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EXHIBIT 10.6
GUARANTOR PLEDGE AND SECURITY AGREEMENT
dated as of
January 27, 1998
LIBERTY GROUP PUBLISHING, INC.
and
the Subsidiary Grantors,
as Grantors
and
CITICORP USA, INC.
as Administrative Agent,
as Secured Party
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TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS.......................................................
Section 1.1..Certain Terms............................................
Section 1.2..Terms Defined in Credit Agreement........................
Section 1.3..Terms Defined in the.....................................
Section 1.4..Terms Generally..........................................
ARTICLE II. THE SECURITY INTERESTS...........................................
Section 2.1...Grant of Security Interests.............................
Section 2.2...Delivery of Instruments and Securities..................
Section 2.3...Investment Property.....................................
Section 2.4...Registration of Pledge..................................
Section 2.5...Financing Statements....................................
Section 2.6...Secured Party Filing....................................
Section 2.7...Further Assurances......................................
Section 2.8...Power of Attorney.......................................
Section 2.9...Survival of Security Interests..........................
Section 2.10...Reinstatement of Security Interests....................
Section 2.11...Each Grantor Remains Liable............................
Section 2.12...Application of Guaranty Provisions.....................
Section 2.13...Liability Joint and Several............................
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS.......................
Section 3.1..The Collateral..........................................
Section 3.2...Maintenance of Perfection...............................
Section 3.3..Defense of Collateral....................................
Section 3.4...Transfer or Encumbrance.................................
Section 3.5...Payments, Dividends and Distributions...................
Section 3.6...Voting Rights...........................................
Section 3.7...Maintenance of Collateral...............................
Section 3.8...Concerning Equipment and Inventory......................
Section 3.9...Concerning Accounts, Instruments and other Claims.......
Section 3.10...Substituted Performance................................
ARTICLE IV. DEFAULT; REMEDIES................................................
Section 4.1...Default.................................................
Section 4.2...Remedies upon Default...................................
Section 4.3...Waivers by Grantors.....................................
Section 4.4...Standard of Care........................................
Section 4.5..Application of Proceeds..................................
Section 4.6..Indemnity and Expenses...................................
Section 4.7...Surplus, Deficiency.....................................
Section 4.8...Information Related to the Collateral...................
Section 4.9...Sale Exempt from Registration...........................
Section 4.10...Registration Rights....................................
Section 4.11...Rights and Remedies Cumulative.........................
Section 4.12...No Direct Enforcement by Beneficiaries.................
ARTICLE V. CONCERNING THE SECURED PARTY......................................
Section 5.1...Agent for Holders.......................................
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Section 5.2...Administrative Agent shall be the Secured Party
Section 5.3...No Assurances or Liability..............................
Section 5.4..Holders Bound............................................
ARTICLE VI. MISCELLANEOUS PROVISIONS.........................................
Section 6.1...Continuing Security Interests; Release..................
Section 6.2...Senior Indebtedness.....................................
Section 6.3...Amendments; Etc.........................................
Section 6.4...Failure or Indulgence Not...............................
Section 6.5...Notices.................................................
Section 6.6..Severability.............................................
Section 6.7..Headings.................................................
Section 6.8..Governing Law; Terms.....................................
Section 6.9..Consent to Jurisdiction and Service of Process...........
Section 6.10... Waiver of Jury Trial..................................
Section 6.11...Additional Grantors....................................
Section 6.12..Counterparts............................................
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GUARANTOR PLEDGE AND SECURITY AGREEMENT
This GUARANTOR PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated
as of January 27, 1998 and entered into by and among LIBERTY GROUP PUBLISHING,
INC., a Delaware corporation ("Holdings"), each of the Persons identified as
Initial Subsidiary Grantors on the signature pages hereof (each, an "Initial
Subsidiary Grantor") and each other Person that at any time agrees in writing
to be bound as a Subsidiary Grantor hereunder (the Initial Subsidiary Grantors
and each such other Person, the "Subsidiary Grantors" and, together with
Holdings, the "Grantors"), and CITICORP USA, INC., a Delaware corporation, in
its capacity as Administrative Agent under the Credit Agreement referred to
below ("Secured Party"), FOR THE BENEFIT OF the Persons that now are or at any
time hereafter become party as a Lender to the Credit Agreement described
herein (the "Lenders"), CITICORP USA, INC., in its individual capacity, as
Administrative Agent and as Swingline Lender, CITIBANK, N.A., as Issuing Bank,
BT ALEX. XXXXX INCORPORATED, as Syndication Agent, XXXXX FARGO BANK, N.A., as
Documentation Agent, BANK OF AMERICA NT & SA, as Co-Agent, and all other
present and future Holders of any of the Secured Obligations described herein
(all, collectively, including the Lenders, the Administrative Agent, the
Swingline Lender, the Issuing Bank, the Syndication Agent, the Documentation
Agent and the Co-Agent, the "Beneficiaries").
RECITALS
Liberty Group Operating, Inc., a Delaware corporation (the "Borrower"), is
a Subsidiary of Holdings. Each Initial Subsidiary Grantor is a Subsidiary of
the Borrower, and each Person that hereafter agrees to become bound hereby as a
Subsidiary Grantor is, on the date it becomes bound hereby, a Subsidiary of the
Borrower.
The Borrower has requested that credit be extended to the Borrower on
terms and conditions set forth in the Credit Agreement.
To induce the Lenders, the Administrative Agent, the Swingline Lender, the
Issuing Bank, the Syndication Agent, the Documentation Agent and the Co-Agent
to enter into the Credit Agreement, and in consideration thereof and of any and
all credit at any time extended thereunder, (a) Holdings and the Initial
Subsidiary Grantors have offered to issue the guaranties and indemnities and
enter into the agreements set forth in Guaranty, Indemnity and Subordination
Agreement dated as of January 27, 1997 (the "Guaranty, Indemnity and
Subordination Agreement") and to grant to the Administrative Agent, for the
benefit of the Beneficiaries, the
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collateral security described herein as security for the payment of the Secured
Obligations on the terms herein set forth, and (b) Holdings and the Borrower
have agreed in the Credit Agreement to cause each Person that hereafter becomes
a Subsidiary of the Borrower to become bound by the provisions of the Guaranty,
Indemnity and Subordination Agreement as a Subsidiary Guarantor thereunder and
to become bound by the provisions hereof as a Subsidiary Grantor hereunder.
ACCORDINGLY, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party for the benefit of
the Beneficiaries as follows:
ARTICLE
DEFINITIONS
SECTION CERTAIN TERMS
. As used in this Agreement, the following terms have the meanings
specified below:
"BANKRUPTCY CODE" means Title 11 of the United States Code, as from time
to time amended.
"CLAIM" has the meaning set forth in the Bankruptcy Code.
"COLLATERAL" has the meaning set forth in Section 2.1.
"CREDIT AGREEMENT" means the Credit Agreement dated as of January 27,
1998, by and among Liberty Group Operating, Inc., a Delaware corporation,
Liberty Group Publishing, Inc., a Delaware corporation, the Lenders party
thereto, the Administrative Agent, the Swingline Lender, the Issuing Bank, the
Syndication Agent, the Documentation Agent and the Co-Agent, as such agreement
from time to time may be modified, amended, restated, extended, refinanced or
replaced in any manner or in any respect (including so as to reduce or increase
the amount or cost of credit extended thereunder or to shorten or extend the
time of payment thereunder or in any other manner change the amount or terms of
credit extended to the Borrower or the identity, rights or obligations of any
party thereto).
"DISCHARGE OF THE CREDIT AGREEMENT" means that all obligations of the
Lenders to extend credit under the Credit Agreement and all letters of credit
at any time issued under the
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Credit Agreement have expired or been terminated and have been absolutely,
unconditionally and irrevocably discharged and all Obligations at any time
created, incurred or outstanding (except Obligations for indemnification which
are then contingent and in respect of which no claim or demand has then been
made) have been fully and finally paid in cash.
"EQUITY INTERESTS" means, with respect to any Person, any capital stock of
such Person or membership interests, partnership interests (whether general or
limited) or other equity interests in such Person, regardless of type, class,
preference or designation, and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto, in each case whether outstanding on the date of this
Agreement or issued or granted at any time thereafter.
"EXCLUDED ASSETS" means (a) rights, licenses and franchises granted by any
Governmental Authority in which it is unlawful to create a Lien, (b) any
leasehold interest in real estate, except the tenant's interest in Fixtures
thereon, and (c) any owned real estate, except Fixtures thereon.
"HOLDER" means, in respect of any Secured Obligation, the Person entitled
to enforce payment thereof and specifically includes each Lender, the
Administrative Agent, the Swingline Lender, the Issuing Bank, the Syndication
Agent, the Documentation Agent, the Co-Agent and the Arranger.
"LOAN PARTIES" means the Borrower and the Guarantors.
"OBLIGATIONS" means all direct or indirect debts, liabilities and
obligations of the Borrower or any other Loan Party of any and every type and
description at any time arising under or in connection with the Credit
Agreement or any other Loan Document, to the Administrative Agent, the
Swingline Lender, the Arranger, the Syndication Agent, the Documentation Agent,
the Co-Agent, the Issuing Bank, Citibank, any Lender, any Person entitled to
indemnification pursuant to the Credit Agreement or any other Loan Document or
to any other Person, in each case whether now outstanding or hereafter created
or incurred, whether or not the right of such Person to payment in respect of
any such debts, liabilities or obligations is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured and whether or not such claim is
discharged, stayed or otherwise affected by any bankruptcy case or insolvency,
reorganization, receivership, dissolution or liquidation proceeding, and shall
include (a) all liabilities of the Borrower for principal of and interest on
any and all loans at any time outstanding under the Credit Agreement, (b) all
liabilities of the Borrower in respect of letters of credit at any time issued
pursuant to the Credit Agreement, (c) all liabilities of the Borrower under the
Loan Documents for any fees, costs, taxes, expenses, indemnification and other
amounts payable thereunder, (d) all liabilities of any Borrower Subsidiary
under any Subsidiary Note, (e) all liabilities of any Guarantor under the
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Guaranty, Indemnity and Subordination Agreement, and (f) all other liabilities
of the Borrower or any other Loan Party under or in respect of any of the Loan
Documents or any of the transactions contemplated thereby and specifically
includes any and all present and future "Obligations" as such term is defined
in the Credit Agreement.
"PERFECTED" means, as to the security interests granted to Secured Party
in Section 2.1, that (a) a creditor on a simple contract cannot acquire a
judicial lien that is superior to such security interests and (b) if a case
were pending under the Bankruptcy Code in which any Grantor is the debtor, such
security interests would be a Lien that is perfected in such bankruptcy case.
"POST-PETITION INTEREST AND EXPENSE CLAIMS" means any and all claims of
any Holder of Secured Obligations (a) for interest on any Obligations
determined for any period of time occurring after the commencement of any case
under the Bankruptcy Code or any other insolvency, reorganization,
receivership, dissolution or liquidation proceeding at the contract rate
(including any applicable post-default increase therein) set forth in the
Credit Agreement or any other Loan Document or (b) for cost and expense
reimbursements or indemnification on the terms set forth in the Credit
Agreement or any other Loan Document relating to costs and expenses incurred
and indemnification rights accrued at any time after the commencement of any
such case or proceeding, in each case to the extent such claim accrues or
becomes payable in accordance with the provisions of the Credit Agreement or
other Loan Documents (or would have accrued or become payable if enforceable or
allowable in such case or proceeding), whether or not such claim is
enforceable, allowable or allowed in such case or proceeding and even if such
claim is disallowed therein.
"SECURED OBLIGATIONS" is defined in Section 2.1.
SECTION TERMS DEFINED IN CREDIT AGREEMENT
. Unless the context otherwise requires, the following terms used in this
Agreement are used as defined in the Credit Agreement:
ABR Loans
Arranger
Asset Purchase Agreements
Borrower
Borrower Subsidiary
Business Day
Co-Agent
Default
Disqualified Stock
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Documentation Agent
Event of Default
Governmental Authority
Guarantee
Guarantors
Issuing Bank
Lien
Loan Documents
Loans
Material Adverse Effect
Miscellaneous Unpledged Assets
Permitted Cash Investments
Person
Required Lenders
Subsidiary
Subsidiary Note
Swingline Lender
Syndication Agent
Transaction Agreements
Transactions
SECTION TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE
. When capitalized, the following terms used in this Agreement or the
Security Documents have the meanings given to them in the Uniform Commercial
Code, as in effect in the State of New York on the date of this Agreement:
Accounts
Certificated Security
Commodity Account
Commodity Contract
Commodity Intermediary
Control
Documents
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Equipment
Financial Asset
Fixtures
General Intangibles
Goods
Instruments
Inventory
Investment Property
Securities Account
Securities Intermediary
Security
Security Certificate
Security Entitlement
Uncertificated Security
SECTION TERMS GENERALLY
. The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "will" shall be construed to have
the same meaning and effect as the word "shall." Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person's successors, transferees and
assigns, (c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer
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to this Agreement in its entirety and not to any particular provision hereof,
(d) all references herein to Articles, Sections, Exhibits and Schedules shall
be construed to refer to Articles and Sections of, and Exhibits and Schedules
to, this Agreement, and (e) the words "asset" and "property" shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, whether real, personal or mixed and of every
type and description.
ARTICLE
THE SECURITY INTERESTS
SECTION GRANT OF SECURITY INTERESTS
. As security for the payment of the Obligations and all Post-Petition
Interest and Expense Claims (collectively, the "Secured Obligations"), each
Grantor hereby assigns to Secured Party for the benefit of the Beneficiaries,
and grants Secured Party for the benefit of the Beneficiaries security
interests in, all of such Grantor's right, title and interest in and to the
following types or items of property, in each case whether now or hereafter
existing or owned by such Grantor or in which such Grantor now owns or
hereafter acquires an interest and wherever the same may be located
(collectively, the "Collateral"):
all Inventory, including specifically all raw materials,
work-in-process, finished goods, supplies, materials, spare parts, Goods
held for sale or on lease or for lease or furnished or to be furnished
under contracts of service, merchandise inventory, rental inventory, and
returned or repossessed Goods and all rights to enforce return or
repossession by reclamation, stoppage in transit or otherwise,
all Equipment, including specifically all manufacturing, printing,
distribution, delivery, retailing, vending, data processing,
communications, office and other equipment in all of its forms, all
vehicles, all tools, dies, and molds, all Fixtures, all other Goods used
or bought for use primarily in a business and all other Goods except
Inventory,
all Accounts,
all Chattel Paper,
all Documents,
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all Instruments and all other Claims that are in any respect
evidenced or represented by any writing, including specifically all
writings evidencing or representing a Claim against Holdings or any
Borrower Subsidiary or any other Person,
all Securities, whether constituting Certificated Securities or
Uncertificated Securities, all Financial Assets, all Security
Entitlements, all Securities Accounts, all Commodity Contracts, all
Commodity Accounts, and all other Investment Property, including
specifically the Security Certificates described in Schedule 3.1(b) and
all other Equity Interests and all Permitted Cash Investments,
all money, cash and cash equivalents, including specifically all
deposit accounts and all certificates of deposit,
all General Intangibles, including specifically (a) the property
described on Schedule 3.1(c), (b) all registered and unregistered
trademarks and servicemarks and all trademark and service xxxx license
agreements to which any Grantor is a party (whether as licensor or
licensee) and all Claims (including infringement claims) relating
thereto, (c) all patents and patent applications and all patent license
agreements to which any Grantor is a party (whether as licensor or
licensee) and all Claims (including infringement claims) relating
thereto, (d) all registered and unregistered copyrights and all copyright
license agreements to which any Grantor is a party (whether as licensor
or licensee) and Claims (including infringement claims) relating thereto,
(e) all other intellectual property in which any Grantor has an interest,
including proprietary research and development, know-how, trade secrets,
trade names, trade styles, license agreements and user rights and Claims
(including infringement claims) relating thereto, (f) all customer lists
and agreements, (g) all supplier lists and agreements, (h) all employee
and consultant lists, rights, and agreements, (i) all computing, data and
information processing and communications programs, discs, designs, and
information and the data and other entries thereon, (j) all books,
records, catalogs, back issues, library rights and all manifestations and
embodyments thereof, (k) all rights and Claims arising under or in
respect of the Asset Purchase Agreements or the other Transaction
Agreements, including all indemnification rights and indemnification
payments thereunder, (l) all rights and Claims arising under or in
respect of the Credit Agreement or any Loan Document, including rights
and Claims against Secured Party or any other Beneficiary, (m) all rights
and Claims arising in respect of the Transactions, (n) all Net Cash
Proceeds, (o) all tax refunds, (p) all policies of insurance and
condemnation awards of every type and description and the proceeds
thereof, (q) all loans receivable, letters of credit, bonds and
undertakings, deferred purchase price or deferred purchase consideration,
consulting or non-competition payments and other Indebtedness,
liabilities and obligations receivable not constituting an Account and
not evidenced or represented by any Instrument, Chattel Paper or
Security, (r) all rights of recoupment, recourse, reimbursement,
subrogation,
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indemnity or contribution (including those arising under the Guaranty,
Indemnity and Subordination Agreement, those arising in respect of any
Guarantee of the Senior Subordinated Notes or any other Guarantee or any
payment thereon, and those arising on account of any other agreement,
transaction or event), (s) all other causes of action and Claims of every
type and description, whether fixed or contingent, liquidated or not
liquidated, accrued or not accrued, and all judgments, orders and
recoveries thereon, (t) all other agreements and contract rights of every
type and description and Claims thereon or relating in any manner
thereto, (u) all other rights, privileges, benefits, entitlements,
franchises, licenses and expectancies of every type and description, (v)
all other intangible property of every type and description, and (w) all
goodwill associated with any of the foregoing,
all property that is at any time delivered to, or that is is at any
time in the Control of, Secured Party,
TOGETHER, IN EACH CASE, WITH (a) all accessions thereto and products and
replacements thereof, (b) all guaranties, Liens and other forms of collateral
security therefor, and (c) all dividends, distributions, and payments received
thereon or in exchange or substitution therefor or upon Transfer thereof, and
(d) all other proceeds thereof,
EXCEPT AND EXCLUDING, HOWEVER, each item of property that is an Excluded
Asset, for as long as it remains an Excluded Asset.
SECTION DELIVERY OF INSTRUMENTS AND SECURITIES
. On the date hereof or, if hereafter acquired, immediately upon
acquisition thereof, without any notice from or demand by Secured Party, (a)
each Grantor shall deliver to Secured Party the Security Certificates described
in Schedule 3.1(b) as owned by it and all other Instruments (except checks
received and collected in the ordinary course of business) and Security
Certificates at any time owned by it and constituting Collateral, in each case
in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer, assignments in blank or with appropriate endorsements,
in form and substance satisfactory to Secured Party, and (b) each Grantor shall
cause the issuer of each Uncertificated Security owned by it and constituting
Collateral to register Secured Party as the registered owner thereof, either
upon original issuance or by registration of transfer and shall executed and
deliver all writings necessary to cause such issuer to do so.
SECTION INVESTMENT PROPERTY
. Each Grantor will cause Secured Party's security interests in
Investment
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Property owned by such Grantor to be and remain continuously Perfected by
Control and, in addition, will cause such security interests to be Perfected by
filing. No Grantor will grant or permit any other security interest or Lien
upon any Investment Property constituting Collateral. If so requested at any
time by Secured Party or the Required Lenders as to any Security Entitlement or
Securities Account or any Commodity Contract or Commodity Account that is owned
by any Grantor, constitutes Collateral and does not constitute Miscellaneous
Unpledged Assets, such Grantor will promptly cause each Person who is a
Securities Intermediary as to any such Security Entitlement or Securities
Account and each Person who is a Commodity Intermediary as to any such Commodity
Contract or Commodity Account to deliver a written agreement enforceable by
Secured Party for the benefit of the Beneficiaries waiving and releasing, and
agreeing not to create, grant, accept or hold, any priority, pari passu or
junior security interest or Lien therein. No Grantor will cause or permit any
Equity Interest in any Subsidiary to be outstanding as an Uncertificated
Security or to constitute a Security Entitlement or be held in a Securities
Account.
SECTION REGISTRATION OF PLEDGE
. Secured Party may at any time when any Event of Default is continuing
and without any notice to any Loan Party or any other Person, transfer to and
register in Secured Party's name, as pledgee, any and all Instruments and
Investment Property constituting Collateral. Such transfer and registration
shall not foreclose or otherwise affect any rights or interests of any Loan
Party and shall not increase, restrict or reduce any of Secured Party's rights
and remedies. If after any such transfer and registration any Grantor remains
entitled under Section 3.6 to exercise voting rights with respect to Equity
Interests included in such Investment Property, Secured Party shall, at the
written request of such Grantor, deliver to such Grantor a revocable proxy or
other instrument sufficient to permit such Grantor to exercise such voting
rights to the extent permitted under Section 3.6.
SECTION FINANCING STATEMENTS
. Each Grantor will duly execute, deliver and (subject to execution by
Secured Party, where required by law) file duly completed financing statements
naming such Grantor as debtor, naming Secured Party as secured party, and
covering the property described in Section 2.1, in the proper filing office in
each jurisdiction in which a financing statement is required from time to time
to be filed in order to ensure that the security interests granted to Secured
Party in Section 2.1 are at all times continuously Perfected, to the extent
that, under applicable law, such security interests can be Perfected by the
filing of a financing statement.
SECTION SECURED PARTY FILING
. Secured Party is hereby authorized to file one or more financing
statements and continuations thereof and amendments thereto, relative to all or
any part of the Collateral, without
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the signature of any Grantor where permitted by law.
SECTION FURTHER ASSURANCES
. Each Grantor will promptly (and in any event within three Business Days
after request by Secured Party or the Required Lenders) execute and deliver,
and use its reasonable and diligent best efforts to obtain from other Persons,
all instruments and documents (including security agreements, security
assignments, Lien releases, Lien waivers, transfer documents and transfer
notices, financing statements and other lien notices), in form and substance
satisfactory to Secured Party or the Required Lenders, and take all other
actions which are necessary or, in the good faith judgment of Secured Party or
the Required Lenders, desirable or appropriate in order to create, maintain,
perfect, ensure the agreed priority of, protect or enforce Secured Party's
security interests in the Collateral, to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral, to
protect the Collateral against the rights, claims or interests of third
persons, or to effect or to assure further the purposes and provisions of this
Agreement, and each Grantor agrees to pay all costs related thereto and all
reasonable expenses incurred by Secured Party in connection therewith.
SECTION POWER OF ATTORNEY
. Each Grantor hereby irrevocably constitutes and appoints Secured Party
and any officer, agent or nominee of Secured Party, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority, in the name of such Grantor or in its own name, if and whenever any
Grantor is in default under this Agreement as set forth in Section 4.1 to take
any and all actions and to execute and deliver any and all agreements,
documents, notices, instruments and writings that Secured Party or the Required
Lenders may determine to be necessary or desirable to create, perfect or ensure
the agreed priority of the security interests granted in Section 2.1 or to
enforce such security interests in any lawful and commercial reasonable manner
or otherwise to protect Secured Party's interest in the Collateral in any
lawful and commercially reasonable manner, including the power and right on
behalf of any Grantor, without notice to or assent by any Grantor:
to ask for, demand, xxx for, collect, settle and give acquittance
for any and all moneys due or to become due with respect to any or all
of the Collateral and otherwise to demand and enforce payment and
collection of any and all Claims constituting Collateral,
to sign and file in any office in any jurisdiction financing
statements, lien notices, collateral assignments and any other
instruments or writings that may be required or, in the opinion of
Secured Party or the Required Lenders, appropriate to create or Perfect a
security interest in or Lien upon any of the Collateral as security for
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the Secured Obligations,
to accept, hold, collect, endorse, transfer and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
nonnegotiable Instruments, Securities, Documents and Chattel Paper
constituting Collateral that may be delivered to Secured Party in
accordance with the provisions of this Agreement, whether made payable to
a Grantor or otherwise,
to commence, file, prosecute, defend, settle, compromise or adjust
any claim, suit, action or proceeding with respect to any or all of the
Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Collateral,
to obtain, contest, enforce, adjust and settle Claims for insurance
proceeds or condemnation awards constituting proceeds of Collateral or
required to be paid to Secured Party pursuant to this Agreement or the
Credit Agreement,
to do, at its option and at the expense and for the account of any
Grantor, at any time and from time to time, all lawful and commercially
reasonable acts and things that Secured Party or the Required Lenders may
deem necessary or desirable to protect or preserve the Collateral or to
realize upon the Collateral,
to contest, settle, pay or discharge taxes or Liens (other than
Liens permitted under this Agreement or the Credit Agreement) levied or
placed upon or threatened against any of the Collateral, and for such
purposes (A) the legality or validity thereof and amounts necessary to
settle or discharge the same may be determined by Secured Party or the
Required Lenders in its or their commercially reasonable discretion and
(B) each Grantor agrees immediately upon demand to reimburse Secured
Party for any payments made by Secured Party on account of any such taxes
or Liens, as part of the Obligations secured hereby,
to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with the Accounts
and other documents relating to the Collateral, and
generally to sell, Transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes,
and to do, at Secured Party's option and at Grantors' expense, at any
time or from time to time, all acts and things that Secured Party or the
Required Lenders reasonably deem necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interests
therein in
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order to effect the intent of this Agreement, all as fully and
effectively as any Grantor might do.
The power granted in this Section 2.8 is a power coupled with an interest, is
irrevocable and shall be discharged upon Discharge of the Credit Agreement.
SECTION SURVIVAL OF SECURITY INTERESTS
. The security interests granted hereby shall, unless released in writing
by Secured Party, (a) remain enforceable as security for all Secured
Obligations now outstanding or created or incurred at any future time (whether
or not created or incurred pursuant to any agreement presently in effect or
hereafter made and notwithstanding any subsequent repayment of any of the
Secured Obligations or any other act, occurrence or event), until Discharge of
the Credit Agreement, (b) survive the Discharge of the Credit Agreement to the
same extent that any contingent Obligation survives, and (c) survive any sale
or other Transfer of any Collateral and remain enforceable against each
transferee and subsequent owner thereof, even if such sale or other Transfer is
permitted at the time under the Credit Agreement, except in the case of
inventory sold in the ordinary course of business and any other Collateral that
is expressly and specifically released from the security interests created
hereby pursuant to a written release signed by Secured Party.
SECTION REINSTATEMENT OF SECURITY INTERESTS
. If at any time any payment on any Secured Obligation is set aside,
avoided or rescinded or must otherwise be restored or returned, this Agreement
and the security interests granted to Secured Party herein and all other
obligations of each Grantor hereunder shall remain in full force and effect
and, if previously released or terminated, shall be automatically and fully
reinstated, without any necessity for any act, consent or agreement of any
Grantor, as fully as if such payment had never been made and as fully as if any
such release or termination had never become effective.
SECTION EACH GRANTOR REMAINS LIABLE
. Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under all contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations under any
contract or agreement included in the Collateral, (c) Secured Party shall not
have any obligation or liability under any contract or agreement included in
the Collateral by reason of this Agreement or the grant to Secured Party of any
security interest in such contract or agreement, and (d) Secured
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Party shall not be obligated to perform any of the obligations or duties of any
Grantor under any contract or agreement included in the Collateral or to take
any action to collect or enforce any claim for payment assigned hereunder.
SECTION APPLICATION OF GUARANTY PROVISIONS
. Each and all of the provisions set forth in the Guaranty, Indemnity and
Subordination Agreement that govern or in any respect relate to any Guarantor's
guarantee of payment of the Guaranteed Obligations (as defined therein) or the
liability of any Guarantor thereunder or any recourse, reimbursement,
contribution, indemnity or subrogation rights related thereto and the
subordination of claims arising therefrom (including specifically each and all
of the provisions in Section 2.5, Article III, Article IV and Sections 5.1,
5.2, 5.3, 5.4, 5.5, 5.6 and 5.7 thereof) shall apply with like force and effect
to the security interest granted by such Guarantor as Grantor under this
Agreement and to the liability of such Guarantor as Grantor under this
Agreement, mutatis mutandis, to the end and with the effect that (a) such
security interest and liability hereunder shall be as equally absolute,
unconditional, continuing, unlimited (except to the extent provided in Section
2.5 of the Guaranty, Indemnity and Subordination Agreement), enduring, assured
and protected as such Guaranteed Obligations and the liability of such
Guarantor under the Guaranty, Indemnity and Subordination Agreement are
absolute, unconditional, continuing, unlimited, enduring, assured and protected
and (b) all recourse, reimbursement, contribution, indemnity or subrogation
rights are forever waived, released and discharged with respect to such
security interest or any enforcement of such security interest or the liability
of any Grantor hereunder on the same terms as those set forth in Article IV of
the Guaranty, Indemnity and Subordination Agreement, with the exceptions
therein set forth.
SECTION LIABILITY JOINT AND SEVERAL
. The security interest granted by each Grantor herein and all liability
of each Grantor hereunder shall be the joint and several obligation of each
Grantor and may be freely enforced against each Grantor, for the full amount of
the Secured Obligations and all other liabilities of such Grantor hereunder,
without regard to whether enforcement is sought or available against any other
Grantor.
ARTICLE
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Grantor represents and warrants to Secured Party and agrees with
Secured Party that:
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SECTION THE COLLATERAL.
OWNERSHIP. Except as otherwise expressly permitted under the Credit
Agreement, (i) each Grantor owns its interest in the Collateral free and clear
of any and all Liens and (ii) no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any filing or recording office, except those in favor of Secured
Party.
INTERESTS IN AND CLAIMS AGAINST SUBSIDIARIES. Schedule 3.1(b) sets forth
accurately and exhaustively all Equity Interests owned by any Grantor in any
Subsidiary of any Grantor and all other Equity Interests owned by any Grantor.
All such Equity Interests are represented by Security Certificates that have
been duly authorized and validly issued, are fully paid and non-assessable and
were not issued in breach or derogation of preemptive rights of any Person.
INTELLECTUAL PROPERTY. Schedule 3.1(c) sets forth accurately and
exhaustively (a) all registered and unregistered trademarks and servicemarks
owned by any Grantor, all trademark and service xxxx license agreements to
which any Grantor is a party (whether as licensor or licensee), and all pending
or overtly threatened infringement claims by or against any Grantor and other
litigation relating to any such trademarks, servicemarks or trademark or
servicemark license agreements, (b) all patents and patent applications owned
by any Grantor, all patent license agreements to which any Grantor is a party
(whether as licensor or licensee), and all pending or overtly threatened
infringement claims by or against any Grantor and other litigation relating to
any such patents, patent applications or patent license agreements, (c) all
registered and unregistered copyrights owned by any Grantor, all copyright
license agreements to which any Grantor is a party (whether as licensor or
licensee) and all pending or overtly threatened infringement claims by or
against any Grantor or other litigation relating to any such copyrights or
copyright license agreements, (d) all other General Intangibles in which any
Grantor has an interest, including proprietary research and development,
know-how, trade secrets, trade names, license agreements and user rights and
other intellectual property of every type and description, all pending or
overtly threatened infringement claims by or against any Grantor and other
litigation relating thereto. and all other intangible property, except General
Intangibles that constitute Miscellaneous Unpledged Assets.
OTHER INVESTMENT PROPERTY. Schedule 3.1(d) sets forth accurately and
exhaustively all other Investment Property of any Grantor, except Investment
Property constituting Miscellaneous Unpledged Assets or Permitted Cash
Investments.
LOCATION OF EQUIPMENT AND INVENTORY. All Equipment and Inventory are
located and intended to be kept at one of the collateral locations specified on
Schedule 3.1(e).
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NO CONSUMER GOODS OR FARM PRODUCTS. No Grantor owns any assets that are,
as to it, consumer goods or farm products.
LOCATION OF GRANTORS. Each Grantor's chief place of business, chief
executive office and office or offices where such Grantor keeps its records
regarding its Accounts and all originals of its Chattel Paper are located, and
during the preceding four months were located, at the Grantor locations
specified on Schedule 3.1(g).
NAMES. The correct legal name of each Grantor is set forth in the
preamble to this Agreement. No Grantor conducts business or hold itself out
under, and in the past five years has not conducted business or held itself out
under, any other name (including any trade-name or fictitious business name)
except any name listed on Schedule 3.1(h).
TAXPAYER ID NUMBER. The proper taxpayer identification number for each
Loan Party is accurately set forth on Schedule 3.1(i).
PERFECTION. Except in the case of property (if any) constituting
Miscellaneous Unpledged Assets, the security interests granted to Secured Party
in Section 2.1 are lawful, valid and enforceable security interests that at all
times have been, and remain, duly and continuously Perfected.
AMENDMENT OF SCHEDULE 3.1. Any Grantor may at any time unilaterally amend
Schedule 3.1 in any respect required by the occurrence of any event that does
not constitute or give rise to a Default, by giving written notice thereof to
Secured Party. To be effective, such notice must state conspicuously that it
constitutes an amendment to certain factual matters relating to the Collateral
set forth in Section 3.1 of this Agreement.
SECTION MAINTENANCE OF PERFECTION.
No Grantor will (a) cause, permit or suffer any voluntary or
involuntary change in its name, identity or corporate structure, or in the
location of its chief executive office, or (b) keep any records relating to its
Accounts or any tangible Collateral (other than mobile goods) at any location
other than a location set forth in Schedule 3.1, unless (in each case) (i)
Schedule 3.1 has first been appropriately supplemented with respect thereto,
and (ii) an appropriate financing statement has been filed in the proper office
and in the proper form, and all other requisite actions have been taken, to
Perfect and continue the Perfection (without loss of priority) of Secured
Party's security interests in the Collateral.
SECTION DEFENSE OF COLLATERAL.
Each Grantor will defend the Collateral against all claims and demands
of all
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Persons at any time claiming any interest therein.
SECTION TRANSFER OR ENCUMBRANCE.
No Grantor will encumber or Transfer any item of Collateral or any
interest therein, or permit or suffer any item of Collateral to be encumbered
or Transferred, unless (a) such action is permitted at the time under the
Credit Agreement and (ii) each Loan Party makes all payments on account of the
Secured Obligations required to be made therefrom and takes all other actions
required to be taken in connection therewith under the Credit Agreement or any
other Loan Document.
SECTION PAYMENTS, DIVIDENDS AND DISTRIBUTIONS.
Each Grantor shall be entitled to receive all payments on Accounts,
Instruments and Claims owned by it and all dividends and distributions on
Equity Interests and other Investment Property owned by it, so long as (a) no
Event of Default has occurred and is continuing or would result, (b) such
Grantor ensures that Secured Party's security interests in any and all such
payments, dividends and distributions (except those constituting Miscellaneous
Unpledged Assets) remain continuously Perfected and (c) each Loan Party makes
all payments on account of the Secured Obligations required to be made
therefrom and takes all other actions required to be taken in connection
therewith under the Credit Agreement or any other Loan Document.
SECTION VOTING RIGHTS.
So long as no Event of Default has occurred or would result, each
Grantor shall have and may exercise all voting rights with respect to any and
all Equity Interests constituting Collateral, except that:
NO BREACH. No Grantor shall act or vote in favor of any action that would
constitute or cause a breach of any obligations of any Loan Party under the
Credit Agreement or under any other Loan Document;
NO CAPITAL STRUCTURE CHANGES. No Grantor shall act or vote in favor of
(i) the authorization or issuance of any Disqualified Stock, options, warrants,
voting rights, or preference shares or additional shares, or (ii) any
reclassification, readjustment, reorganization, merger, consolidation, sale or
disposition of assets, or dissolution, without giving Secured Party at least 15
days' prior written notice thereof;
MATERIAL ADVERSE CHANGES. No Grantor shall act or vote in favor of any
action that has or is reasonably likely to have a material adverse effect on
the value of any of the
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Collateral or that has, or would reasonably be expected to result in, a
Material Adverse Effect; and
TERMINATION OF VOTING RIGHTS. At any time when any Grantor is in
default under this Agreement as set forth in Section 4.1, Secured Party may
terminate any or all of each Grantor's voting rights with respect to any or all
Equity Interests constituting Collateral, either by giving written notice of
such termination to the Borrower or by transferring such Equity Interests into
Secured Party's name, and Secured Party shall thereupon have the sole right and
power to exercise such voting rights.
SECTION MAINTENANCE OF COLLATERAL.
Each Grantor shall:
not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any other Loan Document
or any applicable statute, regulation or ordinance or any policy of
insurance covering any such Collateral;
notify Secured Party of any change in such Grantor's name, identity
or corporate structure within 30 days after such change;
give Secured Party 30 days' prior written notice of any change in
such Grantor's chief place of business, chief executive office, places of
business, collateral locations or federal taxpayer ID number or the
office where such Grantor keeps its Chattel Paper and its records
regarding any Accounts;
if the Lenders give value to enable such Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes; and
pay promptly when due all material property and other taxes,
assessments and governmental charges or levies imposed upon any
Collateral and all Claims that are or might become secured by any Lien
upon any Collateral, except to the extent the same is being contested as
permitted under the Credit Agreement; PROVIDED, that, notwithstanding any
other provision in the Loan Documents, each Grantor shall in any event
pay such taxes, assessments, charges, levies and Claims not later than
five days prior to the date of any proposed sale under any judgment, writ
or warrant of attachment or other legal process entered or filed against
any Grantor or any Collateral as a result of the failure to make such
payment.
SECTION CONCERNING EQUIPMENT AND INVENTORY.
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Each Grantor will:
cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new (ordinary wear and tear
and worn-out and surplus equipment excepted) and in accordance with such
Grantor's past practices and make or cause to be made all repairs,
replacements and other improvements in connection therewith that are
necessary or desirable to such end;
notify Secured Party of any loss or damage to any Equipment in an
amount exceeding $2,000,000;
keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, such Grantor's cost
therefor and (where applicable) the current list prices for the
Inventory, in the ordinary course of such Grantor's business;
if any Inventory is in possession or control of any agent, carrier,
warehouseman, bailee, consignee or processor, upon the occurrence of an
Event of Default instruct such Person to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured
Party; and
if so requested at any time by Secured Party or the Required
Lenders, promptly endorse and deliver to Secured Party each and all
negotiable Documents constituting Collateral.
SECTION CONCERNING ACCOUNTS, INSTRUMENTS AND OTHER CLAIMS.
Each Grantor will:
maintain accurate and complete records concerning the Accounts,
Instruments and all other Claims and the identity, name and address of
each account debtor or obligor thereon, hold and preserve such records in
safekeeping, permit representatives of Secured Party at any time during
normal business hours to inspect, copy and make abstracts from such
records, and render to Secured Party, at such Grantor's cost and expense,
such clerical and other assistance as may be reasonably requested with
regard thereto,
if so requested at any time by Secured Party or the Required
Lenders, such Grantor will certify and deliver to Secured Party complete
and correct copies of each contract or agreement constituting Collateral,
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continue to collect, at such Grantor's expense, all amounts due or
to become due to such Grantor under Accounts, Instruments and other
Claims and, in connection therewith take such action as such Grantor (or,
whenever any Grantor is in default under this Agreement as set forth in
Section 4.1, as Secured Party or the Required Lenders) may reasonably
deem necessary or advisable to enforce collection of amounts due or to
become due to thereunder; PROVIDED, that Secured Party shall have the
right at any time when any Grantor is in default under this Agreement as
set forth in Section 4.1 (A) to notify the account debtors or obligors
under any or all Accounts, Instruments or other Claims of the assignment
of such Accounts, Instruments or Claims to Secured Party and to direct
such account debtors or obligors to make payment of all amounts due or to
become due to any Grantor thereunder directly to Secured Party, (B) to
notify each Person maintaining a lockbox or similar arrangement to which
account debtors or obligors under any Accounts, Instruments or other
Claims have been directed to make payment to remit all amounts
representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly
to Secured Party and (C) at the expense of Grantors, to demand payment of
any Accounts, Instruments and Claims and enforce collection thereof by
legal proceedings in any lawful manner and to extend, renew adjust,
settle or compromise the amount or payment thereof, in the same manner
and to the same extent as any Grantor might have done, and
if Secured Party at any time exercises any of the rights described
in the proviso in Section 3.9(iii), (A) segregate from all other funds
and hold in trust for Secured Party and immediately deliver to Secured
Party (in the identical form received) all amounts and proceeds
(including checks and other instruments) received by any Grantor in
respect of any and all Accounts, Instruments and other Claims, and (B)
not adjust, settle or compromise the amount or payment of any Account or
Claim, or release wholly or partly any account debtor or obligor thereon,
or allow any credit or discount thereon.
SECTION SUBSTITUTED PERFORMANCE.
Secured Party may at any time (but shall not be obligated to) (a)
perform any of the obligations of any Grantor under this Agreement if such
Grantor fails to perform such obligation within three Business Days (or, in the
case of insurance, within one Business Day) after written demand by Secured
Party and (b) make any payments and do any other acts which Secured Party or
the Required Lenders may deem necessary or desirable to protect Secured Party's
security interests in the Collateral, including the right to pay, purchase,
contest or compromise any Lien that attaches or is asserted against any
Collateral, to procure insurance, and to appear in and defend any action or
proceeding relating to any Collateral, and each Grantor agrees promptly to
reimburse Secured Party for all payments made by Secured Party in doing so,
together with interest thereon at the rate then applicable to ABR Loans, all
reasonable attorneys'
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fees and disbursements incurred by Secured Party in connection therewith,
whether or not suit is brought, and all other costs and expenses related
thereto.
ARTICLE
DEFAULT; REMEDIES
SECTION DEFAULT.
Grantors shall be in default under this Agreement (a) whenever any
Event of Default has occurred and is continuing (and each of the Grantors shall
thereupon be in default hereunder without regard to whether or to what degree
any Grantor individually may have caused, participated in, or had any knowledge
of the occurrence of such Event of Default) and (b) at all times after the
Loans have become due and payable, whether at maturity, upon acceleration
pursuant to Section 7.1 of the Credit Agreement or otherwise.
SECTION REMEDIES UPON DEFAULT.
At any time when any Grantor is in default under this Agreement as
set forth in Section 4.1, Secured Party may exercise and enforce, in any order,
(a) each and all of the rights and remedies available to a secured party upon
default under the Uniform Commercial Code or other applicable law, (b) each and
all of the rights and remedies available to it under the Credit Agreement or
any other Loan Document and (c) each and all of the following rights and
remedies:
COLLECTION RIGHTS. Without notice to any Grantor or any other Loan
Party, Secured Party may notify any or all account debtors and obligors on any
Accounts, Instruments or other Claims constituting Collateral of Secured
Party's security interests therein and may direct, demand and enforce payment
thereof directly to Secured Party.
TAKING POSSESSION. Secured Party may (i) enter upon any and all
premises owned or leased by any Grantor where Collateral is located (or
believed by Secured Party to be located), with or without judicial process and
without any obligation to pay rent, (ii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Secured
Party deems appropriate, (iii) take possession of any Grantor's premises or
place custodians in exclusive control thereof, remain on such premises and use
the same and any Grantor's equipment for the purpose of completing any work in
process or otherwise preparing the Collateral for sale or selling or otherwise
Transferring the Collateral, (iv) take possession of all items of Collateral
that are not then in its possession, either upon such premises or by removal
from such premises, and
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(v) require any Grantor or the Person in possession thereof to deliver such
Collateral to Secured Party at one or more locations designated by Secured
Party and reasonably convenient to it and each Grantor owning an interest
therein.
FORECLOSURE. Secured Party may sell, lease, license or otherwise
dispose of or Transfer any or all of the Collateral or any part thereof in one
or more parcels at public sale or in private sale or transaction, on any
exchange or market or at Secured Party's offices or on any Grantor's premises
or at any other location, for cash, on credit or for future delivery, and may
enter into all contracts necessary or appropriate in connection therewith,
without any notice whatsoever unless required by law. Where permitted by law,
one or more of the Beneficiaries may be the purchasers at any such sale and in
such event, if such bid is made by all of the Lenders or by all of the Holders
of Secured Obligations or otherwise whenever a credit bid is expressly
permitted under the Credit Agreement or approved in writing by the
Administrative Agent and the Required Lenders, the Beneficiaries bidding at
such sale may bid part or all of the Obligations owing to them without
necessity of any cash payment on account of the purchase price, even though any
other purchaser at such sale is required to bid a purchase price payable in
cash. Each Grantor agrees that at least 10 calendar days' written notice to
such Grantor of the time and place of any public sale of Collateral owned by it
(or, to the extent such Grantor is entitled by law to notice thereof, the
public sale of any other Collateral), or the time after which any private sale
of Collateral owned by it (or, to the extent such Grantor is entitled by law to
notice thereof, the private sale of any other Collateral) is to be made, shall
be commercially reasonable. For purposes of such notice, to the fullest extent
permitted by law (i) each Grantor waives notice of any sale of Collateral owned
by any other Grantor and (ii) each Grantor agrees that notice given to the
Borrower shall constitute notice given to such Grantor. The giving of notice
of any such sale or other disposition shall not obligate Secured Party to
proceed with the sale or disposition, and any such sale or disposition may be
postponed or adjourned from time to time, without further notice.
USE OF INTELLECTUAL PROPERTY. Secured Party may, on a royalty-free
basis, use and license use of any trademark, trade name, trade style,
copyright, patent or technical knowledge or process owned, held or used
by any Grantor in respect of any Collateral as to which any right or remedy of
Secured Party is exercised or enforced.
In addition, each Holder of any Secured Obligation may exercise and enforce
such rights and remedies for the collection of such Secured Obligation as may
be available to it by law or agreement.
SECTION WAIVERS BY GRANTORS.
. Each Grantor hereby irrevocably waives (a) all rights of redemption from
any foreclosure sale, (b) the benefit of all valuation, appraisal, exemption
and moratorium laws,
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(c) to the fullest extent permitted by law, all rights to notice or a hearing
prior to the exercise by Secured Party of its right to take possession of any
Collateral, whether by self-help or by legal process and any right to object to
the Secured Party taking possession of any Collateral by self-help, (d) if
Secured Party seeks to obtain possession of any Collateral by replevin, claim
and delivery, attachment, levy or other legal process, (i) any notice or demand
for possession prior to the commencement of legal proceedings, (ii) the posting
of any bond or security in any such proceedings, and (iii) any requirement
that Secured Party retain possession and not dispose of any Collateral until
after a trial or final judgment in such proceedings.
SECTION STANDARD OF CARE.
. The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or to protect, preserve, vote or exercise any rights
pertaining to any Collateral. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which
Secured Party accords its own property or if it selects, with reasonable care,
a custodian to hold such Collateral on its behalf.
SECTION APPLICATION OF PROCEEDS.
. Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of
Secured Party, be held by Secured Party as Collateral for, or then, or at any
other time thereafter, applied in full or in part by Secured Party against, the
Secured Obligations in the following order of priority:
FIRST: To the payment of all reasonable costs and expenses of such
sale, collection or other realization, including reasonable compensation
to Secured Party and its agents and counsel, and all other reasonable
expenses, liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is entitled
to indemnification hereunder and all reasonable advances made by Secured
Party hereunder for the account of any Grantor, and to the payment of all
reasonable costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder, all in
accordance with Section 4.6;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) then due and payable; and
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THIRD: To the payment to or upon the order of the Grantor entitled
thereto, or to whomsoever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
SECTION INDEMNITY AND EXPENSES.
INDEMNITY. Each Grantor will defend, indemnify and hold harmless
Secured Party and each Beneficiary from and against any and all claims, losses
and liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including enforcement of
any interest, right or remedy created hereby), except to the extent such
claims, losses or liabilities are directly attributable to Secured Party's or
such Beneficiary's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction.
EXPENSES. Each Grantor will pay to Secured Party upon demand the
amount of any and all reasonable costs and expenses, including the reasonable
fees and expenses of its counsel and of any advisors, consultants, experts and
agents, that Secured Party may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the interests, rights or remedies
of Secured Party hereunder, (iv) the failure by any Grantor to perform or
observe any of the provisions hereof, or (v) the proof, allowance, protection,
administration, treatment, discharge, collection or enforcement of any of the
Secured Obligations or any of the Collateral in any bankruptcy case or
insolvency, reorganization, receivership, dissolution or liquidation proceeding
of or affecting any Loan Party.
SECTION SURPLUS, DEFICIENCY.
. Any surplus proceeds of any sale or other disposition by Secured Party
of any Collateral remaining after Discharge of the Credit Agreement and after
all Secured Obligations are paid in full and in cash shall be paid over to the
Grantor entitled thereto, or to whomever may be lawfully entitled to receive
such surplus or as a court of competent jurisdiction may direct, but prior to
Discharge of the Credit Agreement, such surplus proceeds may be retained by
Secured Party and held as Collateral until Discharge of the Credit Agreement.
The Borrower and each Guarantor shall be and remain liable for any deficiency.
SECTION INFORMATION RELATED TO THE COLLATERAL.
. If Secured Party determines to sell or otherwise Transfer any
Collateral, each Grantor shall, and shall cause any Person controlled by it to,
furnish to Secured Party all
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information Secured Party may request that pertains or could pertain to the
value or condition of the Collateral or that would or might facilitate such
sale or Transfer. Secured Party shall have the right, notwithstanding any
confidentiality obligation or agreement otherwise binding upon it, freely to
disclose such information, and any and all other information (including
confidential information) pertaining in any manner to the Collateral or the
assets, liabilities, results of operations, business or prospects of any Loan
Party, freely to any Person that Secured Party in good faith believes to be a
potential or prospective purchaser in such sale or Transfer, without liability
for any disclosure, dissemination or use that may be made as to such information
by any such Person.
SECTION SALE EXEMPT FROM REGISTRATION.
. Secured Party shall be entitled at any such sale or other Transfer, if
it deems it advisable to do so, to restrict the prospective bidders or
purchasers to Persons who will provide assurances satisfactory to Secured Party
that the Collateral may be offered and sold to them without registration under
the Securities Act of 1933, as amended, and without registration or
qualification under any other applicable state or federal law. Upon the
consummation of any such sale, Secured Party shall have the right to assign,
transfer and deliver to the purchaser or purchasers thereof the Collateral so
sold. Secured Party may solicit offers to buy the Collateral, or any part of
it, from a limited number of investors deemed by Secured Party, in its good
faith judgment or in good faith reliance upon advice of its counsel, to meet
the requirements to purchase securities under Regulation D promulgated under
the Securities Act of 1933 as then in effect (or any other regulation of
similar import). If Secured Party solicits such offers from such investors,
then the acceptance by Secured Party of the highest offer obtained from any of
them shall be deemed to be a commercially reasonable method of disposition of
the Collateral
SECTION REGISTRATION RIGHTS.
. If Secured Party determines that registration of any securities
constituting Collateral under the Securities Act of 1933 or registration or
qualification of such securities under any other applicable state or federal
law is required or desirable in connection with any sale or Transfer of any
Collateral, then as and when requested by Secured Party, each Grantor will use
its best efforts to cause such registration to be effectively made, at no
expense to Secured Party, and to continue any such registration effective for
such time as may be reasonably necessary in the opinion of Secured Party.
SECTION RIGHTS AND REMEDIES CUMULATIVE.
. The rights provided for in this Agreement and the other Loan Documents
are cumulative and are not exclusive of any other rights, powers or privileges
or remedies provided by law or in equity, or under any other instrument,
document or agreement. Secured Party may
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exercise and enforce each right and remedy available to it either before or
concurrently with or after, and independently of, any exercise or enforcement
of any other right or remedy of Secured Party or any Holder of any Secured
Obligation against any Person or property. All such rights and remedies shall
be cumulative, and no one of them shall exclude or preclude any other.
SECTION NO DIRECT ENFORCEMENT BY BENEFICIARIES.
. Secured Party may freely exercise and enforce any and all of its rights
and remedies hereunder, for the benefit of the Beneficiaries. No Beneficiary,
other than Secured Party, shall have any independent right to collect, take
possession of, foreclose against or otherwise enforce the security interests
granted hereby.
ARTICLE
CONCERNING THE SECURED PARTY
SECTION AGENT FOR HOLDERS.
. Secured Party is executing and delivering this Agreement, and accepting
the security interests, rights, remedies, powers and benefits conferred upon
Secured Party hereby, both for its own benefit and as agent for all present
and future Holders of Secured Obligations. The provisions of the Credit
Agreement and all rights, powers, immunities and indemnities granted to Secured
Party under the Credit Agreement or any other Loan Document, or under any
separate agreement made by or otherwise binding upon any Holder of Secured
Obligations, shall apply in respect of such execution, delivery and acceptance
and in respect of any and all actions taken or omitted by Secured Party under,
in connection with or in respect of this Agreement.
SECTION ADMINISTRATIVE AGENT SHALL BE THE SECURED PARTY.
. Secured Party shall at all times be the same Person that is the
Administrative Agent under the Credit Agreement. Written notice of resignation
by the Administrative Agent pursuant to Section 8.6 of the Credit Agreement
shall also constitute notice of resignation as Secured Party under this
Agreement; and appointment of a successor Administrative Agent pursuant to
Section 8.6 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under Section 8.6 of the Credit Agreement
by a successor Administrative Agent, the successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Secured Party under this Agreement, and the retiring
Secured Party under this Agreement shall promptly (a) transfer to such
successor Secured Party
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all sums, securities and other items of Collateral held hereunder, together
with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Secured Party under this
Agreement, and (b) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring Secured Party shall be discharged from its duties and obligations
under this Agreement. After any retiring Administrative Agent's resignation
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION NO ASSURANCES OR LIABILITY.
Secured Party makes no statement, promise, representation or warranty
whatsoever, and shall have no liability whatsoever, to any Holder of any
Secured Obligations as to the authorization, execution, delivery, legality,
enforceability or sufficiency of this Agreement or as to the creation,
perfection, priority, or enforceability of any security interests granted
hereunder or as to existence, ownership, quality, condition, value or
sufficiency of any Collateral or as to any other matter whatsoever.
SECTION HOLDERS BOUND.
Except where the consent of others may be required pursuant to the express
provisions of Section 9.2 of the Credit Agreement, any modification, amendment,
waiver, release, termination or discharge of any security interest, right,
remedy, power or benefit conferred upon Secured Party that is effectuated in a
writing signed by Secured Party shall be binding upon all Holders of Secured
Obligations if it is (i) authorized pursuant to any provision of the Credit
Agreement or any other Loan Document, (ii) required by law or (iii) authorized
or ratified either (A) by the Required Holders or (B) by the Holders of at
least a majority in outstanding principal amount of the Secured Obligations
(other than contingent or unliquidated Secured Obligations).
ARTICLE
MISCELLANEOUS PROVISIONS
SECTION CONTINUING SECURITY INTERESTS; RELEASE.
. This Agreement creates continuing security interests in the Collateral
and shall (a) remain in full force and effect until the Discharge of the Credit
Agreement, (b) be binding
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upon each Grantor and its successors and assigns, and (c) inure, together with
the rights and remedies of Secured Party hereunder, to the benefit of and be
enforceable by Secured Party and its successors, transferees and assigns acting
in the capacity of Administrative Agent under the Credit Agreement. Subject to
and upon Discharge of the Credit Agreement, Secured Party shall (within a
reasonable time after it receives from Grantors a written request for release
of the Collateral) execute and deliver to Grantors an instrument in form and
substance satisfactory to Secured Party releasing (on a quitclaim basis,
without recourse, without warranty, and without any liability whatsoever) any
security interest Secured Party may then hold in the Collateral and thereupon
Secured Party shall, at Grantors' expense, execute and deliver to Grantors such
UCC termination statements and other like documents as Grantors may reasonably
request to evidence such release.
SECTION SENIOR INDEBTEDNESS.
. All liability of each Grantor hereunder (A) is and shall be (and is
hereby designated as) "Senior Indebtedness" within the meaning of and for the
purposes of the Indenture dated as of January 27, 1998 by and among the
Borrower, the Subsidiary Guarantors named therein, and State Street Bank and
Trust Company, as trustee, governing the Borrower's 9 3/8% Senior Subordinated
Notes due 2008, and (B) is and shall be (and is hereby made) senior in right of
payment, on the terms set forth in said Indenture, to said Senior Subordinated
Notes and all "Obligations" (as defined in said Indenture) in respect of said
Senior Subordinated Notes and all "Subsidiary Guarantees" (as defined in said
Indenture) at any time issued under or pursuant to said Indenture.
SECTION AMENDMENTS; ETC.
No amendment or waiver of any provision of this Agreement, or consent to
any departure by any Grantor herefrom, shall in any event be effective unless
the same shall be in writing and signed by Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
. No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION NOTICES.
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. Any and all notices and communications to be given to any Grantor or
Secured Party may be given by courier service, personal service, mailing
the same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at the address of the Borrower set forth in the Credit Agreement, on
the signature pages hereof or to any other address as any party hereto may
specify by written notice to the other parties, and such communication shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three Business Days after depositing it
in the United States mail with postage prepaid and properly addressed.
SECTION SEVERABILITY
. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
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 for any other purpose or be given any substantive effect.
SECTION GOVERNING LAW; TERMS
. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE NEW YORK UNIFORM COMMERCIAL CODE PROVIDES THAT THE PERFECTION
OF THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
Notwithstanding the foregoing, the creation, perfection, priority and
enforcement of a security interest in any deposit account shall be governed by
the laws of the state in which the depositary bank, or branch bank, maintaining
such deposit account is located.
SECTION CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT
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JURISDICTION IN THE STATE OF NEW YORK. BY EXECUTION AND DELIVERY OF THIS
AGREEMENT EACH GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. Each Grantor hereby agrees that service of all process in
any such proceeding in any such court may be made by registered or certified
mail, return receipt requested, to such Grantor at its address provided in
Section 6.5, such service being hereby acknowledged by such Grantor to be
sufficient for personal jurisdiction in any action against such Grantor in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Secured Party to bring proceedings
against such Grantor in the courts of any other jurisdiction.
SECTION WAIVER OF JURY TRIAL
. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Grantors and Secured Party each acknowledge that this waiver
is a material inducement for Grantors and Secured Party to enter into a
business relationship, that Grantors and Secured Party have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION ADDITIONAL GRANTORS
. The initial Grantors hereunder shall be Holdings and such of the
Subsidiaries of the Borrower as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Subsidiaries of the
Borrower may become party hereto, as additional Grantors (each an "Additional
Grantor"), by executing a counterpart of this Agreement. Upon
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delivery of any such counterpart to the Administrative Agent, notice of which
is hereby waived by each Grantor, each such Additional Grantor shall be a
Grantor and shall be as fully a party hereto as if such Additional Grantor were
an original signatory hereof. Each Grantor expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Grantor hereunder, nor by any election of any
Beneficiary not to cause any Subsidiary of Borrower to become an Additional
Grantor hereunder. This Agreement shall be fully effective as to any Grantor
that is or becomes a party hereto regardless of whether any other Person
becomes or fails to become or ceases to be a Grantor hereunder.
SECTION COUNTERPARTS
. This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantors and Secured Party have executed this
Agreement as of the date first written above.
LIBERTY GROUP ARIZONA HOLDINGS, INC.
LIBERTY GROUP ARKANSAS HOLDINGS, INC.
LIBERTY GROUP CALIFORNIA HOLDINGS, INC.
LIBERTY GROUP ILLINOIS HOLDINGS, INC.
LIBERTY GROUP IOWA HOLDINGS, INC.
LIBERTY GROUP KANSAS HOLDINGS, INC.
LIBERTY GROUP MICHIGAN HOLDINGS, INC.
LIBERTY GROUP MINNESOTA HOLDINGS, INC.
LIBERTY GROUP MISSOURI HOLDINGS, INC.
LIBERTY GROUP NEW YORK HOLDINGS, INC.
LIBERTY GROUP PENNSYLVANIA HOLDINGS, INC.
LIBERTY GROUP MANAGEMENT SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
Acting for and on behalf of each of the entities named
above (the "Initial Subsidiary Grantors")
LIBERTY GROUP PUBLISHING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
Accepted as of the 27th day
of January, 1998
CITICORP USA, INC.,
AS ADMINISTRATIVE AGENT
By: /s/ Xxxxxxx Xxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxx
Title: Attorney-In-Fact
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