EXECUTION COPY
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of July 1, 2003, among KINDERCARE LEARNING
CENTERS, INC. a Delaware corporation (the "Borrower"), the undersigned
Subsidiaries of the Borrower listed on Annex A hereto (each a "Subsidiary
Grantor" and, collectively, the "Subsidiary Grantors"; the Borrower and the
Subsidiary Grantors, collectively, the "Grantors") and CITICORP NORTH AMERICA,
INC., as administrative agent (in such capacity, the "Administrative Agent") for
the lenders (the "Lenders") from time to time parties to the Revolving Credit
Agreement dated as of July 1, 2003 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the Lenders, Citibank, N.A., as Letter of Credit Issuer, the
Administrative Agent, Credit Suisse First Boston, acting through its Cayman
Islands Branch, as Syndication Agent, and UBS AG, Cayman Islands Branch, as
Documentation Agent.
W I T N E S S E T H:
WHEREAS, (a) pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Borrower and the Letter of Credit Issuer
has agreed to issue Letters of Credit for the account of the Borrower
(collectively, the "Extensions of Credit") upon the terms and subject to the
conditions set forth therein and (b) one or more Lenders or affiliates of
Lenders may from time to time enter into Hedge Agreements with the Borrower;
WHEREAS, (a) each Subsidiary Grantor is a Domestic Subsidiary of the
Borrower and (b) each Subsidiary Grantor has, pursuant to the Guarantee dated as
of the date hereof, unconditionally and irrevocably guaranteed, as primary
obligor and not merely as surety, to the Administrative Agent, for the ratable
benefit of the Secured Parties, the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations;
WHEREAS, the proceeds of the Extensions of Credit will be used in part
to enable the Borrower to make valuable transfers to the Subsidiary Grantors in
connection with the operation of their respective businesses;
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WHEREAS, the Borrower and the Subsidiary Grantors are engaged in
related businesses and each Grantor will derive substantial direct and indirect
benefit from the making of the Extensions of Credit; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
and the Letter of Credit Issuer to make their respective Extensions of Credit to
the Borrower under the Credit Agreement that the Borrower and the Subsidiary
Grantors shall have executed and delivered this Agreement to the Administrative
Agent for the ratable benefit of the Secured Parties;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents, the Lenders and the Letter of Credit Issuer to enter into the Credit
Agreement and to induce the Lenders and the Letter of Credit Issuer to make
their respective Extensions of Credit to the Borrower under the Credit Agreement
and to induce one or more Lenders or affiliates of Lenders to enter into Hedge
Agreements with the Borrower, the Grantors hereby agree with the Administrative
Agent, for the ratable benefit of the Secured Parties, as follows:
1. Defined Terms.
1.1 Definitions. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and all terms defined in the Uniform Commercial Code from
time to time in effect in the State of New York (the "NY UCC") and not defined
herein shall have the meanings specified therein; the term "instrument" shall
have the meaning specified in Article 9 of the NY UCC.
(b) As used in this Agreement, the following terms have the meanings
specified below:
"Account Debtor" means any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Administrative Agent" has the meaning assigned to such term in the
recitals hereto.
"Agreement" means this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Closing Perfection Certificate" has the meaning assigned to such term
in Section 3.3.
"Collateral" has the meaning assigned to such term in Section 2.
"Collateral Account" means any collateral account established by the
Administrative Agent as provided in Section 5.3 or Section 8.2.
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"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any copyright now or
hereafter owned by any Grantor (including all Copyrights) or that any Grantor
otherwise has the right to license, or granting any right to any Grantor under
any copyright now or hereafter owned by any third party, and all rights of any
Grantor under any such agreement, including those listed on Schedule 1.
"copyrights" means, with respect to any Person, all of the following
now owned or hereafter acquired by such Person: (i) all copyright rights in any
work subject to the copyright laws of the United States or any other country,
whether as author, assignee, transferee or otherwise, and (ii) all registrations
and applications for registration of any such copyright in the United States or
any other country, including registrations, recordings, supplemental
registrations and pending applications for registration in the United States
Copyright Office.
"Copyrights" means all copyrights now owned or hereafter acquired by
any Grantor, including those listed on Schedule 2.
"Grantor" has the meaning assigned to such term in the recitals
hereto.
"Indemnitee" means the Secured Parties and their respective officers,
directors, trustees, affiliates and controlling persons.
"Intellectual Property" means all intellectual and similar property of
every kind and nature now owned or hereafter acquired by any Grantor, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
domain names, confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and databases and all
embodiments or fixations thereof and related documentation, registrations and
franchises, and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing, provided
that the term "Intellectual Property" shall not include any of the foregoing
owned by or licensed or sublicensed from any third party (other than the
Borrower or any Subsidiary of the Borrower) to the extent the grant by any
Grantor of a security interest in its rights, title and interest therein (x) is
prohibited by the terms thereof or by the contract, agreement or instrument
pursuant to which such rights, title or interest was acquired by such Grantor
without the consent of any or all other parties thereto or (y) would give any
other party to any such contract, agreement or instrument the right to terminate
its obligations thereunder.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party.
"NY UCC" has the meaning assigned to such term in Section 1.1(a).
"Obligations" means the collective reference to (i) the due and
punctual payment of (x) the principal of and premium, if any, and interest at
the applicable rate provided in the Credit Agreement (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether
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allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (y) each payment required to be made by the Borrower under the Credit
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements made by the Letter of
Credit Issuer, interest thereon and obligations to provide cash collateral in
connection therewith, and (z) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of the Borrower
or any other Credit Party to any of the Secured Parties under the Credit
Agreement and the other Credit Documents, (ii) the due and punctual performance
of all covenants, agreements, obligations and liabilities of the Borrower under
or pursuant to the Credit Agreement and the other Credit Documents, (iii) the
due and punctual payment and performance of all the covenants, agreements,
obligations and liabilities of each other Credit Party under or pursuant to this
Agreement or the other Credit Documents, and (iv) unless otherwise agreed in
writing by the applicable Lender (or affiliate of a Lender) party thereto, the
due and punctual payment and performance of all obligations of each Credit Party
under each Hedge Agreement that (x) is in effect on the Closing Date with a
counterparty that is a Lender or an affiliate of a Lender as of the Closing Date
or (y) is entered into after the Closing Date with any counterparty that is a
Lender or an affiliate of a Lender at the time such Hedge Agreement is entered
into.
"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any invention
on which a patent, now or hereafter owned by any Grantor (including all Patents)
or that any Grantor otherwise has the right to license, is in existence, or
granting to any Grantor any right to make, use or sell any invention on which a
patent, now or hereafter owned by any third party, is in existence, and all
rights of any Grantor under any such agreement, including those listed on
Schedule 3.
"patents" means, with respect to any Person, all of the following now
owned or hereafter acquired by such Person: (a) all letters patent of the United
States or the equivalent thereof in any other country, all registrations and
recordings thereof, and all applications for letters patent of the United States
or the equivalent thereof in any other country, including registrations,
recordings and pending applications in the United States Patent and Trademark
Office or any similar offices in any other country, and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions thereof,
and the inventions disclosed or claimed therein, including the right to make,
use and/or sell the inventions disclosed or claimed therein.
"Patents" means all patents now owned or hereafter acquired by any
Grantor, including those listed on Schedule 4.
"Permitted Liens" means (a) the Lien created by this Agreement, (b)
Liens permitted by Sections 10.2(a), (b) or (d)(y) of the Credit Agreement, (c)
to the extent permitted by Sections 10.1(j) or 10.1(k) of the Credit Agreement,
Liens permitted by
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Sections 10.2(f) or 10.2(g)(ii) of the Credit Agreement and (d) to the extent
replacing, extending or renewing any of the foregoing, Liens permitted by
Section 10.2(h) of the Credit Agreement.
"Secured Parties" means (i) the Lenders, (ii) the Letter of Credit
Issuer, (iii) the Swingline Lender, (iv) the Administrative Agent, (v) the
Syndication Agent, (vi) the Documentation Agent, (vii) each counterparty to a
Hedge Agreement entered into with the Borrower the obligations under which
constitute Obligations, (viii) the beneficiaries of each indemnification
obligation undertaken by any Credit Party under any Credit Document and (ix) any
successors, indorsees, transferees and assigns of each of the foregoing.
"Security Interest" has the meaning assigned to such term in Section
2.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any trademark now or
hereafter owned by any Grantor (including any Trademark) or that any Grantor
otherwise has the right to license, or granting to any Grantor any right to use
any trademark now or hereafter owned by any third party, and all rights of any
Grantor under any such agreement, including those listed on Schedule 5.
"trademarks" means, with respect to any Person, all of the following
now owned or hereafter acquired by such Person: (i) all trademarks, service
marks, trade names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all registrations and recordings thereof (if
any), and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office or any similar offices in any State of the
United States or any other country or any political subdivision thereof, and all
extensions or renewals thereof, (ii) all goodwill associated therewith or
symbolized thereby and (iii) all other assets, rights and interests that
uniquely reflect or embody such goodwill.
"Trademarks" means all trademarks now owned or hereafter acquired by
any Grantor, including those listed on Schedule 6 hereto.
1.2 Other Definitional Provisions. (a) References to "Lenders" in this
Agreement shall be deemed to include affiliates of Lenders that may from time to
time enter into Hedge Agreements with the Borrower.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section references are to
Sections of this Agreement unless otherwise specified. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation".
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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2. Grant of Security. (a) As collateral security for the payment and
performance, as the case may be, in full of the Obligations, each Grantor hereby
assigns and pledges to the Administrative Agent, for the ratable benefit of the
Secured Parties, and hereby grants to the Administrative Agent, for the ratable
benefit of the Secured Parties, a security interest (the "Security Interest") in
all of the following assets and properties now owned or at any time hereafter
acquired by such Grantor or in which such Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, with respect to
each Grantor, the "Collateral"):
(i) all Accounts;
(ii) all Collateral Accounts;
(iii) all Intellectual Property;
(iv) all books and records pertaining to the Collateral; and
(v) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees given by
any Person with respect to any of the foregoing.
(b) Each Grantor hereby irrevocably authorizes the Administrative
Agent at any time and from time to time to file in any relevant jurisdiction any
initial financing statements with respect to the Collateral or any part thereof
and amendments thereto that contain the information required by Article 9 of the
Uniform Commercial Code of each applicable jurisdiction for the filing of any
financing statement or amendment, including whether such Grantor is an
organization, the type of organization and any organizational identification
number issued to such Grantor. Each Grantor agrees to provide such information
to the Administrative Agent promptly upon request.
Each Grantor also ratifies its authorization for the Administrative
Agent to file in any relevant jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.
The Administrative Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) such documents as
may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Administrative Agent as secured party.
The Security Interests are granted as security only and shall not
subject the Administrative Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with respect to or
arising out of the Collateral.
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3. Representations and Warranties. Each Grantor hereby represents and
warrants, as to itself and the Collateral in which the Security Interest is
created hereunder, that:
3.1 Title; No Other Liens. Except for Permitted Liens, such Grantor
owns each item of the Collateral free and clear of any and all Liens. No Grantor
has filed or consented to the filing of any security agreement, financing
statement or other public notice with respect to all or any part of such
Collateral is on file or of record in any public office, except such as have
been filed, pursuant to this Agreement, in favor of the Administrative Agent,
for the ratable benefit of the Secured Parties, or in respect of Permitted
Liens. For the avoidance of doubt, it is understood and agreed that as part of
the Grantors' business, any Grantor may grant non-exclusive licenses to third
parties to use Intellectual Property owned or developed by a Grantor and that
such non-exclusive licenses do not constitute Liens on such Intellectual
Property.
3.2 Authority. Each Grantor has full power and authority to grant to
the Administrative Agent the security interest in the Collateral pursuant hereto
and to execute, deliver and perform its obligations in accordance with the terms
of this Agreement, without the consent or approval of any other person other
than any consent or approval that has been obtained.
3.3 Enforceable Obligation; Perfected, First Priority Security
Interests. (a) This Agreement constitutes a legal, valid and binding obligation
of each Grantor, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and subject to general principles of
equity.
(b) The Perfection Certificate dated the Closing Date and delivered
pursuant to Section 6.1 of the Credit Agreement (the "Closing Perfection
Certificate") has been duly prepared, completed and executed and the information
set forth therein, including the exact legal name of each Grantor, is correct
and complete as of the date hereof.
(c) Subject to Section 4.3(b), the Security Interests granted pursuant
to this Agreement (i) upon (x) completion of the filings, registrations and
recordings specified in Section 3 of the Closing Perfection Certificate (as such
information is updated pursuant to the certificates delivered pursuant to
Section 9.1(d)) in each governmental, municipal or other office specified in
Section 4 of the Perfection Certificate to the extent that a security interest
may be perfected by such filings, registrations and recordings, and (y)
completion of the filing, registration and recording of a fully executed
agreement in the form hereof (or a supplement hereto) and containing a
description of all Collateral constituting Intellectual Property in the United
Stated Patent and Trademark Office within the three-month period (commencing as
of the date hereof) or, in the case of
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Collateral constituting Intellectual Property acquired after the date hereof,
thereafter pursuant to 35 USC ss.261 and 15 USC ss.1060 and the regulations
thereunder with respect to United States Patents and United States registered
Trademarks and in the United States Copyright Office within the one-month period
(commencing as of the date hereof) or, in the case of Collateral constituting
Intellectual Property acquired after the date hereof, thereafter with respect to
Unites States registered Copyrights pursuant to 17 USC ss.205 and the
regulations thereunder and otherwise as may be required pursuant to the laws of
any other necessary jurisdiction to the extent that a security interest may be
perfected by such filings, registrations and recordings, shall constitute
perfected Security Interests in the Collateral in favor of the Administrative
Agent for the ratable benefit of the Secured Parties and (ii) are prior to all
other Liens (other than Permitted Liens) on the Collateral.
3.4 Accounts. Set forth opposite the name of such Grantor in Section 2
of the Closing Perfection Certificate is the place where such Grantor maintains
any books or records relating to any Accounts as of the Closing Date.
4. Covenants. Each Grantor covenants and agrees with the
Administrative Agent, for the benefit of the Secured Parties, that, from and
after the date of this Agreement until this Agreement is terminated and the
Security Interests created hereby are released:
4.1 Delivery of Instruments. If an Event of Default shall have
occurred and be continuing and if any amount payable under or in connection with
any of the Collateral owned by such Grantor shall be or become evidenced by any
promissory note, other instrument or Chattel Paper, upon the request of the
Administrative Agent, such promissory note, instrument or Chattel Paper 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, provided that the Grantors shall only be obligated
to deliver to the Administrative Agent any such promissory notes, instruments or
Chattel Paper to the extent that the aggregate face amount of all such
promissory notes, instruments and Chattel Paper held by all Grantors at such
time exceeds $500,000 (in which case the Grantors shall deliver all such
promissory notes, instruments and Chattel Paper to the Administrative Agent).
4.2 Maintenance of Insurance. Each Grantor shall maintain insurance
policies in accordance with the requirements of Section 9.3 of the Credit
Agreement.
4.3 Maintenance of Perfected Security Interest; Further Documentation.
(a) Each Grantor shall cause all filings and other actions contemplated by
Section 3.3(c) to be taken. Subject to Section 4.3(b), each Grantor shall
maintain the Security Interests created by this Agreement as first priority,
perfected security interests subject only to Permitted Liens and shall defend
such security interests against all claims and demands of all persons whomsoever
(other than those pursuant to Permitted Liens).
(b) For the avoidance of doubt, it is understood and agreed that no
filings, registrations, recordings or other actions have been made or, unless
requested to be made by the Administrative Agent pursuant to Section 4.3(c),
will be required to be made with respect to the perfection of Security Interests
in any Collateral in any jurisdiction outside of the United States.
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(c) Upon the request of the Administrative Agent, each Grantor will
execute, acknowledge, deliver and cause to be duly filed any and all further
documents, financing statements, agreements and instruments, and take all such
further actions (including the filing and recording of financing statements and
other documents), that may be required under any applicable law, or that the
Administrative Agent or the Required Lenders may reasonably request, in order to
effectuate the transactions contemplated by this Agreement and in order to
grant, preserve, protect and perfect the validity and priority (other than with
respect to rights of Persons pursuant to Permitted Liens) of the Security
Interests created or intended to be created by this Agreement or to enable the
Administrative Agent to exercise and enforce its rights and remedies with
respect to any Collateral, including the filing of any financing or continuation
statements under the Uniform Commercial Code in effect in any jurisdiction with
respect to the security interests created hereby, all at the expense of such
Grantor.
4.4 Changes in Locations, Name, etc. Each Grantor will furnish to the
Administrative Agent 15 days prior written notice of any change (i) in its legal
name, (ii) in its jurisdiction of incorporation or organization, (iii) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
(including the establishment of any such new office), (iv) in its identity or
type of organization or corporate structure or (v) in its Federal Taxpayer
Identification Number or organizational identification number. Each Grantor
agrees promptly to provide the Administrative Agent with certified
organizational documents reflecting any of the changes described in the first
sentence of this paragraph. Each Grantor agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Administrative Agent to continue at all times following such change to have
a valid, legal and perfected first-priority security interest in all the
Collateral other than with respect to rights of Persons pursuant to Permitted
Liens. Each Grantor also agrees promptly to notify the Administrative Agent if
any material portion of the Collateral is damaged or destroyed.
4.5 Notices. A Grantor shall advise the Administrative Agent promptly
in reasonable detail, at its address set forth in Section 13.2 of the Credit
Agreement, of:
(a) any Lien of which it has knowledge (other than the Security
Interests created hereby or Permitted Liens) on any material portion of the
Collateral; and
(b) the occurrence of any other event that could reasonably be
expected to have a material adverse effect on the Security Interests created
hereby or on the aggregate value of (i) the Collateral and (ii) all other
Collateral (as such term is defined in the Credit Agreement) of the Borrower and
its Subsidiaries taken as a whole.
4.6 Administrative Agent's Liabilities and Expenses; Indemnification.
(a) Notwithstanding anything to the contrary provided herein, the Administrative
Agent assumes no liabilities with respect to any claims regarding each Grantor's
ownership (or purported ownership) of, or rights or obligations (or purported
rights or obligations) arising from, the Collateral or any use (or actual or
alleged misuse) whether arising out of
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any past, current or future event,
circumstance, act or omission or otherwise, or any claim, suit, loss, damage,
expense or liability of any kind or nature arising out of or in connection with
the Collateral or the production, marketing, delivery, sale or provision of
goods or services under or in connection with any of the Collateral. All of such
liabilities shall, as between the Administrative Agent and the Grantors, be
borne exclusively by the Grantors.
(b) Each Grantor hereby agrees to pay all expenses of the
Administrative Agent and to indemnify the Administrative Agent with respect to
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including reasonable and documented fees, disbursements and other
charges of counsel, with respect to this Agreement or the Collateral, in each
case to the extent the Borrower is required to do so pursuant to Section 13.5 of
the Credit Agreement.
(c) Any amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. Without
prejudice to the survival of any other agreements contained herein, all
indemnification and reimbursement obligations contained herein shall survive the
payment in full in cash of the Obligations, the expiration of the Letters of
Credit and the termination of the Commitments or this Agreement.
4.7 Transfers and Other Liens. Each Grantor shall not (i) sell or
otherwise dispose of any of the Collateral, except as permitted by the Credit
Agreement, or (ii) create or suffer to exist any Lien upon or with respect to
any of the Collateral, except for the Lien under this Agreement and except for
Permitted Liens, provided that in the event such Grantor sells or otherwise
disposes of Collateral in a manner permitted by the Credit Agreement, the
Administrative Agent shall release such Collateral free and clear of the Lien
under this Pledge Agreement concurrently with the consummation of such sale.
Notwithstanding the foregoing, each Grantor may use and dispose of the
Collateral in any lawful manner not in violation of the provisions of this
Agreement, the Credit Agreement or any other Credit Document unless the
Administrative Agent shall, after an Event of Default shall have occurred,
notify such Grantor not to sell, convey, lease, assign, transfer or otherwise
dispose of any such Collateral other than any transfers between the Borrower or
a Subsidiary that is a Grantor.
5. Provisions Relating to Accounts.
5.1 Grantors Remain Liable under Accounts. Anything herein to the
contrary notwithstanding, (a) no Secured Party shall have any obligation or
liability under any Account (or any agreement giving rise thereto) by reason of
or arising out of this Agreement or the receipt by the Administrative Agent or
any Secured Party of any payment relating to such Account pursuant hereto, nor
shall any Secured Party be obligated in any manner to perform any of the
obligations of a Grantor under or pursuant to any Account (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 under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or
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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 and (b) in furtherance of clause
(a) each Grantor acknowledges and agrees that it shall remain liable under each
of the Accounts 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 to each such Account.
5.2 Analysis of Accounts. The Administrative Agent shall have the
right upon the occurrence and during the continuance of an Event of Default to
make test verifications of the Accounts in any manner and through any medium
that it considers reasonably 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 and from time to time upon
the occurrence and during the continuance of an Event of Default, upon the
Administrative Agent's reasonable request and at the expense of each Grantor,
each Grantor shall cause independent public accountants or others reasonably
satisfactory to the Administrative Agent to furnish to the Administrative Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts. Upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent in its own name or in the name of
others may communicate with Account Debtors on the Accounts to verify with them
to the Administrative Agent's reasonable satisfaction the existence, amount and
terms of any Accounts. The Administrative Agent shall have the absolute right to
share any information it gains from such inspection or verification with any
Secured Party.
5.3 Collections on Accounts. (a) The Administrative Agent hereby
authorizes each Grantor to collect such Grantor's Accounts, and the
Administrative Agent may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. If requested
in writing by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Accounts, when
collected by a Grantor during the continuance of such an Event of Default, (i)
shall be forthwith (and, in any event, within two Business Days) 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 and on terms and conditions reasonably satisfactory
to the Administrative Agent, subject to withdrawal by the Administrative Agent
as provided in Section 8.3, and (ii) until so turned over, shall be held by such
Grantor in trust for the Secured Parties, segregated from other funds of such
Grantor.
(b) At the Administrative Agent's reasonable request after the
occurrence and during the continuance of an Event of Default, each Grantor shall
deliver to the Administrative Agent all original and other documents evidencing,
and relating to, the material agreements and material transactions that gave
rise to the Accounts, including all original orders, invoices and shipping
receipts.
5.4 Other Covenants. (a) Upon the occurrence and during the
continuance of an Event of Default, a Grantor shall not grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle the
same for less than
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the full amount thereof, release, wholly or partly, any person liable for the
payment thereof, or allow any credit or discount whatsoever thereon if the
Administrative Agent shall have instructed the Grantors in writing not to grant
or make any such extension, credit, discount, compromise, or settlement under
any circumstances during the continuance of such Event of Default.
6. Provisions Relating to Contracts.
6.1 Grantors Remain Liable under Contracts. Anything herein to the
contrary notwithstanding, (a) no Secured Party shall have any obligation or
liability under any contract, agreement or instrument relating to the Collateral
by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any other such Secured Party of any payment thereunder
pursuant hereto, nor shall any Secured Party be obligated in any manner to
perform any of the obligations of a Grantor under or pursuant to any such
contract, agreement or instrument, 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 under any such contract, agreement
or instrument, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts that may have been assigned
to it or to which it may be entitled at any time or times and (b) in furtherance
of clause (a), each Grantor acknowledges and agrees that it shall remain liable
under each contract, agreement or instrument relating to the Collateral to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with and pursuant to the terms and
provisions thereof.
6.2 Communication With Contracting Parties. Upon the occurrence and
during the continuance of an Event of Default and after the Grantors shall have
received written notice from the Administrative Agent of its intent to do so,
the Administrative Agent in its own name or in the name of others may
communicate with parties to each contract, agreement or instrument relating to
the Collateral to verify with them to the Administrative Agent's satisfaction
the existence, amount and terms of any such contract, agreement or instrument.
The Administrative Agent shall have the absolute right to share any information
it gains from such communications with any Secured Party.
7. Provisions Relating to Intellectual Property.
7.1 Maintenance of Intellectual Property. Each Grantor will take all
reasonable steps to maintain and pursue each material application relating to
the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties, except to the extent the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
Each Grantor agrees that it will not do any act or omit to do any act (and will
exercise commercially reasonable efforts to prevent its licensees from doing any
act or omitting to do any act) whereby any Patent, Trademark or Copyright that
is material to the conduct of such Grantor's business
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may become invalidated or prematurely (after any steps to renew or extend such
Grantor's rights therein available under applicable law have been taken)
dedicated to the public, except to the extent that such act or omission could
not reasonably be expected to have a Material Adverse Effect. Each Grantor
agrees that it will not knowingly use or knowingly permit its licensees and
sublicensees to use any Patent, Trademark or Copyright that is material to the
conduct of such Grantor's business in violation of any third party rights,
except to the extent that such use or permission could not reasonably be
expected to have a Material Adverse Effect.
7.2 Notice of Filing. Whenever any Grantor, either itself or through
any agent, employee, licensee or designee, files an application with respect to
any Patent, Trademark or Copyright material to the conduct of such Grantor's
business (or with respect to the registration of any Trademark or Copyright
material to the conduct of such Grantor's business) with the United States
Patent and Trademark Office, United States Copyright Office or any office or
agency in any political subdivision of the United States or in any other country
or any political subdivision thereof, such Grantor shall report such filing to
the Administrative Agent promptly thereafter. Whenever any Grantor, either
itself or through any agent, employee, licensee or designee, files an
application with respect to any Patent, Trademark or Copyright other than any
Patent, Trademark or Copyright material to the conduct of such Grantor's
business (or with respect to the registration of any Trademark or Copyright
other than any Trademark or Copyright material to the conduct of such Grantor's
business) with the United States Patent and Trademark Office, United States
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof, such
Grantor shall report such filing to the Administrative Agent at the time of the
next delivery of the financial statements provided for in Sections 9.1(a) and
(b) of the Credit Agreement. Upon the written request of the Administrative
Agent, each Grantor shall execute and deliver 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 Patent,
Trademark or Copyright, and each Grantor hereby appoints the Administrative
Agent as its attorney-in-fact to execute and file such writings for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.
7.3 Licensor Consents. Upon and during the continuance of an Event of
Default and after receipt of written notice from the Administrative Agent, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
from the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all such Grantor's right, title and interest
thereunder to the Administrative Agent or its designee.
7.4 Grant of License to Use Intellectual Property. For the purpose of
enabling the Administrative Agent to exercise rights and remedies under this
Agreement, effective as of the occurrence and during the continuance of an Event
of Default, each Grantor hereby grants to the Administrative Agent an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Grantors) to use, license or sublicense any of the
Collateral consisting of Intellectual Property now owned
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or hereafter acquired by such Grantor (except to the extent that the granting of
such license would violate the terms of any license existing on the date hereof,
as such terms exist on the date hereof, granting a Grantor any right under any
Intellectual Property now or hereafter owned by any third party) and wherever
the same may be located, and including in such license reasonable access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.
8. Remedies. If any Event of Default shall have occurred and be
continuing:
8.1 Notice to Account Debtors. Upon the written request of the
Administrative Agent, a Grantor shall notify Account Debtors on the Accounts and
parties to each contract, agreement or instrument relating to such Accounts that
the Accounts have been assigned to the Administrative Agent for the ratable
benefit of the Secured Parties and that payments in respect thereof during the
continuance of such an Event of Default shall be made directly to the
Administrative Agent.
8.2 Proceeds to be Turned Over To Administrative Agent. In addition to
the rights of the Administrative Agent and the Secured Parties specified in
Section 5.3 with respect to payments of Accounts, all Proceeds of any Collateral
received by a Grantor consisting of cash, checks and other near-cash items shall
upon the Administrative Agent's written request be held by such Grantor in trust
for the Secured Parties, segregated from other funds of such Grantor, and shall,
upon the Administrative Agent's written request (it being understood that the
exercise of remedies by the Secured Parties in connection with an Event of
Default under Section 11.5 of the Credit Agreement shall be deemed to constitute
a request by the Administrative Agent for the purposes of this sentence) be
forthwith, upon receipt by such Grantor, 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 Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under the sole dominion and control of and on terms and
conditions reasonably satisfactory to the Administrative Agent. All Proceeds
while held by the Administrative Agent in a Collateral Account (or by such
Grantor in trust for the Administrative Agent and the Secured Parties) shall,
subject to Section 8.3, continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 8.3.
8.3 Application of Proceeds. The Administrative Agent shall apply the
proceeds of any collection or sale of the Collateral at any time after receipt
as follows:
(a) first, to the payment of all costs and expenses incurred by the
Administrative Agent in connection with such collection or sale or otherwise in
connection with this Agreement, the other Credit Documents or any of the
Obligations, including all court costs and the fees and expenses of its agents
and legal counsel, the repayment of all advances made by the Administrative
Agent hereunder or under any other Credit
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Document on behalf of any Grantor and any other costs or expenses incurred in
connection with the exercise of any right or remedy hereunder or under any other
Credit Document;
(b) second, to the Secured Parties, an amount equal to all Obligations
owing to them on the date of any such distribution and, if such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any
one over any other) to such Secured Parties in proportion to the unpaid amounts
thereof; and
(c) third, any surplus then remaining shall be paid to the Grantors or
their successors or assigns or to whomsoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
Upon any sale of the Collateral by the Administrative Agent (including pursuant
to a power of sale granted by statute or under a judicial proceeding), the
receipt of the Administrative Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Administrative
Agent or such officer or be answerable in any way for the misapplication
thereof.
8.4 Code Remedies. The Administrative Agent may exercise in respect of
the Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party upon
default under the NY UCC (whether or not the NY UCC applies to the affected
Collateral) and also may, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange broker's board or at any of the Administrative Agent's offices
or elsewhere, for cash, on credit or for future delivery, at such price or
prices and upon such other terms as are commercially reasonable irrespective of
the impact of any such sales on the market price of the Collateral. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by law) all rights of redemption, stay and/or appraisal
that it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Administrative Agent or any
Secured Party shall have the right upon any such public sale, and, to the extent
permitted by law, upon any such private sale, to purchase the whole or any part
of the Collateral so sold, and the Administrative Agent or such Secured Party
may subject to (x) the satisfaction in full in cash of all payments due pursuant
to Section 8.3(a), and (y) the ratable satisfaction of the Obligations in
accordance with Section 8.3(b) pay the purchase price by crediting the amount
thereof against the Obligations. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to such Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. To the extent permitted by law, each Grantor
hereby waives any claim against the Administrative Agent
15
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price that might have been
obtained at a public sale, even if the Administrative Agent accepts the first
offer received and does not offer such Collateral to more than one offeree.
9. Amendments, etc. with Respect to the Obligations; Waiver of Rights.
Each Grantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Grantor and without notice to or further
assent by any Grantor, (a) any demand for payment of any of the Obligations made
by the Administrative Agent or any Secured Party may be rescinded by such party
and any of the Obligations continued, (b) the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Administrative Agent or any
Secured Party, (c) the Credit Agreement, the other Credit Documents, the Letters
of Credit and any other documents executed and delivered in connection therewith
and the Hedge Agreements 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, as the
case may be, or, in the case of any Hedge Agreement, the party thereto) may deem
advisable from time to time, and (d) any collateral security, guarantee or right
of offset at any time held by the Administrative Agent or any Secured Party for
the payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Secured Party shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the Obligations or for this Agreement or any property subject
thereto. When making any demand hereunder against any Grantor, the
Administrative Agent or any Secured Party may, but shall be under no obligation
to, make a similar demand on the Borrower or any other Grantor or pledgor, and
any failure by the Administrative Agent or any Secured Party to make any such
demand or to collect any payments from the Borrower or any other Grantor or
pledgor or any release of the Borrower or any other Grantor or pledgor shall not
relieve any Grantor in respect of which a demand or collection is not made or
any Grantor not so released of its several obligations or liabilities hereunder,
and shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of the Administrative Agent or any Secured Party against any
Grantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
10. Administrative Agent Appointed Attorney-in-Fact.
10.1 Powers. Each Grantor hereby appoints, which appointment is
irrevocable and coupled with an interest, the Administrative Agent as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor or otherwise, to take any action and to
execute any instrument, in each case after the occurrence and during the
continuance of an Event of Default, that the Administrative Agent may deem
reasonably necessary or advisable to accomplish the purposes of this Agreement.
Without limiting the generality of the foregoing, such Grantor hereby gives the
Administrative Agent the power and right, on behalf of such
16
Grantor either in the Administrative Agent's name or in the name of such Grantor
or otherwise, without assent by such Grantor, to do the following upon the
occurrence and during the continuance of an Event of Default and after written
notice by the Administrative Agent of its intent to do so:
(a) to take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Account or with respect to any other Collateral and to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting any and
all such moneys due under any Account or with respect to any other Collateral
whenever payable;
(b) in the case of any Intellectual Property, execute and deliver, and
have recorded, any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent's and the
Secured Parties' security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby;
(c) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral (other than Permitted Liens), to effect any
repairs or any insurance called for by the terms of this Agreement and to pay
all or any part of the premiums therefor and the costs thereof;
(d) to execute, in connection with any sale provided for in Section
8.4 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral;
(e) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Administrative Agent or as the Administrative Agent shall
direct;
(f) to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral;
(g) to sign and indorse any invoices, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral;
(h) to 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 thereof and to enforce any other right in respect of any Collateral;
(i) to defend any suit, action or proceeding brought against any
Grantor with respect to any Collateral;
17
(j) to settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, to give such discharges or releases as
the Administrative Agent may deem appropriate;
(k) to assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions and
in such manner as the Administrative Agent shall in its sole discretion
determine; and
(l) generally, to use, 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 to do, at the Administrative Agent's option and at the
expense of such Grantor, at any time or from time to time, all acts and things
that the Administrative Agent reasonably deems necessary to protect, preserve or
realize upon such Collateral and the Administrative Agent's and the Secured
Parties' security interests therein and to effect the intent of this Agreement,
all as fully and effectively as such Grantor might do.
Anything in this Section 10.1 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 10.1 unless an Event of Default has
occurred and is continuing.
10.2 Performance by Administrative Agent of Grantor's Obligations. If
any Grantor fails to perform or comply with any of its agreements contained
herein, the Administrative Agent, at its option, but without any obligation so
to do, may perform or comply, or otherwise cause performance or compliance, with
such agreement.
10.3 Ratification. Each Grantor hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof.
10.4 Grantor's Reimbursement Obligation. The expenses of the
Administrative Agent reasonably incurred in connection with actions undertaken
as provided in this Section 10, together with interest thereon at a rate per
annum equal to the default rate of interest set forth in clause (y) of Section
2.8(c) of the Credit Agreement, from and including the date payment is demanded
by the Administrative Agent to but excluding the date reimbursed by such
Grantor, shall be payable by the applicable Grantor to the Administrative Agent
on demand.
11. The Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession under Section
9-207 of the NY UCC or otherwise and the accounting for moneys actually received
by it hereunder, the Administrative Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Collateral. The Administrative
Agent shall be deemed to have exercised reasonable care in the custody
18
and preservation of any Collateral in its possession if such Collateral is
accorded treatment in the same manner to that which the Administrative Agent
accords its own property.
12. 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 request, judgment or other right
or remedy provided for herein or resulting or arising out of this Agreement
shall, as between the Administrative Agent and the other Secured Parties, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the other Secured Parties with
full and valid authority so to act or refrain from acting and no Grantor shall
be under any obligation or have any entitlement to make any inquiry regarding
such authority.
13. Security Interest Absolute. All rights of the Administrative Agent
hereunder, the security interest and all obligations of the Grantors hereunder
shall be absolute and unconditional.
14. Continuing Security Interest; Assignments Under the Credit
Agreement; Release. (a) This Agreement shall create a continuing security
interest in the Collateral and shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon each Grantor and
the successors and assigns thereof, and shall inure to the benefit of the
Administrative Agent and the Secured Parties, and their respective successors,
indorsees, transferees and assigns, until (x) all the Obligations shall have
been satisfied by payment in full, (y) the Commitments shall be terminated and
(z) no Letters of Credit shall be outstanding, notwithstanding that from time to
time during the term of the Credit Agreement and any Hedge Agreement the Credit
Parties may be free from any Obligations; upon clauses (x), (y) and (z) being
satisfied, the Collateral shall be released from the Liens created hereby, all
rights to the Collateral shall revert to the Grantors and this Agreement and all
obligations (other than those expressly stated to survive such termination
either herein or in any other Credit Document) of the Administrative Agent and
each Grantor shall terminate, all without delivery of any instrument or
performance of any act by any party.
(b) A Subsidiary Grantor shall automatically be released from its
obligations hereunder, the Security Interest in the Collateral of such
Subsidiary Grantor shall be automatically released and all rights to the
Collateral granted hereunder by such Subsidiary Grantor shall revert to such
Subsidiary Grantor upon the consummation of any transaction permitted by the
Credit Agreement as a result of which such Subsidiary Grantor ceases to be a
Domestic Subsidiary of the Borrower, all without delivery of any instrument or
performance of any act by any party.
(c) Upon any sale, disposition or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement or upon the
effectiveness of any written consent to the release of the security interest
granted hereby in any Collateral pursuant to Section 13.1 of the Credit
Agreement, the Security Interest in such Collateral
19
shall be automatically released and such Collateral shall be sold free and clear
of the Lien and Security Interest created hereby.
(d) In connection with any termination or release pursuant to
paragraph (a), (b) or (c), at the request of any Grantor, the Administrative
Agent shall execute and deliver to any Grantor, at such Grantor's expense, all
documents that such Grantor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this
Section 14 shall be without recourse to or warranty by the Administrative Agent.
15. Reinstatement. This Agreement shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or returned
by the Administrative Agent or any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
other Credit Party, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrower or
any other Credit Party or any substantial part of its property, or otherwise,
all as though such payments had not been made.
16. Notices. All notices, requests and demands pursuant hereto shall
be made in accordance with Section 13.2 of the Credit Agreement; provided that
any such notice, request or demand to or upon any Subsidiary Grantor shall be
addressed to such Subsidiary Grantor at the notice address set forth under its
signature below.
17. Counterparts. This Agreement may be executed by one or more of the
parties hereto on any number of separate counterparts (including by facsimile or
other electronic transmission) and all of such counterparts taken together shall
be deemed to constitute one and the same instrument. A set of the counterparts
of this Agreement signed by all the parties hereto shall be lodged with the
Administrative Agent and the Borrower.
18. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
19. Integration. This Agreement and the other Credit Documents
represent the agreement of each Grantor and the Administrative Agent and the
Secured Parties with respect to the subject matter hereof and there are no
promises or representations by the Administrative Agent or any Secured Party
relative to the subject matter hereof not reflected herein or therein.
20. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by each affected
Grantor and the Administrative Agent in accordance with Section 13.1 of the
Credit Agreement.
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(b) Neither the Administrative Agent nor any Secured Party shall by
any act (except by a written instrument pursuant to Section 20(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent or any Secured
Party, 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. A waiver by the
Administrative Agent or any Secured Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that the
Administrative Agent or any Secured Party would otherwise have on any future
occasion.
(c) The rights, remedies, powers and privileges herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
21. Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
22. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Secured Parties and their successors and assigns,
except that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
23. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY AND, BY ACCEPTANCE OF
THE BENEFITS HEREOF, THE ADMINISTRATIVE AGENT AND EACH SECURED PARTY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT OR ANY LETTER OF CREDIT
AND FOR ANY COUNTERCLAIM THEREIN.
24. Submission to Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement, any other Credit Document or any Letter
of Credit, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such
21
action or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 16 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section 24 any special, exemplary, punitive or consequential damages.
25. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
26. Additional Grantors. Pursuant to Section 9.13 of the Credit
Agreement, (a) any Domestic Subsidiary (other than any Unrestricted Subsidiary,
Acquisition Subsidiary, Real Estate Financing Entity or, to the extent permitted
pursuant to Sections 10.1(j) or 10.1(k) of the Credit Agreement, any Restricted
Subsidiary or any acquired Person (as defined in Section 10.1(k) of the Credit
Agreement)) formed or otherwise purchased or acquired after the date of this
Agreement and (b) any Subsidiary that is not a Domestic Subsidiary on the date
of this Agreement but subsequently becomes a Domestic Subsidiary (other than any
Unrestricted Subsidiary, Acquisition Subsidiary or Real Estate Financing Entity)
is required, in each case promptly after such formation, purchase, acquisition
or transformation, (i) to execute a supplement to this Agreement, substantially
in the form of Exhibit B hereto, in order to become a Subsidiary Grantor and
(ii) to file, register or record (or deliver to the Administrative Agent for
filing, registration or recording) all documents and instruments, including
Uniform Commercial Code financing statements, required by law or reasonably
requested by the Administrative Agent to be filed, registered or recorded to (x)
create the Liens intended to be created by this Agreement and (y) perfect such
Liens to the extent required by, and with the priority required by, this
Agreement. Upon execution and delivery by the Administrative Agent and any such
Subsidiary of an instrument substantially in the form of Annex B hereto, such
Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor hereunder. The execution and delivery of any such
instrument shall not require the consent of any Grantor hereunder. The rights
and obligations of each Grantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Grantor as a party to this Agreement.
22
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.
KINDERCARE LEARNING CENTERS, INC.,
By: /s/ XXX X. XXXXXXXXX
------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Senior Vice President
and General Counsel
EACH SUBSIDIARY GRANTOR LISTED ON
ANNEX A HERETO
By: /s/ XXX X. XXXXXXXXX
------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Senior Vice President
and General Counsel
Address for Notices for each Grantor:
000 XX Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxxxxxx, Esq.
Fax: (000) 000-0000
With a copy to:
KINDERCARE LEARNING CENTERS, INC.,
In care of Kohlberg Kravis Xxxxxxx
& Co., L.P.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax: 000-000-0000
23
Signature Page to KinderCare Security
Agreement
CITICORP NORTH AMERICA, INC., as
Administrative Agent,
by /s/ XXXXXX X. XXXXX
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director & VP
24
SCHEDULE 1
TO THE SECURITY AGREEMENT
COPYRIGHT LICENSES
None.
25
SCHEDULE 2
TO THE SECURITY AGREEMENT
COPYRIGHTS
Registration
Registered Owner/Grantor Title Number
---------------------------- -------------------------- ----------------
KinderCare Learning Welcome to Learning: TX 0-000-000
Centers, Inc. More About Babies and
Toddlers
---------------------------- -------------------------- ----------------
KinderCare Learning More About Schoolagers TX 0-000-000
Centers, Inc.
---------------------------- -------------------------- ----------------
KinderCare Learning KinderCare's Guide to TX 0-000-000
Centers, Inc. Completing the Child
Development Associate
---------------------------- -------------------------- ----------------
KinderCare Learning Let's Move, Let's Play TX 0-000-000
Centers, Inc.
---------------------------- -------------------------- ----------------
KinderCare Learning Let's Move, Let's Play! TX 0-000-000
Centers, Inc. Developmentally
Appropriate Movement and
Classroom Activities for
Preschool Children
---------------------------- -------------------------- ----------------
KinderCare Learning Your KinderCare TX 0-000-000
Centers, Inc. Classroom: Creating
Interesting Places for
Learning
---------------------------- -------------------------- ----------------
KinderCare Learning Feed Me Fun TX 0-000-000
Centers, Inc.
---------------------------- -------------------------- ----------------
KinderCare Learning Watch it Fall Into Pending
Centers, Inc. Place: Your Guide to a
Successful Fall
Enrollment
---------------------------- -------------------------- ----------------
KinderCare Learning Reaching for Social TX 0-000-000
Centers, Inc. Sensitivity
---------------------------- -------------------------- ----------------
KinderCare Learning Whole Language: Pending
Centers, Inc. Instructing the Whole
Child
---------------------------- -------------------------- ----------------
KinderCare Learning The 15 goals of TX 861-564
Centers, Inc. Kinder-Care's Education
Programs
---------------------------- -------------------------- ----------------
KinderCare Learning Playscapes at TX 0-000-000
Centers, Inc. KinderCare: An Action
Training Guide
---------------------------- -------------------------- ----------------
KinderCare Learning Preschool at KinderCare Pending
Centers, Inc. (13 manuals)
---------------------------- -------------------------- ----------------
KinderCare Learning Summer Explorations Pending
Centers, Inc. curriculum manuals
---------------------------- -------------------------- ----------------
KC Distance Learning, Inc. Earth Science TX 4287335
---------------------------- -------------------------- ----------------
KC Distance Learning, Inc. Life Science TX 4290882
---------------------------- -------------------------- ----------------
KC Distance Learning, Inc. You & Your Health TX 4008098
---------------------------- -------------------------- ----------------
26
SCHEDULE 3
TO THE SECURITY AGREEMENT
PATENT LICENSES
None.
27
SCHEDULE 4
TO THE SECURITY AGREEMENT
PATENTS
None
28
SCHEDULE 5
TO THE SECURITY AGREEMENT
TRADEMARK LICENSES
None
29
SCHEDULE 6
TO THE SECURITY AGREEMENT
TRADEMARKS
Domestic Trademarks
Registered Registration Application
Owner/Grantor Trademark No. No.
------------------- ---------------------------- ------------ -----------
KinderCare Learning DESIGN 1,345,219
Centers, Inc.
KinderCare Learning DESIGN 1,425,219
Centers, Inc.
KinderCare Learning DESIGN 1,793,070
Centers, Inc.
KinderCare Learning FEED ME FUN 2,075,223
Centers, Inc.
KinderCare Learning FUN-VENTIONS 2,121,660
Centers, Inc.
KinderCare Learning KC IMAGINATION HIGHWAY 2,082,421
Centers, Inc.
KinderCare Learning KC IMAGINATION HIGHWAY 2,155,322
Centers, Inc. [INCLUDING DESIGN]
KinderCare Learning KID'S CHOICE 74/425,362
Centers, Inc.
KinderCare Learning KID'S CHOICE [INCLUDING 74/425,361
Centers, Inc. DESIGN]
KinderCare Learning KINDER BEAR 1,513,719
Centers, Inc.
KinderCare Learning KINDERACADEMY 76/346,892
Centers, Inc.
KinderCare Learning KINDERCAMPUS 76/347,007
Centers, Inc.
KinderCare Learning KINDERCARE 1,224,603
Centers, Inc.
KinderCare Learning KINDERCARE 1,594,176
Centers, Inc.
KinderCare Learning KINDERCARE 1,905,371
Centers, Inc.
KinderCare Learning KINDERCARE [INCLUDING 1,142,919
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 1,238,509
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 1,859,542
Centers, Inc. DESIGN]
30
Registered Registration Application
Owner/Grantor Trademark No. No.
------------------- ---------------------------- ------------ -----------
KinderCare Learning KINDERCARE AT WORK 1,580,750
Centers, Inc.
KinderCare Learning KINDERCARE'S COMPUTER CLUB 2,140,676
Centers, Inc.
KinderCare Learning KINDERCARE'S COMPUTER CLUB 2,163,614
Centers, Inc. [INCLUDING DESIGN]
KinderCare Learning KINDERGARTEN AT KINDERCARE....2,308,798
Centers, Inc. JOURNEY TO DISCOVERY
KinderCare Learning KINDEROO (stylized) 1,270,349
Centers, Inc.
KinderCare Learning KINDUSTRY 78/157,782
Centers, Inc.
KinderCare Learning LET ME DO IT 1,536,887
Centers, Inc.
KinderCare Learning LET'S MOVE, LET'S PLAY 1,879,578
Centers, Inc.
KinderCare Learning MY WINDOW ON THE WORLD 1,538,530
Centers, Inc.
KinderCare Learning WELCOME TO LEARNING 2,134,246
Centers, Inc.
KinderCare Learning YOUR CHILD'S FIRST CLASSROOM 2,320,557
Centers, Inc.
Mulberry Child Care RAZZMATAZZ 2,528,156
Centers, Inc.
Mulberry Child Care MULBERRY CHILD CARE & 2,277,813
Centers, Inc. PRESCHOOL
Mulberry Child Care MULBERRY CHILD CARE CENTERS, 2,272,060
Centers, Inc. INC. [INCLUDING DESIGN]
Mulberry Child Care SPINDLE CITY PRE-SCHOOL 1,444,615
Centers, Inc. [INCLUDING DESIGN]
Trademarks registered in the state of Pennsylvania
--------------------------------------------------
Registered Registration
Owner/Grantor Trademark No.
------------------- ---------------------------- ------------
KC Distance Learning, eSchool 2877490
Inc.
KC Distance Learning, High School @ Home 2868028
Inc.
Foreign Trademarks
------------------
Registered Registration Application
Owner/Grantor Trademark No. No.
------------------- ---------------------------- ------------ -----------
KinderCare Learning KINDERCARE 668357 Australia
Centers, Inc.
KinderCare Learning KINDERCARE [INCLUDING 668356 Australia
Centers, Inc. DESIGN]
31
Registered Registration Application
Owner/Grantor Trademark No. No.
------------------- ---------------------------- ------------ -----------
KinderCare Learning KINDERCARE 524435 Benelux
Centers, Inc.
KinderCare Learning KINDERCARE [INCLUDING 0526257 Benelux
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE AT WORK 522873 Benelux
Centers, Inc.
KinderCare Learning KINDER-CARE [INCLUDING 280617 Canada
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE 881,081 Canada
Centers, Inc.
KinderCare Learning KINDERCARE 691,721 China P.R.
Centers, Inc.
KinderCare Learning KINDERCARE 000000 Xxxxx P.R
Centers, Inc.
KinderCare Learning KINDERCARE 000000 Xxxxx P.R.
Centers, Inc.
KinderCare Learning KINDERCARE [INCLUDING 691,727 China P.R.
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 000000 Xxxxx P.R.
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 158268 Columbia
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE 195222 European
Centers, Inc. Community
KinderCare Learning KINDERCARE [INCLUDING 195180 European
Centers, Inc. DESIGN] Community
KinderCare Learning KINDER CARE 1.627.583 France
Centers, Inc.
KinderCare Learning KINDER CARE [INCLUDING 1.627.582 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning CENTERLINE (CENTRELINE) 2018403 Great Britain
Centers, Inc.
KinderCare Learning DESIGN 1513670 Great Britain
Centers, Inc.
KinderCare Learning DESIGN 1513669 Great Britain
Centers, Inc.
KinderCare Learning DESIGN 1513668 Great Britain
Centers, Inc.
KinderCare Learning DESIGN 1513667 Great Britain
Centers, Inc.
KinderCare Learning DESIGN 1513666 Great Britain
Centers, Inc.
KinderCare Learning INFANT CARE [INCLUDING 2018364 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning KINDER CARE B1375702 Great Britain
Centers, Inc.
KinderCare Learning KINDER CARE [INCLUDING B1121672 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning KINDER CARE [INCLUDING B1443624 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING B1443576 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE B1328249 Great Britain
Centers, Inc.
32
Registered Registration Application
Owner/Grantor Trademark No. No.
------------------- ---------------------------- ------------ -----------
KinderCare Learning KINDERCARE B1443201 Great Britain
Centers, Inc.
KinderCare Learning KINDERCARE (WORD XXXX) B1499973 Great Britain
Centers, Inc.
KinderCare Learning KLUBMATES [INCLUDING 2018360 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning LET ME DO IT 2018370 Great Britain
Centers, Inc.
KinderCare Learning LET ME DO IT [INCLUDING 2018372 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning LET'S MOVE, LET'S PLAY 2018377 Great Britain
Centers, Inc.
KinderCare Learning LOOK AT ME 2018374 Great Britain
Centers, Inc.
KinderCare Learning LOOK AT ME [INCLUDING 2018352 Great Britain
Centers, Inc. DESIGN]
KinderCare Learning ONCE UPON A TIME 2018397 Great Britain
Centers, Inc.
KinderCare Learning ONCE UPON A TIME 2025143 Great Britain
Centers, Inc. [INCLUDING DESIGN]
KinderCare Learning THE WHOLE CHILD IS THE 2018402 Great Britain
Centers, Inc. WHOLE IDEA
KinderCare Learning KINDERCARE [INCLUDING 1,176,396 Germany
Centers, Inc. DESIGN]
KinderCare Learning KINDER CARE [INCLUDING 602.117 Italy
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE 602.116 Italy
Centers, Inc.
KinderCare Learning KINDERCARE 0000000 Xxxxx
Centers, Inc.
KinderCare Learning KINDERCARE [INCLUDING 0000000 Xxxxx
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 017767 South Korea
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE (KOREAN 39038 South Korea
Centers, Inc. LANGUAGE) [INCLUDING
DESIGN]
KinderCare Learning MISCELLANEOUS DESIGN 224967 New Zealand
Centers, Inc.
KinderCare Learning MISCELLANEOUS DESIGN 224969 New Zealand
Centers, Inc.
KinderCare Learning KINDERCARE B2804/94 Singapore
Centers, Inc.
KinderCare Learning KINDERCARE [INCLUDING B2803/94 Singapore
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 000000 Xxxxxxxxxxx
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE [INCLUDING 408 558 Switzerland
Centers, Inc. DESIGN]
KinderCare Learning KINDERCARE 00000 Xxxxxx
Centers, Inc.
33
Registered Registration Application
Owner/Grantor Trademark No. No.
------------------- ---------------------------- ------------ -----------
KinderCare Learning KINDERCARE [INCLUDING 00000 Xxxxxx
Centers, Inc. DESIGN]
34
ANNEX A
TO THE SECURITY AGREEMENT
SUBSIDIARY grantorS
KinderCare Real Estate, LLC
KC Development, LLC
KC Distance Learning, Inc.
Mini-Skools, Inc.
Mulberry Child Care Centers, Inc.
35
ANNEX B
TO THE SECURITY AGREEMENT
SUPPLEMENT NO. [ ] dated as of [ ], to the Security Agreement dated as
of July 1, 2003 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Security Agreement"), among KINDERCARE LEARNING CENTERS,
INC., a Delaware corporation (the "Borrower"), the Subsidiaries of the Borrower
listed on Annex A thereto (the Borrower and such Subsidiaries are referred to
collectively as the "Grantors") and CITICORP NORTH AMERICA, INC., as
administrative agent (in such capacity, the "Administrative Agent") for the
lenders (the "Lenders") from time to time parties to the Credit Agreement dated
as of July 1, 2003 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lenders, Citibank, N.A., as Letter of Credit Issuer, the Administrative Agent,
Credit Suisse First Boston, acting through its Cayman Islands Branch, as
Syndication Agent, and UBS AG, Cayman Islands Branch, as Documentation Agent.
A. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Security Agreement.
B. The Grantors have entered into the Security Agreement in order to
induce the Agents, the Lenders and the Letter of Credit Issuer to enter into the
Credit Agreement and to induce the Lenders and the Letter of Credit Issuer to
make their respective Extensions of Credit to the Borrower under the Credit
Agreement and to induce one or more Lenders or affiliates of Lenders to enter
into Hedge Agreements with the Borrower. Pursuant to Section 9.13 of the Credit
Agreement, (a) any Domestic Subsidiary (other than any Unrestricted Subsidiary,
Acquisition Subsidiary, Real Estate Financing Entity or, to the extent permitted
pursuant to Sections 10.1(j) or 10.1(k) of the Credit Agreement, any Restricted
Subsidiary or any acquired Person (as defined in Section 10.1(k) of the Credit
Agreement)) formed or otherwise purchased or acquired after the date of the
Security Agreement and (b) any Subsidiary that is not a Domestic Subsidiary on
the date of the Security Agreement but subsequently becomes a Domestic
Subsidiary (other than any Unrestricted Subsidiary, Acquisition Subsidiary or
Real Estate Financing Entity) is required, in each case promptly after such
formation, purchase, acquisition or transformation, (i) to execute a supplement
to the Security Agreement, substantially in the form of Annex B thereto, in
order to become a Subsidiary Grantor and (ii) to file, register or record (or
deliver to the Administrative Agent for filing, registration or recording) all
documents and instruments, including Uniform Commercial Code financing
statements, required by law or reasonably requested by the Administrative Agent
to be filed, registered or recorded to (x) create the Liens intended to be
created by the Security Agreement and (y) perfect such Liens to the extent
required by, and with the priority required by, the Security Agreement. Section
26 of the Security Agreement provides that such Subsidiaries may become Grantors
under the Security Agreement by
36
execution and delivery of an instrument in the form of this Supplement. Each
undersigned (each, a "New Grantor") is executing this Supplement in accordance
with the requirements of the Credit Agreement to become a Grantor under the
Security Agreement in order to induce the Lenders and the Letter of Credit
Issuer to make additional Extensions of Credit and as consideration for
Extensions of Credit previously made.
Accordingly, the Administrative Agent and the New Grantors agree as
follows:
1. In accordance with Section 26 of the Security Agreement, each New
Grantor by its signature below becomes a Grantor under the Security Agreement
with the same force and effect as if originally named therein as a Grantor and
each New Grantor hereby (a) agrees to all the terms and provisions of the
Security Agreement applicable to it as a Grantor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Grantor
thereunder are true and correct on and as of the date hereof. In furtherance of
the foregoing, each New Grantor, as security for the payment and performance in
full of the Obligations, hereby assigns and pledges to the Administrative Agent,
its successors and assigns, for the ratable benefit of the Secured Parties, and
hereby grants to the Administrative Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in the Collateral of
the New Grantor. Each reference to a "Grantor" in the Security Agreement shall
be deemed to include the New Grantor. The Security Agreement is hereby
incorporated herein by reference.
2. Each New Grantor represents and warrants to the Administrative
Agent and the Secured Parties that (a) this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and subject to general principles of
equity, (b) Schedule 1 hereto sets forth all of each New Grantor's Copyright
Licenses, (c) Schedule 2 hereto sets forth, in proper form for filing with the
United States Copyright Office, all of each New Grantor's Copyrights (and all
applications therefor), (d) Schedule 3 hereto sets forth all of each New
Grantor's Patent Licenses, (e) Schedule 4 hereto sets forth, in proper form for
filing with the United States Patent and Trademark Office, all of each New
Grantor's Patents (and all applications therefor), (f) Schedule 5 hereto sets
forth all of each New Grantor's Trademark Licenses, (g) Schedule 6 hereto sets
forth, in proper form for filing with the United States Patent and Trademark
Office, all of each New Grantor's Trademarks (and all applications therefor),
(h) Schedule 7 hereto sets forth the location of any and all Collateral of such
New Grantor and (i) set forth under its signature hereto is (A) the legal name
of such New Grantor, (B) the jurisdiction of incorporation or organization of
such New Grantor, (C) the location of the chief executive office and principal
place of business of such New Grantor and any office in which it maintains books
or records relating to Collateral owned by it, (D) the identity or type of
organization or corporate structure of such New Grantor and (E) the Federal
Taxpayer Identification Number and organizational identification number of such
New Grantor. Each Grantor represents and warrants that
37
each of Schedules 2, 4 and 6 contains all the requested information for Patents,
Trademarks and Copyrights arising under the laws of the United States, any other
country or any political subdivision thereof.
3. This Supplement may be executed by one or more of the parties
hereto on any number of separate counterparts (including by facsimile or other
electronic transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. This Supplement shall become
effective as to each New Grantor when the Administrative Agent shall have
received counterparts of this Supplement that, when taken together, bear the
signatures of such New Grantor and the Administrative Agent.
4. Except as expressly supplemented hereby, the Security Agreement
shall remain in full force and effect.
5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
6. Any provision of this Supplement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
7. All notices, requests and demands pursuant hereto shall be made in
accordance with Section 16 of the Security Agreement; provided that any such
notice, request or demand to or upon any New Grantor shall be addressed to such
New Grantor at the notice address set forth under its signature below.
38
IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have
duly executed this Supplement to the Security Agreement as of the day and year
first above written.
NAME OF NEW GRANTOR],
by
--------------------------------
Name:
Title:
Address
Legal Name:
Jurisdiction of incorporation or
organization:
Location of the chief executive office
and principal place of business of such
New Grantor and any office in which it
maintains books or records relating to
Collateral owned by it:
Identity or type of organization or
corporate structure:
Federal Taxpayer Identification Number:
Organizational identification number:
CITICORP NORTH AMERICA, INC., as
Administrative Agent,
by
------------------------------------
Name:
Title:
39
