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EXHIBIT 10.7
BORROWER PLEDGE AND SECURITY AGREEMENT
dated as of
January 27, 1998
LIBERTY GROUP OPERATING, INC.,
as Grantor
and
CITICORP USA, INC.,
as Administative Agent,
as Secured Party
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS .........................................................
Section 1.1. Certain Terms ...............................................
Section 1.2. Terms Defined in Credit Agreement ...........................
Section 1.3. Terms Defined in the Uniform Commercial Code ................
Section 1.4. Terms Generally .............................................
ARTICLE II. THE SECURITY INTERESTS .............................................
Section 2.1. Grant of Security Interests ................................
Section 2.2. Delivery of Instruments and Securities .....................
Section 2.3. Investment Property ........................................
Section 2.4. Registration of Pledge .....................................
Section 2.5. Financing Statements .......................................
Section 2.6. Secured Party Filing .......................................
Section 2.7. Further Assurances .........................................
Section 2.8. Power of Attorney ..........................................
Section 2.9. Survival of Security Interests .............................
Section 2.10. Reinstatement of Security Interests .......................
Section 2.11. Grantor Remains Liable ....................................
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS .........................
Section 3.1. The Collateral .............................................
Section 3.2. Maintenance of Perfection ..................................
Section 3.3. Defense of Collateral .......................................
Section 3.4. Transfer or Encumbrance ....................................
Section 3.5. Payments, Dividends and Distributions ......................
Section 3.6. Voting Rights ..............................................
Section 3.7. Maintenance of Collateral ..................................
Section 3.8. Concerning Equipment and Inventory .........................
Section 3.9. Concerning Accounts, Instruments and other Claims ..........
Section 3.10. Substituted Performance ...................................
ARTICLE IV. DEFAULT; REMEDIES ..................................................
Section 4.1. Default ....................................................
Section 4.2. Remedies upon Default ......................................
Section 4.3. Waivers by Grantor .........................................
Section 4.4. Standard of Care ...........................................
Section 4.5. Application of Proceeds .....................................
Section 4.6. Indemnity and Expenses ......................................
Section 4.7. Surplus, Deficiency ........................................
Section 4.8. Information Related to the Collateral ......................
Section 4.9. Sale Exempt from Registration ..............................
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Section 4.10. Registration Rights........................................
Section 4.11. Rights and Remedies Cumulative ............................
Section 4.12. No Direct Enforcement by Beneficiaries ....................
ARTICLE V. CONCERNING THE SECURED PARTY ........................................
Section 5.1. Agent for Holders ..........................................
Section 5.2. Administrative Agent shall be the Secured Party ............
Section 5.3. No Assurances or Liability .................................
Section 5.4. Holders Bound ...............................................
ARTICLE VI. MISCELLANEOUS PROVISIONS ...........................................
Section 6.1. Continuing Security Interests; Release .....................
Section 6.2. Senior Indebtedness ........................................
Section 6.3. Amendments; Etc. ...........................................
Section 6.4. Failure or Indulgence Not Waiver; Remedies Cumulative ......
Section 6.5. Notices ....................................................
Section 6.6. Severability ................................................
Section 6.7. Headings ....................................................
Section 6.8. Governing Law; Terms ........................................
Section 6.9. Consent to Jurisdiction and Service of Process ..............
Section 6.10. Waiver of Jury Trial .....................................
Section 6.11. Counterparts ...............................................
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BORROWER PLEDGE AND SECURITY AGREEMENT
This BORROWER PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as
of January 27, 1998 and entered into by and between LIBERTY GROUP OPERATING,
INC., a Delaware corporation ("Grantor"), and CITICORP USA, INC., a Delaware
corporation, in its capacity as Administrative Agent under the Credit Agreement
referred to below ("Secured Party"), FOR THE BENEFIT OF the Persons that now
are or at any time hereafter become party as a Lender to the Credit Agreement
described herein (the "Lenders"), CITICORP USA, INC., in its individual
capacity, as Administrative Agent and as Swingline Lender, CITIBANK, N.A., as
Issuing Bank, BT ALEX. XXXXX INCORPORATED, as Syndication Agent, XXXXX FARGO
BANK, N.A., as Documentation Agent, BANK OF AMERICA NT & SA, as Co-Agent, and
all other present and future Holders of any of the Secured Obligations
described herein (all, collectively, including the Lenders, the Administrative
Agent, the Swingline Lender, the Issuing Bank, the Syndication Agent, the
Documentation Agent and the Co-Agent, the "Beneficiaries").
RECITALS
The Grantor has requested that credit be extended to the Grantor on terms
and conditions set forth in the Credit Agreement.
To induce the Lenders, the Administrative Agent, the Swingline Lender, the
Issuing Bank, the Syndication Agent, the Documentation Agent and the Co-Agent
to enter into the Credit Agreement, and in consideration thereof and of any and
all credit at any time extended thereunder, the Grantor has agreed to grant to
the Administrative Agent, for the benefit of the Beneficiaries, the collateral
security described herein as security for the payment of the Secured
Obligations on the terms herein set forth.
ACCORDINGLY, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees with Secured Party for the benefit of the
Beneficiaries as follows:
ARTICLE
DEFINITIONS
SECTION CERTAIN TERMS
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. As used in this Agreement, the following terms have the meanings
specified below:
"BANKRUPTCY CODE" means Title 11 of the United States Code, as from time
to time amended.
"CLAIM" has the meaning set forth in the Bankruptcy Code.
"COLLATERAL" has the meaning set forth in Section 2.1.
"CREDIT AGREEMENT" means the Credit Agreement dated as of January 27,
1998, by and among Liberty Group Operating, Inc., a Delaware corporation,
Liberty Group Publishing, Inc., a Delaware corporation, the Lenders party
thereto, the Administrative Agent, the Swingline Lender, the Issuing Bank, the
Syndication Agent, the Documentation Agent and the Co-Agent, as such agreement
from time to time may be modified, amended, restated, extended, refinanced or
replaced in any manner or in any respect (including so as to reduce or increase
the amount or cost of credit extended thereunder or to shorten or extend the
time of payment thereunder or in any other manner change the amount or terms of
credit extended to the Borrower or the identity, rights or obligations of any
party thereto).
"DISCHARGE OF THE CREDIT AGREEMENT" means that all obligations of the
Lenders to extend credit under the Credit Agreement and all letters of credit
at any time issued under the Credit Agreement have expired or been terminated
and have been absolutely, unconditionally and irrevocably discharged and all
Obligations at any time created, incurred or outstanding (except Obligations
for indemnification which are then contingent and in respect of which no claim
or demand has then been made) have been fully and finally paid in cash.
"EQUITY INTERESTS" means, with respect to any Person, any capital stock of
such Person or membership interests, partnership interests (whether general or
limited) or other equity interests in such Person, regardless of type, class,
preference or designation, and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto, in each case whether outstanding on the date of this
Agreement or issued or granted at any time thereafter.
"EXCLUDED ASSETS" means (a) rights, licenses and franchises granted by any
Governmental Authority in which it is unlawful to create a Lien, (b) any
leasehold interest in real estate, except the tenant's interest in Fixtures
thereon, and (c) any owned real estate, except Fixtures thereon.
"HOLDER" means, in respect of any Secured Obligation, the Person entitled
to enforce payment thereof and specifically includes each Lender, the
Administrative Agent, the Swingline Lender, the Issuing Bank, the Syndication
Agent, the Documentation Agent, the Co-Agent and the Arranger.
"LOAN PARTIES" means the Borrower and the Guarantors.
"OBLIGATIONS" means all direct or indirect debts, liabilities and
obligations of the
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Borrower or any other Loan Party of any and every type and description at any
time arising under or in connection with the Credit Agreement or any other Loan
Document, to the Administrative Agent, the Swingline Lender, the Arranger, the
Syndication Agent, the Documentation Agent, the Co-Agent, the Issuing Bank,
Citibank, any Lender, any Person entitled to indemnification pursuant to the
Credit Agreement or any other Loan Document or to any other Person, in each
case whether now outstanding or hereafter created or incurred, whether or not
the right of such Person to payment in respect of any such debts, liabilities
or obligations is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy case or insolvency, reorganization, receivership,
dissolution or liquidation proceeding, and shall include (a) all liabilities of
the Borrower for principal of and interest on any and all Loans at any time
outstanding under the Credit Agreement, (b) all liabilities of the Borrower in
respect of letters of credit at any time issued pursuant to the Credit
Agreement, (c) all liabilities of the Borrower under the Loan Documents for any
fees, costs, taxes, expenses, indemnification and other amounts payable
thereunder, (d) all liabilities of any Guarantor under the Guaranty, Indemnity
and Subordination Agreement, and (e) all other liabilities of the Borrower or
any other Loan Party under or in respect of any of the Loan Documents or any of
the transactions contemplated thereby and specifically includes any and all
present and future "Obligations" as such term is defined in the Credit
Agreement.
"PERFECTED" means, as to the security interests granted to Secured Party
in Section 2.1, that (a) a creditor on a simple contract cannot acquire a
judicial lien that is superior to such security interests and (b) if a case
were pending under the Bankruptcy Code in which Grantor is the debtor, such
security interests would be a Lien that is perfected in such bankruptcy case.
"POST-PETITION INTEREST AND EXPENSE CLAIMS" means any and all claims of
any Holder of Secured Obligations (a) for interest on any Obligations
determined for any period of time occuring after the commencement of any case
under the Bankruptcy Code or any other insolvency, reorganization,
receivership, dissolution or liquidation proceeding at the contract rate
(including any applicable post-default increase therein) set forth in the
Credit Agreement or any other Loan Document or (b) for cost and expense
reimbursements or indemnification on the terms set forth in the Credit
Agreement or any other Loan Document relating to costs and expenses incurred
and indemnification rights accrued at any time after the commencement of any
such case or proceeding, in each case to the extent such claim accrues or
becomes payable in accordance with the provisions of the Credit Agreement or
other Loan Documents (or would have accrued or become payable if enforceable or
allowable in such case or proceeding), whether or not such claim is
enforceable, allowable or allowed in such case or proceeding and even if such
claim is disallowed therein.
"SECURED OBLIGATIONS" is defined in Section 2.1.
SECTION TERMS DEFINED IN CREDIT AGREEMENT
. Unless the context otherwise requires, the following terms used in this
Agreement are used as defined in the Credit Agreement:
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ABR Loans
Arranger
Asset Purchase Agreements
Borrower
Borrower Subsidiary
Business Day
Co-Agent
Default
Disqualified Stock
Documentation Agent
Event of Default
Governmental Authority
Guarantee
Guarantors
Guarantor Pledge and Security Agreement
Issuing Bank
Lien
Loan Documents
Loans
Material Adverse Effect
Miscellaneous Unpledged Assets
Permitted Cash Investments
Person
Required Lenders
Subsidiary
Subsidiary Note
Swingline Lender
Syndication Agent
Transaction Agreements
Transactions
SECTION TERMS DEFINED IN THE UNIFORM COMMERCIAL CODE
. When capitalized, the following terms used in this Agreement or the
Security Documents have the meanings given to them in the Uniform Commercial
Code, as in effect in the State of New York on the date of this Agreement:
Accounts
Certificated Security
Commodity Account
Commodity Contract
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Commodity Intermediary
Control
Documents
Equipment
Financial Asset
Fixtures
General Intangibles
Goods
Instruments
Inventory
Investment Property
Securities Account
Securities Intermediary
Security
Security Certificate
Security Entitlement
Uncertificated Security
SECTION TERMS GENERALLY
. The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The word "will" shall be construed to have
the same meaning and effect as the word "shall." Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended,
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supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors,
transferees and assigns, (c) the words "herein," "hereof" and "hereunder," and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement, and
(e) the words "asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, whether real, personal or mixed and of every type and
description.
ARTICLE
THE SECURITY INTERESTS
SECTION GRANT OF SECURITY INTERESTS
. As security for the payment of the Obligations and all Post-Petition
Interest and Expense Claims (collectively, the "Secured Obligations"), Grantor
hereby assigns to Secured Party for the benefit of the Beneficiaries, and
grants Secured Party for the benefit of the Beneficiaries security interests
in, all of Grantor's right, title and interest in and to the following types or
items of property, in each case whether now or hereafter existing or owned by
Grantor or in which Grantor now owns or hereafter acquires an interest and
wherever the same may be located (collectively, the "Collateral"):
all Inventory, including specifically all raw materials,
work-in-process, finished goods, supplies, materials, spare parts, Goods
held for sale or on lease or for lease or furnished or to be furnished
under contracts of service, merchandise inventory, rental inventory, and
returned or repossessed Goods and all rights to enforce return or
repossession by reclamation, stoppage in transit or otherwise,
all Equipment, including specifically all manufacturing, printing,
distribution, delivery, retailing, vending, data processing,
communications, office and other equipment in all of its forms, all
vehicles, all tools, dies, and molds, all Fixtures, all other Goods used
or bought for use primarily in a business and all other Goods except
Inventory,
all Accounts,
all Chattel Paper,
all Documents,
all Instruments and all other Claims that are in any respect
evidenced or represented by any writing, including specifically the
Subsidiary Notes described in Schedule 3.1(b) and all other Subsidiary
Notes and all other writings evidencing or representing a Claim against
Holdings or any Borrower Subsidiary or any other Person,
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all Securities, whether constituting Certificated Securities or
Uncertificated Securities, all Financial Assets, all Security
Entitlements, all Securities Accounts, all Commodity Contracts, all
Commodity Accounts, and all other Investment Property, including
specifically the Security Certificates described in Schedule 3.1(b) and
all other Equity Interests and all Permitted Cash Investments,
all money, cash and cash equivalents, including specifically all
deposit accounts and all certificates of deposit,
all General Intangibles, including specifically (a) the property
described on Schedule 3.1(c), (b) all registered and unregistered
trademarks and servicemarks and all trademark and service xxxx license
agreements to which Grantor is a party (whether as licensor or licensee)
and all Claims (including infringement claims) relating thereto, (c) all
patents and patent applications and all patent license agreements to
which Grantor is a party (whether as licensor or licensee) and all Claims
(including infringement claims) relating thereto, (d) all registered and
unregistered copyrights and all copyright license agreements to which
Grantor is a party (whether as licensor or licensee) and Claims
(including infringement claims) relating thereto, (e) all other
intellectual property in which Grantor has an interest, including
proprietary research and development, know-how, trade secrets, trade
names, trade styles, license agreements and user rights and Claims
(including infringement claims) relating thereto, (f) all customer lists
and agreements, (g) all supplier lists and agreements, (h) all employee
and consultant lists, rights, and agreements, (i) all computing, data and
information processing and communications programs, discs, designs, and
information and the data and other entries thereon, (j) all books,
records, catalogs, back issues, library rights and all manifestations and
embodyments thereof, (k) all rights and Claims arising under or in
respect of the Asset Purchase Agreements or the other Transaction
Agreements, including all indemnification rights and indemnification
payments thereunder, (l) all rights and Claims arising under or in
respect of the Credit Agreement or any Loan Document, including rights
and Claims against Secured Party or any other Beneficiary, (m) all rights
and Claims arising in respect of the Transactions, (n) all Net Cash
Proceeds, (o) all tax refunds, (p) all policies of insurance and
condemnation awards of every type and description and the proceeds
thereof, (q) all loans receivable, letters of credit, bonds and
undertakings, deferred purchase price or deferred purchase consideration,
consulting or non-competition payments and other Indebtedness,
liabilities and obligations receivable not constituting an Account and
not evidenced or represented by any Instrument, Chattel Paper or
Security, (r) all rights of recoupment, recourse, reimbursement,
subrogation, indemnity or contribution (including those arising under the
Guaranty, Indemnity and Subordination Agreement, those arising in respect
of any Guarantee of the Senior Subordinated Notes or any other Guarantee
or any payment thereon, and those arising on account of any other
agreement, transaction or event), (s) all other causes of action and
Claims of every type and description, whether fixed or contingent,
liquidated or not liquidated, accrued or not accrued, and all judgments,
orders and recoveries thereon, (t) all other agreements and contract
rights of every type and description and Claims thereon or relating in
any manner thereto, (u) all
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other rights, privileges, benefits, entitlements, franchises, licenses
and expectancies of every type and description, (v) all other intangible
property of every type and description, and (w) all goodwill associated
with any of the foregoing,
all property that is at any time delivered to, or that is is at any
time in the Control of, Secured Party,
TOGETHER, IN EACH CASE, WITH (a) all accessions thereto and products and
replacements thereof, (b) all guaranties, Liens and other forms of collateral
security therefor, and (c) all dividends, distributions, and payments received
thereon or in exchange or substitution therefor or upon Transfer thereof, and
(d) all other proceeds thereof,
EXCEPT AND EXCLUDING, HOWEVER, each item of property that is an Excluded
Asset, for as long as it remains an Excluded Asset.
SECTION DELIVERY OF INSTRUMENTS AND SECURITIES
. On the date hereof or, if hereafter acquired, immediately upon
acquisition thereof by Grantor, without any notice from or demand by Secured
Party, (a) Grantor shall deliver to Secured Party the Subsidiary Notes and
Security Certificates described in Schedule 3.1(b) and all other Instruments
(except checks received and collected in the ordinary course of business) and
Security Certificates at any time constituting Collateral, in each case in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer, assignments in blank or with appropriate endorsements,
in form and substance satisfactory to Secured Party, and (b) Grantor shall
cause the issuer of each Uncertificated Security constituting Collateral to
register Secured Party as the registered owner thereof, either upon original
issuance or by registration of transfer and shall executed and deliver all
writings necessary to cause such issuer to do so.
SECTION INVESTMENT PROPERTY
. Grantor will cause Secured Party's security interests in Investment
Property to be and remain continuously Perfected by Control and, in addition,
will cause such security interests to be Perfected by filing. Grantor will not
grant or permit any other security interest or Lien upon any Investment
Property constituting Collateral. If so requested at any time by Secured Party
or the Required Lenders as to any Security Entitlement or Securities Account or
any Commodity Contract or Commodity Account that constitutes Collateral and
does not constitute Miscellaneous Unpledged Assets, Grantor will promptly cause
each Person who is a Securities Intermediary as to any such Security
Entitlement or Securities Account and each Person who is a Commodity
Intermediary as to any such Commodity Contract or Commodity Account to deliver
a written agreement enforceable by Secured Party for the benefit of the
Beneficiaries waiving and releasing, and agreeing not to create, grant, accept
or hold, any priority, pari passu or junior security interest or Lien therein.
Grantor will not cause or permit any Equity Interest in any Subsidiary to be
outstanding as an Uncertificated Security or to constitute a Security
Entitlement or be held in a Securities Account.
SECTION REGISTRATION OF PLEDGE
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. Secured Party may at any time when any Event of Default is continuing
and without any notice to any Loan Party or any other Person, transfer to and
register in Secured Party's name, as pledgee, any and all Instruments and
Investment Property constituting Collateral. Such transfer and registration
shall not foreclose or otherwise affect any rights or interests of any Loan
Party and shall not increase, restrict or reduce any of Secured Party's rights
and remedies. If after any such transfer and registration Grantor remains
entitled under Section 3.6 to exercise voting rights with respect to Equity
Interests included in such Investment Property, Secured Party shall, at the
written request of Grantor, deliver to Grantor a revocable proxy or other
instrument sufficient to permit Grantor to exercise such voting rights to the
extent permitted under Section 3.6.
SECTION FINANCING STATEMENTS
. Grantor will duly execute, deliver and (subject to execution by Secured
Party, where required by law) file duly completed financing statements naming
Grantor as debtor, naming Secured Party as secured party, and covering the
property described in Section 2.1, in the proper filing office in each
jurisdiction in which a financing statement is required from time to time to be
filed in order to ensure that the security interests granted to Secured Party
in Section 2.1 are at all times continuously Perfected, to the extent that,
under applicable law, such security interests can be Perfected by the filing of
a financing statement.
SECTION SECURED PARTY FILING
. Secured Party is hereby authorized to file one or more financing
statements and continuations thereof and amendments thereto, relative to all
or any part of the Collateral, without the signature of Grantor where permitted
by law.
SECTION FURTHER ASSURANCES
. Grantor will promptly (and in any event within three Business Days after
request by Secured Party or the Required Lenders) execute and deliver, and use
its reasonable and diligent best efforts to obtain from other Persons, all
instruments and documents (including security agreements, security assignments,
Lien releases, Lien waivers, transfer documents and transfer notices, financing
statements and other lien notices), in form and substance satisfactory to
Secured Party or the Required Lenders, and take all other actions which are
necessary or, in the good faith judgment of Secured Party or the Required
Lenders, desirable or appropriate in order to create, maintain, perfect, ensure
the agreed priority of, protect or enforce Secured Party's security interests
in the Collateral, to enable Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral, to protect the
Collateral against the rights, claims or interests of third persons, or to
effect or to assure further the purposes and provisions of this Agreement, and
Grantor agrees to pay all costs related thereto and all reasonable expenses
incurred by Secured Party in connection therewith.
SECTION POWER OF ATTORNEY
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. Grantor hereby irrevocably constitutes and appoints Secured Party and
any officer, agent or nominee of Secured Party, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority, in the name of Grantor or in its own name, if and whenever Grantor
is in default under this Agreement as set forth in Section 4.1 to take any and
all actions and to execute and deliver any and all agreements, documents,
notices, instruments and writings that Secured Party or the Required Lenders
may determine to be necessary or desirable to create, perfect or ensure the
agreed priority of the security interests granted in Section 2.1 or to enforce
such security interests in any lawful and commercial reasonable manner or
otherwise to protect Secured Party's interest in the Collateral in any lawful
and commercially reasonable manner, including the power and right on behalf of
Grantor, without notice to or assent by Grantor:
to ask for, demand, xxx for, collect, settle and give acquittance
for any and all moneys due or to become due with respect to any or all of
the Collateral and otherwise to demand and enforce payment and collection
of any and all Claims constituting Collateral,
to sign and file in any office in any jurisdiction financing
statements, lien notices, collateral assignments and any other
instruments or writings that may be required or, in the opinion of
Secured Party or the Required Lenders, appropriate to create or Perfect a
security interest in or Lien upon any of the Collateral as security for
the Secured Obligations,
to accept, hold, collect, endorse, transfer and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
nonnegotiable Instruments, Securities, Documents and Chattel Paper
constituting Collateral that may be delivered to Secured Party in
accordance with the provisions of this Agreement, whether made payable to
Grantor or otherwise,
to commence, file, prosecute, defend, settle, compromise or adjust
any claim, suit, action or proceeding with respect to any or all of the
Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Collateral,
to obtain, contest, enforce, adjust and settle Claims for insurance
proceeds or condemnation awards constituting proceeds of Collateral or
required to be paid to Secured Party pursuant to this Agreement or the
Credit Agreement,
to do, at its option and at the expense and for the account of
Grantor, at any time and from time to time, all lawful and commercially
reasonable acts and things that Secured Party or the Required Lenders may
deem necessary or desirable to protect or preserve the Collateral or to
realize upon the Collateral,
to contest, settle, pay or discharge taxes or Liens (other than
Liens permitted under this Agreement or the Credit Agreement) levied or
placed upon or threatened against any of the Collateral, and for such
purposes (A) the legality or validity thereof and amounts necessary to
settle or discharge the same may be determined by Secured Party or the
Required Lenders in its or their commercially reasonable discretion and
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(B) Grantor agrees immediately upon demand to reimburse Secured Party for
any payments made by Secured Party on account of any such taxes or Liens,
as part of the Obligations secured hereby,
to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with the Accounts
and other documents relating to the Collateral, and
generally to sell, Transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes,
and to do, at Secured Party's option and at Grantor's expense, at any
time or from time to time, all acts and things that Secured Party or the
Required Lenders reasonably deem necessary to protect, preserve or
realize upon the Collateral and Secured Party's security interests
therein in order to effect the intent of this Agreement, all as fully and
effectively as Grantor might do.
The power granted in this Section 2.8 is a power coupled with an interest, is
irrevocable and shall be discharged upon Discharge of the Credit Agreement.
SECTION SURVIVAL OF SECURITY INTERESTS
. The security interests granted hereby shall, unless released in writing
by Secured Party, (a) remain enforceable as security for all Secured
Obligations now outstanding or created or incurred at any future time (whether
or not created or incurred pursuant to any agreement presently in effect or
hereafter made and notwithstanding any subsequent repayment of any of the
Secured Obligations or any other act, occurrence or event), until Discharge of
the Credit Agreement, (b) survive the Discharge of the Credit Agreement to the
same extent that any contingent Obligation survives, and (c) survive any sale
or other Transfer of any Collateral and remain enforceable against each
transferee and subsequent owner thereof, even if such sale or other Transfer is
permitted at the time under the Credit Agreement, except in the case of
inventory sold in the ordinary course of business and any other Collateral that
is expressly and specifically released from the security interests created
hereby pursuant to a written release signed by Secured Party.
SECTION REINSTATEMENT OF SECURITY INTERESTS
. If at any time any payment on any Secured Obligation is set aside,
avoided or rescinded or must otherwise be restored or returned, this Agreement
and the security interests granted to Secured Party herein and all other
obligations of Grantor hereunder shall remain in full force and effect and, if
previously released or terminated, shall be automatically and fully reinstated,
without any necessity for any act, consent or agreement of Grantor, as fully as
if such payment had never been made and as fully as if any such release or
termination had never become effective.
SECTION GRANTOR REMAINS LIABLE.
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Anything contained herein to the contrary notwithstanding, (a) Grantor shall
remain liable under all contracts and agreements included in the Collateral, to
the extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (b)
the exercise by Secured Party of any of its rights hereunder shall not release
Grantor from any of its duties or obligations under any contract or agreement
included in the Collateral, (c) Secured Party shall not have any obligation or
liability under any contract or agreement included in the Collateral by reason
of this Agreement or the grant to Secured Party of any security interest in
such contract or agreement, and (d) Secured Party shall not be obligated to
perform any of the obligations or duties of Grantor under any contract or
agreement included in the Collateral or to take any action to collect or
enforce any claim for payment assigned hereunder.
ARTICLE
REPRESENTATIONS, WARRANTIES AND COVENANTS
Grantor represents and warrants to Secured Party and agrees with Secured
Party that:
SECTION THE COLLATERAL.
OWNERSHIP
. Except as otherwise expressly permitted under the Credit Agreement, (i)
Grantor owns the Collateral free and clear of any and all Liens and (ii) no
effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any filing or recording office,
except those in favor of Secured Party.
INTERESTS IN AND CLAIMS AGAINST SUBSIDIARIES
. Schedule 3.1(b) sets forth accurately and exhaustively all Equity
Interests owned by Grantor in any Subsidiary of Grantor, all other Equity
Interests owned by Grantor, and all Subsidiary Notes issued to Grantor by any
Subsidiary of Grantor. All such Equity Interests are represented by Security
Certificates that have been duly authorized and validly issued, are fully paid
and non-assessable and were not issued in breach or derogation of preemptive
rights of any Person. Each Subsidiary of Grantor is lawfully indebted under its
Subsidiary Note described in Schedule 3.1(b) in the amount of the Initial Loan
set forth in such Subsidiary Note. Such indebtedness (i) constitutes a legally
valid and binding obligation of each such Borrower Subsidiary, enforceable
against it in accordance with its terms, (ii) is evidenced by and due and
payable on the terms set forth in such Subsidiary Note, and (iii) is secured by
the security interests granted by such Subsidiary to the Administrative Agent,
for the benefit of the Beneficiaries, as set forth in the Guarantor Pledge and
Security Agreement. Each Subsidiary Note and the indebtedness from time to
time evidenced thereby and any and all collateral security therefor are
enforceable solely by the Administrative Agent for the benefit of the
Beneficiaries , as security for the payment of the Secured Obligations.
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INTELLECTUAL PROPERTY
. Schedule 3.1(c) sets forth accurately and exhaustively (a) all
registered and unregistered trademarks and servicemarks owned by Grantor, all
trademark and service xxxx license agreements to which Grantor is a party
(whether as licensor or licensee), and all pending or overtly threatened
infringement claims by or against Grantor and other litigation relating to any
such trademarks, servicemarks or trademark or servicemark license agreements,
(b) all patents and patent applications owned by Grantor, all patent license
agreements to which Grantor is a party (whether as licensor or licensee), and
all pending or overtly threatened infringement claims by or against Grantor and
other litigation relating to any such patents, patent applications or patent
license agreements, (c) all registered and unregistered copyrights owned by
Grantor, all copyright license agreements to which Grantor is a party (whether
as licensor or licensee) and all pending or overtly threatened infringement
claims by or against Grantor or other litigation relating to any such
copyrights or copyright license agreements, (d) all other General Intangibles
in which Grantor has an interest, including proprietary research and
development, know-how, trade secrets, trade names, license agreements and user
rights and other intellectual property of every type and description, all
pending or overtly threatened infringement claims by or against Grantor and
other litigation relating thereto. and all other intangible property, except
General Intangibles that constitute Miscellaneous Unpledged Assets.
OTHER INVESTMENT PROPERTY
. Schedule 3.1(d) sets forth accurately and exhaustively all other
Investment Property of Grantor, except Investment Property constituting
Miscellaneous Unpledged Assets or Permitted Cash Investments.
LOCATION OF EQUIPMENT AND INVENTORY
. All Equipment and Inventory are located and intended to be kept at one
of the collateral locations specified on Schedule 3.1(e).
NO CONSUMER GOODS OR FARM PRODUCTS
. Grantor does not own any assets that are, as to it, consumer goods or
farm products.
LOCATION OF GRANTOR
. The Grantor's chief place of business, chief executive office and office
or offices where the Grantor keeps its records regarding its Accounts and all
originals of its Chattel Paper are located, and during the preceding four
months were located, at the Grantor locations specified on Schedule 3.1(g).
NAMES
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. The correct legal name of Grantor is set forth in the preamble to this
Agreement. Grantor does not conduct business or hold itself out under, and in
the past five years has not conducted business or held itself out under, any
other name (including any trade-name or fictitious business name) except any
name listed on Schedule 3.1(h).
TAXPAYER ID NUMBER
. The proper taxpayer identification number for each Loan Party is
accurately set forth on Schedule 3.1(i).
PERFECTION
. Except in the case of property (if any) constituting Miscellaneous
Unpledged Assets, the security interests granted to Secured Party in Section
2.1 are lawful, valid and enforceable security interests that at all times have
been, and remain, duly and continuously Perfected.
AMENDMENT OF SCHEDULE 3.1
. Grantor may at any time unilaterally amend Schedule 3.1 in any respect
required by the occurrence of any event that does not constitute or give rise
to a Default, by giving written notice thereof to Secured Party. To be
effective, such notice must state conspicuously that it constitutes an
amendment to certain factual matters relating to the Collateral set forth in
Section 3.1 of this Agreement.
SECTION MAINTENANCE OF PERFECTION
. Grantor will not (a) cause, permit or suffer any voluntary or involuntary
change in its name, identity or corporate structure, or in the location of its
chief executive office, or (b) keep any records relating to its Accounts or any
tangible Collateral (other than mobile goods) at any location other than a
location set forth in Schedule 3.1, unless (in each case) (i) Schedule 3.1 has
first been appropriately supplemented with respect thereto, and (ii) an
appropriate financing statement has been filed in the proper office and in the
proper form, and all other requisite actions have been taken, to Perfect and
continue the Perfection (without loss of priority) of Secured Party's security
interests in the Collateral.
SECTION DEFENSE OF COLLATERAL
. Grantor will defend the Collateral against all claims and demands of all
Persons at any time claiming any interest therein.
SECTION TRANSFER OR ENCUMBRANCE
. Grantor will not encumber or Transfer any item of Collateral or any
interest therein, or permit or suffer any item of Collateral to be encumbered
or Transferred, unless (a) such action is permitted at the time under the
Credit Agreement and (ii) each Loan Party makes all payments on account of the
Secured Obligations required to be made therefrom and takes all other actions
required
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to be taken in connection therewith under the Credit Agreement or any other
Loan Document.
SECTION PAYMENTS, DIVIDENDS AND DISTRIBUTIONS.
Grantor shall be entitled to receive all payments on Accounts, Instruments
and Claims and all dividends and distributions on Equity Interests and other
Investment Property constituting Collateral, so long as (a) no Event of Default
has occurred and is continuing or would result, (b) Grantor ensures that
Secured Party's security interests in any and all such payments, dividends and
distributions (except those constituting Miscellaneous Unpledged Assets) remain
continously Perfected and (c) each Loan Party makes all payments on account of
the Secured Obligations required to be made therefrom and takes all other
actions required to be taken in connection therewith under the Credit Agreement
or any other Loan Document.
SECTION VOTING RIGHTS
. So long as no Event of Default has occurred or would result, Grantor
shall have and may exercise all voting rights with respect to any and all
Equity Interests constituting Collateral, except that:
NO BREACH. Grantor shall not act or vote in favor of any action that
would constitute or cause a breach of any obligations of any Loan Party under
the Credit Agreement or under any other Loan Document;
NO CAPITAL STRUCTURE CHANGES. Grantor shall not act or vote in favor of
(i) the authorization or issuance of any Disqualified Stock, options, warrants,
voting rights, or preference shares or additional shares, or (ii) any
reclassification, readjustment, reorganization, merger, consolidation, sale or
disposition of assets, or dissolution, without giving Secured Party at least 15
days' prior written notice thereof;
MATERIAL ADVERSE CHANGES. Grantor shall not act or vote in favor of any
action that has or is reasonably likely to have a material adverse effect on
the value of any of the Collateral or that has, or would reasonably be expected
to result in, a Material Adverse Effect; and
TERMINATION OF VOTING RIGHTS. At any time when Grantor is in default
under this Agreement as set forth in Section 4.1, Secured Party may terminate
any or all of Grantor's voting rights with respect to any or all Equity
Interests constituting Collateral, either by giving written notice of such
termination to Grantor or by transferring such Equity Interests into Secured
Party's name, and Secured Party shall thereupon have the sole right and power
to exercise such voting rights.
SECTION MAINTENANCE OF COLLATERAL
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. Grantor shall:
not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any other Loan Document
or any applicable statute, regulation or ordinance or any policy of
insurance covering any such Collateral;
notify Secured Party of any change in Grantor's name, identity
or corporate structure within 30 days after such change;
give Secured Party 30 days' prior written notice of any change
in Grantor's chief place of business, chief executive office, places of
business, collateral locations or federal taxpayer ID number or the
office where Grantor keeps its Chattel Paper and its records regarding
any Accounts;
if the Lenders give value to enable Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes; and
pay promptly when due all material property and other taxes,
assessments and governmental charges or levies imposed upon any
Collateral and all Claims that are or might become secured by any Lien
upon any Collateral, except to the extent the same is being contested as
permitted under the Credit Agreement; PROVIDED, that, notwithstanding any
other provision in the Loan Documents, Grantor shall in any event pay
such taxes, assessments, charges, levies and Claims not later than five
days prior to the date of any proposed sale under any judgment, writ or
warrant of attachment or other legal process entered or filed against
Grantor or any Collateral as a result of the failure to make such
payment.
SECTION CONCERNING EQUIPMENT AND INVENTORY
. Grantor will:
cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new (ordinary wear and tear
and worn-out and surplus equipment excepted) and in accordance with
Grantor's past practices and make or cause to be made all repairs,
replacements and other improvements in connection therewith that are
necessary or desirable to such end;
notify Secured Party of any loss or damage to any Equipment in
an amount exceeding $2,000,000;
keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity of Inventory, Grantor's cost
therefor and (where applicable) the current list prices for the
Inventory, in the ordinary course of Grantor's business;
if any Inventory is in possession or control of any agent,
carrier,
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warehouseman, bailee, consignee or processor, upon the occurrence of an
Event of Default instruct such Person to hold all such Inventory for the
account of Secured Party and subject to the instructions of Secured
Party; and
if so requested at any time by Secured Party or the Required
Lenders, promptly endorse and deliver to Secured Party each and all
negotiable Documents constituting Collateral.
SECTION CONCERNING ACCOUNTS, INSTRUMENTS AND OTHER CLAIMS
. Grantor will:
maintain accurate and complete records concerning the Accounts,
Instruments and all other Claims and the identity, name and address of
each account debtor or obligor thereon, hold and preserve such records in
safekeeping, permit representatives of Secured Party at any time during
normal business hours to inspect, copy and make abstracts from such
records, and render to Secured Party, at Grantor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto,
if so requested at any time by Secured Party or the Required
Lenders, Grantor will certify and deliver to Secured Party complete and
correct copies of each contract or agreement constituting Collateral,
continue to collect, at Grantor's expense, all amounts due or to
become due to Grantor under Accounts, Instruments and other Claims and,
in connection therewith take such action as Grantor (or, whenever Grantor
is in default under this Agreement as set forth in Section 4.1, as
Secured Party or the Required Lenders) may reasonably deem necessary or
advisable to enforce collection of amounts due or to become due to
thereunder; PROVIDED, that Secured Party shall have the right at any time
when Grantor is in default under this Agreement as set forth in Section
4.1 (A) to notify the account debtors or obligors under any or all
Accounts, Instruments or other Claims of the assignment of such Accounts,
Instruments or Claims to Secured Party and to direct such account debtors
or obligors to make payment of all amounts due or to become due to
Grantor thereunder directly to Secured Party, (B) to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Accounts, Instruments or other Claims have been
directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in
such lockbox or other arrangement directly to Secured Party and (C) at
the expense of Grantor, to demand payment of any Accounts, Instruments
and Claims and enforce collection thereof by legal proceedings in any
lawful manner and to extend, renew adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as
Grantor might have done, and
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if Secured Party at any time exercises any of the rights
described in the proviso in Section 3.9(iii), (A) segregate from all
other funds and hold in trust for Secured Party and immediately deliver
to Secured Party (in the identical form received) all amounts and
proceeds (including checks and other instruments) received by Grantor in
respect of any and all Accounts, Instruments and other Claims, and (B)
not adjust, settle or compromise the amount or payment of any Account or
Claim, or release wholly or partly any account debtor or obligor thereon,
or allow any credit or discount thereon.
SECTION SUBSTITUTED PERFORMANCE
. Secured Party may at any time (but shall not be obligated to) (a)
perform any of the obligations of Grantor under this Agreement if Grantor
fails to perform such obligation within three Business Days (or, in the case of
insurance, within one Business Day) after written demand by Secured Party and
(b) make any payments and do any other acts which Secured Party or the Required
Lenders may deem necessary or desirable to protect Secured Party's security
interests in the Collateral, including the right to pay, purchase, contest or
compromise any Lien that attaches or is asserted against any Collateral, to
procure insurance, and to appear in and defend any action or proceeding
relating to any Collateral, and Grantor agrees promptly to reimburse Secured
Party for all payments made by Secured Party in doing so, together with
interest thereon at the rate then applicable to ABR Loans, all reasonable
attorneys' fees and disbursements incurred by Secured Party in connection
therewith, whether or not suit is brought, and all other costs and expenses
related thereto.
ARTICLE
DEFAULT; REMEDIES
SECTION DEFAULT
. Grantor shall be in default under this Agreement (a) whenever any
Event of Default has occurred and is continuing (without regard to whether or
to what degree Grantor individually may have caused, participated in, or had
any knowledge of the occurrence of such Event of Default) and (b) at all times
after the Loans have become due and payable, whether at maturity, upon
acceleration pursuant to Section 7.1 of the Credit Agreement or otherwise.
SECTION REMEDIES UPON DEFAULT
. At any time when Grantor is in default under this Agreement as set
forth in Section 4.1, Secured Party may exercise and enforce, in any order, (a)
each and all of the rights and remedies available to a secured party upon
default under the Uniform Commercial Code or other applicable law, (b) each and
all of the rights and remedies available to it under the Credit Agreement or
any other Loan Document and (c) each and all of the following rights and
remedies:
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COLLECTION RIGHTS. Without notice to Grantor or any other Loan Party,
Secured Party may notify any or all account debtors and obligors on any
Accounts, Instruments or other Claims constituting Collateral of Secured
Party's security interests therein and may direct, demand and enforce payment
thereof directly to Secured Party.
TAKING POSSESSION. Secured Party may (i) enter upon any and all
premises owned or leased by Grantor where Collateral is located (or believed by
Secured Party to be located), with or without judicial process and without any
obligation to pay rent, (ii) prior to the disposition of the Collateral, store,
process, repair or recondition the Collateral or otherwise prepare the
Collateral for disposition in any manner to the extent Secured Party deems
appropriate, (iii) take possession of Grantor's premises or place custodians in
exclusive control thereof, remain on such premises and use the same and any of
Grantor's equipment for the purpose of completing any work in process or
otherwise preparing the Collateral for sale or selling or otherwise
Transferring the Collateral, (iv) take possession of all items of Collateral
that are not then in its possession, either upon such premises or by removal
from such premises, and (v) require Grantor or the Person in possession thereof
to deliver such Collateral to Secured Party at one or more locations designated
by Secured Party and reasonably convenient to it and Grantor.
FORECLOSURE. Secured Party may sell, lease, license or otherwise
dispose of or Transfer any or all of the Collateral or any part thereof in one
or more parcels at public sale or in private sale or transaction, on any
exchange or market or at Secured Party's offices or on Grantor's premises or at
any other location, for cash, on credit or for future delivery, and may enter
into all contracts necessary or appropriate in connection therewith, without
any notice whatsoever unless required by law. Where permitted by law, one or
more of the Beneficiaries may be the purchasers at any such sale and in such
event, if such bid is made by all of the Lenders or by all of the Holders of
Secured Obligations or otherwise whenever a credit bid is expressly permitted
under the Credit Agreement or approved in writing by the Administrative Agent
and the Required Lenders, the Beneficiaries bidding at such sale may bid part
or all of the Obligations owing to them without necessity of any cash payment
on account of the purchase price, even though any other purchaser at such sale
is required to bid a purchase price payable in cash. Grantor agrees that at
least 10 calendar days' written notice to Grantor of the time and place of any
public sale or the time after which any private sale is to be made shall be
commercially reasonable. The giving of notice of any such sale or other
disposition shall not obligate Secured Party to proceed with the sale or
disposition, and any such sale or disposition may be postponed or adjourned
from time to time, without further notice.
USE OF INTELLECTUAL PROPERTY. Secured Party may, on a royalty-free
basis, use and license use of any trademark, trade name, trade style,
copyright, patent or technical knowledge or process owned, held or used by
Grantor in respect of any Collateral as to which any right or remedy of Secured
Party is exercised or enforced.
In addition, each Holder of any Secured Obligation may exercise and enforce
such rights and
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remedies for the collection of such Secured Obligation as may be available to
it by law or agreement.
SECTION WAIVERS BY GRANTOR
. Grantor hereby irrevocably waives (a) all rights of redemption from
any foreclosure sale, (b) the benefit of all valuation, appraisal, exemption
and moratorium laws, (c) to the fullest extent permitted by law, all rights to
notice or a hearing prior to the exercise by Secured Party of its right to take
possession of any Collateral, whether by self-help or by legal process and any
right to object to the Secured Party taking possession of any Collateral by
self-help, (d) if Secured Party seeks to obtain possession of any Collateral by
replevin, claim and delivery, attachment, levy or other legal process, (i) any
notice or demand for possession prior to the commencement of legal proceedings,
(ii) the posting of any bond or security in any such proceedings, and (iii)
any requirement that Secured Party retain possession and not dispose of any
Collateral until after a trial or final judgment in such proceedings.
SECTION STANDARD OF CARE
. The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or to protect, preserve, vote or exercise any rights
pertaining to any Collateral. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of Collateral in its possession
if such Collateral is accorded treatment substantially equal to that which
Secured Party accords its own property or if it selects, with reasonable care,
a custodian to hold such Collateral on its behalf.
SECTION APPLICATION OF PROCEEDS
. Except as expressly provided elsewhere in this Agreement, all
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral may, in the
discretion of Secured Party, be held by Secured Party as Collateral for, or
then, or at any other time thereafter, applied in full or in part by Secured
Party against, the Secured Obligations in the following order of priority:
FIRST: To the payment of all reasonable costs and expenses of such
sale, collection or other realization, including reasonable compensation
to Secured Party and its agents and counsel, and all other reasonable
expenses, liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is entitled
to indemnification hereunder and all reasonable advances made by Secured
Party hereunder for the account of Grantor, and to the payment of all
reasonable costs and expenses paid or incurred by Secured Party in
connection with the exercise of any right or remedy hereunder, all in
accordance with Section 4.6;
SECOND: To the payment of all other Secured Obligations (for the
ratable benefit of the holders thereof) then due and payable; and
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THIRD: To the payment to or upon the order of the Grantor, or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION INDEMNITY AND EXPENSES.
INDEMNITY. Grantor will defend, indemnify and hold harmless Secured
Party and each Beneficiary from and against any and all claims, losses and
liabilities in any way relating to, growing out of or resulting from this
Agreement and the transactions contemplated hereby (including enforcement of
any interest, right or remedy created hereby), except to the extent such
claims, losses or liabilities are directly attributable to Secured Party's or
such Beneficiary's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction.
EXPENSES. Grantor will pay to Secured Party upon demand the amount of
any and all reasonable costs and expenses, including the reasonable fees and
expenses of its counsel and of any advisors, consultants, experts and agents,
that Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the interests, rights or remedies of Secured
Party hereunder, (iv) the failure by Grantor to perform or observe any of the
provisions hereof, or (v) the proof, allowance, protection, administration,
treatment, discharge, collection or enforcement of any of the Secured
Obligations or any of the Collateral in any bankruptcy case or insolvency,
reorganization, receivership, dissolution or liquidation proceeding of or
affecting any Loan Party.
SECTION SURPLUS, DEFICIENCY
. Any surplus proceeds of any sale or other disposition by Secured
Party of any Collateral remaining after Discharge of the Credit Agreement and
after all Secured Obligations are paid in full and in cash shall be paid over
to Grantor or to whomever may be lawfully entitled to receive such surplus or
as a court of competent jurisdiction may direct, but prior to Discharge of
the Credit Agreement, such surplus proceeds may be retained by Secured Party
and held as Collateral until Discharge of the Credit Agreement. The Borrower
and each Guarantor shall be and remain liable for any deficiency.
SECTION INFORMATION RELATED TO THE COLLATERAL
. If Secured Party determines to sell or otherwise Transfer any
Collateral, Grantor shall, and shall cause any Person controlled by it to,
furnish to Secured Party all information Secured Party may request that
pertains or could pertain to the value or condition of the Collateral or that
would or might facilitate such sale or Transfer. Secured Party shall have the
right, notwithstanding any confidentiality obligation or agreement otherwise
binding upon it, freely to disclose such
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information, and any and all other information (including confidential
information) pertaining in any manner to the Collateral or the assets,
liabilities, results of operations, business or prospects of any Loan Party,
freely to any Person that Secured Party in good faith believes to be a
potential or prospective purchaser in such sale or Transfer, without liability
for any disclosure, dissemination or use that may be made as to such
information by any such Person.
SECTION SALE EXEMPT FROM REGISTRATION
. Secured Party shall be entitled at any such sale or other Transfer,
if it deems it advisable to do so, to restrict the prospective bidders or
purchasers to Persons who will provide assurances satisfactory to Secured Party
that the Collateral may be offered and sold to them without registration under
the Securities Act of 1933, as amended, and without registration or
qualification under any other applicable state or federal law. Upon the
consummation of any such sale, Secured Party shall have the right to assign,
transfer and deliver to the purchaser or purchasers thereof the Collateral so
sold. Secured Party may solicit offers to buy the Collateral, or any part of
it, from a limited number of investors deemed by Secured Party, in its good
faith judgment or in good faith reliance upon advice of its counsel, to meet
the requirements to purchase securities under Regulation D promulgated under
the Securities Act of 1933 as then in effect (or any other regulation of
similar import). If Secured Party solicits such offers from such investors,
then the acceptance by Secured Party of the highest offer obtained from any of
them shall be deemed to be a commercially reasonable method of disposition of
the Collateral.
SECTION REGISTRATION RIGHTS
. If Secured Party determines that registration of any securities
constituting Collateral under the Securities Act of 1933 or registration or
qualification of such securities under any other applicable state or federal
law is required or desirable in connection with any sale or Transfer of any
Collateral, then as and when requested by Secured Party, Grantor will use its
best efforts to cause such registration to be effectively made, at no expense
to Secured Party, and to continue any such registration effective for such time
as may be reasonably necessary in the opinion of Secured Party.
SECTION RIGHTS AND REMEDIES CUMULATIVE
. The rights provided for in this Agreement and the other Loan
Documents are cumulative and are not exclusive of any other rights, powers or
privileges or remedies provided by law or in equity, or under any other
instrument, document or agreement. Secured Party may exercise and enforce each
right and remedy available to it either before or concurrently with or after,
and independently of, any exercise or enforcement of any other right or remedy
of Secured Party or any Holder of any Secured Obligation against any Person or
property. All such rights and remedies shall be cumulative, and no one of them
shall exclude or preclude any other.
SECTION NO DIRECT ENFORCEMENT BY BENEFICIARIES
. Secured Party may freely exercise and enforce any and all of its
rights and remedies hereunder, for the benefit of the Beneficiaries. No
Beneficiary, other than Secured Party, shall have any independent right to
collect, take possession of, foreclose against or otherwise enforce the
security interests granted hereby.
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ARTICLE
CONCERNING THE SECURED PARTY
SECTION AGENT FOR HOLDERS.
Secured Party is executing and delivering this Agreement, and accepting
the security interests, rights, remedies, powers and benefits conferred upon
Secured Party hereby, both for its own benefit and as agent for all present and
future Holders of Secured Obligations. The provisions of the Credit Agreement
and all rights, powers, immunities and indemnities granted to Secured Party
under the Credit Agreement or any other Loan Document, or under any separate
agreement made by or otherwise binding upon any Holder of Secured Obligations,
shall apply in respect of such execution, delivery and acceptance and in
respect of any and all actions taken or omitted by Secured Party under, in
connection with or in respect of this Agreement.
SECTION ADMINISTRATIVE AGENT SHALL BE THE SECURED PARTY
. Secured Party shall at all times be the same Person that is the
Administrative Agent under the Credit Agreement. Written notice of resignation
by the Administrative Agent pursuant to Section 8.6 of the Credit Agreement
shall also constitute notice of resignation as Secured Party under this
Agreement; and appointment of a successor Administrative Agent pursuant to
Section 8.6 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under Section 8.6 of the Credit Agreement
by a successor Administrative Agent, the successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Secured Party under this Agreement, and the retiring
Secured Party under this Agreement shall promptly (a) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (b) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring Secured Party shall be discharged from its
duties and obligations under this Agreement. After any retiring Administrative
Agent's resignation hereunder as Secured Party, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION NO ASSURANCES OR LIABILITY.
Secured Party makes no statement, promise, representation or warranty
whatsoever, and shall have no liability whatsoever, to any Holder of any
Secured Obligations as to the
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authorization, execution, delivery, legality, enforceability or sufficiency of
this Agreement or as to the creation, perfection, priority, or enforceability
of any security interests granted hereunder or as to existence, ownership,
quality, condition, value or sufficiency of any Collateral or as to any other
matter whatsoever.
SECTION HOLDERS BOUND.
Except where the consent of others may be required pursuant to the
express provisions of Section 9.2 of the Credit Agreement, any modification,
amendment, waiver, release, termination or discharge of any security interest,
right, remedy, power or benefit conferred upon Secured Party that is
effectuated in a writing signed by Secured Party shall be binding upon all
Holders of Secured Obligations if it is (i) authorized pursuant to any
provision of the Credit Agreement or any other Loan Document, (ii) required by
law or (iii) authorized or ratified either (A) by the Required Holders or (B)
by the Holders of at least a majority in outstanding principal amount of the
Secured Obligations (other than contingent or unliquidated Secured
Obligations).
ARTICLE
MISCELLANEOUS PROVISIONS
SECTION CONTINUING SECURITY INTERESTS; RELEASE
. This Agreement creates continuing security interests in the Collateral
and shall (a) remain in full force and effect until the Discharge of the Credit
Agreement, (b) be binding upon Grantor and its successors and assigns, and (c)
inure, together with the rights and remedies of Secured Party hereunder, to the
benefit of and be enforceable by Secured Party and its successors, transferees
and assigns acting in the capacity of Administrative Agent under the Credit
Agreement. Subject to and upon Discharge of the Credit Agreement, Secured
Party shall (within a reasonable time after it receives from Grantor a written
request for release of the Collateral) execute and deliver to Grantor an
instrument in form and substance satisfactory to Secured Party releasing (on a
quitclaim basis, without recourse, without warranty, and without any liability
whatsoever) any security interest Secured Party may then hold in the Collateral
and thereupon Secured Party shall, at Grantor's expense, execute and deliver to
Grantor such UCC termination statements and other like documents as Grantor may
reasonably request to evidence such release.
SECTION SENIOR INDEBTEDNESS
. All liability of Grantor hereunder (A) is and shall be (and is hereby
designated as) "Senior Indebtedness" within the meaning of and for the purposes
of the Indenture dated as of January 27, 1998 by and among the Borrower, the
Subsidiary Guarantors named therein, and State Street Bank and Trust Company,
as trustee, governing the Borrower's 9 3/8% Senior Subordinated Notes due 2008,
and (B) is and shall be (and is hereby made) senior in right of payment, on the
terms set forth in said Indenture, to said Senior Subordinated Notes and all
"Obligations" (as defined in said Indenture) in respect of said Senior
Subordinated Notes and all "Subsidiary Guarantees" (as defined in said
Indenture) at any time issued under or pursuant to said Indenture.
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SECTION AMENDMENTS; ETC.
. No amendment or waiver of any provision of this Agreement, or consent
to any departure by Grantor herefrom, shall in any event be effective unless
the same shall be in writing and signed by Secured Party, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE
. No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION NOTICES
. Any and all notices and communications to be given to Grantor or
Secured Party may be given by courier service, personal service, mailing the
same, postage prepaid, or by telex, facsimile transmission or cable to each
such party at its address set forth in the Credit Agreement, on the signature
pages hereof or to any other address as any party hereto may specify by written
notice to the other parties, and such communication shall be deemed to have
been given when delivered in person or by courier service, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the
United States mail with postage prepaid and properly addressed.
SECTION SEVERABILITY
. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION HEADINGS
. Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION GOVERNING LAW; TERMS
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF
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THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE NEW YORK UNIFORM COMMERCIAL
CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK .
Notwithstanding the foregoing, the creation, perfection, priority and
enforcement of a security interest in any deposit account shall be governed by
the laws of the state in which the depositary bank, or branch bank, maintaining
such deposit account is located.
SECTION CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK. BY EXECUTION AND DELIVERY
OF THIS AGREEMENT GRANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT. Grantor hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to Grantor at its address provided in
Section 6.5, such service being hereby acknowledged by Grantor to be sufficient
for personal jurisdiction in any action against Grantor in any such court and
to be otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law or
shall limit the right of Secured Party to bring proceedings against Grantor in
the courts of any other jurisdiction.
SECTION WAIVER OF JURY TRIAL
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including without limitation contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. Grantor and Secured Party each acknowledge that this waiver
is a material inducement for Grantor and Secured Party to enter into a business
relationship, that Grantor and Secured Party have already relied on this waiver
in entering into this Agreement and that each will continue to rely on this
waiver in their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be
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filed as a written consent to a trial by the court.
SECTION COUNTERPARTS
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and Secured Party have executed this Agreement
as of the date first written above.
LIBERTY GROUP OPERATING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
___________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
Accepted as of the 27th day
of January, 1998
CITICORP USA, INC.,
AS ADMINISTRATIVE AGENT
By: /s/ Xxxxxxx Xxxxxxx
________________________________
Name: Xxxxxxx Xxxxxxx
Title: Attorney-In-Fact
