
all other intangible property of every kind and nature.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) of any Grantor, including, without
limitation, instruments, chattel paper and letters of credit evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts, including (but not
limited to) promissory notes, drafts, bills of exchange and trade acceptances.
"Intellectual Property" means, collectively, all of the following of
any Grantor: (a) all systems software and applications software, including, but
not limited to, screen displays and formats, program structures, sequence and
organization, all documentation for such software, including, but not limited
to, user manuals, flowcharts, programmer's notes, functional specifications, and
operations manuals, all formulas, processes, ideas and know-how embodied in any
of the foregoing, and all program materials, flowcharts, notes and outlines
created in connection with any of the foregoing, whether or not patentable or
copyrightable, (b) concepts, discoveries, improvements and ideas, (c)
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any useful information relating to the items described in clause (a) or (b),
including know-how, technology, engineering drawings, reports, design
information, trade secrets, practices, laboratory notebooks, specifications,
test procedures, maintenance manuals, research, development, manufacturing,
marketing, merchandising, selling, purchasing and accounting, (d) Patents,
Patent rights and Patent applications, Copyrights and Copyright applications,
Trademarks, Trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, applications for registration of Trademarks, trade names
and service marks, and Trademark, trade name and service ▇▇▇▇ registrations and
Patent Licenses, Trademark Licenses, Copyright Licenses, and (e) other licenses
to use any of the items described in the foregoing clauses (a), (b), (c) and (d)
or any other similar items of any Grantor necessary for the conduct of its
business.
"Inventory" means all "inventory" (as defined in the UCC) of any
Grantor, including without limitation, all raw materials, inventory and other
materials and supplies, work-in-process, finished goods, all accessions thereto,
documents therefor and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto.
"Patent License" means any written agreement now or hereafter in
existence granting to any Grantor any right to use any invention on which a
Patent is in existence.
"Patents" means, collectively, all of the following of any Grantor: (a)
all patents and patent applications including all patentable inventions; (b) all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing; (c) all income, royalties,
damages or payments now or hereafter due and/or payable under any of the
foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (d) the right to ▇▇▇ for past, present and future infringements of
any of the foregoing; and (e) all rights corresponding to any of the foregoing
throughout the world.
"Perfection Certificate" means a certificate dated as of even date
herewith, setting forth the corporate names, chief executive office or principal
place of business in each state and other current locations of each Grantor
(including each manufacturing plant, if applicable) and such other information
as the Administrative Agent deems pertinent to the perfection of security
interests, completed and supplemented with the schedules and attachments
contemplated thereby to the reasonable satisfaction of the Administrative Agent,
and duly certified by the chief executive, chief financial officer of the
Borrower.
"Permitted Investments" means investments described in Section 10.4
of the Credit Agreement.
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"Permitted Liens" means all such Liens respecting the Collateral
permitted pursuant to Section 10.3 of the Credit Agreement.
"Proceeds" means all proceeds (as defined by the UCC) of, and all other
profits, rentals or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or
realization upon, Collateral, including, without limitation, all claims of the
Grantor against third parties for loss of, damage to or destruction of, or for
proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral, and any condemnation or requisition
payments with respect to any Collateral and the following types of property
acquired with cash proceeds: Accounts, Inventory, Documents, Fixtures,
Instruments, General Intangibles, Equipment and Vehicles.
"Secured Obligations" means the Obligations as defined in the Credit
Agreement and any renewals or extensions of any of the Obligations.
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Schedule of Inventory" means a schedule of Inventory based upon each
Grantor's most recent physical inventory and its perpetual inventory records,
showing each Grantor's cost of all such Inventory with a monthly reconciliation
to the general ledger inventory account of such Grantor, as may be requested by
the Administrative Agent or the Required Lenders pursuant to Section 4(c)(i)
hereof.
"Trademark License" means any written agreement now or hereafter in
existence granting to any Grantor any right to use any Trademark.
"Trademarks" means, collectively, all of the following of any Grantor:
(a) all Trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, other business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications 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 of any thereof, including without limitation any thereof referred to
on Schedule I hereto; (b) all reissues, extensions and renewals of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or
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with respect to any of the foregoing, including, without limitation, damages or
payments for past or future infringements of any of the foregoing; (d) the right
to ▇▇▇ for past, present and future infringements of any of the foregoing; and
(e) all rights corresponding to any of the foregoing throughout the world.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of North Carolina; 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 is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than North Carolina, "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.
"Vehicles" means all cars, trucks, trailers, construction and earth
moving equipment of any Grantor and other vehicles covered by a certificate of
title law of any state, and all tires and other appurtenances to any of the
foregoing.
SECTION 2. The Security Interests.
(a) In order to secure the Credit Agreement in accordance with the
terms thereof, and to secure the payment and performance of all of the Secured
Obligations, each Grantor hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a continuing security interest in and
to all of such Grantors' estate, right, title and interest in and to all of the
following property, whether now or hereafter owned or acquired by the Grantor or
in which such Grantor now have or hereafter have or acquire any estate right,
title or interest, and wherever located (collectively, along with any other
property of such Grantor which may from time to time secure the Secured
Obligations, the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Equipment;
(v) Fixtures;
(vi) Instruments;
(vii) General Intangibles;
(viii) Vehicles;
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(ix) The Collateral Account, all cash deposited therein from time to
time, the investments made pursuant to Section 6 and other monies and
property of any kind of any Grantor in the possession or under the control
of the Administrative Agent or any Lender;
(x) All books and records (including, without limitation, customer
lists, credit files, computer programs, printouts and other computer
materials and records) of any Grantor pertaining to any of the Collateral;
(xi) All other goods and personal property of any Grantor, whether
tangible or intangible; and
(xii) All products and Proceeds of all or any of the Collateral
described in clauses (i) through (xi) hereof;
(b) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any Lender to, or transfer to the
Administrative Agent or any Lender, or in any way affect or modify, any
obligation or liability of the Grantor with respect to any of the Collateral
or any transaction in connection therewith.
SECTION 3. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor has the corporate power and authority and the legal
right to execute and deliver, to perform its obligations under, and to grant the
Security Interests in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Security Interests on the Collateral pursuant
to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding obligation of
such Grantor enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of any Applicable Law or contractual obligation of such
Grantor and will not result in the creation or imposition of any Lien on any of
the properties or revenues of such Grantor pursuant to any Applicable Law or
contractual obligation of such Grantor, except as contemplated hereby.
(d) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of such
Grantor), is required in connection
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with the execution, delivery, performance, validity or enforceability of this
Agreement, except those which have been obtained, UCC filings and required
notices under the Federal Assignment of Claims Act or any corresponding state
law.
(e) No actions, suits or proceedings are pending nor, to the knowledge
of such Borrower, are threatened against or in any other way relate adversely to
or affect such Grantor or any of its properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority, which, if
adversely determined, are reasonably likely to have a Material Adverse Effect.
(f) Such Grantor has good and marketable title to all of its respective
collateral, free and clear of any Liens other than Permitted Liens and as
otherwise permitted by the Credit Agreement.
(g) Such Grantor has not performed any acts that would prevent or
hinder the Administrative Agent from enforcing any of the terms of this
Agreement. Other than financing statements or other similar or equivalent
documents or instruments with respect to Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file or of record in
any jurisdiction. No Collateral is in the possession of any Person (other than
such Grantor) asserting any claim thereto or security interest therein, except
that the Administrative Agent or its designee may have possession of Collateral
as contemplated hereby.
(h) All of the information set forth in the Perfection Certificate is
true and correct in all material respects as of the Closing Date.
(i) With respect to any Intellectual Property of such Grantor which is
material to the conduct of its business:
(i) such Intellectual Property is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) such Grantor has made all necessary filings and recordations
to protect its interest in such Intellectual Property, including,
without limitation, recordations of all of its interests in the Patents
and Trademarks in the United States Patent and Trademark Office and its
claims to the Copyrights in the United States Copyright Office;
(iv) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property and such Grantor has not received any
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written claim that the use of such Intellectual Property does not or
may violate the asserted rights of any third party; and
(v) such Grantor has performed all acts and has paid all required
fees and taxes to maintain each and every item of Intellectual Property
in full force and effect.
(j) The Financing Statements are in appropriate form and when filed in
the offices specified in the Perfection Certificate and upon payment of the
filing fees, the Security Interests will constitute valid and perfected security
interests in the Collateral, prior to all other Liens and rights of others
therein except for the Permitted Liens (to the extent that a security interest
therein may be perfected by filing pursuant to the UCC) and all filings and
other actions necessary or desirable to perfect and protect such Security
Interests have been duly taken.
(k) The Inventory, Fixtures, Equipment and Vehicles are insured in
accordance with the requirements hereof and of the Credit Agreement.
(l) All Inventory, if any, has or will have been produced in
substantial compliance in all material respects with the applicable requirements
of the Fair Labor Standards Act, as amended.
SECTION 4. Further Assurances; Covenants.
(a) General.
(i) No Grantor will change the location of its chief executive
office or principal place of business in any state unless it shall have
given the Administrative Agent thirty (30) days prior written notice
thereof and executed and delivered to the Administrative Agent all
financing statements and financing statement amendments which the
Administrative Agent may reasonably request in connection therewith. No
Grantor shall change the locations where it keeps or holds any
Collateral or any records relating thereto from the applicable location
described in the Perfection Certificate unless such Grantor shall have
given the Administrative Agent thirty (30) days prior written notice of
such change of location and executed and delivered to the
Administrative Agent all financing statements and financing statement
amendments which the Administrative Agent may reasonably request in
connection therewith; provided, however, that such Grantor may keep
Inventory at, or in transit to, any location described in the
Perfection Certificate. No Grantor shall in any event change the
location of any Collateral if such change would cause the Security
Interests in such Collateral to lapse or cease to be perfected.
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(ii) No Grantor will change its name, identity or corporate
structure in any manner unless it shall have given the Administrative
Agent thirty (30) days prior written notice thereof and executed and
delivered to the Administrative Agent all financing statements and
financing statement amendments which the Administrative Agent may
reasonably request in connection therewith.
(iii) Each Grantor will maintain the Administrative Agent's Lien on
the Collateral as a first priority perfected Lien thereon. Each Grantor
will, from time to time, at its expense, execute, deliver, file and
record any statement, assignment, instrument, document, agreement or
other paper and take any other action (including without limitation any
filings of financing or continuation statements under the UCC and any
filings with the United States Patent and Trademark Office and United
States Copyright Office) that from time to time may be necessary, or
that the Administrative Agent may reasonably request, in order to
create, preserve, perfect or validate the Security Interests or to
enable the Administrative Agent and the Lenders to obtain the full
benefits of this Agreement, or to enable the Administrative Agent to
exercise and enforce any of its rights, powers and remedies hereunder
with respect to any of the Collateral. Prior to the irrevocable payment
in full of the Secured Obligations, each Grantor hereby authorizes the
Administrative Agent, upon the failure of any Grantor to so do within
five (5) Business Days after receipt of notice from the Administrative
Agent, to execute and file financing statements, financing statement
amendments or continuation statements without any Grantor's signature
appearing thereon. Each Grantor agrees that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. The Grantors shall
pay the reasonable costs of, or incidental to, any recording or filing
of the Financing Statements and any other financing statements,
financing statement amendments or continuation statements concerning
the Collateral.
(iv) The Grantors shall bear the full risk of any loss of any nature
whatsoever with respect to its respective Collateral. At the Grantors'
own cost and expense in amounts and with carriers acceptable to the
Administrative Agent, the Grantors shall (a) keep the Collateral
insured against such hazards, and for such amounts,as is customary in
the case of companies engaged in businesses similar to the Grantors
including, without limitation, business interruption insurance
satisfactory to the Administrative Agent; and (b) furnish to the
Administrative Agent loss payable endorsements in form and substance
reasonably satisfactory to the Administrative Agent, naming the
Administrative Agent as loss payee, on behalf of itself and the Lenders
with respect to all insurance coverage
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referred to above, and providing (i) that all proceeds thereunder shall be
payable to the Administrative Agent, on behalf of itself and the Lenders and
(ii) that such policy and loss payable clauses may not be canceled, amended or
terminated unless at least thirty (30) days' prior written notice is sent to
the Administrative Agent. The Grantors shall furnish to the Administrative
Agent evidence of the maintenance of such policies by the renewal thereof at
least thirty (30) days before any expiration date. In the event of any loss
thereunder, the carriers named therein hereby are directed by the
Administrative Agent and the Grantors to make payment for such loss to the
Administrative Agent, on behalf of itself and the Lenders, and not to any
Grantor and the Administrative Agent jointly. The Administrative Agent is
hereby authorized in its good faith discretion to adjust and compromise claims
under insurance coverage referred to above after notifying and consulting with
the Grantors with respect thereto.
(v) Each Grantor will, promptly upon request, provide to the
Administrative Agent all information the Administrative Agent may reasonably
request concerning the Collateral, and in particular the Accounts, to enable the
Administrative Agent to enforce the provisions of this Agreement.
(vi) Each Grantor will, upon request by the Administrative Agent,
deliver to the Administrative Agent possession of all originals of all
negotiable Instruments, documents and chattel paper constituting Collateral
currently owned or held by such Grantor, if any (duly endorsed in blank, if
requested by the Administrative Agent).
(vii) Each Grantor will observe and remain in compliance with all
Applicable Laws and maintain in full force and effect all Governmental
Approvals, in each case applicable to the Collateral and the conduct of its
business, except to the extent failure to do so is not reasonably likely to
have a Material Adverse Effect.
(viii) Each Grantor will pay promptly when due all taxes, assessments
and governmental charges or levies imposed upon the Collateral or in respect of
its income or profits therefrom, as well as all claims of any kind (including,
without limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if (A) the
validity thereof is being contested in good faith by appropriate proceedings and
(B) such charge is adequately reserved against such Grantor's books in
accordance with GAAP.
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(ix) No Grantor shall
(1) sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral, except as
permitted by the Credit Agreement; or
(2) create or suffer to exist any Lien or other
charge or encumbrance upon or with respect to any of the
Collateral to secure indebtedness of any Person or entity,
except as permitted by the Credit Agreement.
(b) Accounts, Etc.
(i) Each Grantor shall use all reasonable efforts to cause to
be collected from its Account Debtors, as and when due, any and all
amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be
collected in accordance with lawful collection procedures) and to apply
forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance of such Account. The reasonable costs and
expenses (including, without limitation, attorney's fees), of
collection of Accounts incurred by any Grantor or the Administrative
Agent shall be borne by the Grantor.
(ii) Upon the occurrence and during the continuance of any
Event of Default, upon request of the Administrative Agent or the
Required Lenders, each Grantor will promptly notify (and such Grantor
hereby authorizes the Administrative Agent so to notify) each Account
Debtor in respect of any Account that such Account has been assigned to
the Administrative Agent hereunder and that any payments due or to
become due in respect of such Account are to be made directly to the
Administrative Agent or its designee.
(iii) Each Grantor will perform and comply with all of its
obligations in respect of Accounts and General Intangibles and the
exercise by the Administrative Agent of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations.
(iv) No Grantor shall (A) amend, modify, terminate or waive
any provision of any agreement giving rise to an Account in any manner
which could reasonably be expected to materially adversely affect the
value of such Account as Collateral or (B) fail to exercise promptly
and diligently its material rights which it may have under each
agreement giving rise to an Account (other than any right of
termination).
(v) Other than in the ordinary course of business as generally
conducted by the Grantor over a period of time and subject to Section
4(b)(iv), no Grantor will compromise,
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compound or settle any Account for less than the full amount thereof,
release, wholly or partially, any Person liable for the payment
thereof, or allow any credit or discount whatsoever thereon; provided,
however, that after an Event of Default, no Grantor will settle or
compromise its any Accounts without the prior written consent of the
Administrative Agent.
(vi) From time to time, at the request of the Administrative
Agent or Required Lenders, each Grantor shall deliver to the
Administrative Agent and each Lender an Accounts Aging Report.
(c) Inventory, Etc.
(i) Not more than once each month, at the request of the
Administrative Agent or Required Lenders, the Grantor shall deliver to
the Administrative Agent with a copy for each Lender a Schedule of
Inventory. Unless otherwise indicated in writing by the Grantor, each
Schedule of Inventory delivered by such Grantor to the Administrative
Agent shall constitute a representation with respect to the Inventory
listed thereon or referred to therein that: (A) all such Inventory is
located at places of business listed in the Perfection Certificate or
as to which the applicable Grantor has complied with the provisions of
Section 4(a)(i) hereof or on the premises identified on the then
current Schedule of Inventory or is Inventory in transit from one such
location to another such location; (B) no such Inventory is subject to
any Lien whatsoever, except for Permitted Liens; (C) no such Inventory
in aggregate value exceeding $50,000 at any time is, nor shall at any
time or times be, kept, stored or maintained with a bailee,
warehouseman, carrier or similar party (other than a carrier delivering
Inventory to a purchaser in the ordinary course of such Grantor's
business) unless the Required Lenders have given their prior written
consent and the applicable Grantor has delivered to the Administrative
Agent a Letter satisfactory thereto acknowledging the priority of its
security interest.
(ii) If at any time during the term of this Agreement, any
Inventory is placed by any Grantor on consignment with any Consignee,
such Grantor shall, prior to the delivery of any such consigned
Inventory: (A) provide the Administrative Agent with all consignment
agreements and other instruments and documentation to be used in
connection with such consignment, all of which agreements, instruments
and documentation shall be reasonably acceptable in form and substance
to the Administrative Agent; (B) prepare, execute and file appropriate
financing statements with respect to any consigned Inventory showing
the Consignee as debtor, such Grantor as secured party and the
Administrative Agent as assignee of secured party; (C) prepare, execute
and file appropriate
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financing statements with respect to any consigned Inventory showing
such Grantor as debtor and the Administrative Agent as secured party;
(D) after all financing statements referred to in clauses (B) and (C)
above shall have been filed, conduct a search of all filings made
against the Consignee in all jurisdictions in which the Inventory to be
consigned is to be located while on consignment, and deliver to the
Administrative Agent copies of the results of all such searches; (E)
notify, in writing, all creditors of the Consignee which would be
holders of security interests in the Inventory to be consigned that
such Grantor expects to deliver certain Inventory to the Consignee, all
of which Inventory shall be described in such notice by item or type,
and (F) if requested by the Administrative Agent, deliver an opinion of
counsel to the effect that all financing statements and amendments or
supplements thereto, continuation statements and other documents
required to be recorded or filed in order to perfect and protect the
Security Interests and priority thereof against all creditors of and
purchasers of such Grantor and such Consignee have been filed in each
filing office necessary or desirable for such purposes and that all
filing fees and taxes, if any, payable in connection with such filings
have been paid in full.
(d) Equipment, Etc. With the exception of Equipment disposed of in
accordance with Section 10.6 of the Credit Agreement, each Grantor will
maintain each item of Equipment in the same condition, repair and
working order as when acquired, ordinary wear and tear excepted, and
will provide all maintenance, service and repairs necessary for such
purpose and will promptly furnish to the Administrative Agent a
statement respecting any material loss or damage to any of the
Equipment in an amount in excess of $250,000.
(e) Intellectual Property.
(i) Each Grantor shall notify the Administrative Agent
promptly (a) of its acquisition after the Closing Date of any Patent,
Patent License, Trademark or Trademark License and (b) if it knows, or
has reason to know of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office or any court) regarding such Grantor's
ownership of any Patent or Trademark, its right to register the same,
or to keep and maintain the same. In no event shall any Grantor, either
itself or through any agent, employee or licensee, file an application
for the registration of any Patent or Trademark with the United States
Patent and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof, unless promptly
thereafter it informs the Administrative Agent, and, promptly after
issuance of such
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patent or Trademark, executes and delivers any and all agreements,
instrument, documents and papers the Administrative Agent may
reasonably request to evidence the Security Interests in such Patent or
Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby. Each Grantor hereby
constitutes the Administrative Agent its attorney-in-fact to execute
and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed, and such power, being
coupled with an interest, shall be irrevocable until the Commitment has
terminated and the Secured Obligations are paid in full.
(ii) Each Grantor shall: (a) preserve and maintain in all
material respects rights in the Intellectual Property; and (b) upon and
after the occurrence of an Event of Default, use its best efforts to
obtain any consents, waivers or agreements necessary to enable
Administrative Agent to exercise its remedies with respect to the
Intellectual Property. No Grantor shall abandon any right to file a
Copyright, Patent or Trademark application that is necessary to the
business of such Grantor nor shall such Grantor abandon any such
necessary pending Copyright, Patent or Trademark application, or
Copyright, Copyright License, Patent, Patent License, Trademark or
Trademark License without the prior written consent of Administrative
Agent.
(iii) Each Grantor hereby assigns, transfers and conveys to
Administrative Agent, effective upon the occurrence and during the
continuance of any Event of Default, the nonexclusive right and license
to use all Intellectual Property owned or used by such Grantor,
together with any goodwill associated therewith, all to the extent
necessary to enable Administrative Agent to realize on the Collateral
(including, without limitation, completing production of, advertising
for sale and selling the Collateral) and any successor or assign to
enjoy the benefits of the Collateral. This right and license shall
inure to the benefit of all successors, assigns and transferees of
Administrative Agent and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such
right and license is granted free of charge, without requirement that
any monetary payment whatsoever be made to such Grantor by
Administrative Agent.
(f) Vehicles. With the exception of Vehicles disposed of in accordance
with Section 10.6 of the Credit Agreement, the Grantors will maintain each
Vehicle in good operating condition, ordinary wear and tear excepted, and will
provide all maintenance, service and repairs necessary for such purpose. Upon
the request of the Administrative Agent, all applications for certificates of
title or ownership indicating the Administrative Agent's first priority Lien
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on the Vehicle covered by such certificate, and any other necessary
documentation, shall be filed in each office in each jurisdiction which the
Administrative Agent shall deem advisable to perfect its Liens on the Vehicles.
Prior thereto, each certificate of title or ownership relating to each Vehicle
shall be maintained by the applicable Grantor in accordance with Applicable Law
to reflect the ownership interest of such Grantor.
(g) Indemnification. Each Grantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, costs and expenses
(including, without limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from, any and all excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, complying with any
Applicable Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Agreement (except to the extent any
such liabilities, costs and expenses result from the gross negligence or willful
misconduct of the Administrative Agent or Lenders). In any suit, proceeding or
action brought by the Administrative Agent under any Account for any sum owing
thereunder, or to enforce any provisions of any Account, each Grantor will save,
indemnify and keep the Administrative Agent and the Lenders harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the Account
Debtor or any other obligor thereunder, arising out of a breach by any Grantor
of any obligation thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such Account Debtor or obligor
or its successors from any Grantor (except to the extent any such expense, loss
or damage results from the gross negligence or willful misconduct of the
Administrative Agent or Lenders). The obligations of the Grantors under this
Section 4(g) shall survive the termination of the other provisions of this
Agreement.
SECTION 5. Reporting and Recordkeeping. Each Grantor respectively
covenants and agrees with the Administrative Agent and the Lenders that from and
after the date of this Agreement and until the Commitments have terminated and
all Secured Obligations have been fully satisfied:
(a) Maintenance of Records Generally. Each Grantor will keep and
maintain at its own cost and expense complete and accurate records of the
Collateral, including, without limitation, a record of all payments received
and all credits granted with respect to the Collateral and all other dealings
with the Collateral. All chattel paper given to any Grantor with respect to any
Accounts will be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
First Union National Bank of Tennessee, as Administrative Agent", and, if
requested thereby or the Required Lenders,
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delivered to the Administrative Agent to be held as Collateral. For the
Administrative Agent's and the Lenders' further security, each Grantor agrees
that upon the occurrence and during the continuation of any Default or Event of
Default and upon foreclosure by the Administrative Agent on any property of any
Grantor, such Grantor shall deliver and turn over any such books and records
directly to the Administrative Agent or its designee. Each Grantor shall permit
any representative of the Administrative Agent to inspect such books and records
in accordance with Section 8.11 of the Credit Agreement and will provide
photocopies thereof to the Administrative Agent upon its reasonable request.
(b) Certain Provisions Regarding Maintenance of Records and Reporting
Re: Accounts. Schedule IV hereto sets forth the contract number, date,
applicable grantor and Governmental Authority with respect to each Account
arising out of a contract with the United States of America, or any department,
agency, subdivision or instrumentality thereof, or of any state (or department,
agency, subdivision or instrumentality thereof) where such state has a state
assignment of claims act or other law comparable to the Federal Assignment of
Claims Act. Each Grantor will deliver to the Administrative Agent along with the
Officer's Compliance Certificate delivered pursuant to Section 7.2 of the Credit
Agreement a revised Schedule VI hereto including all applicable information with
respect to each such Account originated during the applicable quarter and (ii)
take any other action required or requested by the Administrative Agent or give
notice of the Administrative Agent's Security Interest in such Accounts under
the provisions of the Federal Assignment of Claims Act or any comparable law or
act enacted by any state or local Governmental Authority. Any notifications or
other documents executed and delivered to the Administrative Agent in connection
with the Federal Assignment of Claims Act or any comparable state law may be
promptly filed with the appropriate Governmental Authority by the Administrative
Agent or held by the Administrative Agent until the Administrative Agent or the
Required Lenders decide in its or their sole discretion to make any such filing.
(c) Further Identification of Collateral. Each Grantor will, if so
requested by the Administrative Agent, furnish to the Administrative Agent
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(d) Notices. In addition to the notices required by Section 5(b)
hereof, the Grantors will advise the Administrative Agent promptly, in
reasonable detail, (i) of any material Lien or claim made or asserted against
any of the Collateral, (ii) of any adverse change in the composition of the
Collateral which is reasonably likely to have a Material Adverse Effect, and
(iii) of the
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occurrence of any other event which is reasonably likely to have a Material
Adverse Effect.
SECTION 6. Collateral Account.
(a) There is hereby established with the Administrative Agent a
Collateral Account in the name and under the exclusive dominion and control of
the Administrative Agent. There shall be deposited from time to time into such
account, after the occurrence of and during the continuation of an Event of
Default, the cash proceeds of the Collateral required to be delivered to the
Administrative Agent pursuant to Section 6(b) or any other provision of this
Agreement. Any income received by the Administrative Agent with respect to the
balance from time to time standing to the credit of the Collateral Account,
including any interest or capital gains on investments of amounts on deposit in
the Collateral Account, shall remain, or be deposited, in the Collateral Account
together with any investments from time to time made pursuant to subsection (c)
of this Section 6, shall vest in the Administrative Agent, shall constitute part
of the Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied thereto as hereinafter provided.
(b) Upon the occurrence and during the continuance of an Event of
Default, if requested by the Administrative Agent, the Grantors shall instruct
all Account Debtors and other Persons obligated in respect of all Accounts to
make all payments in respect of the Accounts either (i) directly to the
Administrative Agent (by instructing that such payments be remitted to a post
office box which shall be in the name and under the exclusive dominion and
control of the Administrative Agent) or (ii) to one or more other banks in any
state in the United States (by instructing that such payments be remitted to a
post office box which shall be in the name and under the exclusive dominion and
control of such bank) under a Lockbox Letter substantially in the form of Annex
I hereto duly executed by the Grantors and such bank or under other
arrangements, in form and substance reasonably satisfactory to the
Administrative Agent, pursuant to which the Grantors shall have irrevocably
instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Administrative Agent for deposit into
the Collateral Account or as the Administrative Agent may otherwise instruct
such bank, and thereafter if the proceeds of any Collateral shall be received by
any Grantor, such Grantor will promptly deposit such proceeds into the
Collateral Account and until so deposited, all such proceeds shall be held in
trust by such Grantor for and as the property of the Administrative Agent, for
the benefit of itself and the Lenders and shall not be commingled with any other
funds or property of such Grantor. At any time after the occurrence and during
the continuance of an Event of Default, the Administrative Agent may itself so
instruct the Grantors' Account Debtors. All such
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payments made to the Administrative Agent shall be deposited in the
Collateral Account.
(c) Amounts on deposit in the Collateral Account shall be promptly
liquidated and applied to the payment of the Secured Obligations in the manner
specified in Section 10 hereof.
SECTION 7. General Authority.
(a) The Grantors hereby irrevocably appoint the Administrative Agent
their true and lawful attorney, with full power of substitution, in the name
of each Grantor, the Administrative Agent, the Lenders or otherwise, for the
sole use and benefit of the Agent and the Lenders, but at the Grantors'
expense, to exercise, at any time from time to time all or any of the
following powers:
(i) to file the Financing Statements and any financing
statements, financing statement amendments and continuation statements
referred to in Sections 4(a)(i), 4(a)(ii), 4(a)(iii) and 4(c)(ii)
hereof,
(ii) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due with respect to any
Collateral or by virtue thereof,
(iii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral,
(iv) to sell, transfer, assign or otherwise deal in or with
the Collateral and the Proceeds thereof, as fully and effectually as if
the Agent were the absolute owner thereof, and
(v) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference to the
Collateral;
provided that the Administrative Agent shall not take any of the actions
described in this Section 7 except those described in clause (i) above unless
an Event of Default shall have occurred and be continuing and the
Administrative Agent shall give the Grantors not less than ten (10) days'
prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Each Grantor agrees that any such
notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC (to the extent such Section is applicable).
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(b) Ratification. Each Grantor hereby ratifies all that said attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and shall be irrevocable.
(c) Other Powers. Each Grantor also authorizes the Administrative
Agent at any time and from time to time, to execute, in connection with the
sale provided for in Section 8 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
SECTION 8. Remedies Upon Event of Default.
(a) If any Event of Default has occurred and is continuing, the
Administrative Agent may exercise on behalf of itself and Lenders all rights
of a secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) and, in addition, the Agent may
(i) withdraw all cash, if any, in the Collateral Account and investments made
with amounts on deposit in the Collateral Account, and apply such monies,
investments and other cash, if any, then held by it as Collateral as
specified in Section 10 hereof and (ii) if there shall be no such monies,
investments or cash or if such monies, investments or cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Agent may deem
satisfactory. The Administrative Agent or any Lender may be the purchaser of
any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a
type which is the subject of widely distributed standard price quotations or
if otherwise permitted under applicable law, at any private sale) and
thereafter hold the same, absolutely, free from any right or claim of
whatsoever kind. Each Grantor will execute and deliver such documents and
take such other action as the Administrative Agent deems reasonably necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold (without
warranty). Each purchaser at any such sale shall hold the Collateral so sold
to it absolutely, free from any claim or right of whatsoever kind, including
any equity or right of redemption of any Grantor. To the extent permitted by
law, each Grantor hereby specifically waives all rights of redemption, stay
or appraisal which it has or may have under any law now existing or hereafter
adopted. The notice of such sale shall be given to the Grantors ten (10) days
prior to such sale and (A) in case of a public sale, state the time and place
fixed for such sale, and (B) in the case of a private sale, state the day
after which sale may be consummated. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places
as the Administrative Agent may fix in the notice of such sale. At
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any such sale the Collateral may be sold in one lot as an entirety or in
separate parcels, as the Administrative Agent may determine. The
Administrative Agent shall not be obligated to make any such sale pursuant to
any such notice. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the sale, and
such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the
Administrative Agent until the selling price is paid by the purchaser
thereof, but the Administrative Agent shall not incur any liability in case
of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent, instead of exercising the power of
sale herein conferred upon it, may proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction. The Grantors shall remain liable for any deficiency.
(b) For the purpose of enforcing any and all rights and remedies under
this Agreement, the Administrative Agent may (i) require the Grantors to, and
each Grantor agrees that it will, at its expense and upon the request of the
Administrative Agent, forthwith assemble all or any part of the Collateral as
directed by the Administrative Agent and make it available at a place
designated by the Administrative Agent which is, in the Agent's opinion,
reasonably convenient to the Agent and such Grantor, whether at the premises
of such Grantor or otherwise, (ii) to the extent permitted by applicable law,
enter, with or without process of law and without breach of the peace, any
premise where any of the Collateral is or may be located and, without charge or
liability to the Administrative Agent, seize and remove such Collateral from
such premises, (iii) have access to and use such Grantor's books and records
relating to the Collateral and (iv) prior to the disposition of the
Collateral, store or transfer such Collateral without charge in or by means
of any storage or transportation facility owned or leased by such Grantor,
process, repair or recondition such Collateral or otherwise prepare it for
disposition in any manner and to the extent the Administrative Agent deems
appropriate and, in connection with such preparation and disposition, use
without charge any Trademark, trade name, Copyright, Patent or technical
process used by such Grantor.
(c) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Administrative Agent may license, or sublicense,
whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any Patents or Trademarks
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included in the Collateral 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;
(ii) the Administrative Agent may (without assuming any
obligations or liability thereunder), at any time and from time to
time, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of the Grantors in,
to and under any Patent Licenses or Trademark Licenses and take or
refrain from taking any action under any thereof, provided, however,
that no such actions shall result in the failure of such Patent
Licenses or Trademark Licenses to remain in compliance with all
Applicable Law, and each Grantor hereby releases the Administrative
Agent and each of the Lenders free and harmless from and against any
claims arising out of, any lawful action so taken or omitted to be
taken with respect thereto except with respect to the gross negligence
or willful misconduct of the Administrative Agent or the Lenders; and
(iii) upon request by the Administrative Agent, each Grantor
will execute and deliver to the Administrative Agent a power of
attorney, in form and substance satisfactory to the Administrative
Agent, for the implementation of any lease, assignment, license,
sublicense, grant or option, sale or other disposition of a Patent or
Trademark. In the event of any such disposition pursuant to this
Section, the Grantors shall supply their know-how and expertise
relating to the manufacture and sale of the products bearing Trademarks
or the products or services made or rendered in connection with
Patents, and its customer lists and other records relating to such
Patents or Trademarks and to the distribution of said products, to the
Administrative Agent.
SECTION 9. Limitation on Duty of Administrative Agent in Respect of
Collateral. Beyond reasonable care in the custody thereof, the Administrative
Agent shall have no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or any income thereon or as to
the preservation of rights against prior parties or any other rights pertaining
thereto. The Administrative Agent shall be deemed to have exercised reasonable
care in the custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property, and the Administrative Agent shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by the
Administrative Agent in good faith.
SECTION 10. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any
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sale of, or other realization upon, all or any part of the Collateral shall be
applied by the Administrative Agent as follows:
first, to payment of the out-of-pocket expenses of such sale
or other realization, including all reasonable out-of-pocket expenses,
liabilities and advances incurred or made by the Administrative Agent
in connection therewith, and any other unreimbursed expenses for which
the Administrative Agent or any Lender is to be reimbursed pursuant to
Section 13.2 of the Credit Agreement, or Section 4(g) or 13 hereof or
any corresponding provision of any of the other Loan Documents;
second, to ratable payment of accrued but unpaid interest
(including post-petition interest) on the Secured Obligations and of
any unpaid fees owing to the Administrative Agent or any Lender under
the Credit Agreement in accordance with the provisions of the Credit
Agreement;
third, to the ratable payment of unpaid principal of
the Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Grantors or their successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
The Administrative Agent may make distribution hereunder in cash or in kind or,
on a ratable basis, in any combination thereof.
SECTION 11. Concerning the Administrative Agent. The provisions of
Article XII of the Credit Agreement shall inure to the benefit of the
Administrative Agent in respect of this Agreement and shall be binding upon the
parties to the Credit Agreement in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the Administrative Agent
therein set forth:
(a) The Administrative Agent is authorized to take all such
action as is provided to be taken by it as Administrative Agent
hereunder and all other action incidental thereto. As to any matters
not expressly provided for herein, the Administrative Agent may request
instructions from the Lenders and shall act or refrain from acting in
accordance with written instructions from the Required Lenders (or,
when expressly required by this Agreement or the Credit Agreement, all
the Lenders) or, in the absence of such instructions, in accordance
with its discretion.
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(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security
Interests, whether impaired by operation of law or by reason of any
action or omission to act on its part (other than any such action or
inaction constituting gross negligence or willful misconduct. The
Administrative Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement by
the Grantors.
SECTION 12. Appointment of Collateral Agents. At any time or times, in
order to comply with any legal requirement in any jurisdiction or in order to
effectuate any provision of the Loan Documents, the Administrative Agent may
appoint another bank or trust company or one or more other Persons, either to
act as collateral agent or agents, jointly with the Administrative Agent or
separately, on behalf of the Administrative Agent and the Lenders with such
power and authority as may be necessary for the effectual operation of the
provisions hereof and specified in the instrument of appointment (which may, in
the discretion of the Administrative Agent, include provisions for the
protection of such collateral agent similar to the provisions of Section 11
hereof).
SECTION 13. Expenses. In the event that the Grantor fail to comply with
the provisions of the Credit Agreement, this Agreement or any other Loan
Document, such that the value of any Collateral or the validity, perfection,
rank or value of the Security Interests are thereby diminished or potentially
diminished or put at risk, the Administrative Agent if requested by the Required
Lenders may, but shall not be required to, effect such compliance on behalf of
such Grantor, and the Grantors shall reimburse the Administrative Agent for the
costs thereof on demand. All insurance expenses and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining and shipping
the Collateral, any and all excise, stamp, intangibles, transfer, property,
sales, and use taxes imposed by any state, federal, or local authority or any
other Governmental Authority on any of the Collateral, or in respect of the sale
or other disposition thereof, shall be borne and paid by the Grantors; and if
the Grantor fail promptly to pay any portion thereof when due, the
Administrative Agent or any Lender may, at its option, but shall not be required
to, pay the same and charge the Grantors' account therefor, and each Grantor
agrees to reimburse the Administrative Agent or such Lender therefor on demand.
All sums so paid or incurred by the Administrative Agent or any Lender for any
of the foregoing and any and all other sums for which the Grantors may become
liable hereunder and all costs and expenses (including reasonable attorneys'
fees, legal expenses and court costs) incurred by the Administrative Agent or
any Lender in enforcing or protecting the Security Interests or any of their
rights or remedies thereon shall be payable by the Grantors on demand and
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shall bear interest (after as well as before judgment) until paid at the rate
then applicable to Base Rate Loans under the Credit Agreement and shall be
additional Secured Obligations hereunder.
SECTION 14. Notices. All notices, communications and distributions
hereunder shall be given or made in accordance with Section 13.1 of the Credit
Agreement.
SECTION 15. Waivers, Non-Exclusive Remedies. No failure on the part of
the Agent or any Lender to exercise, and no delay in exercising and no course of
dealing with respect to, any right under the Credit Agreement, this Agreement or
any other Loan Document shall operate as a waiver thereof or hereof; nor shall
any single or partial exercise by the Agent or any Lender of any right under the
Credit Agreement, this Agreement or any other Loan Document preclude any other
or further exercise thereof, and the exercise of any rights in this Agreement,
the Credit Agreement and the other Loan Documents are cumulative and are not
exclusive of any other remedies provided by law. This Agreement is a Loan
Document executed pursuant to the Credit Agreement.
SECTION 16. Successors and Assigns. This Agreement is for the benefit
of the Agent and the Lenders and their successors and assigns (as permitted by
the Credit Agreement), and in the event of an assignment of all or any of the
Secured Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Agreement shall be binding on the Grantors and their successors and assigns;
provided that the Grantors may not assign any of their rights or obligations
hereunder without the prior written consent of the Agent and the Lenders.
SECTION 17. Changes in Writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Grantors and the Agent with the consent of the
Required Lenders (or, when expressly required by this Agreement or the Credit
Agreement, all of the Lenders).
SECTION 18. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
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SECTION 20. Binding Arbitration; Waiver of Jury Trial.
(a) Binding Arbitration. Upon demand of any party, whether made before or
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Security Agreement
("Disputes"), between or among parties to this Security Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, claims brought as class actions, claims arising from Loan
Documents executed in the future, or claims concerning any aspect of the past,
present or future relationships arising out of or connected with this Security
Agreement. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. The expedited procedures set
forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall apply to
any Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted. Notwithstanding the foregoing, this paragraph shall not apply to any
Hedging Agreement that is a Loan Document.
(b) Jury Trial. TO THE EXTENT PERMITTED BY LAW, THE AGENT, EACH LENDER
AND EACH GRANTOR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief,
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sequestration, garnishment, attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
SECTION 21. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent and the
Lenders in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (b) the invalidity or unenforceability of any provisions
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
SECTION 22. Headings. The various headings of this Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof.
SECTION 23. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
GRANTOR:
[CORPORATE SEAL] CCA Prison Realty Trust
Attest: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ________________________________
_______________________ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary Title: Chief Development Officer
STATE OF Tennessee
_________________________
COUNTY OF Davidson
________________________
This 17th day of July, 1997, personally came before me ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, who, being by me duly sworn, says that he is Chief Development Officer
of CCA Prison Realty Trust, that the seal affixed to the foregoing instrument in
writing is the corporate seal of said Corporation, and that said writing was
signed and sealed by him, in behalf of said Corporation, by its authority duly
given. And the said ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ acknowledged the said writing to be the
act and deed of said Corporation.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________
NOTARY PUBLIC
My Commission Expires: 7-25-98
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Administrative Agent:
FIRST UNION NATIONAL BANK OF
TENNESSEE, as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title: Vice President
----------------------------
[Security Agreement]
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ANNEX I
(to Security Agreement)
[FORM OF LOCKBOX LETTER]
_______________, 19___
[Name and Address of Lockbox Bank)
Re: [CORPORATION]
Ladies and Gentlemen:
We hereby notify you that effective ________________ 19__, we have
transferred exclusive ownership and control of our lock-box account(s) no[s].
_____________________ (the "Lockbox Account[s]") maintained with you under the
terms of the [Lockbox Agreement] attached hereto as Exhibit A (the "Lockbox
Agreement[s]") to First Union National Bank of North Carolina, as Administrative
Agent (the "Agent").
We hereby irrevocably instruct you to make all payments to be made by
you out of or in connection with the Lockbox Account(s) (i) to the
Administrative Agent for credit to account no. ________ maintained by it at its
office at ________________________ or (ii) as you may otherwise be instructed by
the Administrative Agent.
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Lockbox Account(s), including, without limitation, the right
to specify when payments are to be made out of or in connection with the Lockbox
Account(s).
All funds deposited into the Lockbox Account(s) will not be subject to
deduction, set-off, banker's lien or any other right in favor of any other
person than the Administrative Agent, except that you may set-off against the
Lockbox Account(s) the face amount of any check deposited in and credited to
such Lockbox Account(s) which is subsequently returned for any reason. Your
compensation for providing the service contemplated herein shall be mutually
agreed between you and us from time to time and we will continue to pay such
compensation.
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Please confirm your acknowledgment of and agreement to the
foregoing instructions by signing in the space provided below
Very truly yours,
___________________________________
By:________________________________
Name:___________________________
Title:__________________________
Acknowledged and agreed
to as of this _____ day of
__________________, 19___.
[LOCKBOX BANK]
By:_______________________
Name: ____________________
Title:____________________
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SCHEDULE I
(to Security Agreement)
Trademarks and Related Rights
None.
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SCHEDULE II
(to Security Agreement)
Copyrights and Related Rights
None.
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Schedule III
(to Security Agreement)
Government Contracts
None.