AMENDED AND RESTATED GUARANTY AND COLLATERAL AGREEMENT dated as of April 2, 2008 among KIDS LINE, LLC, SASSY, INC., LAJOBI, INC., and THE OTHER PARTIES HERETO as Grantors, and LASALLE BANK NATIONAL ASSOCIATION, as the Administrative Agent
Exhibit 4.22
Execution Copy
AMENDED AND RESTATED
GUARANTY AND COLLATERAL AGREEMENT
GUARANTY AND COLLATERAL AGREEMENT
dated as of April 2, 2008
among
KIDS LINE, LLC,
SASSY, INC.,
LAJOBI, INC.,
I & J HOLDCO, INC.
and
THE OTHER PARTIES HERETO
as Grantors,
as Grantors,
and
LASALLE BANK NATIONAL ASSOCIATION,
as the Administrative Agent
as the Administrative Agent
AMENDED AND RESTATED
GUARANTY AND COLLATERAL AGREEMENT
GUARANTY AND COLLATERAL AGREEMENT
This Amended and Restated Guaranty and Collateral Agreement dated as of April 2, 2008 (this
“Agreement”) is entered into among KIDS LINE, LLC, a Delaware limited liability company
(“Kids Line”), SASSY, INC., an Illinois corporation (“Sassy”), LAJOBI, INC., a
Delaware corporation (“LaJobi”), I & J HOLDCO, INC., a Delaware corporation
(“I&J”), those Subsidiaries that are or, in accordance with Section 10.10 of the
Credit Agreement, may hereafter become parties to the Credit Agreement (as defined herein) as
“Borrowers” (Kids Line, Sassy, LaJobi, I & J and such Subsidiaries are sometimes referred to herein
collectively as the “Borrowers”) and those Subsidiaries that are or, in accordance with
Section 10.10 of the Credit Agreement, may hereafter become parties hereto and to the
Credit Agreement as “Guarantors” (collectively, the “Guarantors”) (the Borrowers and the
Guarantors being collectively referred to herein as the “Grantors”, and each a
“Grantor”) and any other person that becomes a party hereto as provided herein being,
collectively, the “Grantors”, in favor of LASALLE BANK NATIONAL ASSOCIATION, as the
“Administrative Agent” for itself and the Lenders (as defined in the Credit Agreement).
Kids Line, Sassy, the Administrative Agent and certain Lenders previously entered into the
Existing Credit Agreement (as defined in the Credit Agreement) pursuant to which the “Lenders”
party thereto agreed to make certain credit facilities available to Kids Line, Sassy and any other
“Borrowers” (as defined in the Existing Credit Agreement) party thereto. In connection with such
extension of credit, such Borrowers and certain other parties executed that certain Guaranty and
Collateral Agreement dated as of March 14, 2006 (as amended prior to the date hereof, the
“Existing Guaranty and Collateral Agreement”) pursuant to which the “Grantors” party
thereto (i) provided certain guarantees in favor of the Administrative Agent on behalf of itself
and such Lenders and (ii) granted to the Administrative Agent on behalf of itself and such Lenders
a security interest in the “Collateral” as defined therein.
As of the date hereof, the Existing Credit Agreement is being amended and restated at the
request of the Borrowers party thereto and the parties hereto are entering into an Amended and
Restated Credit Agreement of even date herewith among the Borrowers, the other Grantors from time
to time party thereto, the Lenders, and the Administrative Agent (as amended, supplemented,
restated or otherwise modified from time to time, the “Credit Agreement”) pursuant to which
the Administrative Agent and the Lenders have severally agreed to add additional Borrowers,
increase the amount of the term loan facility and revolving credit facility (which includes letters
of credit) available to the Borrowers, permit the Target Acquisitions and make certain other
amendments thereto, in each case, upon the terms and conditions set forth therein. In connection
therewith, the parties hereto desire to amend and restate the Existing Guaranty and Collateral
Agreement in its entirety.
The Administrative Agent and Lenders have severally agreed to extend credit and provide other
financial accommodations to the Borrowers pursuant to the Credit Agreement. The Borrowers are
affiliated with each other Grantor. The Borrowers and the other Grantors are engaged in
interrelated businesses, and each Grantor will derive substantial direct and indirect benefit from
extensions of credit under the Credit Agreement. It is a condition precedent to the Administrative
Agent’s and each Lender’s obligation to extend credit under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to the
Administrative Agent for the benefit of itself and all the Lenders.
In consideration of the premises and to induce the Administrative Agent and the Lenders to
enter into the Credit Agreement and to induce the Administrative Agent and the Lenders to extend
credit and provide other financial accommodations thereunder, each Grantor hereby agrees with the
Administrative Agent, for the benefit of itself and the Lenders, as follows:
SECTION 1 DEFINITIONS.
1.1 Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement, and the following terms are used
herein as defined in the UCC: Accounts, Account Debtor, Certificated Security, Commercial Tort
Claims, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Goods, Instruments,
Inventory, Leases, Letter-of-Credit Rights, Money, Payment Intangibles, Supporting Obligations,
Tangible Chattel Paper.
1.2 When used herein the following terms shall have the following meanings:
Assigned Agreements means (i) the Acquisition Documents, together with all security
agreements, and all liens, security interest and other encumbrances granted thereunder, (ii) any
agreement executed from time to time in favor of any Grantor by their customers securing the
purchase price of goods purchased by such customers from such Grantor (or any of them), and (iii)
each material document, instrument and agreement to be executed in connection with each Permitted
Acquisition.
Agreement has the meaning set forth in the preamble hereto.
Borrower Obligations means all Obligations of the Borrowers.
Chattel Paper means all “chattel paper” as such term is defined in Section
9-102(a)(11) of the UCC and, in any event, including with respect to any Grantor, all Electronic
Chattel Paper and Tangible Chattel Paper.
Collateral means (a) all of the personal property now owned or at any time hereafter
acquired by any Grantor or in which any Grantor now has or at any time in the future may acquire
any right, title or interest, including all of each Grantor’s Accounts, Chattel Paper, Commercial
Tort Claims, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Goods,
Instruments, Intellectual Property, Inventory, Investment Property, Leases, Letter-of-Credit
Rights, Money, Supporting Obligations, and Identified Claims, (b) all of the real property
mortgaged by any Grantor to the Administrative Agent, (c) all books and records pertaining to any
of the foregoing and to each Grantor’s business, (d) any other property of any Grantor now or
hereafter in the possession, custody or control of the Administrative Agent, or any Lender or any
participant with any Lender in the Loans, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise), (e) all additions and accessions to,
substitutions for, and replacements, products and Proceeds of any of the foregoing, including
without limitation, proceeds of all insurance policies insuring the foregoing property, and (f) all
collateral security and guaranties given by any Person with respect to any of the
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foregoing. Where the context requires, terms relating to the Collateral or any part thereof,
when used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part
thereof. Notwithstanding the foregoing, in no event shall any equity interest of any Second-Tier
Foreign Subsidiary or more than 65% of the total outstanding equity interests of any First-Tier
Foreign Subsidiary of any Grantor be deemed at any time to be “Collateral” hereunder. Anything
contained in this Agreement to the contrary notwithstanding, the term “Collateral” shall not
include any rights or interests in any real property lease or any contract, permit, license,
charter or other agreement covering personal property that are now or hereafter held by any Grantor
in the event that as a result of an assignment thereof or grant of a security interest therein,
such Grantor’s rights in or with respect to such real property lease, contract, permit, license,
charter, or other agreement would be forfeited or such Grantor would be deemed to have breached or
defaulted under such real property lease, contract, permit, license, charter or other agreement
pursuant to restrictions contained in such real property lease, contract, permit, license, charter,
or other agreement (but only to the extent such prohibition is enforceable at law) (such real
estate leases, contracts, permits, licenses, charters and other agreements in existence as of the
date hereof are set forth on Schedule 1.1A attached hereto, as the same may be updated in
accordance with Section 5.10(f)(y); all such real estate leases, contracts, permits,
licenses, charters and other agreements being the “Restricted Agreements”);
provided that the security interest granted herein and the term “Collateral” shall include
the right to receive payments and other Proceeds with respect to such Restricted Agreements and the
Goods produced under such Restricted Agreements and the Proceeds thereof (except for the Restricted
Agreements set forth on Schedule 1.1B attached hereto as the same may be updated monthly to
reflect any additions or changes thereto); and provided further that the applicable
Grantor shall, after the Administrative Agent’s request, have used its reasonable efforts to
provide notice to the Administrative Agent of such restrictions contained in any Restricted
Agreement to an assignment thereof or a grant of a security interest therein. In addition, the
term “Collateral” shall not include Equipment which is subject to a Permitted Lien described in
Section 11.2(d) of the Credit Agreement, which pursuant to and for so long as the terms of
any lease or financing agreement with respect thereto prohibits the granting of a security interest
in such Equipment (so long as such restriction is limited to the particular Equipment financed or
leased thereunder).
Contract Rights means all of the Grantors’ rights and remedies with respect to the
Assigned Agreements.
Copyrights means all copyrights arising under the laws of the United States, any other
country or any political subdivision thereof, whether registered or unregistered and whether
published or unpublished, including those listed on Schedule 5 hereto, all registrations
and recordings thereof, and all applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office, and the right to obtain all
renewals of any of the foregoing.
Copyright Licenses means all written agreements naming any Grantor as licensor or
licensee, including those listed on Schedule 5 hereto, granting any right under any
Copyright, including the grant of rights to manufacture, distribute, exploit and sell materials
derived from any Copyright.
Credit Agreement has the meaning set forth in the recitals hereto.
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Existing Guaranty and Collateral Agreement has the meaning set forth in the preamble
hereto.
Fixtures means all of the following, whether now owned or hereafter acquired by a
Grantor: plant fixtures; business fixtures and other fixtures, wherever located; and all additions
and accessories thereto and replacements therefor.
General Intangibles means all “general intangibles” as such term is defined in Section
9-102(a)(42) of the UCC and, in any event, shall include with respect to any Grantor, all Payment
Intangibles, all contracts and Contract Rights (including all Assigned Agreements and Seller
Undertakings), agreements, instruments and indentures in any form, and portions thereof, to which
such Grantor is a party or under which such Grantor has any right, title or interest or to which
such Grantor or any property of such Grantor is subject, as the same from time to time may be
amended, supplemented or otherwise modified, including, without limitation, (a) all rights of such
Grantor to receive monies due and to become due to it thereunder or in connection therewith, (b)
all rights of such Grantor to damages arising thereunder and (c) all rights of such Grantor to
perform and to exercise all remedies thereunder; provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money or other amounts due or to become due
under any such Payment Intangible, contract, agreement, instrument or indenture.
Grantor means the collective reference to the Borrowers and each other Person that
becomes a party to this Agreement in accordance with Section 8.16.
Guarantor Obligations means, collectively, with respect to each Guarantor, all
Obligations of such Guarantor.
Guarantors means the collective reference to each Grantor other than the Borrowers.
Identified Claims means the Commercial Tort Claims described on Schedule 7 as
such schedule shall be supplemented from time to time.
Intellectual Property means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to xxx at law or in
equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
Intercompany Note means any promissory note evidencing loans made by any Grantor to
any other Grantor.
Investment Property means the collective reference to (a) all “investment property” as
such term is defined in Section 9-102(a)(49) of the UCC (other than the equity interest of any
Foreign Subsidiary excluded from the definition of Pledged Equity), (b) all “financial assets” as
such term is defined in Section 8-102(a)(9) of the UCC, and (c) whether or not constituting
“investment property” as so defined, all Pledged Notes and all Pledged Equity.
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Issuers means the collective reference to each issuer of any Investment Property.
LaJobi Sellers means LaJobi Industries, Xxxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx.
Paid in Full means (a) the payment in full in cash and performance of all Secured
Obligations (other than unasserted contingent and indemnification obligations), (b) the termination
of all Commitments and (c) either (i) the cancellation and return to the Administrative Agent of
all Letters of Credit or (ii) the cash collateralization of all Letters of Credit in accordance
with the Credit Agreement.
Patents means (a) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all goodwill associated
therewith, including any of the foregoing referred to in Schedule 5, (b) all applications
for letters patent of the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing referred to in Schedule 5,
and (c) all rights to obtain any reissues or extensions of the foregoing.
Patent Licenses means all agreements, whether written or oral, providing for the grant
by or to any Grantor of any right to manufacture, use or sell any invention covered in whole or in
part by a Patent, including any of the foregoing referred to in Schedule 5.
Pledged Equity means the equity interests listed on Schedule 1, together with
any other equity interests, certificates, options or rights of any nature whatsoever in respect of
the equity interests of any Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect; provided that in no event shall more than 65% of the total
outstanding equity interests of any First-Tier Foreign Subsidiary be required to be directly or
indirectly pledged hereunder; and provided, further that in no event shall any of the
equity interests of any Second-Tier Foreign Subsidiary be required to be directly or indirectly
pledged hereunder.
Pledged Notes means all promissory notes listed on Schedule 1, all
Intercompany Notes at any time issued to any Grantor and all other promissory notes issued to or
held by any Grantor (other than (a) promissory notes issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business and (b) any individual promissory note
which is less than $250,000 in principal amount, up to an aggregate of $500,000 for all such
promissory notes excluded under this clause (b)).
Proceeds means all “proceeds” as such term is defined in Section 9-102(a)(64) of the
UCC and, in any event, shall include all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
Receivable means any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or
not it has been earned by performance (including any Accounts).
Restricted Agreements has the meaning set forth in the definition of “Collateral.”
Secured Obligations means, collectively, the Borrower Obligations and Guarantor
Obligations.
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Securities Act means the Securities Act of 1933, as amended.
Seller Undertakings means, collectively, all representations, warranties, covenants
and agreements in favor of any Grantor, and all indemnifications for the benefit of any Grantor
relating thereto, pursuant to the Assigned Agreements.
Sellers means, collectively, (i) the CoCaLo Sellers and the LaJobi Sellers, (ii)
customers of any Grantor that have executed an agreement in favor of such Grantor securing the
purchase price of goods purchased from such Grantor and (iii) any party obligated to a Grantor
under any material document, instrument or agreement executed in connection with a Permitted
Acquisition.
Trademarks means (a) all trademarks, trade names, corporate names, the Grantors’
names, business names, fictitious business names, trade styles, service marks, logos and other
source or business identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country or any political subdivision
thereof, or otherwise, and all common-law rights related thereto, including any of the foregoing
referred to in Schedule 5, and (b) the right to obtain all renewals thereof.
Trademark Licenses means, collectively, each agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark, including any of
the foregoing referred to in Schedule 5.
UCC means the Uniform Commercial Code as in effect on the date hereof and from
time to time in the State of New York, provided that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-perfection of the security interests in
any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial
Code as in effect on or after the date hereof in any other jurisdiction, “UCC” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection or availability of such
remedy.
SECTION 2 GUARANTY.
2.1 Guaranty. (a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, as a primary obligor and not only a surety, guaranties to the
Administrative Agent, for the benefit of itself and of the Lenders, and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment and performance by
the Borrowers when due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum
liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed
the amount which can be guarantied by such Guarantor under applicable federal and state laws
relating to the insolvency of debtors (after giving effect to the right of contribution established
in Section 2.2).
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(c) Each Guarantor agrees that the Secured Obligations may at any time and from time to time
exceed the amount of the liability of such Guarantor hereunder without impairing the guaranty
contained in this Section 2 or affecting the rights and remedies of the Administrative
Agent or any Lender hereunder.
(d) The guaranty contained in this Section 2 shall remain in full force and effect
until all of the Secured Obligations shall have been Paid in Full.
(e) No payment made by the Borrowers, any of the Guarantors, any other guarantor or any other
Person or received or collected by the Administrative Agent or any Lender from the Borrowers, 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 Secured Obligations shall be deemed to modify, reduce, 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 Secured Obligations or any payment received or
collected from such Guarantor in respect of the Secured Obligations), remain liable for the Secured
Obligations up to the maximum liability of such Guarantor hereunder until the Secured Obligations
are Paid in Full.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the extent that a
Guarantor shall have paid more than its proportionate share of any payment made hereunder, such
Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment. Each Guarantor’s right of
contribution shall be subject to the terms and conditions of Section 2.3. The provisions
of this Section 2.2 shall in no respect limit the obligations and liabilities of any
Guarantor to the Administrative Agent and the Lenders, and each Guarantor shall remain liable to
the Administrative Agent and the Lenders for the full amount guarantied by such Guarantor
hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or
any set-off or application of funds of any Guarantor by the Administrative Agent or any Lender, no
Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agent or
any Lender against the Borrowers or any other Guarantor or any collateral security or guaranty or
right of offset held by the Administrative Agent or any Lender for the payment of the Secured
Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement
from the Borrowers or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all of the Secured Obligations are Paid in Full. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the Secured Obligations
shall not have been Paid in Full, such amount shall be held by such Guarantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact
form received by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent, if
required), to be applied against the Secured Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.
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2.4 Amendments, etc. with respect to the Secured 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 Secured Obligations made by the Administrative Agent or any Lender may be rescinded by the
Administrative Agent or such Lender and any of the Secured Obligations continued, and the Secured
Obligations, or the liability of any other Person upon or for any part thereof, or any collateral
security or guaranty therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, 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 Required Lenders or all the Lenders, as the case may be) and, to the extent required
thereunder, the other parties thereto may deem advisable from time to time. Neither the
Administrative Agent nor any Lender shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Secured Obligations or for the guaranty
contained in this Section 2 or any property subject thereto.
The Administrative Agent or any Lender may, from time to time, at its sole discretion and
without notice to any Guarantor (or any of them), take any or all of the following actions: (a)
retain or obtain a security interest in any property to secure any of the Secured Obligations or
any obligation hereunder, (b) retain or obtain the primary or secondary obligation of any obligor
or obligors, in addition to the undersigned, with respect to any of the Secured Obligations, (c)
extend or renew any of the Secured Obligations for one or more periods (whether or not longer than
the original period), alter or exchange any of the Secured Obligations, or release or compromise
any obligation of any of the undersigned hereunder or any obligation of any nature of any other
obligor with respect to any of the Secured Obligations, (d) release any guaranty or right of offset
or its security interest in, or surrender, release or permit any substitution or exchange for, all
or any part of any property securing any of the Secured Obligations or any obligation hereunder, or
extend or renew for one or more periods (whether or not longer than the original period) or
release, compromise, alter or exchange any obligations of any nature of any obligor with respect to
any such property, and (e) resort to the undersigned (or any of them) for payment of any of the
Secured Obligations when due, whether or not the Administrative Agent or such Lender shall have
resorted to any property securing any of the Secured Obligations or any obligation hereunder or
shall have proceeded against any other of the undersigned or any other obligor primarily or
secondarily obligated with respect to any of the Secured Obligations.
2.5 Waivers. Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Secured Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guaranty contained in this Section 2 or
acceptance of the guaranty contained in this Section 2; the Secured 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 guaranty contained in this Section 2, and
all dealings between the Borrowers and any of the Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the guaranty contained in this Section 2.
Each Guarantor
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waives (a) diligence, presentment, protest, demand for payment and notice of default, dishonor
or nonpayment and all other notices whatsoever to or upon the Borrowers or any of the Guarantors
with respect to the Secured Obligations, (b) notice of the existence or creation or non-payment of
all or any of the Secured Obligations and (c) all diligence in collection or protection of or
realization upon any Secured Obligations or any security for or guaranty of any Secured
Obligations.
2.6 Payments. Each Guarantor hereby guaranties that payments by such Guarantor
hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at
the office of the Administrative Agent specified in the Credit Agreement.
SECTION 3 GRANT OF SECURITY INTEREST.
3.1 Grant. Each Grantor hereby collaterally assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the benefit of itself and
the Lenders, a continuing security interest in all of its Collateral, as collateral security for
the prompt and complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations or the Guarantor Obligations, as the case
may be.
3.2 Collateral Assignment of Rights under the Assigned Agreements. Each Grantor
hereby irrevocably authorizes and empowers the Administrative Agent or its agents, in their sole
discretion, to assert, either directly or on behalf of any Grantor, at any time that an Event of
Default has occurred and is continuing, any claims any Grantor may from time to time have against
the Sellers or any of their affiliates with respect to any and all of the Contract Rights to the
extent permitted by the applicable Assigned Agreement or with respect to any and all payments or
other obligations due from the Sellers or any of their affiliates to any Grantor under or pursuant
to the Assigned Agreements (“Payments”), and to receive and collect any damages, awards and
other monies resulting therefrom and to apply the same on account of the Secured Obligations.
After the occurrence of any Event of Default, the Administrative Agent may provide notice to the
Sellers or any of their affiliates that all Payments shall be made to or at the direction of the
Administrative Agent for so long as such Event of Default shall be continuing. Following the
delivery of any such notice, the Administrative Agent shall promptly notify the Sellers upon the
termination or waiver of any such Event of Default. Each Grantor hereby irrevocably makes,
constitutes and appoints the Administrative Agent (and all officers, employees, or agents
designated by the Administrative Agent) as such Grantor’s true and lawful attorney (and
agent-in-fact) for the purpose of enabling the Administrative Agent or its agents to, during the
occurrence and continuance of an Event of Default, assert and collect such claims and to apply such
monies in the manner set forth hereinabove.
SECTION 4 REPRESENTATIONS AND WARRANTIES.
To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrowers thereunder, each
Grantor jointly and severally hereby represents and warrants to the Administrative Agent and each
Lender that:
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4.1 Title; No Other Liens. Except for Permitted Liens, the Grantors own each item of
the Collateral free and clear of any and all Liens. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any public office,
except filings evidencing Permitted Liens and filings for which termination statements have been
delivered to the Administrative Agent.
4.2 Perfected First Priority Liens. The security interests granted pursuant to this
Agreement (a) upon completion of the filings and other actions specified on Schedule 2
(exclusive of any filings or other actions required to perfect a security interest in the Pledged
Equity of any Foreign Subsidiary in any jurisdiction outside of the United States) (which, in the
case of all filings and other documents referred to on Schedule 2, have been delivered to
the Administrative Agent in completed and duly executed form) and payment of all necessary filing
fees will constitute valid perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the benefit of itself and the Lenders as collateral security for each
Grantor’s Obligations, enforceable in accordance with the terms hereof (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) against all creditors of each Grantor and any Persons purporting to purchase any
Collateral from each Grantor and (b) are prior to all other Liens on the Collateral in existence on
the date hereof except for Permitted Liens for which priority is accorded under applicable law.
Subject to the payment of all necessary filing fees, the filings and other actions specified on
Schedule 2 (exclusive of any filings or other actions required to perfect a security
interest in the Pledged Equity of any Foreign Subsidiary in any jurisdiction outside of the United
States) constitute all of the filings and other actions necessary to perfect all security interests
granted hereunder; provided, that notwithstanding anything contained in this Agreement to
the contrary, in no event shall any Grantor be required to file, register, record or otherwise
perfect any lien or security interest in any jurisdiction outside of the United States with respect
to the Pledged Equity of any Person (other than any of the foregoing required in connection with
the Pledged Equity of Kids Line UK LTD and Kids Line Australia Pty. LTD) until such time as such
Person has revenue in excess of $500,000.
4.3 Grantor Information. On the date hereof, Schedule 3 sets forth (a) each
Grantor’s jurisdiction of organization, (b) the location of each Grantor’s chief executive office,
(c) each Grantor’s exact legal name as it appears on its organizational documents and (d) each
Grantor’s organizational identification number (to the extent a Grantor is organized in a
jurisdiction which assigns such numbers) and federal employer identification number.
4.4 Collateral Locations. On the date hereof, Schedule 4 sets forth (a) each
place of business of each Grantor (including its chief executive office), (b) all locations where
all Inventory and the Equipment owned by each Grantor is kept, except with respect to locations at
which Inventory and Equipment with a fair market value of less than $10,000 in the aggregate for
each location (up to an aggregate of $200,000 for all locations) and excluding Inventory with
respect to “xxxx and hold” or consignment arrangements with fair market value of less than $10,000
in the aggregate for each location (up to an aggregate of $200,000 for all locations) which may be
located at other locations and (c) whether each such Collateral location and place of business
(including each Grantor’s chief executive office) is owned or leased (and if leased,
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specifies the complete name and notice address of each lessor). No Collateral is located
outside the United States (excluding In-Transit Inventory) or in the possession of any lessor,
bailee, warehouseman or consignee, except as indicated on Schedule 4 or except for
Collateral with a fair market value of less than $10,000 in the aggregate for each location and
$200,000 in the aggregate for all locations of the Grantors.
4.5 Certain Property. None of the Collateral constitutes, or is the Proceeds of, (a)
Farm Products, (b) Health Care Insurance Receivables or (c) vessels, aircraft or any other property
subject to any certificate of title or other registration statute of the United States, any State
or other jurisdiction, except for vehicles owned by the Grantors and used by employees of the
Grantors in the ordinary course of business with an aggregate fair market value of less than
$200,000 (in the aggregate for all Grantors).
4.6 Investment Property. (a) The Pledged Equity pledged by each Grantor hereunder
constitute all the issued and outstanding equity interests of each Issuer owned by such Grantor
and, in the case of any First-Tier Foreign Subsidiary, 65% of all issued and outstanding equity
interests of such First-Tier Foreign Subsidiary.
(b) All of the Pledged Equity has been duly and validly issued and is fully paid and
nonassessable.
(c) Each of the Intercompany Notes and, to the applicable Grantor’s knowledge, each of the
other Pledged Notes in favor of such Grantor constitutes the legal, valid and binding obligation of
the obligor with respect thereto, enforceable in accordance with its terms (subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors’ rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing).
(d) Subject to quarterly updates to reflect any additions or changes thereto, Schedule
1 lists all Investment Property owned by each Grantor having a fair market value or remaining
principal balance, as applicable, in excess of $250,000 each, or $500,000, in aggregate among all
Grantors. Each Grantor is the record and beneficial owner of, and has good and marketable title
to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor
of, or claims of, any other Person, except Permitted Liens.
4.7 Receivables. (a) No amount in excess of $200,000 payable to any such Grantor (or
$250,000 in aggregate among all Grantors) 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 Lenders from time to time as owing to such
Grantor in respect of the Receivables (to the extent such representations are required by any of
the Loan Documents) will at all such times be accurate in all material respects; provided however
that such amounts included in any Borrowing Base Certificate shall be accurate in all respects on
the date represented in such Borrowing Base Certificate.
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4.8 Intellectual Property. (a) Subject to quarterly updates to reflect any additions
or changes thereto, Schedule 5 lists all material registered or applied for Intellectual
Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property owned or licensed by any Grantor is
valid, subsisting, unexpired and enforceable and has not been abandoned.
(c) Subject to quarterly updates to reflect any additions or changes thereto, except as set
forth in Schedule 5, none of the material Intellectual Property is the subject of any
licensing or franchise agreement pursuant to which such Grantor is the licensor or franchisor.
(d) Each Grantor owns and possesses or has a license or other right to use all Intellectual
Property as is necessary for the conduct of the businesses of such Grantor, without any
infringement upon rights of others which could reasonably be expected to have a Material Adverse
Effect.
4.9 Depositary and Other Accounts. All depositary and other accounts maintained by
each Grantor are described on Schedule 6 hereto (subject to quarterly updates to reflect
any additions or changes thereto), which description includes for each such account the name of the
Grantor maintaining such account, the name, address, telephone and fax numbers of the financial
institution at which such account is maintained and the account number of such account.
4.10 Eligible Accounts. Each Account which the Grantors shall request the
Administrative Agent to classify as an Eligible Account shall, as of the time when such request is
made or deemed made, meet all requirements of and constitute an “Eligible Account” for purposes of
the Credit Agreement at such time.
SECTION 5 COVENANTS.
Each Grantor covenants and agrees with the Administrative Agent and the Lenders that, from and
after the date of this Agreement until the Secured Obligations shall have been Paid in Full:
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper. If any amount
payable under or in connection with any of the Collateral in excess of $250,000 (in the aggregate
for all Grantors) shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper shall be delivered to the
Administrative Agent within five (5) Business Days of the applicable Grantor’s receipt thereof,
duly indorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement. Notwithstanding the foregoing, in the event that an Event
of Default shall have occurred and be continuing, upon the written request of the Administrative
Agent, any Instrument, Certificated Security or Chattel Paper not theretofore delivered to the
Administrative Agent and at such time being held by any Grantor shall be promptly delivered to the
Administrative Agent, duly indorsed in a manner reasonably satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Agreement.
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5.2 Maintenance of Perfected Security Interest; Further Documentation. (a) Except
with respect to actions affirmatively taken by the Administrative Agent with respect to its Liens
or any failure by the Administrative Agent to continue any such Lien prior to the lapse thereof due
to the passage of time, such Grantor shall maintain such security interest as a perfected security
interest having at least the priority described in Section 4.2 and shall defend such
security interest against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the Lenders from time to time
statements and schedules further identifying and describing the assets and property of such Grantor
and such other reports in connection therewith as the Administrative Agent may reasonably request,
all in reasonable detail.
(c) At any time and from time to time, upon the written request of the Administrative Agent,
and at the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver,
and have recorded, such further instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted, including, but not limited
to, (i) filing any financing or continuation statements under the UCC (or other similar laws) in
effect in any jurisdiction with respect to the security interests created hereby and, (ii) subject
to Section 4.6(a) hereof in the case of Investment Property and any other relevant
Collateral, taking any actions necessary or reasonably advisable to enable the Administrative Agent
to obtain “control” (within the meaning of the applicable UCC) with respect thereto, including
obtaining Account Control Agreements.
(d) Such Grantor shall not permit any of the Collateral with a fair market value in excess of
$250,000, in aggregate for all Grantors, to become a Fixture to any real property unless such real
property is subject to a mortgage by such Grantor in favor of Administrative Agent.
5.3 Changes in Locations, Name, etc. Such Grantor shall not, except upon twenty (20)
days’ prior written notice to the Administrative Agent and delivery to the Administrative Agent of
(a) all additional financing statements and other documents reasonably requested by the
Administrative Agent as to the validity, perfection and priority of the security interests provided
for herein and (b) if applicable, a written supplement to Schedule 4 showing any additional
location at which Inventory or Equipment shall be kept (other than locations at which Inventory or
Equipment shall be kept with a fair market value not to exceed $10,000 in the aggregate for each
location and $200,000 in the aggregate for all locations for all Grantors):
(i) permit any of the Inventory or Equipment (other than In-Transit Inventory or
Inventory related to any “xxxx and hold” or consignment arrangement, with a fair market
value not to exceed $10,000 in the aggregate for each location and $200,000 in the aggregate
for all locations for all Grantors) to be kept at a location other than those listed on
Schedule 4;
(ii) change its jurisdiction of organization or the location of its chief executive
office from that specified on Schedule 3 or in any subsequent notice delivered
pursuant to this Section 5.3; or
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(iii) change its name, identity or corporate structure.
5.4 Notices. Such Grantor will advise the Administrative Agent promptly, in
reasonable detail, of:
(a) any Lien (other than Permitted Liens) on any of the Collateral which would adversely
affect the ability of the Administrative Agent to exercise any of its remedies hereunder; and
(b) the occurrence of any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the Liens created hereby.
5.5 Investment Property. (a) If such Grantor shall become entitled to receive or
shall receive any certificate, option or rights in respect of the equity interests (other than the
equity interests not required to be pledged hereunder) of any Issuer of Pledged Equity, whether in
addition to, in substitution of, as a conversion of, or in exchange for, any of the Pledged Equity,
or otherwise in respect thereof, such Grantor shall accept the same as the agent of the
Administrative Agent and the Lenders, hold the same in trust for the Administrative Agent and the
Lenders and, if certificated, deliver the same forthwith to the Administrative Agent in the exact
form received, duly indorsed by such Grantor to the Administrative Agent, if required, together
with an undated instrument of transfer covering such certificate duly executed in blank by such
Grantor, to be held by the Administrative Agent, subject to the terms hereof, as additional
Collateral for the Secured Obligations (and if uncertificated, shall promptly notify the
Administrative Agent of its receipt thereof and take such actions as the Administrative Agent shall
reasonably request to note the Administrative Agent’s Lien on such interest, right or option and to
enable the Administrative Agent to exercise its rights with respect thereto (including the transfer
thereof) upon the occurrence and during the continuance of an Event of Default without any action
on the part of the Grantor). Upon the occurrence and during the continuance of an Event of
Default, (i) any sums paid upon or in respect of the Investment Property upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as additional Collateral for the Secured Obligations, and (ii) in case any distribution of capital
shall be made on or in respect of the Investment Property or any property shall be distributed upon
or with respect to the Investment Property pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected Lien in favor of the Administrative Agent, be
delivered to the Administrative Agent to be held by it hereunder as additional Collateral for the
Secured Obligations. Upon the occurrence and during the continuance of an Event of Default, if any
sums of money or property so paid or distributed in respect of the Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is paid or delivered to
the Administrative Agent, hold such money or property in trust for the Lenders, segregated from
other funds of such Grantor, as additional Collateral for the Secured Obligations.
(b) Without the prior written consent of the Administrative Agent, such Grantor will not (i)
vote to enable, or take any other action to permit, any Issuer of Pledged Equity to issue any
equity interests of any nature or to issue any other securities or interests
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convertible into or granting the right to purchase or exchange for any equity interests of any
nature of any Issuer of Pledged Equity, except, in each case, as permitted by the Credit Agreement,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Investment Property or Proceeds thereof (except pursuant to a transaction expressly
permitted by the Credit Agreement) other than, with respect to Investment Property not constituting
Pledged Equity or Pledged Notes, any such action which is not prohibited by the Credit Agreement,
(iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person
other than such Grantor with respect to, any of the Investment Property or Proceeds thereof, or any
interest therein, except for Permitted Liens, or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof, except, with respect to such
Investment Property, shareholders’ agreements entered into by such Grantor with respect to Persons
in which such Grantor maintains an ownership interest of 50% or less.
(c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Investment Property issued by it and will
comply with such terms insofar as such terms are applicable to it, (ii) it will notify the
Administrative Agent promptly in writing of the occurrence of any of the events described in
Section 5.5(a) with respect to the Investment Property issued by it and (iii) the terms of
Sections 6.3(c) and 6.7 shall apply to such Grantor with respect to all actions
that may be required of it pursuant to Section 6.3(c) or 6.7 regarding the
Investment Property issued by it.
5.6 Receivables. (a) Other than in the ordinary course of business consistent with
the past practices of the Grantors and/or the Company and in amounts which are not material to such
Grantor and as permitted by Section 11.14 of the Credit Agreement, such Grantor will not
(i) grant any extension of the time of payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any Receivable, (iv) allow any credit or discount whatsoever on any
Receivable or (v) amend, supplement or modify any Receivable in any manner that could reasonably be
expected to materially and adversely affect the value thereof; provided, however, that no
Grantor shall take any such action at any time that an Event of Default then exists or would result
therefrom; provided further that no Grantor shall take any action described in clause (v)
above at any time that an Event of Default or an Unmatured Event of Default then exists or would
result therefrom.
(b) Such Grantor will deliver to the Administrative Agent a copy of each material demand,
notice or document received by it that questions or calls into doubt the validity or enforceability
of more than 5% of the aggregate amount of the then outstanding Receivables for all Grantors.
5.7 Intellectual Property. (a) Unless such Grantor, in its commercially reasonable
business judgment determines that doing otherwise would be in its best commercial interest, such
Grantor (either itself or through licensees) will (i) continue to use each Trademark material to
its business in order to maintain such Trademark in full force free from any claim of abandonment
for non-use, (ii) maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration and all other
notices and legends required by applicable law, (iv) not adopt or use any xxxx which is
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confusingly similar or a colorable imitation of such Trademark unless the Administrative
Agent, for the benefit of itself and the Lenders, shall obtain a perfected security interest in
such xxxx pursuant to this Agreement, and (v) not (and not knowingly 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) Unless such Grantor, in its commercially reasonable business judgment determines doing so
would be in its best commercial interest, such Grantor (either itself or through licensees) will
not do any act, or omit to do any act, whereby any Patent material to its business may become
forfeited, abandoned or dedicated to the public.
(c) Unless such Grantor, in its commercially reasonable business judgment determines that
doing otherwise would be in its best commercial interest, such Grantor (either itself or through
licensees) (i) will employ each Copyright material to its business and (ii) will not (and will not
knowingly permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of such Copyrights may become invalidated or otherwise impaired. Such
Grantor will not (either itself or through licensees) do any act whereby any material portion of
such Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any act that knowingly uses
any Intellectual Property material to its business to infringe the intellectual property rights of
any other Person.
(e) Such Grantor will notify the Administrative Agent and the Lenders promptly if it knows, or
has reason to know, that any application or registration relating to any material Intellectual
Property may become forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such determination or
development in, any proceeding 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.
(f) 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 by the later of 30 days thereafter or concurrently with the next
delivery of financial statements of the Borrowers pursuant to Section 10.1 of the Credit
Agreement. Upon the request of the Administrative Agent, such Grantor shall execute and deliver,
and have recorded, any and all agreements, instruments, documents, and papers as the Administrative
Agent may reasonably request to evidence the Administrative Agent’s and the Lenders’ security
interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.
(g) Unless such Grantor, in its commercially reasonable business judgment determines doing so
would be in its best commercial interest, such Grantor will take all reasonable and necessary steps
to maintain and pursue each application (and to obtain the
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relevant registration) and to maintain each registration of all material Intellectual Property
owned by it.
(h) In the event that any material Intellectual Property is infringed upon or misappropriated
or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall
reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii)
if such Grantor in its commercially reasonable business judgment determines that such Intellectual
Property is of material economic value, promptly notify the Administrative Agent after it learns
thereof and, to the extent, in its commercially reasonable business judgment, such Grantor
determines it appropriate under the circumstances, 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.
5.8 Seller Undertakings.
(a) Each Grantor shall keep the Administrative Agent informed of all circumstances bearing
upon any potential claim under or with respect to the Assigned Agreements and the Seller
Undertakings that could have a materially adverse effect on the Administrative Agent and the
Lenders and such Grantor shall not, without the prior written consent of the Administrative Agent,
(i) waive any of its rights or remedies under any Assigned Agreement with respect to any of the
Seller Undertakings in excess of $25,000, (ii) settle, compromise or offset any amount payable by
the Sellers to such Grantor under any Assigned Agreement in excess of $25,000 or (iii) amend or
otherwise modify any Assigned Agreement in any manner which is materially adverse to the interests
of the Administrative Agent or the Lenders.
(b) Each Grantor shall perform and observe all of the material terms and conditions of each
Assigned Agreement to be performed by it, maintain each Assigned Agreement in full force and effect
(except such Assigned Agreement which, by its terms, has expired or terminated), enforce the
material provisions of each Assigned Agreement in accordance with its terms as it deems appropriate
in its reasonable business judgment and, after the occurrence and during the continuance of an
Event of Default, take all such action to such end as may from time to time be reasonably requested
by the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, (i) each applicable Grantor shall remain
liable under each Assigned Agreement to the extent set forth therein to perform all of its material
duties and obligations thereunder to the same extent as if this Agreement had not been executed,
(ii) the exercise by the Administrative Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under any Assigned Agreement and (iii) neither the
Administrative Agent nor any other Lender shall have any obligation or liability under any Assigned
Agreement by reason of this Agreement, nor shall the Administrative Agent or any other Lender be
obligated to perform any of the obligations or duties of any Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
5.9 Collection of Accounts. Administrative Agent may, at any time after the
occurrence and during the continuance of an Event of Default, whether before or after
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notification to any Account Debtor and whether before or after the maturity of any of the
Secured Obligations, (i) enforce collection of any of each Grantor’s Accounts or other amounts owed
to a Grantor by suit or otherwise; (ii) exercise all of such Grantor’s rights and remedies with
respect to proceedings brought to collect any Accounts or other amounts owed to such Grantor; (iii)
surrender, release or exchange all or any part of any Accounts or other amounts owed to such
Grantor, or compromise or extend or renew for any period (whether or not longer than the original
period) any indebtedness thereunder; (iv) sell or assign any Account of such Grantor or other
amount owed to such Grantor upon such terms, for such amount and at such time or times as the
Administrative Agent deems advisable; (v) prepare, file and sign such Grantor’s name on any proof
of claim in bankruptcy or other similar document against any Account Debtor or other Person
obligated to such Grantor; and (vi) do all other acts and things which are necessary or reasonably
advisable, in the Administrative Agent’s commercially reasonable discretion, to fulfill such
Grantor’s obligations under this Agreement and the Loan Documents and to allow Administrative Agent
to collect the Accounts or other amounts owed to such Grantor. In addition to any other provision
hereof, Administrative Agent may at any time, after the occurrence and during the continuance of an
Event of Default, at Grantors’ expense, notify any parties obligated on any of the Accounts to make
payment directly to Administrative Agent of any amounts due or to become due thereunder.
5.10 Other Matters.
(a) Grantors shall each use commercially reasonable efforts to cause to be delivered to the
Administrative Agent a Collateral Access Agreement with respect to each landlord which leases real
property (and the accompanying facilities) to any of the Grantors at which such Grantor keeps
Inventory or other assets with a fair market value in excess of $250,000. Such requirement may be
waived at the option of the Administrative Agent or may, in the discretion of the Administrative
Agent after consultation with the Loan Party Representative, be substituted with a requirement to
maintain a Rent Reserve as set forth in the Credit Agreement.
(b) Each Grantor authorizes the Administrative Agent to, at any time and from time to time,
file financing statements, continuation statements, and amendments thereto that describe the
Collateral as set forth herein or describe the collateral covered thereby as “all assets” of each
Grantor, or words of similar effect, and which contain any other information required pursuant to
the UCC for the sufficiency of filing office acceptance of any financing statement, continuation
statement, or amendment, and each Grantor agrees to furnish any such information to the
Administrative Agent promptly upon request. Any such financing statement, continuation statement,
or amendment may be signed and/or filed by the Administrative Agent on behalf of any Grantor and
may be filed at any time in any jurisdiction.
(c) Each Grantor shall, at any time and from time and to time, as reasonably requested by the
Administrative Agent (i) use commercially reasonable efforts to obtain an acknowledgement, in form
and substance reasonably satisfactory to the Administrative Agent, of any bailee having possession
of any of the Collateral having a value in excess of $250,000, stating that the bailee holds such
Collateral for the Administrative Agent, (ii) take such steps as are reasonably necessary to
provide the Administrative Agent “control” of any letter-of-credit rights, or electronic chattel
paper having a value in excess of $250,000 (as such terms are defined
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by the UCC with corresponding provisions thereof defining what constitutes “control” for such
items of Collateral), with any agreements establishing control to be in form and substance
reasonably satisfactory to the Administrative Agent, and (iii) take such steps as are reasonably
necessary to otherwise insure the continued perfection and priority of the Administrative Agent’s
security interest in any of the Collateral and of the preservation of its rights therein. If any
Grantor shall at any time, acquire a “commercial tort claim” (as such term is defined in the UCC)
in excess of $250,000, such Grantor shall promptly notify the Administrative Agent thereof in
writing and supplement Schedule 7, therein providing a reasonable description and summary
thereof, and upon delivery thereof to the Administrative Agent, such Grantor shall be deemed to
thereby grant to the Administrative Agent (and such Grantor hereby grants to the Administrative
Agent) a security interest and lien in and to such commercial tort claim and all proceeds thereof,
all upon the terms of and governed by this Agreement.
(d) Without limiting the generality of the foregoing, if any Grantor at any time holds or
acquires an interest in any electronic chattel paper or any “transferable record”, as that term is
defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or
in §16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction having
a value greater than $250,000, such Grantor shall promptly notify the Administrative Agent thereof
and, at the request of the Administrative Agent, shall take such action as the Administrative Agent
may reasonably request to vest in the Administrative Agent “control” under Section 9-105 of the UCC
of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, §16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable record.
(e) Subject to Section 10.2 of the Credit Agreement, each Grantor shall permit during
regular business hours and with reasonable prior notice (or at any time without notice if an Event
of Default has occurred and is continuing) the Administrative Agent and the Lenders to examine any
of the Collateral and wherever the Collateral may be located. Each Grantor shall, at the request of
the Administrative Agent, indicate on its records concerning the Collateral a notation, in form
reasonably satisfactory to the Administrative Agent, of the security interest of the Administrative
Agent hereunder.
(f) Each Grantor shall (x) use its commercially reasonable efforts to obtain the consent to
the assignment thereof or the granting of a security interest by such Grantor to the Administrative
Agent of the applicable parties to any Restricted Agreement entered into after the date of this
Agreement which contains a restriction or prohibition on the assignment of, or grant of a security
interest in the right to receive payments and other Proceeds with respect to, or the Goods produced
under, such Restricted Agreement (provided however that such Grantor’s commercially reasonable
efforts shall not include the requirement that such Grantor pay any fees to any other party of a
Restricted Agreement to obtain a consent to the assignment thereof or a grant of a security
interest therein), and (y) shall provide the Administrative Agent with monthly updates to
Schedules 1.1A and 1.1B to reflect any additions to or changes in such schedules.
SECTION 6 REMEDIAL PROVISIONS.
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6.1 Certain Matters Relating to Receivables. (a) At any time after the occurrence
and during the continuance of an Event of Default, the Administrative Agent (through its officers,
employees or agents) shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each Grantor shall
furnish all such assistance and information as the Administrative Agent may reasonably require in
connection with such test verifications. At any time after the occurrence and during the
continuance of an Event of Default, upon the Administrative Agent’s request and at the expense of
the relevant Grantor, such Grantor shall cause independent public accountants or others reasonably
satisfactory to the Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, agings and test verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to collect such Grantor’s
Receivables, and the Administrative Agent may curtail or terminate such authority at any time after
the occurrence and during the continuance of an Event of Default. If required by the
Administrative Agent at any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall be forthwith (and,
in any event, within one (1) Business Day) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Administrative Agent if required, in a collateral account
maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal
by the Administrative Agent for the account of the Lenders only as provided in Section 6.5,
and (ii) until so turned over, shall be held by such Grantor in trust for the Administrative Agent
and the Lenders, segregated from other funds of such Grantor. If required by the Administrative
Agent at any time after the occurrence and during the continuance of an Event of Default, 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 any time after the occurrence and during the continuance of an Event of Default, at the
Administrative Agent’s request, each Grantor shall deliver to the Administrative Agent all original
and other documents evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including all original orders, invoices and shipping receipts in such Grantor’s
possession.
(d) Each Grantor hereby irrevocably authorizes and empowers the Administrative Agent, in the
Administrative Agent’s sole discretion, at any time after the occurrence and during the continuance
of an Event of Default, to assert, either directly or on behalf of such Grantor, any claim such
Grantor may from time to time have against the Sellers under or with respect to the Assigned
Agreements and to receive and collect any and all damages, awards and other monies resulting
therefrom and to apply the same to the Secured Obligations. Each Grantor hereby irrevocably makes,
constitutes and appoints the Administrative Agent as its true and lawful attorney in fact for the
purpose of enabling the Administrative Agent to, after the occurrence and during the continuance of
an Event of Default, assert and collect such claims and to apply such monies in the manner set
forth above, which appointment, being coupled with an interest, is irrevocable.
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 after the
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occurrence and during the continuance of an Event of Default, communicate with obligors under
the Receivables to verify with them to the Administrative Agent’s satisfaction the existence,
amount and terms of any Receivables.
(b) Anything herein to the contrary notwithstanding, each Grantor shall remain liable in
respect of each of the Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any agreement giving
rise thereto. Neither the Administrative Agent nor any Lender shall have any obligation or
liability under any Receivable (or any agreement giving rise thereto) by reason of or arising out
of this Agreement or the receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party thereunder, to
present or file any claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled at any time or
times.
(c) For the purpose of enabling the Administrative Agent to exercise rights and remedies under
this Agreement, each Grantor hereby grants to the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to such Grantor) to, during the continuance of an Event of
Default, use, license or sublicense for such purpose any Intellectual Property now owned or
hereafter acquired by such Grantor, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded or stored and, to
the extent permitted by terms of the applicable underlying agreement, all computer software and
programs used for the compilation or printout thereof.
6.3 Investment Property. (a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given written 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 and distributions paid in
respect of the Pledged Equity and all payments made in respect of the Pledged Notes, to the extent
permitted in the Credit Agreement, and to exercise all voting and other rights with respect to the
Investment Property; provided, that no vote shall be cast or other right exercised or
action taken which would or would reasonably be likely to 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 written notice of its intent to exercise such rights to the relevant Grantor(s), (i) the
Administrative Agent shall have the right to receive any and all cash dividends and distributions,
payments or other Proceeds paid in respect of the Investment Property and make application thereof
to the Secured Obligations in accordance with Section 6.5 hereof, and (ii) any or all of
the Investment Property shall be registered in the name of the Administrative Agent or its nominee,
and the Administrative Agent or its nominee may thereafter exercise (x) all voting and other rights
pertaining to such Investment Property at any meeting of holders of the
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equity interests of the relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or options pertaining to
such Investment Property as if it were the absolute owner thereof (including the right to exchange
at its discretion any and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate or other structure of
any Issuer, or upon the exercise by any Grantor or the Administrative Agent of any right, privilege
or option pertaining to such Investment Property, and in connection therewith, the right to deposit
and deliver any and all of the Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except for the Administrative Agent’s gross negligence or willful
misconduct (as determined by a final, nonappealable judgment by a court of competent jurisdiction)
and except to account for property actually received by it, but the Administrative Agent shall have
no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer under the control of such Grantor
of any Investment Property pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Administrative Agent in writing that (x) states that an Event of Default
has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying and (ii) unless otherwise expressly permitted by
this Agreement or other Loan Documents, pay any dividends, distributions or other payments with
respect to the Investment Property directly to the Administrative Agent.
6.4 Proceeds to be Turned Over to Administrative Agent. In addition to the rights of
the Administrative Agent and the Lenders 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, checks and other cash equivalent items shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds of such Grantor,
and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in
the exact form received by such Grantor (duly indorsed by such Grantor to the Administrative Agent,
if required). All such Proceeds received by the Administrative Agent under this Section
6.4 shall be held by the Administrative Agent in a collateral account maintained under its sole
dominion and control. All such Proceeds, while held by the Administrative Agent in any collateral
account (or by such Grantor in trust for the Administrative Agent and the Lenders) established
pursuant hereto, shall continue to be held as collateral security for the Secured Obligations and
shall not constitute payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be elected by the
Administrative Agent upon its receipt of any payments or Net Cash Proceeds in respect of the
Secured Obligations, the Administrative Agent may or, if an Event of Default shall have occurred
and be continuing, upon its receipt of any payments or Net Cash Proceeds in respect of the Secured
Obligations, the Administrative Agent shall apply all or any part of Net Cash Proceeds from the
sale of, or other realization upon, all or any part of the Collateral in payment of the Secured
Obligations as set forth below (subject to the terms of the Credit Agreement).
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Any part of such funds which the Administrative Agent elects not so to apply and deems not
required as collateral security for the Secured Obligations shall be paid over from time to time by
the Administrative Agent to the applicable Grantor or to whomsoever may be lawfully entitled to
receive the same. Any balance of such Net Cash Proceeds remaining after the Secured Obligations
shall have been Paid in Full shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive the same. In the absence of a specific determination by the
Administrative Agent, and at all times during the continuation of an Event of Default, the Net Cash
Proceeds from the sale of, or other realization upon, all or any part of the Collateral in payment
of the Secured Obligations shall be applied in the following order:
FIRST, TO THE PAYMENT OF ALL FEES, REASONABLE COSTS, REASONABLE EXPENSES AND
INDEMNITIES OF THE ADMINISTRATIVE AGENT (IN ITS CAPACITY AS SUCH), INCLUDING ATTORNEY COSTS,
AND ANY OTHER SECURED OBLIGATIONS THEN DUE AND PAYABLE TO THE ADMINISTRATIVE AGENT IN
RESPECT OF SUMS ADVANCED BY THE ADMINISTRATIVE AGENT TO PRESERVE THE COLLATERAL OR TO
PRESERVE ITS SECURITY INTEREST IN THE COLLATERAL, UNTIL PAID IN FULL;
SECOND, TO THE PAYMENT OF ALL FEES, REASONABLE COSTS, REASONABLE EXPENSES AND
INDEMNITIES OF THE LENDERS, PRO-RATA, UNTIL PAID IN FULL;
THIRD, TO THE PAYMENT OF ALL OF THE SECURED OBLIGATIONS CONSISTING OF ACCRUED AND
UNPAID INTEREST THEN DUE AND PAYABLE TO THE LENDERS, PRO-RATA, UNTIL PAID IN FULL;
FOURTH, TO THE PAYMENT OF ALL SECURED OBLIGATIONS CONSISTING OF PRINCIPAL THEN DUE AND
PAYABLE TO THE LENDERS, PRO-RATA, UNTIL PAID IN FULL;
FIFTH, TO THE PAYMENT OF THE ADMINISTRATIVE AGENT AN AMOUNT EQUAL TO ALL SECURED
OBLIGATIONS IN RESPECT OF ALL OUTSTANDING LETTERS OF CREDIT, IF ANY, TO BE HELD AS CASH
COLLATERAL IN RESPECT OF SUCH OBLIGATIONS;
SIXTH, TO THE PAYMENT OF ALL BANK PRODUCTS OBLIGATIONS AND SPECIFIED HEDGING
OBLIGATIONS THEN DUE AND PAYABLE TO ANY LENDER OR ITS AFFILIATES, PRO-RATA, UNTIL PAID IN
FULL;
SEVENTH, TO THE PAYMENT OF ALL OTHER SECURED OBLIGATIONS THEN DUE AND PAYABLE TO EACH
LENDER, PRO-RATA, UNTIL PAID IN FULL; AND
EIGHTH, THE REMAINING PROCEEDS, IF ANY, TO THE GRANTORS OR TO WHOMEVER MAY BE LAWFULLY
ENTITLED TO RECEIVE SUCH AMOUNTS.
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6.6 Code and Other Remedies. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders, may exercise, in addition to all other rights
and remedies granted to them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a secured party under
the UCC or any other applicable law. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred to below) to or
upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect, receive, appropriate,
realize upon and take possession of the Collateral, or any part thereof (in addition to Collateral
of which it already has possession), wherever it may be found, and for that purpose may pursue the
same wherever it may be found, and may enter onto any of Grantor’s premises where any of the
Collateral may be, and search for, take possession of, remove, keep and store any of the Collateral
until the same shall be sold or otherwise disposed of, and the Administrative Agent shall have the
right to store the same at any of Grantor’s premises without cost to the Administrative Agent or
any Lender in each case, subject to the terms of the applicable lease agreement and Collateral
Access Agreements with respect to premises leased by Grantor. The Administrative Agent may
forthwith sell, lease, assign, give options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of the Administrative
Agent or any Lender or elsewhere upon such terms and conditions as it may deem advisable and at
such prices as it may deem best, for cash or on credit or for future delivery with assumption of
any credit risk. The Administrative Agent or any Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption
in any Grantor, which right or equity is hereby waived and released. Each Grantor further agrees,
at the Administrative Agent’s request and at each Grantor’s expense, 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 Administrative Agent and the Lenders hereunder, including Attorney
Costs, as provided in Section 6.5. To the extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by them of any rights hereunder, except claims, damages and
demands related to Administrative Agent or any Lender’s gross negligence, willful misconduct or bad
faith as determined by a final, nonappealable judgment by a court of competent jurisdiction. 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.
6.7 Registration Rights. (a) If the Administrative Agent shall determine to exercise
its right to sell any or all of the Pledged Equity in any Domestic Wholly-Owned Subsidiary (as
defined in the Credit Agreement) pursuant to Section 6.6, and if in the opinion of the
Administrative Agent it is necessary or reasonably advisable to have the Pledged Equity in
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any Subsidiary, 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 reasonable opinion of
the Administrative Agent or its counsel, necessary or advisable to register the Pledged Equity, or
that portion thereof to be sold, under the provisions of the Securities Act, (ii) use commercially
reasonable efforts to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public offering of the Pledged
Equity, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus which, in the reasonable opinion of the Administrative Agent or its counsel, are
necessary or reasonably advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission applicable thereto. Each
Grantor agrees to cause such Issuer to comply with the provisions of the securities or “Blue Sky”
laws of any and all jurisdictions which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be unable to effect a public
sale of any or all the Pledged Equity, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to
one or more private sales thereof to a restricted group of purchasers which will be obliged to
agree, among other things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be
under no obligation to delay a sale of any of the Pledged Equity for the period of time necessary
to permit the Issuer thereof to register such securities or other interests for public sale under
the Securities Act, or under applicable state securities laws, even if such Issuer would agree to
do so.
(c) Each Grantor agrees to use commercially reasonable efforts to do or cause to be done all
such other acts as may be reasonably necessary to make such sale or sales of all or any portion of
the Pledged Equity pursuant to this Section 6.7 valid and binding and in compliance with
applicable law. Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and the Lenders,
that the Administrative Agent and the Lenders have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in this Section 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 defense that no Event of Default has occurred under the Credit Agreement.
(d) Each of the Grantors hereby acknowledges and consents to the rights and remedies of the
Administrative Agent in connection with the enforcement of its security interests in the Pledged
Equity in accordance with the terms of this Agreement (including the rights to foreclose upon and
transfer such Pledged Equity in accordance with the terms of this Agreement,
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the UCC and other applicable law) and this Section 6.7(d) shall, to the fullest extent
permitted by the applicable document or agreement and by law, serve as the consent necessary under
any such document or agreement (including under any organizational document of or equityholders
agreement relating to any such Pledged Equity) for the Administrative Agent to effect such remedies
and/or to effect the transfer of the full rights and benefits (including full membership or
partnership rights and entitlements as opposed to merely the economic rights and benefits) of such
Pledged Equity to any transferee thereof (including the Administrative Agent and/or any Lender to
the extent applicable) in accordance with the terms of this Agreement, the UCC, applicable law and
the terms of any applicable document or agreement. Following the occurrence and during the
continuance of an Event of Default and the Administrative Agent’s delivery of notice in accordance
with the terms of this Agreement, each such Grantor hereby agrees to take such actions and execute
any such agreements or documents as shall be reasonably requested by the Administrative Agent to
authorize and effect the entitlement of any such transferee to all rights and benefits (including
full membership or partnership rights and entitlements) of such Pledged Equity. In connection with
the foregoing, each Grantor hereby irrevocably appoints the Administrative Agent as its
attorney-in-fact, to take any such actions and execute any such agreements, in each case, in the
name of and for and on behalf of such Grantor, to effect any of the foregoing following the
occurrence and during the continuance of an Event of Default and the Administrative Agent’s
delivery of notice in accordance with the terms of this Agreement. This power being coupled with
an interest is irrevocable.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-626 of the UCC. Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Secured Obligations in full and the reasonable fees and disbursements of
any attorneys employed by the Administrative Agent or any Lender 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
reasonably necessary or desirable to accomplish the purposes of this Agreement, and, without
limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the
power and right, on behalf of and at the expense of such Grantor, without notice to or assent by
such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of monies due under any Receivable or with respect to any other Collateral and file
any claim or take any other action or proceeding in any court of law or equity or otherwise
deemed reasonably appropriate by the Administrative Agent for the purpose of collecting any
and all such monies due under any Receivable or with respect to any other Collateral
whenever payable;
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(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
reasonably request to evidence the Administrative Agent’s security interest in such
Intellectual Property and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby;
(iii) discharge Liens levied or placed on or threatened against the Collateral (other
than Permitted Liens), and effect any repairs or insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6 or 6.7,
any indorsements, assignments or other instruments of conveyance or transfer with respect to
the Collateral; and
(v) (1) direct any party liable for any payment under any of the Collateral to make
payment of any and all monies 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 monies, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3) sign and indorse
any invoices, freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of any
Collateral; (5) defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or releases as the
Administrative Agent may deem reasonably appropriate; (7) assign any Copyright, Patent or
Trademark, in each case, that is subject to the Lien of the Administrative Agent granted
pursuant to any Loan Document, throughout the world for such term or terms, on such
conditions, and in such manner, as the Administrative Agent shall in its reasonable
discretion determine; (8) vote any right or interest with respect to any Investment
Property; (9) order good standing certificates and conduct lien searches in respect of such
jurisdictions or offices as the Administrative Agent may deem reasonably appropriate; and
(10) generally sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the Administrative Agent
were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s
option and such Grantor’s expense, at any time, or from time to time, all acts and things
which the Administrative Agent deems reasonably necessary to protect, preserve or realize
upon the Collateral and the Administrative Agent’s security interests therein and to effect
the intent of this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) or any other Loan Document 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.
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(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, after written notice
to such Grantor, perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) Each Grantor hereby ratifies all that such attorneys in fact 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 Secured
Obligations are Paid in Full.
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 shall be
to deal with it in the same manner as the Administrative Agent deals with similar property for its
own account. Neither the Administrative Agent or any Lender nor any of their respective officers,
directors, employees or agents shall be liable for any failure to demand, collect or realize upon
any of the Collateral or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to protect the
Administrative Agent’s and the Lenders’ interests in the Collateral and shall not impose any duty
upon the Administrative Agent or any Lender to exercise any such powers. The Administrative Agent
and the Lenders shall be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither the Administrative Agent, nor any Lender nor any of their
respective officers, directors, employees or agents shall be responsible to any Grantor for any act
(except for the Administrative Agent’s or any Lender’s gross negligence or willful misconduct as
determined by a final, nonappealable judgment by a court of competent jurisdiction, in so acting)
or failure to act hereunder.
7.3 Authority of Administrative Agent. Each Grantor acknowledges that the rights and
responsibilities of the Administrative Agent under this Agreement with respect to any action taken
by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for herein or resulting
or arising out of this Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
SECTION 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 15.1
of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the Administrative Agent or
any Grantor hereunder shall be addressed to the Administrative Agent or Loan Party
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Representative, respectively, and effected in the manner provided for in Section 15.3
of the Credit Agreement and each Grantor hereby appoints the Loan Party Representative as its agent
to give and receive notices hereunder and the Administrative Agent shall be fully protected and
held harmless by the Grantors hereunder for relying on any such notice reasonably believed by it to
have been delivered by the Loan Party Representative.
8.3 Indemnification by Grantors. THE GRANTORS, JOINTLY AND SEVERALLY, HEREBY AGREE TO
INDEMNIFY AND HOLD EACH LENDER PARTY FREE AND HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIED
LIABILITIES, INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR
RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE OF EQUITY INTERESTS, PURCHASE OF ASSETS
(INCLUDING THE CLOSING DATE ACQUISITIONS) OR OTHER SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE
FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF ANY OF THE LOANS, (B)
THE PAST, PRESENT OR FUTURE PRESENCE, USE, HANDLING, RELEASE OR THREAT OF RELEASE, EMISSION,
DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS SUBSTANCE AT OR
AFFECTING ANY PROPERTY OWNED OR LEASED BY ANY GRANTOR, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS
WITH RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY GRANTOR OR THE OPERATIONS
CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY
GRANTOR OR ITS RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR INDIRECTLY DISPOSED OF
HAZARDOUS SUBSTANCES OR (E) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR ANY SUCH INDEMNIFIED
LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION.
IF AND TO THE EXTENT THAT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH
GRANTOR HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF
THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDED
FOR IN THIS SECTION 8.3 SHALL SURVIVE REPAYMENT OF ALL (AND SHALL BE) SECURED OBLIGATIONS
AND TERMINATION OF ALL COMMITMENTS UNDER THE CREDIT AGREEMENT, ANY FORECLOSURE UNDER, OR ANY
MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE COLLATERAL DOCUMENTS AND TERMINATION OF
THIS AGREEMENT.
8.4 Enforcement Expenses. (a) Each Grantor agrees, on a joint and several basis, to
pay or reimburse within three (3) Business Days of demand, each Lender and the Administrative Agent
for all reasonable out-of-pocket costs and expenses (subject to the limitations on the number of
counsel set forth in Section 15.5 of the Credit Agreement, including, without duplication of any
provision of this Agreement, Attorney Costs) incurred in collecting against any Guarantor under the
guaranty contained in Section 2 or otherwise enforcing or preserving any rights under this
Agreement and the other Loan Documents.
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(b) Each Grantor agrees to pay, and to save the Administrative Agent and the Lenders harmless
from, any and all liabilities with respect to, or resulting from any delay caused by any Grantor in
paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
(c) The agreements in this Section 8.4 shall survive (i) the repayment in full of all
(and shall be) Secured Obligations, (ii) the termination of all Commitments under the Credit
Agreement, (iii) any foreclosure under, or any modification, release or discharge of, any or all of
the Collateral Documents and (iv) termination of this Agreement.
8.5 Captions. Section captions used in this Agreement are for convenience only and
shall not affect the construction of this Agreement.
8.6 Nature of Remedies. All Secured Obligations of each Grantor and rights of the
Administrative Agent and the Lenders expressed herein or in any other Loan Document shall be in
addition to and not in limitation of those provided by applicable law. No failure to exercise and
no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
8.7 Counterparts. This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts and each such counterpart shall be deemed to
be an original, but all such counterparts shall together constitute but one and the same Agreement.
Receipt by telecopy of any executed signature page to this Agreement or any other Loan Document
shall constitute effective delivery of such signature page.
8.8 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions of this Agreement or any instrument or
agreement required hereunder.
8.9 Entire Agreement. This Agreement, together with the other Loan Documents,
embodies the entire agreement and understanding among the parties hereto and supersedes all prior
or contemporaneous agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof and any prior arrangements made with respect to the payment
by any Grantor of (or any indemnification for) any fees, costs or expenses payable to or incurred
(or to be incurred) by or on behalf of the Administrative Agent or the Lenders.
8.10 Successors; Assigns. This Agreement shall be binding upon Grantors, the Lenders
and the Administrative Agent and their respective successors and assigns, and shall inure to the
benefit of Grantors, Lenders and the Administrative Agent and the successors and assigns of the
Lenders and the Administrative Agent. No other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in connection
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with, this Agreement or any of the other Loan Documents. No Grantor may assign or transfer
any of its rights or Obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.11 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
8.12 Forum Selection; Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION IN WHICH COLLATERAL IS LOCATED. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. EACH GRANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH
GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT
IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
8.13 Waiver of Jury Trial. EACH GRANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
8.14 Set-off. Each Grantor agrees that the Administrative Agent and each Lender have
all rights of set-off and banker’s lien provided by applicable law, and in addition thereto, each
Grantor agrees that at any time any Event of Default occurs and is continuing, the Administrative
Agent and each Lender may apply to the payment of any Secured Obligations, whether or not then due,
any and all balances, credits, deposits, accounts or monies of such Grantor then or thereafter with
the Administrative Agent or such Lender.
8.15 Acknowledgements. Each Grantor hereby acknowledges that:
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(a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with
or duty to any Grantor arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Grantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or among the
Grantors and the Lenders.
8.16 Additional Grantors. Each Loan Party that is required to become a party to this
Agreement pursuant to Section 10.10 of the Credit Agreement shall become a Grantor for all purposes
of this Agreement upon execution and delivery by such Loan Party of a joinder agreement in the form
of Exhibit G to the Credit Agreement.
8.17 Releases. (a) At such time as the Secured Obligations have been Paid in Full,
the Collateral shall be automatically 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 concurrently with any such
termination, the Administrative Agent shall deliver to the Grantors any Collateral held by the
Administrative Agent hereunder, and execute and deliver to the Grantors such documents as the
Grantors shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the
request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or
other documents reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrowers, a Grantor shall be released
from its obligations hereunder in the event that all the equity interests of such Grantor shall be
sold, transferred or otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrowers shall have delivered to the Administrative Agent, with
reasonable notice prior to the date of the proposed release, a written request for release
identifying the relevant Grantor and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith, together with a
certification by the Borrowers stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
8.18 Obligations and Liens Absolute and Unconditional. Each Grantor understands and
agrees that the obligations of each Grantor under this Agreement shall be construed as continuing,
absolute and unconditional without regard to (a) the validity or enforceability of any Loan
Document, any of the Secured Obligations or any other collateral security therefor or guaranty or
right of offset with respect thereto at any time or from time to
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time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be available to or be
asserted by any Grantor or any other Person against the Administrative Agent or any Lender, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of any Grantor) which
constitutes, or might be construed to constitute, an equitable or legal discharge of any Grantor
for the Secured Obligations, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any Grantor, the
Administrative Agent or any Lender may, but shall be under no obligation to, make a similar demand
on or otherwise pursue such rights and remedies as it may have against any other Grantor or any
other Person or against any collateral security or guaranty for the Secured Obligations or any
right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to
make any such demand, to pursue such other rights or remedies or to collect any payments from any
other Grantor or any other Person or to realize upon any such collateral security or guaranty or to
exercise any such right of offset, or any release of any other Grantor or any other Person or any
such collateral security, guaranty or right of offset, shall not relieve any Grantor of any
obligation or liability hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative Agent or any Lender against
any Grantor. For the purposes hereof “demand” shall include the commencement and continuance of
any legal proceedings.
8.19 Reinstatement. This Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against any Grantor or any Issuer for
liquidation or reorganization, should any Grantor or any Issuer become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of such Grantor’s or such Issuer’s assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the Secured
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount,
or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a
“voidable preference”, “fraudulent conveyance”, or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.
[Signature pages follow]
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Each of the undersigned has caused this Guaranty and Collateral Agreement to be duly executed
and delivered as of the date first above written.
GRANTORS:
| KIDS LINE, LLC, a Delaware limited liability company |
||||
| By: | /s/ XXXXXXX XXXX | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Chief Financial Officer | |||
| SASSY, INC., an Illinois corporation |
||||
| By: | /s/ XXXX X. XXXXXXXX | |||
| Name: | Xxxx X. Xxxxxxxx | |||
| Title: | Vice President and Secretary | |||
| LAJOBI, INC., a Delaware corporation |
||||
| By: | /s/ XXXXXXX XXXX | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Chief Financial Officer and Secretary | |||
| I & J HOLDCO, INC., a Delaware Corporation |
||||
| By: | /s/ XXXXXXX XXXX | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Chief Financial Officer and Secretary | |||
| LASALLE NATIONAL BANK ASSOCIATION, as Administrative Agent |
||||
| By: | /s/ XXXXXX X. XXXXX | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | Senior Vice President | |||
