EXHIBIT 10.2
EXECUTION COPY
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SECOND AMENDED AND RESTATED SECURITY AGREEMENT (WITH GUARANTEE)
made by
CORRECTIONS CORPORATION OF AMERICA
and certain of its Subsidiaries
in favor of
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
Dated as of May 3, 2002
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINED TERMS..................................................................2
1.1. Definitions........................................................................2
1.2. Other Definitional Provisions......................................................7
SECTION 2. GUARANTEE......................................................................8
2.1. Guarantee..........................................................................8
2.2. Rights of Reimbursement, Contribution and Subrogation..............................9
2.3. Amendments, etc. with respect to the Borrower Obligations.........................10
2.4. Guarantee Absolute and Unconditional..............................................11
2.5. Reinstatement.....................................................................11
2.6. Payments..........................................................................12
SECTION 3. GRANT OF SECURITY INTEREST....................................................12
SECTION 4. REPRESENTATIONS AND WARRANTIES................................................13
4.1. Representations in Credit Agreement...............................................13
4.2. Title; No Other Liens.............................................................13
4.3. Perfected First Priority Liens....................................................13
4.4. Jurisdiction of Organization, etc.................................................14
4.5. Inventory, Equipment and Books and Records........................................14
4.6. Farm Products.....................................................................14
4.7. Investment Property...............................................................14
4.8. Receivables.......................................................................15
4.9. Contracts.........................................................................15
4.10. Intellectual Property.............................................................15
4.11. Vehicles..........................................................................17
SECTION 5. COVENANTS.....................................................................18
5.1. Covenants in Credit Agreement.....................................................18
5.2. Delivery and Control of Instruments, Chattel Paper and Investment Property........18
5.3. Maintenance of Insurance..........................................................19
5.4. Payment of Obligations............................................................19
5.5. Maintenance of Perfected Security Interest; Further Documentation.................20
5.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc....................20
5.7. Notices. 21
5.8. Investment Property...............................................................21
5.9. Receivables.......................................................................22
5.10. Contracts.........................................................................22
5.11. Intellectual Property.............................................................23
5.12. Vehicles..........................................................................25
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PAGE
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SECTION 6. REMEDIAL PROVISIONS...........................................................26
6.1. Certain Matters Relating to Receivables...........................................26
6.2. Communications with Obligors; Grantors Remain Liable..............................26
6.3. Pledged Securities................................................................27
6.4. Proceeds to be Turned Over To Administrative Agent................................28
6.5. Application of Proceeds...........................................................28
6.6. Code and Other Remedies...........................................................29
6.7. Registration Rights...............................................................30
6.8. Waiver; Deficiency................................................................31
SECTION 7. THE ADMINISTRATIVE AGENT......................................................31
7.1. Administrative Agent's Appointment as Attorney-in-Fact, etc.......................31
7.2. Duty of Administrative Agent......................................................32
7.3. Execution of Financing Statements.................................................33
7.4. Authority of Administrative Agent.................................................33
7.5. Appointment of Co-Collateral Agents...............................................33
SECTION 8. MISCELLANEOUS.................................................................34
8.1. Amendments in Writing.............................................................34
8.2. Notices...........................................................................34
8.3. No Waiver by Course of Conduct; Cumulative Remedies...............................34
8.4. Enforcement Expenses; Indemnification.............................................34
8.5. Successors and Assigns............................................................35
8.6. Set-Off...........................................................................35
8.7. Counterparts......................................................................35
8.8. Severability......................................................................35
8.9. Section Headings..................................................................35
8.10. Integration.......................................................................35
8.11. GOVERNING LAW.....................................................................36
8.12. Submission to Jurisdiction; Waivers...............................................36
8.13. Acknowledgments...................................................................36
8.14. Additional Grantors...............................................................37
8.15. Releases..........................................................................37
8.16. WAIVER OF JURY TRIAL..............................................................37
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SCHEDULES
Schedule 1: Notice Addresses of Guarantors
Schedule 2: Description of Pledged Investment Property
Schedule 3 Filings and Other Actions Required to Perfect Security Interests
Schedule 4 Exact Legal Name, Location of Jurisdiction of Organization and
Chief Executive Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Intellectual Property
Schedule 7 Contracts
EXHIBITS:
Exhibit A Form of Acknowledgment and Consent
Exhibit B-1 Form of Intellectual Property Security Agreement
Exhibit B-2 Form of After-Acquired Intellectual Property Security Agreement
Exhibit C Form of Control Agreement (Uncertificated Securities)
Exhibit D Form of Control Agreement (Securities Entitlements, Deposit Accounts)
Exhibit E Form of Control Agreement (Commodity Contracts)
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FORM OF
SECOND AMENDED AND RESTATED SECURITY AGREEMENT (WITH GUARANTEE)
THIS SECOND AMENDED AND RESTATED SECURITY AGREEMENT (WITH GUARANTEE), dated
as of May 3, 2002, made by each of the signatories hereto (together with any
other entity that may become a party hereto as provided herein, the "Grantors"),
in favor of XXXXXX COMMERCIAL PAPER INC., as Administrative Agent (in such
capacity, the "Administrative Agent") for (i) the banks and other financial
institutions or entities (the "Lenders") from time to time parties to the Credit
Agreement (as hereinafter defined) and (ii) the other Secured Parties (as
hereinafter defined), AMENDS AND RESTATES IN FULL the Amended and Restated
Security Agreement dated as of August 4, 1999 (as heretofore amended, modified,
restated or supplemented from time to time, the "Original Security Agreement")
among the Borrower, the subsidiaries of the Borrower party thereto and the
Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of January 1,
1999 (as heretofore amended, modified, restated or supplemented from time to
time, the "Original Credit Agreement"), among the Borrower, certain Subsidiaries
of the Borrower, the lenders party thereto (the "Original Lenders"), NationsBank
as the original administrative agent, LCPI, in its capacity as documentation
agent, and The Bank of Nova Scotia, in its capacity as syndication agent, the
Original Lenders agreed to make Loans and issue Letters of Credit (each as
defined in the Original Credit Agreement) to the Borrower;
WHEREAS, the Original Credit Agreement was amended and restated pursuant to
that certain Second Amended and Restated Credit Agreement, dated as of December
7, 2001, among the Borrower, the Subsidiaries of the Borrower from time to time
party thereto as guarantors, the lenders and financial institutions party
thereto, Societe Generale, as documentation agent, The Bank of Nova Scotia, as
syndication agent, SouthTrust Bank, N.A., as co-agent and Xxxxxx Commercial
Paper Inc., as administrative agent (as amended, the "Second Amended and
Restated Credit Agreement") and the Borrower has requested that the Second
Amended and Restated Credit Agreement be amended and restated in full, as set
forth in the Third Amended and Restated Credit Agreement, dated as of May 3,
2002 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Corrections Corporation of America, a
Maryland corporation (the "Borrower"), the several banks and other financial
institutions or entities from time to time parties thereto, Xxxxxx Brothers Inc.
as sole lead arranger and sole book manager (in such capacity, the "Arranger"),
the Administrative Agent, Deutsche Bank Securities Inc. and UBS Warburg LLC as
co-syndication agents (collectively in such capacity, the "Syndication Agents")
and Societe Generale, as documentation agent (in such capacity, the
"Documentation Agent");
WHEREAS, the requisite Lenders under the Second Amended and Restated Credit
Agreement are willing to so amend and restate the Second Amended and Restated
Credit
Agreement and to continue to extend credit to the Borrower, upon and subject to
the terms and conditions set forth therein;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make or purchase the Loans and
make additional extensions of credit under the Credit Agreement that the
Original Security Agreement shall have been amended and restated pursuant to
this Agreement; and
WHEREAS, this Agreement is made in amendment, restatement, modification and
continuation of, but not in extinguishment or novation of, the obligations of
the Borrower and its Subsidiaries under the Original Security Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the
Arranger, the Agents and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective Loans and to issue Letters of Credit
to the Borrower thereunder, each Grantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
Definitions. (a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Certificated Security, Chattel Paper, Commodity
Account, Commodity Contract, Commodity Intermediary, Documents, Entitlement
Order, Equipment, Farm Products, Financial Asset, Goods, Instruments, Inventory,
Letter of Credit Rights, Securities Account, Securities Intermediary, Security,
Security Entitlement and Uncertificated Security.
(b) The following terms shall have the following meanings:
"Agreement": this Second Amended and Restated Security Agreement (with
Guarantee), as the same may be amended, supplemented, replaced or otherwise
modified from time to time.
"Assignment of Claims Act": (a) the Assignment of Claims Act, 31 U.S.A. ss.
3727, for all Receivables with respect to which the account debtor is the United
States or any department, agency or instrumentality of the United States and (b)
any comparable statue of any state or other jurisdiction, or any department,
agency, or instrumentality of such state or other jurisdiction.
"Borrower Obligations": the collective reference to the Obligations (as
defined in the Credit Agreement).
"Collateral": as defined in Section 3.
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"Collateral Account": (i) any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4 or (ii) any cash
collateral account established as provided in Sections 2.12(d) or 8 of the
Credit Agreement.
"Contracts": all contracts between a Grantor and a Governmental Authority
with respect to the management and operation of any Prison Facility, including,
without limitation, as of the Restatement Effective Date, the contracts and
agreements listed in Schedule 7, as the same may be amended, supplemented,
replaced or otherwise modified from time to time, including, without limitation,
(i) all rights of any Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of any Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect thereto,
(iii) all rights of any Grantor to damages arising thereunder and (iv) all
rights of any Grantor to terminate, and to perform and compel performance of,
such Contracts and to exercise all remedies thereunder.
"Copyright Licenses": any written agreement naming any Grantor as licensor
or licensee (including, without limitation, those listed in Schedule 6),
granting any right under any Copyright, including, without limitation, the grant
of rights to manufacture, distribute, exploit and sell materials derived from
any Copyright.
"Copyrights": (i) all copyrights, whether or not the underlying works of
authorship have been published, and all works of authorship and other
intellectual property rights therein, all copyrights of works based on,
incorporated in, derived from or relating to works covered by such copyrights,
all right, title and interest to make and exploit all derivative works based on
or adopted from works covered by such copyrights, and all copyright
registrations and copyright applications, and any renewals or extensions
thereof, including, without limitation, each registration and application
identified in Schedule 6, (ii) the rights to print, publish and distribute any
of the foregoing, (iii) the right to xxx or otherwise recover for any and all
past, present and future infringements and misappropriations thereof, (iv) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
Copyright Licenses entered into in connection therewith, and damages and
payments for past, present or future infringements thereof), and (v) all other
rights of any kind whatsoever accruing thereunder or pertaining thereto.
"Deposit Account": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of which
either (i) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (ii) the guaranteeing by such Subsidiary of the Obligations,
would, in the good faith judgment of the Borrower, result in material adverse
tax consequences to the Borrower; provided, however, that a Foreign Subsidiary
that is treated as a pass-through entity for United States federal income tax
purposes shall not be an Excluded Foreign Subsidiary while so treated.
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"Excluded Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Excluded Foreign Subsidiary.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.
"General Intangibles": all "general intangibles" as such term is defined in
Section 9-102(a)(42) of the Uniform Commercial Code in effect in the State of
New York on the date hereof and, in any event, including, without limitation,
with respect to any Grantor, all contracts, agreements, instruments and
indentures and all licenses and permits issued by Governmental Authorities in
any form, and portions thereof, to which such Grantor is a party or under which
such Grantor has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same may from time to time be
amended, supplemented, replaced or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of such Grantor
to receive proceeds of any insurance, indemnity, warranty or guaranty with
respect thereto, (iii) all rights of such Grantor to damages arising thereunder,
(iv) all rights of such Grantor to receive any tax refunds, and (v) all rights
of such Grantor to terminate and to perform, compel performance and to exercise
all remedies thereunder.
"Guarantor Obligations": with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this
Agreement (including, without limitation, Section 2) or any other Loan Document
to which such Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to any Secured Party that are required to be paid by such Guarantor pursuant to
the terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than the
Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps, caps or
collar agreements or similar arrangements entered into by such Person providing
for protection against fluctuations in interest rates or currency exchange rates
or the exchange of nominal interest obligations, either generally or under
specific contingencies.
"Intellectual Property": the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets and the
Trade Secret Licenses, and all rights to xxx at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
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"Intercompany Note": any promissory note evidencing loans made by any
Grantor to the Borrower or any of its Subsidiaries , including, without
limitation, the Subordinated Intercompany Note.
"Investment Property": the collective reference to (i) all "investment
property" as such term is defined in Section 9-102(a)(49) of the Uniform
Commercial Code in effect in the State of New York on the date hereof including,
without limitation, all Certificated Securities and Uncertificated Securities,
all Security Entitlements, all Securities Accounts, all Commodity Contracts and
all Commodity Accounts (other than any Excluded Foreign Subsidiary Voting Stock
excluded from the definition of "Pledged Stock"), (ii) security entitlements, in
the case of any United States Treasury book-entry securities, as defined in 31
C.F.R. section 357.2, or, in the case of any United States federal agency
book-entry securities, as defined in the corresponding United States federal
regulations governing such book-entry securities, and (iii) whether or not
constituting "investment property" as so defined, all Pledged Notes, all Pledged
Stock, all Pledged Security Entitlements and all Pledged Commodity Contracts.
"Issuers": the collective reference to each issuer of a Pledged Security.
"New York UCC": the Uniform Commercial Code as from time to time in effect
in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower Obligations,
and (ii) in the case of each Guarantor, its Guarantor Obligations.
"Patent License": all agreements, whether written or oral, providing for
the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
"Patents": (i) all patents, patent applications and patentable inventions,
including, without limitation, each issued patent and patent application
identified in Schedule 6, (ii) all inventions and improvements described and
claimed therein, (iii) the right to xxx or otherwise recover for any and all
past, present and future infringements and misappropriations thereof, (iv) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
Patent Licenses entered into in connection therewith, and damages and payments
for past, present or future infringement thereof), and (v) all reissues,
divisions, continuations, continuations-in-part, substitutes, renewals, and
extensions thereof, all improvements thereon and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.
"Pledged Commodity Contracts": all commodity contracts listed on Schedule 2
and all other commodity contracts to which any Grantor is party from time to
time.
"Pledged Debt Securities": the debt securities listed on Schedule 2,
together with any other certificates, options, rights or security entitlements
of any nature whatsoever in
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respect of the debt securities of any Person that may be issued or granted to,
or held by, any Grantor while this Agreement is in effect.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor.
"Pledged Securities": the collective reference to the Pledged Debt
Securities, the Pledged Notes and the Pledged Stock.
"Pledged Security Entitlements": all security entitlements with respect to
the financial assets listed on Schedule 2 and all other security entitlements of
any Grantor.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2, together
with any other shares, stock certificates, options, rights or security
entitlements of any nature whatsoever in respect of the Capital Stock of any
Person (other than the Immaterial Subsidiaries and TransCor America, LLC) that
may be issued or granted to, or held by, any Grantor while this Agreement is in
effect; provided that in no event shall more than 65% of the total outstanding
Excluded Foreign Subsidiary Voting Stock of any Excluded Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-102(a)(64)
of the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Securities, collections thereon or distributions
or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any Account).
"Secured Parties": collectively, the Arranger, the Administrative Agent,
the Syndication Agents, the Documentation Agent, the Lenders and, with respect
to any Specified Hedge Agreement, any affiliate of any Lender party thereto or
any Person that was a Lender or an affiliate thereof when such Specified Hedge
Agreement was entered into that has agreed to be bound by the provisions of
Section 7.2 hereof as if it were a party hereto and by the provisions of Section
9 of the Credit Agreement as if it were a Lender party thereto.
"Securities Act": the Securities Act of 1933, as amended.
"Trademark License": any agreement, whether written or oral, providing for
the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule 6.
"Trademarks": (i) all trademarks, service marks, trade names, corporate
names, company names, business names, trade dress, trade styles, logos, or other
indicia of origin or source identification, trademark and service xxxx
registrations, and applications for
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trademark or service xxxx registrations and any renewals thereof, including,
without limitation, each registration and application identified in Schedule 6,
(ii) the right to xxx or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (iii) all income, royalties,
damages and other payments now and hereafter due and/or payable with respect
thereto (including, without limitation, payments under all Trademark Licenses
entered into in connection therewith, and damages and payments for past, present
or future infringements thereof), and (iv) all other rights of any kind
whatsoever accruing thereunder or pertaining thereto, together in each case with
the goodwill of the business connected with the use of, and symbolized by, each
of the above.
"Trade Secret License": any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trade Secret,
including, without limitation, any of the foregoing referred to in Schedule 6.
"Trade Secrets": (i) all trade secrets and all confidential and proprietary
information, including know-how, manufacturing and production processes and
techniques, inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information, including,
without limitation, any of the foregoing referred to in Schedule 6, (ii) the
right to xxx or otherwise recover for any and all past, present and future
infringements and misappropriations thereof, (iii) all income, royalties,
damages and other payments now and hereafter due and/or payable with respect
thereto (including, without limitation, payments under all licenses entered into
in connection therewith, and damages and payments for past, present or future
infringements thereof), and (iv) all other rights of any kind whatsoever of any
Grantor accruing thereunder or pertaining thereto.
"Vehicles": all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any
jurisdiction and all tires and other appurtenances to any of the foregoing.
1.2 Other Definitional Provisions. (a) The words "hereof", "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or any
part thereof, when used in relation to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof.
(d) The expressions "payment in full," "paid in full" and any other similar
terms or phrases when used herein with respect to the Borrower Obligations or
the Guarantor Obligations shall mean the unconditional, final and irrevocable
payment in full, in immediately
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available funds, of all of the Borrower Obligations or the Guarantor
Obligations, as the case may be.
SECTION 2. GUARANTEE
2.1. Guarantee.
(a) Each of the Guarantors hereby, jointly and severally, unconditionally
and irrevocably, guarantees to the Administrative Agent, for the ratable benefit
of the Secured Parties and their respective successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the Borrower
when due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.
(b) If and to the extent required in order for the Obligations of any
Guarantor to be enforceable under applicable federal, state and other laws
relating to the insolvency of debtors, the maximum liability of such Guarantor
hereunder shall be limited to the greatest amount which can lawfully be
guaranteed by such Guarantor under such laws, after giving effect to any rights
of contribution, reimbursement and subrogation arising under Section 2.2. Each
Guarantor acknowledges and agrees that, to the extent not prohibited by
applicable law, (i) such Guarantor (as opposed to its creditors, representatives
of creditors or bankruptcy trustee, including such Guarantor in its capacity as
debtor in possession exercising any powers of a bankruptcy trustee) has no
personal right under such laws to reduce, or request any judicial relief that
has the effect of reducing, the amount of its liability under this Agreement,
(ii) such Guarantor (as opposed to its creditors, representatives of creditors
or bankruptcy trustee, including such Guarantor in its capacity as debtor in
possession exercising any powers of a bankruptcy trustee) has no personal right
to enforce the limitation set forth in this Section 2.1(b) or to reduce, or
request judicial relief reducing, the amount of its liability under this
Agreement, and (iii) the limitation set forth in this Section 2.1(b) may be
enforced only to the extent required under such laws in order for the
obligations of such Guarantor under this Agreement to be enforceable under such
laws and only by or for the benefit of a creditor, representative of creditors
or bankruptcy trustee of such Guarantor or other Person entitled, under such
laws, to enforce the provisions thereof.
(c) Each Guarantor agrees that Borrower Obligations may at any time and
from time to time be incurred or permitted in an amount exceeding the maximum
liability of such Guarantor under Section 2.1(b) without impairing the guarantee
contained in this Section 2 or affecting the rights and remedies of any Secured
Party hereunder.
(d) The guarantee contained in this Section 2 shall remain in full force
and effect until payment in full of the Obligations, notwithstanding that from
time to time during the term of the Credit Agreement the Borrower may be free
from any Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Secured Party from
the Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce,
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release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made by such
Guarantor in respect of the Borrower Obligations or any payment received or
collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such
Guarantor hereunder until the Borrower Obligations (other than Obligations in
respect of any Specified Hedge Agreement) are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated or have expired.
2.2.Rights of Reimbursement, Contribution and Subrogation.
In case any payment is made on account of the Obligations by any Grantor or
is received or collected on account of the Obligations from any Grantor or its
property:
(a) If such payment is made by the Borrower or from its property, then, if
and to the extent such payment is made on account of Obligations arising from or
relating to a Loan made to the Borrower or a Letter of Credit issued for account
of the Borrower, the Borrower shall not be entitled (A) to demand or enforce
reimbursement or contribution in respect of such payment from any other Grantor
or (B) to be subrogated to any claim, interest, right or remedy of any Secured
Party against any other Person, including any other Grantor or its property; and
(b) If such payment is made by a Guarantor or from its property, such
Guarantor shall be entitled, subject to and upon payment in full of the
Obligations, (A) to demand and enforce reimbursement for the full amount of such
payment from the Borrower and (B) to demand and enforce contribution in respect
of such payment from each other Guarantor which has not paid its fair share of
such payment, as necessary to ensure that (after giving effect to any
enforcement of reimbursement rights provided hereby) each Guarantor pays its
fair share of the unreimbursed portion of such payment. For this purpose, the
fair share of each Guarantor as to any unreimbursed payment shall be determined
based on an equitable apportionment of such unreimbursed payment among all
Guarantors based on the relative value of their assets and any other equitable
considerations deemed appropriate by the court.
(c) If and whenever (after payment in full of the Obligations) any right of
reimbursement or contribution becomes enforceable by any Grantor against any
other Grantor under Sections 2.2(a) and 2.2(b), such Grantor shall be entitled,
subject to and upon payment in full of the Obligations, to be subrogated
(equally and ratably with all other Grantors entitled to reimbursement or
contribution from any other Grantor as set forth in this Section 2.2) to any
security interest that may then be held by the Administrative Agent upon any
Collateral granted to it in this Agreement. Such right of subrogation shall be
enforceable solely against the Grantors, and not against the Secured Parties,
and neither the Administrative Agent nor any other Secured Party shall have any
duty whatsoever to warrant, ensure or protect any such right of subrogation or
to obtain, perfect, maintain, hold, enforce or retain any Collateral for any
purpose related to any such right of subrogation. If subrogation is demanded by
any Grantor, then (after payment in full of the Obligations) the Administrative
Agent shall deliver to the Grantors making such demand, or to a representative
of such Grantors or of the Grantors generally, an instrument satisfactory to the
Administrative Agent transferring, on a quitclaim basis without any recourse,
representation, warranty or obligation whatsoever, whatever security interest
the Administrative
9
Agent then may hold in whatever Collateral may then exist that was not
previously released or disposed of by the Administrative Agent.
(d) All rights and claims arising under this Section 2.2 or based upon or
relating to any other right of reimbursement, indemnification, contribution or
subrogation that may at any time arise or exist in favor of any Grantor as to
any payment on account of the Obligations made by it or received or collected
from its property shall be fully subordinated in all respects to the prior
payment in full of all of the Obligations. Until payment in full of the
Obligations, no Grantor shall demand or receive any collateral security, payment
or distribution whatsoever (whether in cash, property or securities or
otherwise) on account of any such right or claim. If any such payment or
distribution is made or becomes available to any Grantor in any bankruptcy case
or receivership, insolvency or liquidation proceeding, such payment or
distribution shall be delivered by the person making such payment or
distribution directly to the Administrative Agent, for application to the
payment of the Obligations. If any such payment or distribution is received by
any Grantor, it shall be held by such Grantor in trust, as trustee of an express
trust for the benefit of the Secured Parties, and shall forthwith be transferred
and delivered by such Grantor to the Administrative Agent, in the exact form
received and, if necessary, duly endorsed.
(e) The obligations of the Grantors under the Loan Documents, including
their liability for the Obligations and the enforceability of the security
interests granted thereby, are not contingent upon the validity, legality,
enforceability, collectibility or sufficiency of any right of reimbursement,
contribution or subrogation arising under this Section 2.2. The invalidity,
insufficiency, unenforceability or uncollectibility of any such right shall not
in any respect diminish, affect or impair any such obligation or any other
claim, interest, right or remedy at any time held by any Secured Party against
any Guarantor or its property. The Secured Parties make no representations or
warranties in respect of any such right and shall have no duty to assure,
protect, enforce or ensure any such right or otherwise relating to any such
right.
(f) Each Grantor reserves any and all other rights of reimbursement,
contribution or subrogation at any time available to it as against any other
Grantor, but (i) the exercise and enforcement of such rights shall be subject to
Section 2.2(d) and (ii) neither the Administrative Agent nor any other Secured
Party shall ever have any duty or liability whatsoever in respect of any such
right, except as provided in Section 2.2(c).
2.3. Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by any Secured Party may be rescinded by such Secured Party and
any of the Borrower Obligations continued, and the Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, increased, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Secured Party, and the Credit Agreement and the other Loan Documents and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Administrative
Agent (or the requisite Lenders under the Credit Agreement or all Lenders, as
the case may be) may deem advisable from time to time, and any collateral
security, guarantee or right of offset at
10
any time held by any Secured Party for the payment of the Borrower Obligations
may be sold, exchanged, waived, surrendered or released. No Secured Party shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Borrower Obligations or for the guarantee
contained in this Section 2 or any property subject thereto.
2.4. Guarantee Absolute and Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by any Secured Party upon the
guarantee contained in this Section 2 or acceptance of the guarantee contained
in this Section 2; the Borrower Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Borrower and any of the Guarantors, on the one
hand, and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower or any of the Guarantors with respect to the Borrower Obligations. Each
Guarantor understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of
payment and performance without regard to (a) the validity or enforceability of
the Credit Agreement or any other Loan Document, any of the Borrower Obligations
or any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Secured Party, (b)
any defense, set-off or counterclaim (other than a defense of payment or
performance hereunder) which may at any time be available to or be asserted by
the Borrower or any other Person against any Secured Party, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, any Secured Party may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by any Secured Party to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any
Secured Party against any Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
2.5. Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or
11
conservator of, or trustee or similar officer for, the Borrower or any Guarantor
or any substantial part of its property, or otherwise, all as though such
payments had not been made.
2.6. Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars in immediately available funds at the office of the Administrative Agent
located at the Payment Office specified in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in, all of the personal property of such
Grantor, including, without limitation, the following property, in each case,
wherever located and now owned or at any time hereafter acquired by such Grantor
or in which such Grantor now has or at any time in the future may acquire any
right, title or interest (collectively, the "Collateral"), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all Letter of Credit Rights;
(m) all money;
(n) all Vehicles;
(o) all Goods and other property not otherwise described above;
12
(p) all bank accounts, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing such bank
accounts;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing.
Notwithstanding anything to the contrary set forth above, in no event shall
the Collateral include, and no Grantor shall be deemed to have granted a
security interest in, any of such Grantor's right, title or interest in any
contract or agreement to which a Grantor is a party (including the Contracts) to
the extent, but only to the extent, that such a grant, under the terms of such
contract or agreement, results in a breach or termination of the terms of, or
constitutes a default under or termination of, such contract or agreement
(unless such terms would be rendered ineffective pursuant to Section 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction, any other applicable law or principals of equity);
provided that, in any event, immediately upon the ineffectiveness, lapse or
termination of such provision, the Collateral shall include, and such Grantor
shall be deemed to have granted a security interest in, all such rights and
interests as if such provision had never been in effect.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Arranger, the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Secured Parties that:
4.1. Representations in Credit Agreement. In the case of each Guarantor,
the representations and warranties set forth in Section 4 of the Credit
Agreement as they relate to such Guarantor or to the Loan Documents to which
such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, in all material respects, except for
representations and warranties expressly stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date, and the Secured
Parties shall be entitled to rely on each of them as if they were fully set
forth herein, provided that each reference in each such representation and
warranty to the Borrower's knowledge shall, for the purposes of this Section
4.l, be deemed to be a reference to such Guarantor's knowledge.
4.2. Title; No Other Liens. Such Grantor owns or has rights in each item of
the Collateral free and clear of any and all Liens or claims, except for
Permitted Liens. No financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except such as have been filed in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, pursuant to this Agreement or as are
permitted by the Credit Agreement.
4.3. Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) constitute (assuming the filings and other
actions specified on Schedule 3 have been duly filed or completed) valid fully
perfected security interests in all of the Collateral
13
in favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, as collateral security for such Grantor's Obligations, enforceable in
accordance with the terms hereof and the provisions of the UCC against all
creditors of such Grantor and any Persons purporting to purchase any Collateral
from such Grantor and (b) are prior to all other Liens on the Collateral except
for Permitted Liens.
4.4. Jurisdiction of Organization, etc. On the date hereof, such Grantor's
exact legal name (as indicated on the public record of such Grantor's
jurisdiction of formation or organization), jurisdiction of organization and the
location of such Grantor's chief executive office or sole place of business are
specified on Schedule 4. Except as otherwise indicated on Schedule 4, the
jurisdiction of each such Grantor's organization or formation is required to
maintain a public record showing the Grantor to have been organized or formed.
4.5. Inventory, Equipment and Books and Records. On the date hereof, the
Inventory and the Equipment (other than mobile goods) and the books and records
pertaining to the Collateral are kept at the locations listed on Schedule 5.
4.6. Farm Products. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
4.7. Investment Property. (a) The shares of Pledged Stock pledged by such
Grantor hereunder constitute all of the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Excluded Foreign Subsidiary Voting Stock, if less, 65% of the
outstanding Excluded Foreign Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.
(c) The terms of any uncertificated limited liability company interests and
partnership interests included in the Pledged Stock expressly provide that they
are securities governed by Article 8 of the Uniform Commercial Code in effect
from time to time in the "issuer's jurisdiction" of each Issuer thereof (as such
term is defined in the Uniform Commercial Code in effect in such jurisdiction).
(d) The terms of any certificated limited liability company interests and
partnership interests included in the Pledged Stock expressly provide that they
are securities governed by Article 8 of the Uniform Commercial Code in effect
from time to time in the State of New York.
(e) Each of the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
14
(f) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
Permitted Liens.
(g) Each Issuer that is not a Grantor hereunder has executed and delivered
to the Administrative Agent an Acknowledgment and Agreement, in substantially
the form of Exhibit A, to the pledge of the Pledged Securities pursuant to this
Agreement.
4.8. Receivables, etc. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent.
(b) The amounts represented by such Grantor to the Secured Parties from
time to time as owing to such Grantor in respect of the Receivables will at such
times be accurate in all material respects.
4.9. Contracts. (a) No consent of any party (other than such Grantor) to
any Contract is required, or purports to be required, in connection with the
execution, delivery and performance of this Agreement, other than consents from
Governmental Authorities which are party to any of the Contracts.
(b) Each Contract is in full force and effect and constitutes a valid and
legally enforceable obligation of the parties thereto, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Contracts by any party thereto other than (i) those which have been duly
obtained, made or performed, are in full force and effect and do not subject the
scope of any such Contract to any material adverse limitation, either specific
or general in nature and (ii) those consisting of customary annual
appropriations requirements by any applicable Governmental Authority.
(d) Neither such Grantor nor (to such Grantor's knowledge) any of the other
parties to the Contracts is in default in the performance or observance of any
of the terms thereof.
(e) To such Grantor's knowledge, the right, title and interest of such
Grantor in, to and under the Contracts are not subject to any defenses, offsets,
counterclaims or claims.
(f) No amount payable to such Grantor under or in connection with any
Contract is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Administrative Agent.
4.10. Intellectual Property. (a) Schedule 6 lists all Intellectual Property
owned by such Grantor in its own name on the date hereof. Except as set forth in
Schedule 6, such Grantor is the exclusive owner of the entire and unencumbered
right, title and interest in and to
15
such Intellectual Property and is otherwise entitled to use all such
Intellectual Property, without limitation, subject only to the license terms of
the licensing or franchise agreements referred to in paragraph (c) below.
(b) On the date hereof, all Intellectual Property is valid, subsisting,
unexpired and enforceable, has not been abandoned and, to such Grantor's
knowledge, does not infringe the intellectual property rights of any other
Person.
(c) Except as set forth in Schedule 6, on the date hereof (i) none of the
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor, and (ii) there are
no other agreements, obligations, orders or judgments which affect the use of
any Intellectual Property.
(d) To such Grantor's knowledge, the rights of such Grantor in or to the
Intellectual Property do not conflict with or infringe upon the rights of any
third party, and no claim has been asserted that the use of such Intellectual
Property does or may infringe upon the rights of any third party. To such
Grantor's knowledge, there is currently no infringement or unauthorized use of
any item of Intellectual Property.
(e) No holding, decision or judgment has been rendered by any Governmental
Authority with respect to such Grantor's Intellectual Property or, to such
Grantor's knowledge, no other holding, decision or judgment has been rendered by
any Governmental Authority, which, in either case, would limit, cancel or
question the validity or enforceability of, or such Grantor's rights in, any
Intellectual Property in any respect that could reasonably be expected to have a
Material Adverse Effect. Such Grantor is not aware of any uses of any item of
Intellectual Property that could reasonably be expected to lead to such item
becoming invalid or unenforceable including, without limitation, unauthorized
uses by third parties and uses which were not supported by the goodwill of the
business connected with Trademarks and Trademark Licenses.
(f) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, (ii) alleging that any services provided by, processes used by, or
products manufactured or sold by such Grantor infringe any patent, trademark,
copyright, or any other right of any third party, (iii) alleging that any
material Intellectual Property is being licensed, sublicensed or used in
violation of any patent, trademark, copyright or any other right of any third
party, or (iv) which, if adversely determined, would have a material adverse
effect on the value of any Intellectual Property. To the knowledge of such
Grantor, no Person is engaging in any activity that infringes upon the
Intellectual Property or upon the rights of such Grantor therein. Except as set
forth in Schedule 6 hereto, such Grantor has not granted any license, release,
covenant not to xxx, non-assertion assurance, or other right to any person with
respect to any part of the Intellectual Property. The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of any of the Intellectual Property.
(g) With respect to each Copyright License, Trademark License and Patent
License: (i) such license is valid and binding and in full force and effect and
represents the entire
16
agreement between the respective licensor and licensee with respect to the
subject matter of such license; (ii) such license will not cease to be valid and
binding and in full force and effect on terms identical to those currently in
effect as a result of the rights and interests granted herein, nor will the
grant of such rights and interests constitute a breach or default under such
license or otherwise give the licensor or licensee a right to terminate such
license; (iii) such Grantor has not received any notice of termination or
cancellation under such license; (iv) such Grantor has not received any notice
of a breach or default under such license, which breach or default has not been
cured; (v) such Grantor has not granted to any other third party any rights,
adverse or otherwise, under such license; and (vi) such Grantor is not in breach
or default in any material respect under, and no event has occurred that, with
notice and/or lapse of time, would constitute such a breach or default or permit
termination, modification or acceleration of, such license.
(h) Except as set forth in Schedule 6, such Grantor has performed all acts
and has paid all required fees and taxes to maintain each and every item of
material Intellectual Property in full force and effect and to protect and
maintain its interest therein. Such Grantor has used proper statutory notice in
connection with its use of each material Patent, Trademark and Copyright
included in the Intellectual Property.
(i) To the knowledge of such Grantor, none of the Trade Secrets of such
Grantor has been used, divulged, disclosed or appropriated to the detriment of
such Grantor for the benefit of any other Person; (ii) no employee, independent
contractor or agent of such Grantor has misappropriated any trade secrets of any
other Person in the course of the performance of his or her duties as an
employee, independent contractor or agent of such Grantor; and (iii) no
employee, independent contractor or agent of such Grantor is in default or
breach of any term of any employment agreement, non-disclosure agreement,
assignment of inventions agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of such
Grantor's Intellectual Property.
(j) Such Grantor has made all filings and recordations necessary to
adequately protect its interest in its Intellectual Property including, without
limitation, recordation of its interests in the Patents and Trademarks with the
United States Patent and Trademark Office and in corresponding national and
international patent offices, and recordation of any of its interests in the
Copyrights with the United States Copyright Office and in corresponding national
and international copyright offices.
(k) Such Grantor has taken all steps to use consistent standards of quality
in the manufacture, distribution and sale of all products sold and provision of
all services provided under or in connection with any item of Intellectual
Property and has taken all steps to ensure that all licensed users of any kind
of Intellectual Property use such consistent standards of quality.
4.11. Vehicles. The aggregate book value of all Vehicles owned by all
Grantors is less than $4,000,000.
17
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Secured Parties that, from and
after the date of this Agreement until the Obligations (other than Obligations
in respect of any Specified Hedge Agreement) shall have been paid in full, no
Letter of Credit shall be outstanding and the Commitments shall have terminated
or expired:
5.1. Covenants in Credit Agreement. Each Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by such Guarantor or any of its Subsidiaries.
5.2. Delivery and Control of Instruments, Chattel Paper and Investment
Property. (a) If any item or items of the Collateral in excess of $250,000 in
the aggregate at any one time outstanding shall be or become evidenced or
represented by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.
(b) If any of the Collateral shall be or become evidenced or represented by
an Uncertificated Security, such Grantor shall cause the Issuer thereof either
(i) to register the Administrative Agent as the registered owner of such
Uncertificated Security, upon original issue or registration of transfer or (ii)
to agree in writing with such Grantor and the Administrative Agent that such
Issuer will comply with instructions with respect to such Uncertificated
Security originated by the Administrative Agent without further consent of such
Grantor, such agreement to be in substantially the form of Exhibit C.
(c) If any of the Collateral shall be or become evidenced or represented by
a Security Entitlement, such Grantor shall cause the Securities Intermediary
with respect to such Security Entitlement either (i) to identify in its records
the Administrative Agent as having such Security Entitlement against such
Securities Intermediary or (ii) to agree in writing with such Grantor and the
Administrative Agent that such Securities intermediary will comply with
Entitlement Orders originated by the Administrative Agent without further
consent of such Grantor, such agreement to be in substantially the form of
Exhibit D.
(d) If any of the Collateral shall be or become evidenced or represented by
a Commodity Contract, such Grantor shall cause the Commodity Intermediary with
respect to such Commodity Contract to agree in writing with such Grantor and the
Administrative Agent that such Commodity Intermediary will apply any value
distributed on account of such Commodity Contract as directed by the
Administrative Agent without further consent of such Grantor, such agreement to
be in substantially the form of Exhibit E.
(e) If any of the Collateral shall be or become evidenced or represented by
or held in a Securities Account or a Commodity Account, such Grantor shall, in
the case of a Securities Account, comply with Section 5.2(c) with respect to all
Security Entitlements carried in such Securities Account and, in the case of a
Commodity Account, comply with Section 5.2(d) with respect to all Commodity
Contracts carried in such Commodity Account.
18
5.3. Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable insurance companies, insurance on all its
property (including, without limitation, all Inventory, Equipment and Vehicles)
in at least such amounts with such deductibles and against at least such risks
as are usually insured against in the same general area by companies engaged in
the same or a similar business; and furnish to the Administrative Agent with
copies for each Secured Party, upon written request, full information as to the
insurance carried; provided that in any event such Grantor will maintain (i)
property and casualty insurance on all real and personal property on an all
risks basis (including the perils of flood and quake and loss by fire, explosion
and theft), covering the repair or replacement cost of all such property and
consequential loss coverage for business interruption and extra expense (which
shall include construction expenses and such other business interruption
expenses as are otherwise generally available to similar businesses), and (ii)
public liability insurance. All such insurance with respect to such Grantor
shall be provided by insurers or reinsurers which (x) in the case of United
States insurers and reinsurers, have an A.M. Best policyholders rating of not
less than A- with respect to primary insurance and B+ with respect to excess
insurance and (y) in the case of non-United States insurers or reinsurers, the
providers of at least 80% of such insurance have either an ISI policyholders
rating of not less than A, an A.M. Best policyholders rating of not less than A-
or a surplus of not less than $500,000,000 with respect to primary insurance,
and an ISI policyholders rating of not less than BBB with respect to excess
insurance, or, if the relevant insurance is not available from such insurers,
such other insurers as the Administrative Agent may approve in writing. All
insurance shall (i) provide that no cancellation, material reduction in amount
or material change in coverage thereof shall be effective until at least 30 days
after receipt by the Administrative Agent of written notice thereof, (ii) if
reasonably requested by the Administrative Agent, include a breach of warranty
clause and (iii) be reasonably satisfactory in all other respects to the
Administrative Agent.
(b) Such Grantor will deliver to the Administrative Agent on behalf of the
Secured Parties, (i) on the Restatement Effective Date, a certificate dated such
date showing the amount and types of insurance coverage as of such date, (ii)
upon request of the Administrative Agent from time to time, full information as
to the insurance carried, (iii) promptly following receipt of notice from any
insurer, a copy of any notice of cancellation or material change in coverage
from that existing on the Restatement Effective Date, (iv) forthwith, notice of
any cancellation or nonrenewal of coverage by such Grantor, and (v) promptly
after such information is available to such Grantor, full information as to any
claim for an amount in excess of $5,000,000 with respect to any property and
casualty insurance policy maintained by such Grantor. Each Secured Party shall
be named as additional insured on all such liability insurance policies of such
Grantor and the Administrative Agent shall be named as loss payee on all
property and casualty insurance policies of such Grantor.
(c) The Borrower shall deliver to the Secured Parties a report of a
reputable insurance broker with respect to such insurance substantially
concurrently with the delivery by the Borrower to the Administrative Agent of
its audited financial statements for each fiscal year and such supplemental
reports with respect thereto as the Administrative Agent may from time to time
reasonably request.
5.4. Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all
19
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of income or profits therefrom, as well as all claims
of any kind (including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except that no such charge
need be paid if the amount or validity thereof is currently being contested in
good faith by appropriate proceedings, reserves in conformity with GAAP with
respect thereto have been provided on the books of such Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any interest therein.
5.5. Maintenance of Perfected Security Interest; Further Documentation. (a)
Such Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section
4.3 and shall defend such security interest as a perfected security interest
having at least the priority described in Section 4.3 against the claims and
demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Secured Parties from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the assets and property of such Grantor as
the Administrative Agent may reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts and any other relevant
Collateral, taking any actions necessary to enable the Administrative Agent to
obtain "control" (within the meaning of the applicable Uniform Commercial Code)
with respect thereto, including without limitation, executing and delivering and
causing the relevant depositary bank or securities intermediary to execute and
deliver a Control Agreement in the form attached hereto as Exhibit E.
5.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc. Such
Grantor will not, except upon 15 days' prior written notice to the
Administrative Agent and delivery to the Administrative Agent of (a) all
additional executed financing statements and other documents reasonably
requested by the Administrative Agent to maintain the validity, perfection and
priority of the security interests provided for herein and (b) if applicable, a
written supplement to Schedule 5 showing any additional location at which
Inventory or Equipment (other than mobile goods) or books and records pertaining
to the Collateral shall be kept:
(i) permit any of the Inventory or Equipment (other than mobile goods)
or books and records pertaining to the Collateral to be kept at a location
other than those listed on Schedule 5;
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(ii) without limiting any applicable prohibitions on mergers involving
the Grantors contained in the Credit Agreement, change its legal name,
jurisdiction of organization or the location of its chief executive office
or sole place of business from that referred to in Section 4.4; or
(iii) change its legal name, identity or structure to such an extent
that any financing statement filed by the Administrative Agent in
connection with this Agreement would become materially misleading or, in
the opinion of the Administrative Agent, might otherwise be deemed invalid
for the purpose for which it was filed.
5.7. Notices. Such Grantor will advise the Secured Parties promptly, in
reasonable detail, of:
(a) any Lien (other than any Permitted Lien) on any of the Collateral which
would adversely affect the ability of the Administrative Agent to exercise any
of its remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be expected
to have a material adverse effect on the aggregate value of the Collateral or on
the security interests created hereby.
5.8. Investment Property. (a) If such Grantor shall become entitled to
receive or shall receive any stock or other ownership certificate (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer, whether in addition to,
in substitution of, as a conversion of, or in exchange for, any shares of or
other ownership interests in the Pledged Stock, or otherwise in respect thereof,
such Grantor shall accept the same as the agent of the Secured Parties, hold the
same in trust for the Secured Parties and deliver the same forthwith to the
Administrative Agent in the exact form received, duly endorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
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(b) Without the prior written consent of the Administrative Agent, such
Grantor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock or other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, any of the Investment Property or Proceeds thereof or
any interest therein (except pursuant to a transaction expressly permitted by
the Credit Agreement), (iii) create, incur or permit to exist any Lien or option
in favor of, or any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement and Permitted Liens or (iv) enter into any
agreement or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Investment Property
or Proceeds thereof or any interest therein.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees that
(i) it will be bound by the terms of this Agreement relating to the Pledged
Securities issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) with
respect to the Pledged Securities issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 with respect to the
Pledged Securities issued by it.
5.9. Receivables. (a) Other than in the ordinary course of business
consistent with its past practice and so long as no Event of Default shall have
occurred and be continuing, such Grantor will not (i) grant any extension of the
time of payment of any Receivable, (ii) compromise or settle any Receivable for
less than the full amount thereof, (iii) release, wholly or partially, any
Person liable for the payment of any Receivable, (iv) allow any credit or
discount whatsoever on any Receivable or (v) amend, supplement or modify any
Receivable in any manner that could adversely affect the value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.
5.10. Contracts. (a) Such Grantor will perform and comply in all material
respects with all its obligations under the Contracts.
(b) Such Grantor will not amend, modify, terminate, waive or fail to
enforce any provision of any Contract in any manner which (i) could reasonably
be expected to materially adversely affect the value of such Contract as
Collateral, except for such amendments, modifications, terminations, waivers, or
failures to enforce as such Grantor shall reasonably determine, in its good
faith business judgment, to be in its best interests, taking into account its
business operations as a whole, or (ii) otherwise have a Material Adverse
Effect.
(c) Such Grantor will exercise promptly and diligently each and every
material right which it may have under each Contract (other than any right of
termination).
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(d) Upon the request of the Administrative Agent, such Grantor will deliver
to the Administrative Agent (i) a complete and correct copy of each Contract,
including all amendments, supplements and other modifications thereto and (ii) a
copy of each material demand, notice or document received by it relating in any
way to any Contract.
(e) If a Default or Event of Default exists and is continuing, upon the
request of the Administrative Agent, such Grantor agrees to use its reasonable
best efforts to obtain a consent to assignment from any Governmental Authority
which is party to a Contract if the Administrative Agent reasonably believes
that such consent is necessary to cause such Contract to be included as
Collateral hereunder.
(f) If a Default or Event of Default exists and is continuing, upon the
request of the Administrative Agent, such Grantor agrees to use its reasonable
best efforts to take such actions as are reasonably required (in the opinion of
the Administrative Agent) to comply with the Assignment of Claims Act for all
Receivables with respect to which the account debtor is the United States, any
department, agency or instrumentality of the United States or any state or other
jurisdiction, department, agency or instrumentality of such state or other
jurisdiction, so as to designate the Administrative Agent as the payee on all
payments against such Receivables.
5.11. Intellectual Property. (a) Such Grantor (either itself or through
licensees) will (i) continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (ii) maintain as
in the past the quality of products and services offered under such Trademark
and take all necessary steps to ensure that all licensed users of such Trademark
maintain as in the past such quality, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Secured Parties, shall
obtain a perfected security interest in such xxxx pursuant to this Agreement and
the Intellectual Property Security Agreement, and (v) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby such Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do any act,
or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ each
material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise impaired.
Such Grantor will not (either itself or through licensees) do any act whereby
any material portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any act
that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
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(e) Such Grantor (either itself or through licensees) will use proper
statutory notice in connection with the use of each material Patent, Trademark
and Copyright included in the Intellectual Property.
(f) Such Grantor will notify the Administrative Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, or the validity of, any material Intellectual Property
or such Grantor's right to register the same or to own and maintain the same.
(g) Whenever such Grantor, either by itself or through any agent, employee,
licensee or designee, shall file an application for the registration of any
Intellectual Property with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within five Business Days after the last day
of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Secured Parties' security interest in any
Copyright, Patent, Trademark or other Intellectual Property and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(h) Such Grantor will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of material Intellectual Property, including, without
limitation, the payment of required fees and taxes, the filing of responses to
office actions issued by the United States Patent and Trademark Office and the
United States Copyright Office, the filing of applications for renewal or
extension, the filing of affidavits of use and affidavits of incontestability,
the filing of divisional, continuation, continuation-in-part, reissue, and
renewal applications or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings.
(i) Such Grantor (either itself or through licensees) will not, without the
prior written consent of the Administrative Agent, discontinue use of or
otherwise abandon any Intellectual Property, or abandon any application or any
right to file an application for letters patent, trademark, or copyright, unless
such Grantor shall have previously determined that such use or the pursuit or
maintenance of such Intellectual Property is no longer desirable in the conduct
of such Grantor's business and that the loss thereof could not reasonably be
expected to have a Material Adverse Effect and, in which case, such Grantor
shall give prompt notice of any such abandonment to the Administrative Agent in
accordance herewith.
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(j) In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such
actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
(k) Such Grantor agrees that, should it obtain an ownership interest in any
item of intellectual property which is not now a part of the Intellectual
Property Collateral (the "After-Acquired Intellectual Property"), (i) the
provisions of Section 3 shall automatically apply thereto, (ii) any such
After-Acquired Intellectual Property, and in the case of trademarks, the
goodwill of the business connected therewith or symbolized thereby, shall
automatically become part of the Intellectual Property Collateral, (iii) it
shall give prompt (and, in any event within five Business Days after the last
day of the fiscal quarter in which such Grantor acquires such ownership
interest) written notice thereof to the Administrative Agent in accordance
herewith, and (iv) it shall provide the Administrative Agent promptly (and, in
any event within five Business Days after the last day of the fiscal quarter in
which such Grantor acquires such ownership interest) with an amended Schedule 6
hereto and take the actions specified in 5.11(m).
(l) Such Grantor agrees to execute an Intellectual Property Security
Agreement with respect to its Intellectual Property in substantially the form of
Exhibit C-1 in order to record the security interest granted herein to the
Administrative Agent for the ratable benefit of the Secured Parties with the
United States Patent and Trademark Office, the United States Copyright Office,
and any other applicable Governmental Authority.
(m) Such Grantor agrees to execute an After-Acquired Intellectual Property
Security Agreement with respect to its After-Acquired Intellectual Property in
substantially the form of Exhibit C-2 in order to record the security interest
granted herein to the Administrative Agent for the ratable benefit of the
Secured Parties with the United States Patent and Trademark Office, the United
States Copyright Office, and any other applicable Governmental Authority.
5.12. Vehicles.
(a) At any time after the fair market value of all Vehicles owned by the
Loan Parties exceeds $7,000,000 in the aggregate, the Borrower shall promptly so
notify the Administrative Agent and, upon the request of the Administrative
Agent, the Borrower shall promptly deliver to the Administrative Agent, with
respect to each such Vehicle, all applications for certificates of title or
ownership indicating the Administrative Agent's first priority security interest
in the Vehicle covered by such certificate, and any such other documentation,
all in form sufficient for filing in each office in each jurisdiction which the
Administrative Agent shall deem advisable to perfect its security interest in
the Vehicles.
(b) From and after the date on which the Administrative Agent makes the
request described in clause (a) above, no Vehicle shall be removed from the
state which has issued the certificate of title or ownership therefor for a
period in excess of four months.
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SECTION 6. REMEDIAL PROVISIONS
6.1. Certain Matters Relating to Receivables. (a) The Administrative Agent
shall have the right to make test verifications of the Receivables in any manner
and through any medium that it reasonably considers advisable (provided that, if
no Default or Event of Default exists and is continuing, the Administrative
Agent shall not contact any Governmental Authority with respect to any
Receivable without the prior written consent of the Borrower (such consent not
to be unreasonably withheld or delayed)), and each Grantor shall furnish all
such assistance and information as the Administrative Agent may require in
connection with such test verifications. At any time and from time to time, upon
the Administrative Agent's request and at the expense of the relevant Grantor,
such Grantor shall cause independent public accountants or others satisfactory
to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to collect such
Grantor's Receivables, subject to the Administrative Agent's direction and
control, and the Administrative Agent may curtail or terminate said authority at
any time after the occurrence and during the continuance of an Event of Default.
If required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
endorsed by such Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Secured Parties only as provided in Section 6.5, and (ii) until
so turned over, shall be held by such Grantor in trust for the Secured Parties,
segregated from other funds of such Grantor. Each such deposit of Proceeds of
Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
(c) At the Administrative Agent's request, each Grantor shall deliver to
the Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Receivables,
including, without limitation, all original orders, invoices and shipping
receipts.
6.2. Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any time
communicate with obligors under the Receivables and parties to the Contracts to
verify with them to the Administrative Agent's satisfaction the existence,
amount and terms of any Receivables or Contracts; provided that, if no Default
or Event of Default exists and is continuing, the Administrative Agent shall not
contact any Governmental Authority with respect to any Receivable or Contract
without the prior written consent of the Borrower (such consent not to be
unreasonably withheld or delayed).
(b) Upon the request of the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables and parties to the Contracts, in each case,
which constitute Collateral hereunder, that such Receivables and such Contracts
have been assigned to the Administrative Agent for the
26
ratable benefit of the Secured Parties and that payments in respect thereof
shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of the Receivables and Contracts to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. No Secured Party shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of or
arising out of this Agreement or the receipt by any Secured Party of any payment
relating thereto, nor shall any Secured Party be obligated in any manner to
perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3. Pledged Securities. (a) Unless an Event of Default shall have occurred
and be continuing and the Administrative Agent shall have given notice to the
relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Securities; provided, however, that
no vote shall be cast or corporate or other ownership right exercised or other
action taken which, in the Administrative Agent's reasonable judgment, would
impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any other
Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Pledged Securities shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such Pledged
Securities at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate or other structure of any Issuer, or
upon the exercise by any Grantor or the Administrative Agent of any right,
privilege or option pertaining to such Pledged Securities, and in connection
therewith, the right to deposit and deliver any and all of the Pledged
Securities with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for property actually
received by it, but the Administrative Agent shall have no
27
duty to any Grantor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged
Securities pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Administrative Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Administrative Agent.
6.4. Proceeds to be Turned Over To Administrative Agent. In addition to the
rights of the Secured Parties specified in Section 6.1 with respect to payments
of Receivables, if an Event of Default shall occur and be continuing, all
Proceeds received by any Grantor consisting of cash, Cash Equivalents, checks
and other near-cash items shall be held by such Grantor in trust for the Secured
Parties, segregated from other funds of such Grantor, and shall, forthwith upon
receipt by such Grantor, be turned over to the Administrative Agent in the exact
form received by such Grantor (duly endorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor in trust
for the Secured Parties) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof until applied as
provided in Section 6.5.
6.5. Application of Proceeds. At such intervals as may be agreed upon by
the Borrower and the Administrative Agent, or, if an Event of Default shall have
occurred and be continuing, at any time at the Administrative Agent's election,
the Administrative Agent may, notwithstanding the provisions of Section 2.12 of
the Credit Agreement, apply all or any part of Proceeds constituting Collateral
realized through the exercise by the Administrative Agent of its remedies
hereunder, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:
First, to the Administrative Agent, to pay incurred and unpaid fees
and expenses of the Secured Parties under the Loan Documents;
Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Lenders according to the amounts of the
Obligations then due and owing and remaining unpaid to the Lenders;
Third, to the Administrative Agent, for application by it towards
prepayment of the Obligations, pro rata among the Lenders according to the
amounts of the Obligations then held by the Lenders; and
Fourth, any balance of such Proceeds remaining after the Obligations
(other than Obligations in respect of any Specified Hedge Agreement) shall
have been paid in full,
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no Letters of Credit shall be outstanding and the Commitments shall have
terminated or expired shall be paid over to the Borrower or to whomsoever
may be lawfully entitled to receive the same.
6.6. Code and Other Remedies. (a) If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC (whether or not the New York UCC applies to the affected
Collateral) or any other applicable law. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of any Secured Party or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Each Secured Party shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released. Each Grantor further agrees, at the Administrative
Agent's request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor's premises or elsewhere. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 6.6, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Secured Parties hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-615(a) of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands it may acquire against any
Secured Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
(b) In the event of any Disposition of any of the Intellectual Property,
the goodwill of the business connected with and symbolized by any Trademarks
subject to such Disposition shall be included, and the applicable Grantor shall
supply the Administrative Agent or its designee with such Grantor's know-how and
expertise, and with documents and things embodying the same, relating to the
manufacture, distribution, advertising and sale of products or the provision of
services relating to any Intellectual Property subject to such Disposition, and
29
such Grantor's customer lists and other records and documents relating to such
Intellectual Property and to the manufacture, distribution, advertising and sale
of such products and services.
6.7. Registration Rights. (a) If the Administrative Agent shall determine
to exercise its right to sell any or all of the Pledged Stock or the Pledged
Debt Securities pursuant to Section 6.6, and if in the opinion of the
Administrative Agent it is necessary or advisable to have the Pledged Stock or
the Pledged Debt Securities, or that portion thereof to be sold, registered
under the provisions of the Securities Act, the relevant Grantor will cause the
Issuer thereof to (i) execute and deliver, and cause the directors and officers
of such Issuer to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts as may be, in the opinion of the
Administrative Agent, necessary or advisable to register the Pledged Stock or
the Pledged Debt Securities, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock or the Pledged Debt Securities, or that portion thereof to be
sold, and (iii) make all amendments thereto and/or to the related prospectus
which, in the opinion of the Administrative Agent, are necessary or advisable,
all in conformity with the requirements of the Securities Act and the rules and
regulations of the SEC applicable thereto. Each Grantor agrees to cause such
Issuer to comply with the provisions of the securities or "Blue Sky" laws of any
and all jurisdictions which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of Section 11(a)
of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all the Pledged Stock or the Pledged Debt
Securities, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale of
any of the Pledged Stock or the Pledged Debt Securities for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be done
all such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock or the Pledged Debt Securities pursuant to this
Section 6.7 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Grantor further agrees that a breach of any
of the covenants contained in this Section 6.7 will cause irreparable injury to
the Secured Parties, that the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
30
defense that no Event of Default has occurred and is continuing under the Credit
Agreement or a defense of payment.
6.8. Waiver; Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by any Secured Party to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1. Administrative Agent's Appointment as Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Administrative Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Grantor and in the name of such Grantor or in its own name,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract which is Collateral hereunder or with respect to any
other Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such moneys
due under any Receivable or Contract or with respect to any other
Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the Secured
Parties' security interest in such Intellectual Property and the goodwill
and general intangibles of such Grantor relating thereto or represented
thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys,
31
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (3) sign and endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (5) defend any suit,
action or proceeding brought against such Grantor with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases
as the Administrative Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which any
such Copyright, Patent or Trademark pertains), 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; and (8)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
the Administrative Agent were the absolute owner thereof for all purposes,
and do, at the Administrative Agent's option and such Grantor's expense, at
any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Secured Parties' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Administrative Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection with
actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Credit Loans that are Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative Agent
to the date reimbursed by the relevant Grantor, shall be payable by such Grantor
to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
7.2. Duty of Administrative Agent. The Administrative Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
32
Administrative Agent, nor any other Secured Party nor any of their respective
officers, directors, partners, employees, agents, attorneys and other advisors,
attorneys-in-fact or affiliates shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Secured Parties hereunder are solely to protect the Secured
Parties' interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or
affiliates shall be responsible to any Grantor for any act or failure to act
hereunder, except to the extent that any such act or failure to act is found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted solely and proximately from their own gross negligence or willful
misconduct in breach of a duty owed to such Grantor.
7.3. Execution of Financing Statements. Pursuant to Section 9-509(b) of the
New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing or continuation statements, and
amendments thereto, and other filing or recording documents or instruments with
respect to the Collateral in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect or maintain the perfection of
the security interests of the Secured Parties under this Agreement. Such
financing statements may describe the collateral in the same manner as described
in the Security documents or as "all assets" or "all personal property" of the
Grantors, whether now owned or hereafter existing or acquired by the Grantors. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
7.4. Authority of Administrative Agent. Each Grantor acknowledges that the
rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Administrative Agent and the other
Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Secured Parties
with full and valid authority so to act or refrain from acting, and no Grantor
shall be under any obligation, or entitlement, to make any inquiry respecting
such authority.
7.5. Appointment of Co-Collateral Agents. At any time or from time to time,
in order to comply with any Requirement of Law, the Administrative Agent may
appoint another bank or trust company or one of more other persons, either to
act as co-agent or agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and which may be specified in the instrument of appointment (which may,
in the discretion of the Administrative Agent, include provisions for
indemnification and similar protections of such co-agent or separate agent).
33
SECTION 8. MISCELLANEOUS
8.1. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2. Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3. No Waiver by Course of Conduct; Cumulative Remedies. No Secured Party
shall by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
8.4. Enforcement Expenses; Indemnification. (a) Each Grantor agrees to pay
or reimburse each Secured Party for all its costs and expenses incurred in
collecting against such Grantor under the guarantee contained in Section 2 or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Grantor is a party, including, without limitation,
the fees and disbursements of counsel to each Secured Party and of counsel to
the Administrative Agent.
(b) Each Grantor agrees to pay, and to save the Secured Parties harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.
(c) Each Grantor agrees to pay, and to save the Secured Parties harmless
from, any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement to the extent the Borrower would be required to
do so pursuant to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
34
(e) Each Grantor agrees that the provisions of Section 2.20 of the Credit
Agreement are hereby incorporated herein by reference, mutatis mutandis, and
each Secured Party shall be entitled to rely on each of them as if they were
fully set forth herein.
8.5. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Secured Parties and their successors and assigns; provided that no Grantor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.
8.6. Set-Off. Each Grantor hereby irrevocably authorizes each Secured Party
at any time and from time to time while an Event of Default shall have occurred
and be continuing, without notice to such Grantor or any other Grantor, any such
notice being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Secured Party to or for
the credit or the account of such Grantor, or any part thereof in such amounts
as such Secured Party may elect, against and on account of the obligations and
liabilities of such Grantor to such Secured Party hereunder and claims of every
nature and description of such Secured Party against such Grantor, in any
currency, whether arising hereunder, under the Credit Agreement, any other Loan
Document or otherwise, as such Secured Party may elect, whether or not any
Secured Party has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. Each Secured Party shall
notify such Grantor promptly of any such set-off and the application made by
such Secured Party of the proceeds thereof, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Secured Party under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which such
Secured Party may have.
8.7. Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9. Section Headings. The Section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
8.10. Integration. This Agreement and the other Loan Documents represent
the agreement of the Grantors, the Administrative Agent and the other Secured
Parties with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations
35
or warranties by any Secured Party relative to subject matter hereof and thereof
not expressly set forth or referred to herein or in the other Loan Documents.
8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12. Submission to Jurisdiction; Waivers. Each Grantor hereby irrevocably
and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13. Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) no Secured Party has any fiduciary relationship with or duty to any
Grantor arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Grantors, on the one hand, and
the Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Secured Parties.
36
8.14. Additional Grantors. Each Subsidiary of the Borrower that is required
to become a party to this Agreement pursuant to Section 6.10 of the Credit
Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15. Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations (other than Obligations in respect of any
Specified Hedge Agreement) shall have been paid in full, the Commitments have
been terminated or expired and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be Disposed of by any Grantor in a
transaction permitted by the Credit Agreement, then the Administrative Agent, at
the request and sole expense of such Grantor, shall execute and deliver to such
Grantor all releases or other documents reasonably necessary or desirable for
the release of the Liens created hereby on such Collateral. At the request and
sole expense of the Borrower, a Subsidiary Guarantor shall be released from its
obligations hereunder in the event that all the Capital Stock of such Subsidiary
Guarantor shall be Disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the Administrative
Agent, at least five Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Subsidiary Guarantor and
the terms of the Disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a certification by the
Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents and that the Proceeds of such Disposition
will be applied in accordance therewith.
(c) Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement originally filed in connection herewith without the prior
written consent of the Administrative Agent subject to such Grantor's rights
under Section 9-509(d)(2) of the New York UCC.
8.16. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE ADMINISTRATIVE AGENT
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
[Signature pages follow]
37
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Security Agreement to be duly executed and delivered as of the date first above
written.
CORRECTIONS CORPORATION OF AMERICA
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: CEO & President
CCA OF TENNESSEE, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: CEO & President
PRISON REALTY MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: CEO & President
CCA INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President - Treasurer
TRANSCOR AMERICA, LLC
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President - Treasurer
TECHNICAL AND BUSINESS INSTITUTE OF
AMERICA, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: CEO & President
38
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Authorized Signatory
39
[Schedules and Exhibits Intentionally Omitted]
