EXHIBIT 10.2
================================================================================
AMENDED AND RESTATED
GUARANTEE AND COLLATERAL AGREEMENT
made by
SMTC CORPORATION,
HTM HOLDINGS, INC.
and certain of their Subsidiaries
in favor of
XXXXXX COMMERCIAL PAPER INC.,
as General Administrative Agent
Dated as of July 27, 2000
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINED TERMS......................................................................................... 2
1.1 Definitions........................................................................................... 2
1.2 Other Definitional Provisions......................................................................... 6
SECTION 2 GUARANTEE............................................................................................. 6
2.1 Guarantee............................................................................................. 6
2.2 Right of Contribution................................................................................. 7
2.3 No Subrogation........................................................................................ 7
2.4 Amendments, etc. with respect to the Borrower Obligations............................................. 8
2.5 Guarantee Absolute and Unconditional.................................................................. 8
2.6 Reinstatement......................................................................................... 9
2.7 Payments.............................................................................................. 9
SECTION 3 GRANT OF SECURITY INTEREST............................................................................ 9
SECTION 4 REPRESENTATIONS AND WARRANTIES........................................................................ 11
4.1 Representations in Credit Agreement................................................................... 11
4.2 Title; No Other Liens................................................................................. 11
4.3 Perfected First Priority Liens........................................................................ 11
4.4 Chief Executive Office................................................................................ 11
4.5 Inventory and Equipment............................................................................... 11
4.6 Farm Products......................................................................................... 11
4.7 Pledged Securities.................................................................................... 12
4.8 Receivables........................................................................................... 12
4.9 Intellectual Property................................................................................. 12
SECTION 5 COVENANTS............................................................................................. 13
5.1 Covenants in Credit Agreement......................................................................... 13
5.2 Delivery of Instruments and Chattel Paper............................................................. 13
5.3 Maintenance of Insurance.............................................................................. 13
5.4 Payment of Obligations................................................................................ 13
5.5 Maintenance of Perfected Security Interest; Further Documentation..................................... 14
5.6 Changes in Locations, Name, etc....................................................................... 14
5.7 Notices............................................................................................... 14
5.8 Investment Property................................................................................... 15
5.9 Receivables........................................................................................... 16
5.10 Intellectual Property................................................................................. 16
5.11 Vehicles.............................................................................................. 17
SECTION 6 REMEDIAL PROVISIONS................................................................................... 17
6.1 Certain Matters Relating to Receivables............................................................... 17
6.2 Communications with Obligors; Grantors Remain Liable.................................................. 18
6.3 Pledged Stock......................................................................................... 19
6.4 Proceeds to be Turned Over To General Administrative Agent............................................ 20
i
6.5 Application of Proceeds............................................................ 20
6.6 Code and Other Remedies............................................................ 20
6.7 Registration Rights................................................................ 21
6.8 Waiver; Deficiency................................................................. 22
SECTION 7 THE GENERAL ADMINISTRATIVE AGENT................................................... 22
7.1 General Administrative Agent's Appointment as Attorney-in-Fact, etc................ 22
7.2 Duty of General Administrative Agent............................................... 24
7.3 Execution of Financing Statements.................................................. 24
7.4 Authority of General Administrative Agent.......................................... 25
SECTION 8 MISCELLANEOUS...................................................................... 25
8.1 Amendments in Writing.............................................................. 25
8.2 Notices............................................................................ 25
8.3 No Waiver by Course of Conduct; Cumulative Remedies................................ 25
8.4 Enforcement Expenses; Indemnification.............................................. 25
8.5 Successors and Assigns............................................................. 26
8.6 Set-Off............................................................................ 26
8.7 Counterparts....................................................................... 27
8.8 Severability....................................................................... 27
8.9 Section Headings................................................................... 27
8.10 Integration........................................................................ 27
8.11 GOVERNING LAW...................................................................... 27
8.12 Submission To Jurisdiction; Waivers................................................ 27
8.13 Acknowledgments.................................................................... 28
8.14 Additional Grantors................................................................ 28
8.15 Releases........................................................................... 28
8.16 WAIVER OF JURY TRIAL............................................................... 29
ii
AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT, dated as of
July 27, 2000, made by each of the signatories hereto (together with any other
entity that may become a party hereto as provided herein, the "Grantors"), in
--------
favor of XXXXXX COMMERCIAL PAPER INC., as General Administrative Agent (in such
capacity, the "General Administrative Agent") for the banks and other financial
----------------------------
institutions (the "Lenders") from time to time parties to the Amended and
-------
Restated Credit and Guarantee Agreement, dated as of July 27, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
----------------
among SMTC CORPORATION, a Delaware corporation ("Holdings"), HTM Holdings, Inc.,
--------
a Delaware corporation (the "U.S. Borrower"), SMTC Manufacturing Corporation of
-------------
Canada (formerly known as The Surface Mount Technology Centre, Inc.), a
corporation organized under the laws of the Province of Ontario, Canada (the
"Canadian Borrower"; together with the U.S. Borrower, the "Borrowers"), the
----------------- ---------
several banks and other financial institutions or entities from time to time
parties to the Credit Agreement (the "Lenders"), XXXXXX BROTHERS INC., as
-------
advisor, lead arranger and book manager (in such capacity, the "Arranger"), the
--------
General Administrative Agent and others.
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to the Guarantee and
Collateral Agreement, dated as of July 28, 1999 (the "Existing Guarantee and
----------------------
Collateral Agreement"), which guarantees and secures the existing credit
--------------------
agreement that is being amended and restated pursuant to the Credit Agreement;
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Extensions of Credit to the Borrowers upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrowers are members of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the Extensions of Credit under the Credit
Agreement will be used in part to enable the Borrowers to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrowers and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the Extensions of Credit under the Credit Agreement;
WHEREAS, it is a condition precedent to the effectiveness of the
Credit Agreement and to the obligation of the Lenders to make their respective
Extensions of Credit to the Borrowers under the Credit Agreement that the
Existing Guarantee and Collateral Agreement shall have been amended and restated
hereby;
NOW, THEREFORE, in consideration of the premises and to induce the
General 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 hereby agrees with the General Administrative
Agent, for the ratable benefit of the Lenders, that,
2
on the Restatement Effective date, the Existing Guarantee and Collateral
Agreement shall be amended and restated in its entirety as follows:
SECTION 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 the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, Goods, Instruments, Inventory and Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Amended and Restated Guarantee and Collateral
---------
Agreement, as the same may be amended, supplemented or otherwise modified
from time to time.
"Borrower Credit Agreement Obligations": the collective reference to
-------------------------------------
the unpaid principal of and interest on the Loans, the Reimbursement
Obligations, the Acceptance Reimbursement Obligations, the guarantee
obligations of the U.S. Borrower under Section 12 of the Credit Agreement
and all other obligations and liabilities of either Borrower (including,
without limitation, interest accruing at the then applicable rate provided
in the Credit Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in the Credit Agreement after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to either Borrower,
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding) to any Agent or any Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Credit
Agreement, this Agreement, or any other document made, delivered or given
in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, guarantee obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Agents or to the Lenders that
are required to be paid by either Borrower pursuant to the terms of any of
the foregoing agreements).
"Borrower Hedge Agreement Obligations": the collective reference to
------------------------------------
all obligations and liabilities of either Borrower (including, without
limitation, interest accruing at the then applicable rate provided in any
Specified Hedge Agreement after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to either Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to any Lender or any
affiliate of any Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, any Specified Hedge
Agreement or any other document made, delivered
3
or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the relevant Lender or affiliate thereof that
are required to be paid by either Borrower pursuant to the terms of any
Specified Hedge Agreement).
"Borrower Obligations": the collective reference to (i) the Borrower
--------------------
Credit Agreement Obligations, (ii) the Borrower Hedge Agreement
Obligations, but only to the extent that, and only so long as, the Borrower
Credit Agreement Obligations are secured and guaranteed pursuant hereto,
and (iii) all other obligations and liabilities of the Borrower, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement (including, without limitation, all fees
and disbursements of counsel to the Agents or to the Lenders that are
required to be paid by either Borrower pursuant to the terms of this
Agreement).
"Collateral": as defined in Section 3.
----------
"Collateral Account": any collateral account established by the
------------------
General Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) 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,
without limitation, those listed in Schedule 6), all registrations and
----------
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
------------------
licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
----------
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
---------------
applicable jurisdiction and, in any event, including, without limitation,
any demand, time, savings, passbook or like account maintained with a
depositary institution.
"Foreign Subsidiary": any Subsidiary of Holdings organized under the
------------------
laws of any jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
-------------------------------
Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest
4
or to which such Grantor or any property of such Grantor is subject, as the
same may from time to time be amended, supplemented or otherwise modified,
including, without limitation, (i) all rights of such Grantor to receive
moneys due and to become due to it thereunder or in connection therewith,
(ii) all rights of such Grantor to damages arising thereunder and (iii) all
rights of such Grantor to perform and to exercise all remedies thereunder,
in each case to the extent the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and interest in such
contract, agreement, instrument or indenture is not prohibited by such
contract, agreement, instrument or indenture without the consent of any
other party thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its obligations
thereunder, or is permitted with consent if all necessary consents to such
grant of a security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); 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 contract, agreement, instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, all
---------------------
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2)
or any other Loan Document to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Agents or to the
Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than the
----------
U.S. Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps, caps or
----------------
collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks 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": any promissory note evidencing loans made by any
-----------------
Grantor to Holdings or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all "investment
-------------------
property" as such term is defined in Section 9-115 of the New York UCC
(other than any Foreign Subsidiary Voting Stock excluded from the
definition of "Pledged Stock") and (ii)
5
whether or not constituting "investment property" as so defined, all
Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of a Pledged
-------
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
------------
effect in the State of New York.
"Obligations": (i) in the case of the U.S. Borrower, the Borrower
-----------
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) 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, without
limitation, any of the foregoing referred to in Schedule 6, (ii) all
----------
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in Schedule
--------
6, and (iii) all rights to obtain any reissues or extensions of the
-
foregoing.
"Patent License": all agreements, whether written or oral, providing
--------------
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
----------
"Pledged Notes": all promissory notes listed on Schedule 2, all
-------------
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business).
"Pledged Securities": the collective reference to the Pledged Notes
------------------
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
------------- ----------
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock 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 66% of the total
--------
outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
--------
of the Uniform Commercial Code in effect in the State of New York on the
date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property, collections thereon
or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
----------
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
6
"Securities Act": the Securities Act of 1933, as amended.
--------------
"Specified Hedge Agreement": any Hedge Agreement (a) entered into by
-------------------------
(i) either Borrower or any of its subsidiaries and (ii) any Lender or any
affiliate thereof, as counterparty, and (b) which has been designated by
such Lender and such Borrower, by notice to the General Administrative
Agent and the Syndication Agent not later than 90 days after the execution
and delivery by such Borrower or such Subsidiary thereof, as a Specified
Hedge Agreement. The designation of any Hedge Agreement as a Specified
Hedge Agreement shall not create in favor of the Lender or affiliate
thereof that is a party thereto any rights in connection with the
management or release of any Collateral or any Guarantor Obligations.
"Trademarks": (i) all trademarks, trade names, corporate names,
----------
company 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, without
limitation, any of the foregoing referred to in Schedule 6, and (ii) the
----------
right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral, providing
-----------------
for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule
--------
6.
-
"Vehicles": all cars, trucks, trailers, construction and earth moving
--------
equipment and other vehicles covered by a certificate of title law of any
state and all tires and other appurtenances to any of the foregoing.
1.2 Other Definitional Provisions.
-----------------------------
The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.
(a) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(b) 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.
7
SECTION 2. GUARANTEE
2.1 Guarantee.
-------------
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the General Administrative Agent,
for the ratable benefit 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 guaranteed
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).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the General Administrative Agent or any
Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrowers may be free from any Borrower
Obligations.
(e) No payment made by either Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by either
Administrative Agent or any Lender from either Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full, no Letter of Credit or Acceptance shall be outstanding and the Commitments
are terminated.
2.2 Right of Contribution.
-------------------------
Each Subsidiary Guarantor hereby agrees that to the extent that a
Subsidiary Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and
receive contribution from and against any other Subsidiary Guarantor hereunder
which has not paid its proportionate share of such payment. Each Subsidiary
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
8
obligations and liabilities of any Subsidiary Guarantor to the General
Administrative Agent and the Lenders, and each Subsidiary Guarantor shall remain
liable to the General Administrative Agent and the Lenders for the full amount
guaranteed by such Subsidiary 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 General Administrative
Agent or any Lender, no Guarantor shall be entitled to be subrogated to any of
the rights of the General Administrative Agent or any Lender against either
Borrower or any other Guarantor or any collateral security or guarantee or right
of offset held by the General Administrative Agent or any Lender for the payment
of the Borrower Obligations, nor shall any Guarantor seek or be entitled to seek
any contribution or reimbursement from either Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the General Administrative Agent and the Lenders by either Borrower on account
of the Borrower Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time when all of the
Borrower Obligations shall not have been paid in full, such amount shall be held
by such Guarantor in trust for the General 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 General Administrative Agent in the
exact form received by such Guarantor (duly indorsed by such Guarantor to the
General Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Credit Agreement
shall provide.
2.4 Amendments, etc. with respect to the Borrower Obligations.
---------------------------------------------------------------
Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the
Borrower Obligations made by either Administrative Agent or any Lender may be
rescinded by such Administrative Agent or such Lender and any of the Borrower
Obligations continued, and the Borrower Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the relevant 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 either
Administrative Agent (or the Required Lenders or all Lenders, as the case may
be) may deem advisable from time to time, and any collateral security, guarantee
or right of offset at any time held by either Administrative Agent or any Lender
for the payment of the Borrower Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agents 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 Borrower Obligations or for the guarantee
contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional.
------------------------------------------
9
Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Borrower Obligations and notice of or proof
of reliance by the Administrative Agents or any Lender upon the guarantee
contained in this Section 2 or acceptance of the guarantee contained in this
Section 2; the Borrower Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Borrowers and any of the Guarantors, on the one
hand, and the Administrative Agents and the Lenders, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon either Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (1) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Borrower Obligations or
any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by either Administrative
Agent or any Lender, (2) 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 either Borrower or any other Person against either Administrative
Agent or any Lender, or (3) any other circumstance whatsoever (with or without
notice to or knowledge of either Borrower or such Guarantor) which constitutes,
or might be construed to constitute, an equitable or legal discharge of either
Borrower for the Borrower Obligations, or of such Guarantor under the guarantee
contained in this Section 2, in bankruptcy or in any other instance. When making
any demand hereunder or otherwise pursuing its rights and remedies hereunder
against any Guarantor, the General 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 either Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agents or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from either
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of either Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agents or any Lender against any Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.6 Reinstatement.
-------------------
The guarantee contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Borrower Obligations is rescinded or must otherwise
be restored or returned by the Administrative Agents or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of either
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
either Borrower or any Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
10
2.7 Payments.
--------------
Each Guarantor hereby guarantees that payments hereunder will be
paid to the relevant Administrative Agent without set-off or counterclaim in the
currency in which the relevant Borrower Obligation is denominated at the U.S.
Payment Office or Canadian Payment Office, as the case maybe, specified in the
Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
(a) Each Grantor hereby confirms that pursuant to the Existing
Guarantee and Collateral Agreement such Grantor has assigned and transferred, or
pursuant hereto hereby assigns and transfers, to the General Administrative
Agent, and hereby confirms that pursuant to the Existing Guarantee and
Collateral Agreement such Grantor has granted, or pursuant hereto hereby grants,
to the General Administrative Agent, for the ratable benefit of the Lenders (and
any affiliates of any Lender to which Borrower Hedge Agreement Obligations are
owing), a first priority security interest in, all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
----------
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations (other than any
obligation of the U.S. Borrower with respect to the Tranche C Term Loans):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Intellectual Property;
(ix) all Inventory;
(x) all Investment Property;
(xi) all Goods and other property not otherwise described above;
(xii) all books and records pertaining to the Collateral; and
11
(xiii) 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 confirms that pursuant to the Existing
Guarantee and Collateral Agreement such Grantor has assigned and transferred, or
pursuant hereto hereby assigns and transfers, to the General Administrative
Agent, and hereby confirms that pursuant to the Existing Guarantee and
Collateral Agreement such Grantor has granted, or pursuant hereto hereby grants,
to the General Administrative Agent, for the ratable benefit of the Lenders, a
second priority security interest in, all of the Collateral 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, as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations in respect of the Tranche C Term Loans.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agents 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 hereby represents and
warrants to the Administrative Agents and each Lender that:
4.1 Representations in Credit Agreement.
-----------------------------------------
(a) In the case of each Guarantor, the representations and
warranties set forth in Section 8 of the Credit Agreement as they relate to such
Guarantor or to the Loan Documents to which such Guarantor is a party, each of
which is hereby incorporated herein by reference, are true and correct, and the
Administrative Agents and each Lender shall be entitled to rely on each of them
as if they were fully set forth herein, provided that each reference in each
such representation and warranty to the knowledge of Holdings or a Borrower
shall, for the purposes of this Section 4.1(a), be deemed to be a reference to
such Guarantor's knowledge.
4.2 Title; No Other Liens.
----------------------------
Except for the security interest granted to the General
Administrative Agent for the ratable benefit of the Lenders pursuant to this
Agreement and the other Liens permitted to exist on the Collateral by the Credit
Agreement, such Grantor owns each item of its Collateral free and clear of any
and all Liens or claims of others. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the General
Administrative Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or as are permitted by the Credit Agreement.
4.3 Perfected First Priority Liens.
--------------------------------------
The security interests granted pursuant to this Agreement (1) upon
completion of the filings and other actions specified on Schedule 3 (which, in
the case of all filings and other
12
documents referred to on said Schedule, have been delivered to the General
Administrative Agent in completed and duly executed form) will constitute valid
perfected security interests in all of the Collateral in favor of the General
Administrative Agent, for the ratable benefit of the Lenders, as collateral
security for such Grantor's Obligations (as specified in Section 3), enforceable
in accordance with the terms hereof against all creditors of such Grantor and
any Persons purporting to purchase any Collateral from such Grantor and are
prior to all other Liens on the Collateral in existence on the date hereof (as
specified in Section 3) except for Liens permitted by Section 11.3 of the Credit
Agreement.
4.4 Chief Executive Office.
-----------------------------
On the date hereof, such Grantor's jurisdiction of organization and
the location of such Grantor's chief executive office or sole place of business
are specified on Schedule 4.
4.5 Inventory and Equipment.
------------------------------
On the date hereof, the Inventory and the Equipment (other than
mobile goods) are kept at the locations listed on Schedule 5.
4.6 Farm Products.
-------------------
None of the Collateral constitutes, or is the Proceeds of, Farm
Products.
4.7 Pledged Securities.
-------------------------
(a) The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary
Voting Stock, if less, 66% of the outstanding Foreign Subsidiary Voting Stock of
each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Investment Property pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement.
4.8 Receivables.
----------------
13
(a) No amount payable to such Grantor under or in connection with
any Receivable is evidenced by any Instrument or Chattel Paper which has not
been delivered to the General Administrative Agent.
(b) None of the obligors on any Receivables is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Lenders from
time to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.9 Intellectual Property.
---------------------------
(a) Schedule 6 lists all Intellectual Property owned by such
Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property of
such Grantor described on Schedule 6 is valid, subsisting, unexpired and
enforceable, has not been abandoned and does not infringe the intellectual
property rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof, none
of the Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of
such Grantor, threatened, on the date hereof (1) seeking to limit, cancel or
question the validity of any Intellectual Property or such Grantor's ownership
interest therein, or (2) which, if adversely determined, would have a material
adverse effect on the value of any Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agents and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit or Acceptance
shall be outstanding and the Commitments shall have terminated:
5.1 Covenants in Credit Agreement.
-----------------------------------
In the case of each Guarantor, such Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by such Guarantor or any of its Subsidiaries.
14
5.2 Delivery of Instruments and Chattel Paper.
------------------------------------------------
If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument, Certificated Security
or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall
be immediately delivered to the General Administrative Agent, duly indorsed in a
manner satisfactory to the General Administrative Agent, to be held as
Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance.
-------------------------------
(a) Such Grantor will maintain, with financially sound and
reputable companies, insurance policies (1) insuring the Inventory, Equipment
and Vehicles against loss by fire, explosion, theft and such other casualties as
may be reasonably satisfactory to the General Administrative Agent and (2)
insuring such Grantor, the General Administrative Agent and the Lenders against
liability for personal injury and property damage relating to such Inventory,
Equipment and Vehicles, such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the General Administrative
Agent and the Lenders.
(b) All such insurance shall (1) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the General Administrative
Agent of written notice thereof, (2) name the General Administrative Agent as
insured party or loss payee, (3) if reasonably requested by the General
Administrative Agent, include a breach of warranty clause and (4) be reasonably
satisfactory in all other respects to the General Administrative Agent.
(c) The U.S. Borrower shall deliver to the General Administrative
Agent and the Lenders a report of a reputable insurance broker with respect to
such insurance substantially concurrently with the delivery by the U.S. Borrower
to the General Administrative Agent of its audited financial statements for each
fiscal year and such supplemental reports with respect thereto as the General
Administrative Agent may from time to time reasonably request.
5.4 Payment of Obligations.
----------------------------
Such Grantor will pay and discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of income or profits therefrom, as well as all claims of any kind
(including, without limitation, claims for labor, materials and supplies)
against or with respect to the Collateral, except that no such charge need be
paid if the amount or validity thereof is currently being contested in good
faith by appropriate proceedings, reserves in conformity with GAAP with respect
thereto have been provided on the books of such Grantor and such proceedings
could not reasonably be expected to result in the sale, forfeiture or loss of
any material portion of the Collateral or any interest therein.
5.5 Maintenance of Perfected Security Interest; Further
----------------------------------------------------------
Documentation.
-------------
(a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
15
(b) Such Grantor will furnish to the General 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 with the Collateral as the General Administrative Agent may
reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request
of the General 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 General
Administrative Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, (1) the filing of any financing
or continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby and (2) in the case of Investment Property, Deposit Accounts and
any other relevant Collateral, taking any actions necessary to enable the
General Administrative Agent to obtain "control" (within the meaning of the
applicable Uniform Commercial Code) with respect thereto.
5.6 Changes in Locations, Name, etc.
--------------------------------------
Such Grantor will not, except upon 15 days' prior written notice
to the General Administrative Agent and delivery to the General Administrative
Agent of (1) all additional executed financing statements and other documents
reasonably requested by the General Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (2) if applicable, a written supplement to Schedule 5 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule 5;
----------
(ii) change its jurisdiction of organization or the location of
its chief executive office or sole place of business from that referred to
in Section 4.4; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the General Administrative
Agent in connection with this Agreement would become misleading.
5.7 Notices.
-------------
Such Grantor will advise the General Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on any of the Collateral which
would adversely affect the ability of the General Administrative Agent to
exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate value
of the Collateral or on the security interests created hereby.
16
5.8 Investment Property.
---------------------------
(a) If such Grantor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the General
Administrative Agent and the Lenders, hold the same in trust for the General
Administrative Agent and the Lenders and deliver the same forthwith to the
General Administrative Agent in the exact form received, duly indorsed by such
Grantor to the General Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the General Administrative Agent so requests, signature
guaranteed, to be held by the General Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. 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 General Administrative Agent
to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or in
respect of the 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 security interest in favor of the General Administrative Agent, be
delivered to the General Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the General Administrative Agent, hold such money or
property in trust for the Lenders, segregated from other funds of such Grantor,
as additional collateral security for the Obligations.
(b) Without the prior written consent of the General
Administrative Agent, such Grantor will not (1) vote to enable, or take any
other action to permit, any Issuer to issue any stock or other equity securities
of any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of any Issuer, (2) 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), (3) create, incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the Investment Property or
Proceeds thereof, or any interest therein, except for the security interests
created by this Agreement or (4) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the General Administrative
Agent to sell, assign or transfer any of the Pledged Securities or Proceeds
thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (1) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (2) it will notify the General Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Pledged Securities issued by it and (3) the terms of
17
Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all
------- --------
actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Securities issued by it.
5.9 Receivables.
-------------------
(a) Other than in the ordinary course of business consistent with
its past practice, such Grantor will not (1) grant any extension of the time of
payment of any Receivable, (2) compromise or settle any Receivable for less than
the full amount thereof, (3) release, wholly or partially, any Person liable for
the payment of any Receivable, (4) allow any credit or discount whatsoever on
any Receivable or (5) amend, supplement or modify any Receivable in any manner
that could adversely affect the value thereof.
(b) Such Grantor will deliver to the General Administrative
Agent a copy of each material demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of more than 5% of
the aggregate amount of the then outstanding Receivables.
5.10 Intellectual Property.
-----------------------------
(a) Such Grantor (either itself or through licensees) will (1)
continue to use each material Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (2) maintain as in the past the
quality of products and services offered under such Trademark, (3) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, (4) not adopt or use any
xxxx which is confusingly similar or a colorable imitation of such Trademark
unless the General Administrative Agent, for the ratable benefit of the Lenders,
shall obtain a perfected security interest in such xxxx pursuant to this
Agreement, and (5) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (1) will
employ each material Copyright and (2) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
18
(e) Such Grantor will notify the General Administrative Agent and
the Lenders immediately if it knows, or has reason to know, that any application
or registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(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 General Administrative Agent within five Business Days after the
last day of the fiscal quarter in which such filing occurs. Upon request of the
General Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
General Administrative Agent may request to evidence the General 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) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the General
Administrative Agent after it learns thereof and xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
5.11 Vehicles.
-----------------
The aggregate book value of all Vehicles owned by such Grantor
does not exceed $250,000.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
-------------------------------------------
19
(a) The General Administrative Agent shall have the right to make
test verifications of the Receivables in any manner and through any medium that
it reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the General Administrative Agent may require in
connection with such test verifications. At any time and from time to time, upon
the General Administrative Agent's request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants or others
satisfactory to the General Administrative Agent to furnish to the General
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The General Administrative Agent hereby authorizes each Grantor
to collect such Grantor's Receivables, subject to the General Administrative
Agent's direction and control, and the General Administrative Agent may curtail
or terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the General 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, (1) 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 General
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the General Administrative Agent, subject to
withdrawal by the General Administrative Agent for the account of the Lenders
only as provided in Section 6.5, and (2) until so turned over, shall be held by
such Grantor in trust for the General Administrative Agent and the Lenders,
segregated from other funds of such Grantor. Each such deposit of Proceeds of
Receivables shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit.
(c) At the General Administrative Agent's request, each Grantor
shall deliver to the General Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable.
-----------------------------------------------------------
(a) The General Administrative Agent in its own name or in the name
of others may at any time after the occurrence and during the continuance of an
Event of Default communicate with obligors under the Receivables to verify with
them to the General Administrative Agent's satisfaction the existence, amount
and terms of any Receivables.
(b) Upon the request of the General Administrative Agent at any
time after the occurrence and during the continuance of an Event of Default,
each Grantor shall notify obligors on the Receivables that the Receivables have
been assigned to the General Administrative Agent for the ratable benefit of the
Lenders and that payments in respect thereof shall be made directly to the
General Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under 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
General Administrative Agent nor any Lender
20
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 General Administrative Agent or any Lender of any payment
relating thereto, nor shall the General 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.
6.3 Pledged Stock.
-------------------
(a) Unless an Event of Default shall have occurred and be
continuing and the General Administrative Agent shall have given notice to the
relevant Grantor of the General Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent not prohibited in the Credit Agreement, and to exercise all voting
and corporate rights with respect to the Pledged Securities; provided, however,
that no vote shall be cast or corporate right exercised or other action taken
which, in the General Administrative Agent's reasonable judgment, would impair
the Collateral or which would be inconsistent with or result in any violation of
any provision of the Credit Agreement, this Agreement or any other Loan
Document.
(b) If an Event of Default shall occur and be continuing and
the General Administrative Agent shall give notice of its intent to exercise
such rights to the relevant Grantor or Grantors, (1) the General Administrative
Agent shall have the right to receive any and all cash dividends, payments or
other Proceeds paid in respect of the Pledged Securities and make application
thereof to the Obligations in the order set forth in Section 6.5, and (2) any or
all of the Pledged Securities shall be registered in the name of the General
Administrative Agent or its nominee, and the General Administrative Agent or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by any Grantor or the General
Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the General Administrative Agent may determine), all without
liability except to account for property actually received by it, but the
General 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
of any Pledged Securities pledged by such Grantor hereunder to (1) comply with
any instruction received by it
21
from the General 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 (2) unless otherwise expressly permitted 20 hereby, pay any
dividends or other payments with respect to the Pledged Securities directly to
the General Administrative Agent.
6.4 Proceeds to be Turned Over To General Administrative Agent.
-----------------------------------------------------------------
In addition to the rights of the General 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 near-cash items shall be held by
such Grantor in trust for the General 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 General Administrative Agent in the exact
form received by such Grantor (duly indorsed by such Grantor to the General
Administrative Agent, if required). All Proceeds received by the General
Administrative Agent hereunder shall be held by the General Administrative Agent
in a Collateral Account maintained under its sole dominion and control. All
Proceeds while held by the General Administrative Agent in a Collateral Account
(or by such Grantor in trust for the General Administrative Agent and the
Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.
6.5 Application of Proceeds.
-----------------------------
At such intervals as may be agreed upon by the U.S. Borrower and
the General Administrative Agent, or, if an Event of Default shall have occurred
and be continuing, at any time at the General Administrative Agent's election,
the General Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Obligations
in the following order:
First, to pay incurred and unpaid fees and expenses of the
-----
Administrative Agents under the Loan Documents;
Second, to the General Administrative Agent, for application by it
------
towards payment of amounts then due and owing and remaining unpaid in
respect of the Obligations, in the order specified in Sections 7.5 and
15.18 of the Credit Agreement;
Third, to the General Administrative Agent, for application by it
-----
towards prepayment of the Obligations, in the order specified in Sections
7.5 and 15.18 of the Credit Agreement; and
Fourth, any balance of such Proceeds remaining after the Obligations
------
shall have been paid in full, no Letters of Credit or Acceptance shall be
outstanding and the Commitments shall have terminated shall be paid over to
the U.S. Borrower or to whomsoever may be lawfully entitled to receive the
same.
22
6.6 Code and Other Remedies.
---------------------------
If an Event of Default shall occur and be continuing, the General
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 Obligations, all
rights and remedies of a secured party under the New York UCC or any other
applicable law. Without limiting the generality of the foregoing, the General
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the General 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
without assumption of any credit risk. The General 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 General Administrative Agent's request, to
assemble the Collateral and make it available to the General Administrative
Agent at places which the General Administrative Agent shall reasonably select,
whether at such Grantor's premises or elsewhere. The General 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
General Administrative Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in the order specified in Sections 7.5 and
15.18 of the Credit Agreement, and only after such application and after the
payment by the General Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the New
York UCC, need the General Administrative Agent account for the surplus, if any,
to any Grantor. To the extent permitted by applicable law, each Grantor waives
all claims, damages and demands it may acquire against the General
Administrative Agent or any Lender arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
6.7 Registration Rights.
-----------------------
(a) If the General Administrative Agent shall determine to exercise
its right to sell any or all of the Pledged Stock pursuant to Section 6.6, and
if in the opinion of the General Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor will
cause the Issuer thereof to (1) 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
23
such other acts as may be, in the opinion of the General Administrative Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (2) use its best efforts to
cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (3) make
all amendments thereto and/or to the related prospectus which, in the opinion of
the General Administrative Agent, are necessary or 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 General 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 General Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, 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 General
Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the General Administrative
Agent and the Lenders, that the General 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.
6.8 Waiver; Deficiency.
----------------------
Each Grantor waives and agrees not to assert any rights or privileges
which it may acquire under Section 9-112 of the New York 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 its Obligations and the
fees and disbursements of any attorneys employed by the General Administrative
Agent or any Lender to collect such deficiency.
24
SECTION 7. THE GENERAL ADMINISTRATIVE AGENT
7.1 General Administrative Agent's Appointment as Attorney-in-Fact, etc.
-----------------------------------------------------------------------
(a) Each Grantor hereby irrevocably constitutes and appoints the General
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the General Administrative Agent the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys 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 appropriate by the General Administrative Agent for the
purpose of collecting any and all such moneys due under any Receivable or
with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the General Administrative Agent may request to evidence the
General Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any 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 moneys due or to become due
thereunder directly to the General Administrative Agent or as the General
Administrative Agent shall direct; (20 ask or demand for, collect, and
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; (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; (40 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
25
suit, action or proceeding and, in connection therewith, give such
discharges or releases as the General Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the General Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the General Administrative Agent were the
absolute owner thereof for all purposes, and do, at the General
Administrative Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the General Administrative
Agent deems necessary to protect, preserve or realize upon the Collateral
and the General Administrative Agent's and the Lenders' security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
Anything in this Section 7.1 (a) to the contrary notwithstanding, the
General Administrative Agent agrees that it will not exercise any rights under
the power of attorney provided for in this Section 7.1(a) unless an Event of
Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the General Administrative Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the General Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due U.S. Revolving Credit Loans that are
U.S. Base Rate Loans under the Credit Agreement, from the date of payment by the
General Administrative Agent to the date reimbursed by the relevant Grantor,
shall be payable by such Grantor to the General Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of General Administrative Agent.
----------------------------------------
The General Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the General Administrative Agent deals with
similar property for its own account. Neither the General Administrative Agent,
any Lender nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the General
Administrative Agent and the Lenders hereunder are solely to protect the General
26
Administrative Agent's and the Lenders' interests in the Collateral and shall
not impose any duty upon the General Administrative Agent or any Lender to
exercise any such powers. The General 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 they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements.
-------------------------------------
Pursuant to Section 9-402 of the New York UCC and any other applicable
law, each Grantor authorizes the General Administrative Agent to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the General Administrative Agent reasonably determines
appropriate to perfect the security interests of the General Administrative
Agent under this Agreement. A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
7.4 Authority of General Administrative Agent.
---------------------------------------------
Each Grantor acknowledges that the rights and responsibilities of the
General Administrative Agent under this Agreement with respect to any action
taken by the General Administrative Agent or the exercise or non-exercise by the
General 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 General 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 General
Administrative Agent and the Grantors, the General 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 General
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 15.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
27
8.3 No Waiver by Course of Conduct; Cumulative Remedies.
-------------------------------------------------------
Neither the General Administrative Agent nor any Lender shall by any
act (except by a written instrument pursuant to Section 8.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default. No failure to exercise,
nor any delay in exercising, on the part of the General Administrative Agent or
any Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the General Administrative
Agent or any Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the General
Administrative Agent or such Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 Enforcement Expenses; Indemnification.
-----------------------------------------
(a) Each Guarantor agrees to pay, or reimburse each Lender and each
Administrative Agent for, all its costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement and the other Loan
Documents to which such Guarantor is a party, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender and of counsel to the Administrative Agents.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agents and the Lenders harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agents and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the U.S. Borrower would be required to do so pursuant to Section 15.5 of
the Credit Agreement.
(d) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns.
--------------------------
This Agreement shall be binding upon the successors and assigns of
each Grantor and shall inure to the benefit of the Agents and the Lenders and
their successors and assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the prior
written consent of the General Administrative Agent.
8.6 Set-Off.
-----------
28
Each Grantor hereby irrevocably authorizes the General Administrative
Agent and each Lender at any time and from time to time while an Event of
Default pursuant to Section 13(a) of the Credit Agreement shall have occurred
and be continuing, without notice to such Grantor or any other Grantor, any such
notice being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the General Administrative
Agent or such Lender to or for the credit or the account of such Grantor, or any
part thereof in such amounts as the General Administrative Agent or such Lender
may elect, against and on account of the obligations and liabilities of such
Grantor to the General Administrative Agent or such Lender hereunder and claims
of every nature and description of the General Administrative Agent or such
Lender against such Grantor, in any currency, whether arising hereunder, under
the Credit Agreement, any other Loan Document or otherwise, as the General
Administrative Agent or such Lender may elect, whether or not the General
Administrative Agent or any Lender has made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured. The
General Administrative Agent and each Lender shall notify such Grantor promptly
of any such set-off and the application made by the General Administrative Agent
or such Lender of the proceeds thereof, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the General Administrative Agent and each Lender under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the General Administrative Agent or such Lender may
have.
8.7 Counterparts.
-----------------
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
8.8 Severability.
-----------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 Section Headings.
---------------------
The Section headings used in this Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
8.10 Integration.
----------------
This Agreement and the other Loan Documents represent the agreement of
the Grantors, the General Administrative Agent and the Lenders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the
29
Administrative Agent or any Lender relative to subject matter hereof and thereof
not expressly set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW.
------------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers.
----------------------------------------
Each Grantor hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the General
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgments.
--------------------
Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) neither any 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 Agents and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
30
(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.
8.14 Additional Grantors.
------------------------
Each Subsidiary of the U.S. Borrower that is required to become a
party to this Agreement pursuant to Section 10.11 of the Credit Agreement shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.
8.15 Releases.
-------------
(a) At such time as the Loans, the Reimbursement Obligations, the
Acceptance Obligations and the other Obligations (other than Borrower Hedge
Agreement Obligations) shall have been paid in full, the Commitments have been
terminated and no Letters of Credit or Acceptances shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the General Administrative Agent and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party, and all rights to the Collateral shall revert to the Grantors.
At the request and sole expense of any Grantor following any such termination,
the General Administrative Agent shall deliver to such Grantor any Collateral
held by the General Administrative Agent hereunder, and execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the General 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 U.S. Borrower,
a Subsidiary Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Subsidiary Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the U.S. Borrower shall have delivered to the General
--------
Administrative Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the U.S. Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
8.16 WAIVER OF JURY TRIAL.
--------------------------
EACH GRANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, EACH AGENT AND
EACH LENDER, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
31
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly executed and delivered as of the date first above written.
SMTC CORPORATION
By: /s/ Xxxx Xxxxxx
----------------------------
Title: President
HTM HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
SMTC MANUFACTURING CORPORATION OF TEXAS
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
SMTC MANUFACTURING CORPORATION OF CALIFORNIA
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
SMTC MANUFACTURING CORPORATION OF NORTH CAROLINA
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
SMTC MEX HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
32
SMTC MANUFACTURING CORPORATION OF COLORADO
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
SMTC MANUFACTURING CORPORATION OF MASSACHUSETTS
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
PENSAR CORPORATION
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: President
