EXHIBIT 10.2
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GUARANTEE AND COLLATERAL AGREEMENT
made by
INFINITY PROPERTY AND CASUALTY CORPORATION
and certain of its Subsidiaries
in favor of
XXXXXX COMMERCIAL PAPER INC.,
as Administrative Agent,
Dated as of July ___, 2003
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TABLE OF CONTENTS
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SECTION 1. DEFINED TERMS.................................................................. 1
1.1 Definitions.................................................................... 1
1.2 Other Definitional Provisions.................................................. 6
SECTION 2. GUARANTEE...................................................................... 7
2.1 Guarantee...................................................................... 7
2.2 Right of Contribution.......................................................... 8
2.3 Subrogation.................................................................... 8
2.4 Amendments, etc. with respect to the Borrower Obligations...................... 9
2.5 Guarantee Absolute and Unconditional........................................... 9
2.6 Reinstatement.................................................................. 11
2.7 Payments....................................................................... 11
SECTION 3. GRANT OF SECURITY INTEREST..................................................... 12
SECTION 4. REPRESENTATIONS AND WARRANTIES................................................. 12
4.1 Representations in Credit Agreement............................................ 13
4.2 Title; No Other Liens.......................................................... 13
4.3 Perfected First Priority Liens................................................. 13
4.4 Chief Executive Office......................................................... 13
4.5 Inventory and Equipment........................................................ 14
4.6 Farm Products.................................................................. 14
4.7 Investment Property............................................................ 14
4.8 Receivables.................................................................... 14
4.9 Intellectual Property.......................................................... 14
SECTION 5. COVENANTS...................................................................... 15
5.1 Covenants in Credit Agreement.................................................. 15
5.2 Delivery of Instruments and Chattel Paper...................................... 15
5.3 Maintenance of Insurance....................................................... 15
5.4 Payment of Obligations......................................................... 16
5.5 Maintenance of Perfected Security Interest; Further Documentation.............. 16
5.6 Changes in Name, etc........................................................... 16
5.7 Notices........................................................................ 17
5.8 Investment Property............................................................ 17
5.9 Receivables.................................................................... 18
5.10 Intellectual Property.......................................................... 18
SECTION 6. REMEDIAL PROVISIONS............................................................ 20
6.1 Certain Matters Relating to Receivables........................................ 20
6.2 Communications with Obligors; Grantors Remain Liable........................... 21
6.3 Pledged Stock.................................................................. 21
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6.4 Proceeds to be Turned Over To Administrative Agent............................. 22
6.5 Application of Proceeds........................................................ 22
6.6 Code and Other Remedies........................................................ 23
6.7 Registration Rights............................................................ 24
6.8 Deficiency..................................................................... 25
SECTION 7. THE ADMINISTRATIVE AGENT....................................................... 25
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.................... 25
7.2 Duty of Administrative Agent................................................... 26
7.3 Filing of Financing Statements................................................. 27
7.4 Authority of Administrative Agent.............................................. 27
SECTION 8. MISCELLANEOUS.................................................................. 27
8.1 Amendments in Writing.......................................................... 27
8.2 Notices........................................................................ 27
8.3 No Waiver by Course of Conduct; Cumulative Remedies............................ 27
8.4 Enforcement Expenses; Indemnification.......................................... 28
8.5 Successors and Assigns......................................................... 28
8.6 Set-Off........................................................................ 28
8.7 Counterparts................................................................... 29
8.8 Severability................................................................... 29
8.9 Section Headings............................................................... 29
8.10 Integration.................................................................... 29
8.11 GOVERNING LAW.................................................................. 29
8.12 Action Requiring Approval...................................................... 29
8.13 Submission To Jurisdiction; Waivers............................................ 30
8.14 Acknowledgements............................................................... 31
8.15 Additional Grantors............................................................ 31
8.16 Releases....................................................................... 31
8.17 WAIVER OF JURY TRIAL........................................................... 32
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Schedules
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Securities
Schedule 3 Filings and Other Actions Required to Perfect Security Interest
Schedule 4 Jurisdiction of Organization, Identification Number and
Location of Chief Executive Office
Schedule 5 Locations of Inventory and Equipment
Schedule 6 Intellectual Property
Annexes
Annex I Assumption Agreement
Annex II Acknowledgment and Consent
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GUARANTEE AND COLLATERAL AGREEMENT, dated as of July ___,
2003, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
XXXXXX COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions (the
"Lenders") from time to time parties to the Credit Agreement, dated as of July
__, 2003 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among INFINITY PROPERTY AND CASUALTY CORPORATION, an Ohio
corporation (the "Borrower"), the Lenders, BEAR, XXXXXXX & CO. INC. and XXXXXX
BROTHERS INC., as joint advisors, joint lead arrangers and joint bookrunners (in
such capacity, the "Arrangers"), BEAR XXXXXXX CORPORATE LENDING INC., as
syndication agent (in such capacity, the "Syndication Agent"), and the
Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member 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 Borrower to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, certain of the Qualified Counterparties may enter
into Specified Hedge Agreements with one or more of the Grantors;
WHEREAS, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and indirect
benefit from the extensions of credit under the Credit Agreement and from the
Specified Hedge Agreements; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the benefit of the Secured Parties, 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 are used herein as defined
in the New York UCC: Accounts, Certificated Security, Chattel Paper, Commercial
Tort Claims, Documents, Equipment, Farm Products,
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General Intangibles, Goods, Instruments, Inventory, Letter-of-Credit Rights and
Supporting Obligations.
(b) The following terms shall have the following meanings:
"Agents": the collective reference to the Syndication Agent
and the Administrative Agent.
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Applicable Insurance Regulatory Authority": with respect to
any Insurance Subsidiary, the insurance department or similar
administrative authority or agency located in (a) each state in which
such Insurance Subsidiary is domiciled or (b) to the extent asserting
regulatory jurisdiction over such Insurance Subsidiary, the insurance
department, authority or agency in each state in which such Insurance
Subsidiary is licensed, including any Federal insurance regulatory
department, authority or agency that may be created and that asserts
regulatory jurisdiction over such Insurance Subsidiary.
"Borrower Credit Agreement Obligations": the collective
reference to the unpaid principal of and interest on the Loans and all
other obligations and liabilities of the 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 the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to the Administrative 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 the other Loan Documents, or any other document made,
delivered 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 Administrative
Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).
"Borrower Hedge Agreement Obligations": the collective
reference to all obligations and liabilities of the 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 the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to any Qualified Counterparty,
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 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
Qualified Counterparty that are
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required to be paid by the 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 Administrative Agent or to the Secured Parties that are
required to be paid by the Borrower pursuant to the terms of this
Agreement).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by
the 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.
"Excluded Assets": the collective reference to (i) any
contract, General Intangible, Copyright License, Patent License or
Trademark License ("Intangible Assets"), in each case to the extent the
grant by the relevant Grantor of a security interest pursuant to this
Agreement in such Grantor's right, title and interest in such
Intangible Asset (A) is prohibited by legally enforceable provisions of
any contract, agreement, instrument or indenture governing such
Intangible Asset, (B) would give any other party to such contract,
agreement, instrument or indenture a legally enforceable right to
terminate its obligations thereunder or (C) is permitted only with the
consent of another party, if the requirement to obtain such consent is
legally enforceable and such consent has not been obtained; provided,
that in any event any Receivable or any money or other amounts due or
to become due under any such contract, agreement, instrument or
indenture shall not be Excluded Assets to the extent that any of the
foregoing is (or if it contained a provision limiting the
transferability or pledge thereof would be) subject to
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Section 9-406 of the New York UCC, and (ii) Foreign Subsidiary Voting
Stock excluded from the definition of "Pledged Stock" set forth in this
Section 1.1.
"Foreign Subsidiary": any Subsidiary 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.
"Guarantor Hedge Agreement Obligations": the collective
reference to all obligations and liabilities of a Guarantor (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 such Guarantor, whether
or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Qualified Counterparty, 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 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
Qualified Counterparty that are required to be paid by such Guarantor
pursuant to the terms of any Specified Hedge Agreement).
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) any Guarantor Hedge Agreement Obligations
of such Guarantor, but only to the extent that, and only so long as,
the other Obligations of such Guarantor are secured and guaranteed
pursuant hereto, and (ii) 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 Administrative Agent or to any
Secured Party that are required to be paid by such Guarantor pursuant
to the terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other
than the Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps,
currency exchange agreements, commodity swaps, caps or collar
agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates,
currency exchange rates or commodity prices or the exchange of nominal
interest obligations, either generally or under specific contingencies.
For avoidance of doubt, Hedge Agreements shall include any interest
rate swap or similar agreement that provides for the payment by the
Borrower or any of its Subsidiaries of amounts based upon a floating
rate in exchange for receipt by the Borrower or such Subsidiary of
amounts based upon a fixed rate.
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"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 the Borrower or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49)
of the New York UCC (other than any Foreign Subsidiary Voting Stock
excluded from the definition of "Pledged Stock" in this Section 1.1)
and (ii) whether or not constituting "investment property" as so
defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any
Investment Property.
"New York UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"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
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Grantor while this Agreement is in effect; provided that in no event
shall more than 65% 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
9-102(a)(64) of the Uniform Commercial Code in effect in the State of
New York on the date hereof and, in any event, including, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Qualified Counterparty": with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified
Hedge Agreement was entered into, was an Agent or a Lender or an
affiliate of an Agent or a Lender.
"Receivable": any right to payment for goods sold, leased,
licensed, assigned or otherwise disposed of, or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Secured Parties": the collective reference to the
Administrative Agent, the Lenders (including any Issuing Lender in its
capacity as Issuing Lender) and any Qualified Counterparties.
"Securities Act": the Securities Act of 1933, as amended.
"Specified Hedge Agreement": any Hedge Agreement entered into
by (i) the Borrower or any Guarantor and (ii) any Qualified
Counterparty.
"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.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
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(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) (i) The Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantee to the Administrative
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at stated maturity, by
acceleration or otherwise) of the Borrower Obligations (other than, in the case
of each Guarantor, Borrower Obligations arising pursuant to clause (ii) of this
Section 2.1(a) in respect of Guarantor Hedge Agreement Obligations in respect of
which such Guarantor is a primary obligor).
(ii) The Borrower hereby unconditionally and irrevocably
guarantees to the Administrative Agent, for the ratable benefit of the Secured
Parties and their respective successors, endorsees, transferees and assigns, the
prompt and complete payment and performance by each Guarantor when due (whether
at stated maturity, by acceleration or otherwise) of the Guarantor Hedge
Agreement Obligations of such Guarantor.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, (i) 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
fraudulent conveyances or transfers or the insolvency of debtors (after giving
effect to the right of contribution established in Section 2.2) and (ii) the
maximum liability of the Borrower under this Section 2 shall in no event exceed
the amount which can be guaranteed by the Borrower under applicable federal and
state laws relating to fraudulent conveyances or transfers or the insolvency of
debtors (after giving effect to the right of contribution established in Section
2.2).
(c) (i) 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 of such Guarantor contained
in this Section 2 or affecting the rights and remedies of the Administrative
Agent or any Secured Party hereunder.
(ii) The Borrower agrees that the Guarantor Hedge
Agreement Obligations may at any time and from time to time exceed the amount of
the liability of the Borrower under this Section 2 without impairing the
guarantee of the Borrower contained in this Section 2 or affecting the rights
and remedies of the Administrative Agent or any Secured Party hereunder.
(d) Subject to Section 8.16 hereof, the guarantee contained in
this Section 2 shall remain in full force and effect until all the Borrower
Obligations (other than Borrower Obligations arising under Section 2.1(a)(ii)
hereof) and the obligations of each Guarantor under the guarantee contained in
this Section 2 (other than Guarantor Obligations in respect of Borrower
Obligations arising under Section 2.1(a)(ii) hereof) shall have been satisfied
by full
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and final payment in cash, 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 Borrower may be free from any Borrower
Obligations and any or all of the Guarantors may be free from their respective
Guarantor Hedge Agreement Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Secured Party from the Borrower, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations or the
Guarantor Hedge Agreement Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of the Borrower or any Guarantor under this
Section 2 which shall, notwithstanding any such payment (other than any payment
made by the Borrower or such Guarantor in respect of the Borrower Obligations or
the Guarantor Hedge Agreement Obligations or any payment received or collected
from the Borrower or such Guarantor in respect of the Borrower Obligations or
the Guarantor Hedge Agreement Obligations), remain liable for the Borrower
Obligations and the Guarantor Hedge Agreement Obligations up to the maximum
liability of the Borrower or such Guarantor hereunder until the Borrower
Obligations and the Guarantor Hedge Agreement Obligations are fully and finally
paid in cash, no Letter of Credit shall be outstanding and the Commitments are
terminated.
2.2 Right of Contribution. (a) Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder or the Guarantor Hedge Agreement Obligations, such
Guarantor shall be entitled to seek and receive contribution from and against
any other Guarantor hereunder which has not paid its proportionate share of such
payment.
(b) The Borrower and each Guarantor agrees that to the extent that
the Borrower or any Guarantor shall have paid more than its proportionate share
of any payment made hereunder in respect of any Guarantor Hedge Agreement
Obligation of any other Guarantor, the Borrower or such Guarantor, as the case
may be, shall be entitled to seek and receive contribution from and against the
Borrower and any other Guarantor which has not paid its proportionate share of
such payment.
(c) The Borrower's and each Guarantor's right of contribution
under this Section 2.2 shall be subject to the terms and conditions of Section
2.3. The provisions of this Section 2.2 shall in no respect limit the
obligations and liabilities of the Borrower or any Guarantor to the
Administrative Agent and the Secured Parties, and the Borrower and each
Guarantor shall remain liable to the Administrative Agent and the Secured
Parties for the full amount guaranteed by the Borrower or such Guarantor
hereunder.
2.3 Subrogation. Notwithstanding any payment made by the Borrower
or any Guarantor hereunder or any set-off or application of funds of the
Borrower or any Guarantor by the Administrative Agent or any Secured Party,
neither the Borrower nor any Guarantor shall be entitled to be subrogated to any
of the rights of the Administrative Agent or any Secured Party against the
Borrower or any other Guarantor or any collateral security or guarantee or right
of offset held by the Administrative Agent or any Secured Party for the payment
of the Borrower Obligations or the Guarantor Hedge Agreement Obligations, nor
shall the Borrower or any
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Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by the Borrower or
such Guarantor hereunder, until all amounts owing to the Administrative Agent
and the Secured Parties by the Borrower on account of the Borrower Obligations
are fully and finally paid in cash, no Letter of Credit shall be outstanding and
the Commitments are terminated. If any amount shall be paid to the Borrower or
any Guarantor on account of such subrogation rights at any time when all of the
Borrower Obligations shall not have been fully and finally paid in cash, such
amount shall be held by the Borrower or such Guarantor in trust for the
Administrative Agent and the Secured Parties, segregated from other funds of the
Borrower or such Guarantor, and shall, forthwith upon receipt by the Borrower or
such Guarantor, be turned over to the Administrative Agent in the exact form
received by the Borrower or such Guarantor (duly indorsed by the Borrower or
such Guarantor to the Administrative Agent, if required), to be applied against
the Borrower Obligations or the Guarantor Hedge Agreement Obligations, whether
matured or unmatured, in such order as the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. The
Borrower and each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Borrower or any Guarantor
and without notice to or further assent by the Borrower or any Guarantor, any
demand for payment of any of the Borrower Obligations or Guarantor Hedge
Agreement Obligations made by the Administrative Agent or any Secured Party may
be rescinded by the Administrative Agent or such Secured Party and any of the
Borrower Obligations or Guarantor Hedge Agreement Obligations continued, and the
Borrower Obligations or Guarantor Hedge Agreement 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 Administrative Agent or any
Secured Party (with the consent of such of the Borrower and the Guarantor as
shall be required thereunder), and the Specified Hedge Agreements, the Credit
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may (with the consent of such of the
Borrower and the Guarantor as shall be required thereunder) deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by the Administrative Agent or any Secured Party for the payment of
the Borrower Obligations or Guarantor Hedge Agreement Obligations may (with the
consent of such of the Borrower and the Guarantor as shall be required
thereunder) be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Secured Party shall, except to the extent set forth
in, and for the benefit of the parties to, the agreements and instruments
governing such Lien or guarantee, have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Borrower
Obligations or Guarantor Hedge Agreement Obligations or for the guarantees
contained in this Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. (a) Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations (other than any notice with respect to any Guarantor
Hedge Agreement Obligation with respect to which such Guarantor is a primary
obligor and to which it is entitled pursuant to the applicable
10
Specified Hedge Agreement) and notice of or proof of reliance by the
Administrative Agent or any Secured Party upon the guarantee contained in this
Section 2 or acceptance of the guarantee contained in this Section 2; the
Borrower Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the
Administrative Agent and the Secured Parties, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations (other than any diligence, presentment, protest, demand or notice
with respect to any Guarantor Hedge Agreement Obligation with respect to which
such Guarantor is a primary obligor and to which it is entitled pursuant to the
applicable Specified Hedge Agreement). Each Guarantor understands and agrees
that the guarantee of such Guarantor contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Credit Agreement or
any other Loan Document, any of the Borrower Obligations or any collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Administrative Agent or any Secured Party,
(b) any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower or any other Person against the Administrative Agent or any Secured
Party, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or such Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Borrower Obligations, or of such Guarantor under the guarantee of such Guarantor
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 Administrative Agent or any Secured Party may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability under this Section 2, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Administrative Agent or any Secured Party against any
Guarantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
(b) The Borrower waives any and all notice of the creation,
renewal, extension or accrual of any of the Guarantor Hedge Agreement
Obligations and notice of or proof of reliance by the Administrative Agent or
any Secured Party upon the guarantee by the Borrower contained in this Section 2
or acceptance of the guarantee by the Borrower contained in this Section 2; the
Guarantor Hedge Agreement 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 by the Borrower contained in
this Section 2; and all dealings between the Borrower
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and any of the Guarantors, on the one hand, and the Administrative Agent and the
Secured Parties, on the other hand, with respect to any Guarantor Hedge
Agreement Obligation likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee by the Borrower contained in this
Section 2. The Borrower waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower with respect
to the Guarantor Hedge Agreement Obligations. The Borrower understands and
agrees that the guarantee by the Borrower contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Guarantor Hedge
Agreement 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
the Administrative Agent or any Secured Party, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by any Person against the Administrative
Agent or any Secured Party, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower or any Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the applicable Guarantor for the applicable Guarantor Hedge
Agreement Obligations, or of the Borrower under its guarantee contained in this
Section 2, in bankruptcy or in any other instance. When making any demand under
this Section 2 or otherwise pursuing its rights and remedies under this Section
2 against the Borrower, the Administrative Agent or any Secured Party may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against any Guarantor or any other
Person or against any collateral security or guarantee for the Guarantor Hedge
Agreement Obligations or any right of offset with respect thereto, and any
failure by the Administrative Agent or any Secured Party to make any such
demand, to pursue such other rights or remedies or to collect any payments from
any 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
any Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve the Borrower of any obligation or liability
under this Section 2, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent or any Secured Party against the Borrower under this Section 2. 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 or Guarantor
Hedge Agreement Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
2.7 Payments. The Borrower and each Guarantor hereby guarantees
that payments by it hereunder will be paid to the Administrative Agent without
set-off or counterclaim (i) in the case of obligations in respect of Borrower
Obligations arising under the Credit Agreement or any other Loan Document in
Dollars at the Payment Office specified in the Credit Agreement and (ii) in the
case of obligations in respect of any Borrower Hedge Agreement Obligations or
any
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Guarantor Hedge Agreement Obligations, in the currency and at the place
specified in the applicable Specified Hedge Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative Agent,
and hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in, all of the 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:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all Investment Property;
(k) all Letter-of-Credit Rights;
(l) all Goods and other property not otherwise described above;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing, all Supporting Obligations in respect
of any of the foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing;
provided, that the Collateral shall not include any Excluded Assets.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower
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thereunder, each Grantor hereby represents and warrants to the Administrative
Agent 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 3 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 Agent 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 Borrower's knowledge 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 Administrative Agent for the ratable benefit of the Secured
Parties pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
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 Administrative Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or as are permitted by the Credit
Agreement. For the avoidance of doubt, it is understood and agreed that any
Grantor may, as part of its business, grant licenses to third parties to use
Intellectual Property owned or developed by a Grantor. For purposes of this
Agreement and the other Loan Documents, such licensing activity shall not
constitute a "Lien" on such Intellectual Property. Each of the Administrative
Agent and each Secured Party understands that any such licenses may be exclusive
to the applicable licensees, and such exclusivity provisions may limit the
ability of the Administrative Agent to utilize, sell, lease or transfer the
related Intellectual Property or otherwise realize value from such Intellectual
Property pursuant hereto.
4.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof except for (i) unrecorded Liens
permitted by the Credit Agreement which have priority over the Liens on the
Collateral by operation of law and (ii) Liens described on Schedule 3.
4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization, identification number from the jurisdiction of
organization (if any), and the location of such Grantor's chief executive office
or sole place of business or principal residence, as the case may be, are
specified on Schedule 4. Such Grantor has furnished to the Administrative Agent
a certified charter, certificate of incorporation or other organization document
and long-form good standing certificate as of a date which is recent to the date
hereof.
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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 Investment Property. (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, 65% 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. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent to the extent required
by Section 5.2.
(b) None of the obligors on any Receivable is a Governmental
Authority, except for Receivables constituting not more than 5% of the face
amount of all Receivables.
(c) The amounts represented by such Grantor to the Secured Parties
from time to time as owing to such Grantor in respect of the Receivables will at
such times be accurate.
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
15
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 (i) seeking to limit, cancel or
question the validity of any material Intellectual Property or such Grantor's
ownership interest therein, or (ii) 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 Agent and the
Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid in full 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.
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 Administrative Agent, duly indorsed in a manner satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement;
provided, that the Grantors shall not be obligated to deliver to the
Administrative Agent any Instruments or Chattel Paper held by any Grantor at any
time to the extent that the aggregate face amount of all such Instruments and
Chattel Paper held by all Grantors at such time does not exceed $100,000.
5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Administrative
Agent and (ii) insuring such Grantor, the Administrative Agent and the Secured
Parties 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
Administrative Agent and the Lenders.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such insurance
substantially concurrently with the delivery by the Borrower to the
Administrative Agent of its audited financial statements for each
16
fiscal year and such supplemental reports with respect thereto as the
Administrative Agent may from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all 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.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts and Letter-of-Credit
Rights, taking any actions necessary to enable the Administrative Agent to
obtain "control" (within the meaning of the applicable Uniform Commercial Code)
with respect thereto.
5.6 Changes in Name, etc. Such Grantor will not, except upon 15
days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the
location of its chief executive office or sole place of business or
principal residence from that referred to in Section 4.3; or
(ii) change its name.
17
5.7 Notices. Such Grantor will advise the 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 Administrative Agent to exercise any of its
remedies hereunder; and
(b) the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Investment Property. (a) If such Grantor shall become entitled
to receive or shall receive any certificate (including, without limitation, any
certificate representing a 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 Administrative
Agent and the Secured Parties, hold the same in trust for the Administrative
Agent and the Secured Parties and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor and with, if
the Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any Issuer shall be paid over to
the Administrative Agent to be held by it hereunder as additional collateral
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 Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Investment Property shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Secured Parties, segregated from other funds of such Grantor, as
additional collateral security for the Obligations. Notwithstanding the
foregoing, the Grantors shall not be required to pay over to the Administrative
Agent or deliver to the Administrative Agent as Collateral any proceeds of any
liquidation or dissolution of any Issuer, or any distribution of capital or
property in respect of any Investment Property, to the extent that (i) such
liquidation, dissolution or distribution, if treated as a Disposition of the
relevant Issuer, would be permitted by the Credit Agreement and (ii) the
proceeds thereof are applied toward prepayment of Loans and reduction of
Commitments to the extent required by the Credit Agreement.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
18
unless such securities are delivered to the Administrative Agent, concurrently
with the issuance thereof, to be held by the Administrative Agent as Collateral,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Investment Property or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Pledged Securities issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Securities issued by it.
(d) Each Issuer that is a partnership or a limited liability
company (i) confirms that none of the terms of any equity interest issued by it
provides that such equity interest is a "security" within the meaning of
Sections 8-102 and 8-103 of the New York UCC (a "Security"), (ii) agrees that it
will take no action to cause or permit any such equity interest to become a
Security, (iii) agrees that it will not issue any certificate representing any
such equity interest and (iv) agrees that if, notwithstanding the foregoing, any
such equity interest shall be or become a Security, such Issuer will (and the
Grantor that holds such equity interest hereby instructs such Issuer to) comply
with instructions originated by the Administrative Agent without further consent
by such Grantor.
5.9 Receivables. (a) Other than in the ordinary course of business
consistent with its past practice, such Grantor will not (I) grant any extension
of the time of payment of any Receivable, (II) compromise or settle any
Receivable for less than the full amount thereof, (III) release, wholly or
partially, any Person liable for the payment of any Receivable, (IV) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy
of each material demand, notice or document received by it that questions or
calls into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10 Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark,
Prohibiting a Grantor from acting to permit an Issuer to issue other equity
securities may be inappropriate in some transactions.
19
(iii) use such Trademark with the appropriate notice of registration and all
other notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any xxxx which is confusingly similar or a colorable imitation of
such Trademark unless the Administrative Agent, for the ratable benefit of the
Secured Parties, shall obtain a perfected security interest in such xxxx
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the 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 Administrative Agent within five Business Days after the last day
of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Secured
Parties' 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 relating to any material Intellectual Property (and
to obtain the relevant registration) and to maintain each registration of the
material
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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
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.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The
Administrative Agent shall have the right, at any time after the occurrence and
during the continuance of an Event of Default, to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information as
the Administrative Agent may require in connection with such test verifications.
At any time and from time to time after the occurrence and during the
continuance of an Event of Default, upon the Administrative Agent's request and
at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others satisfactory to the Administrative Agent to furnish
to the Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the Administrative Agent's
direction and control after the occurrence and during the continuance of an
Event of Default, and the Administrative Agent may curtail or terminate said
authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Secured Parties only as provided in Section 6.5, and (ii) until
so turned over, shall be held by such Grantor in trust for the Administrative
Agent and the Secured Parties, segregated from other funds of such Grantor. Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.
(c) At the Administrative Agent's request, each Grantor shall
deliver to the Administrative Agent all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices and
shipping receipts.
(d) At any time after the occurrence and during the continuance of
an Event of Default, each Grantor will cooperate with the Administrative Agent
to establish a system of lockbox accounts, under the sole dominion and control
of the Administrative Agent, into which
21
all Receivables shall be paid and from which all collected funds will be
transferred to a Collateral Account.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
Administrative Agent in its own name or in the name of others may at any time
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables that the Receivables have been assigned
to the Administrative Agent for the ratable benefit of the Secured Parties and
that payments in respect thereof shall be made directly to the Administrative
Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables (or any agreement giving rise
thereto) to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the Administrative Agent nor any Secured
Party shall have any obligation or liability under any Receivable (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Secured Party of any payment
relating thereto, nor shall the Administrative Agent or any Secured Party be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto), 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 Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, 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
Administrative Agent's reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Pledged Securities shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining
22
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 Administrative Agent of any right, privilege or
option pertaining to such Pledged Securities, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of
any Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the Secured Parties
specified in Section 6.1 with respect to payments of Receivables, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and Instruments shall be held by such Grantor in
trust for the Administrative Agent and the Secured Parties, segregated from
other funds of such Grantor, and shall, forthwith upon receipt by such Grantor,
be turned over to the Administrative Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Administrative
Agent and the Secured Parties) shall continue to be held as collateral security
for all the Obligations and shall not constitute payment thereof until applied
as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Administrative Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may 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 Agent under the Loan Documents;
23
Second, to the Administrative Agent, for application by it
towards payment of amounts then due and owing and remaining unpaid in
respect of the Obligations, pro rata among the Secured Parties
according to the amounts of the Obligations then due and owing and
remaining unpaid to the Secured Parties;
Third, to the Administrative Agent, for application by it
towards prepayment of the Obligations, pro rata among the Secured
Parties according to the amounts of the Obligations then held by the
Secured Parties; and
Fourth, any balance of such Proceeds remaining after the
Obligations shall have been paid in full, and the Commitments shall
have terminated shall be paid over to the Borrower or to whomsoever may
be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur
and be continuing, the Administrative Agent, on behalf of the Secured Parties,
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Administrative Agent or any
Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Administrative Agent
or any Secured Party shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees, at the Administrative Agent's request, to
assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6 with respect to
any Grantor's Collateral, 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 of such Grantor or in any way relating to
the Collateral of such Grantor or the rights of the Administrative Agent and the
Secured Parties hereunder with respect thereto, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations of such Grantor, in the order specified in Section 6.5, and
only after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-615(a)(3) of the New York UCC, need the Administrative
Agent account for the surplus, if any, to any Grantor. To the extent permitted
by applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Secured Party arising out of
24
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 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 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 (I) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (II) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (III) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged 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 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 Administrative Agent and
the Secured Parties, that the Administrative Agent and the Secured Parties have
no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.
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6.8 Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Secured Party to collect
such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and 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 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 Administrative Agent may request to
evidence the Administrative Agent's and the Secured Parties' security
interest in such Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or any
part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (2) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising
out of any Collateral; (3) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (4) commence and
prosecute any
26
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof
and to enforce any other right in respect of any Collateral; (5) defend
any suit, action or proceeding brought against such Grantor with
respect to any Collateral;(6) settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with
the goodwill of the business to which any such Copyright, Patent or
Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Administrative Agent shall
in its sole discretion determine; and (8) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes,
and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent's and the
Secured Parties' security interests therein and to effect the intent of
this Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Base Rate Loans under the Credit
Agreement, from the date of payment by the Administrative Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Secured Party 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 Administrative Agent and the Secured Parties hereunder are
solely to protect the
27
Administrative Agent's and the Secured Parties' interests in the Collateral and
shall not impose any duty upon the Administrative Agent or any Secured Party to
exercise any such powers. The Administrative Agent and the Secured Parties shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
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 Filing of Financing Statements. Pursuant to any applicable
law, each Grantor authorizes the Administrative Agent to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral in such form and in such offices as the Administrative
Agent determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. Each Grantor authorizes the
Administrative Agent to use the collateral description "all personal property"
in any such financing statements. Each Grantor hereby ratifies and authorizes
the filing by the Administrative Agent of any financing statement with respect
to the Collateral made prior to the date hereof.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Secured Parties, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Administrative Agent and the Grantors, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority. Notwithstanding any other provision herein or in any
Loan Document, the only duty or responsibility of the Administrative Agent to
any Qualified Counterparty under this Agreement is the duty to remit to such
Qualified Counterparty any amounts to which it is entitled pursuant to Section
6.5.
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 9.1 of the Credit Agreement. No consent of any Qualified
Counterparty shall be required for any waiver, amendment, supplement or other
modification to this Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 9.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Administrative Agent nor any Secured Party shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any Secured
28
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent or
any Secured Party of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Administrative Agent or
such Secured Party would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay, or reimburse each Secured Party and the 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 Secured
Party and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Secured Parties harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Secured Parties harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant to
Section 9.5 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
Administrative Agent and the Secured Parties and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Secured Party at any time and from time to time
while an Event of Default pursuant to Section 7 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
Administrative Agent or such Secured Party to or for the credit or the account
of such Grantor, or any part thereof in such amounts as the Administrative Agent
or such Secured
29
Party may elect, against and on account of the obligations and liabilities of
such Grantor to the Administrative Agent or such Secured Party hereunder and
claims of every nature and description of the Administrative Agent or such
Secured Party against such Grantor, in any currency, whether arising hereunder,
under the Credit Agreement, any other Loan Document or otherwise, as the
Administrative Agent or such Secured Party may elect, whether or not the
Administrative Agent or any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Secured Party shall notify such
Grantor promptly of any such set-off and the application made by the
Administrative Agent or such Secured Party of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Administrative Agent and each Secured
Party under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Secured Party may have.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Secured Parties with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the
Administrative Agent or any Secured Party relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Action Requiring Approval. (a) If an Event of Default shall
have occurred and be continuing, each Grantor shall take any action which the
Administrative Agent may request in the exercise of its rights and remedies
under this Agreement in order to transfer or assign the Collateral to the
Administrative Agent or to such one or more third parties as the Administrative
Agent may designate, or to a combination of the foregoing. To enforce the
provisions of this Section 8.12, the Administrative Agent is empowered to seek
from any Governmental Authority, to the extent required, consent to or approval
of any involuntary transfer of control of any entity whose Capital Stock is
Collateral under this Agreement for the purpose of seeking a bona fide purchaser
to whom control will ultimately be transferred. Each Grantor agrees to cooperate
with any such purchaser and with the Administrative Agent in the preparation,
execution and filing of
30
any forms and providing any information that may be necessary or helpful in
obtaining any applicable Governmental Authority's consent to the assignment to
such purchaser of the Collateral. Each Grantor hereby agrees to consent to any
such involuntary transfer of control upon the request of the Administrative
Agent after and during the continuation of an Event of Default and, without
limiting any rights of the Administrative Agent under this Agreement, to
authorize the Administrative Agent to nominate a trustee or receiver to assume
control of the Collateral, subject only to required judicial or other consent
required by governmental authorities, in order to effectuate the transactions
contemplated in this Section 8.12. Such trustee or receiver shall have all the
rights and powers as provided to it by law or court order, or to the
Administrative Agent under this Agreement. Each Grantor shall cooperate fully in
obtaining the approval or consent of each Governmental Authority required to
effectuate the foregoing.
(b) If an Event of Default shall have occurred and be continuing,
each Grantor shall use its best efforts to assist in obtaining consent or
approval of any Governmental Authority, if required, for any action or
transactions contemplated by this Agreement, including without limitation, the
preparation, execution and filing of the transferor's or assignor's portion of
any application or applications for consent to the transfer of control or
assignment necessary or appropriate under applicable rules and regulations for
approval of the transfer or assignment of any portion of the Collateral.
(c) Notwithstanding the foregoing or any other provision of this
Agreement or of the Credit Agreement or any of the documents executed pursuant
hereto or thereto to the contrary, the Administrative Agent will not take any
action pursuant to this Agreement, or any such documents, which would constitute
or result in a direct or indirect acquisition or exercise of control of any
Insurance Subsidiary (including, without limitation, any direct or indirect
voting or act transferring control of any Pledged Stock) without first obtaining
the approval (or an exemption from the requirement to obtain such approval) of
the Applicable Insurance Regulatory Authority.
8.13 Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
31
(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.
8.14 Acknowledgements. 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 the Administrative Agent nor any Secured Party has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative Agent
and Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Grantors and the Secured Parties.
8.15 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 5.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.16 Releases. (a) At such time as the Loans and the other
Obligations (other than Borrower Hedge Agreement Obligations and Guarantor Hedge
Agreement Obligations) shall have been paid in full, the Commitments have been
terminated, the Collateral shall be released from the Liens created hereby, and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the 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 Borrower shall have delivered to the 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
32
or other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the Borrower
stating that such transaction is in compliance with the Credit Agreement and the
other Loan Documents.
(c) No consent of any Qualified Counterparty shall be required for
any release of Collateral or Guarantors pursuant to this Section.
8.17 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH AGENT AND EACH SECURED PARTY, 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.
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
INFINITY PROPERTY AND CASUALTY CORPORATION
By: ______________________________________
Name:
Title:
[GRANTORS]
By: ______________________________________
Name:
Title:
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of Shares
--------------------------------------------------------------------------------------------------
PLEDGED NOTES:
Issuer Payee Principal Amount
--------------------------------------------------------------------------------
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a is financing statement to be filed]
Patent and Trademark Filings
[List all filings]
Actions with respect to Pledged Stock
Liens
[List all liens]
Other Actions
[Describe other actions to be taken]
Schedule 4
JURISDICTION OF ORGANIZATION, IDENTIFICATION NUMBER AND
LOCATION OF CHIEF EXECUTIVE OFFICE
Jurisdiction of Identification Location of Chief
Grantor Organization Number Executive Office
------- --------------- -------------- -----------------
Schedule 5
LOCATIONS OF INVENTORY AND EQUIPMENT
Grantor Locations
------- ---------
Schedule 6
INTELLECTUAL PROPERTY
I. Copyrights and Copyright Licenses:
II. Patents and Patent Licenses:
III. Trademarks and Trademark Licenses:
Annex I
to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 200__,
made by ______________________________, a ______________ corporation (the
"Additional Grantor"), in favor of XXXXXX COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent") for the
banks and other financial institutions (the "Lenders") parties to the Credit
Agreement referred to below. All capitalized terms not defined herein shall have
the meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, INFINITY PROPERTY AND CASUALTY CORPORATION (the
"Borrower"), the Lenders and the Administrative Agent have entered into a Credit
Agreement, dated as of July __, 2003 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its Affiliates (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of ____ __, 200__ (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
and Collateral Agreement") in favor of the Administrative Agent for the benefit
of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor
to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.16 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The information set forth
in Annex 1-A hereto is hereby added to the information set forth in Schedules
_______ to the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Guarantee and Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
Annex I-2
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By: _______________________________
Name:
Title:
Annex II
to
Guarantee and Collateral Agreement
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of July ___, 2003 (the "Agreement"), made by
the Grantors parties thereto for the benefit of XXXXXX COMMERCIAL PAPER INC., as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent promptly
in writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 5.8, 6.3(a) and 6.7 of the Agreement
shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it, or prohibited, pursuant to Section 5.8, 6.3(a) or 6.7 of the
Agreement.
4. The undersigned further acknowledges that pursuant to the
terms of the Agreement [insert appropriate Grantor] has assigned and transferred
to the Administrative Agent, and has granted to the Administrative Agent, for
the ratable benefit of the Lenders, a security interest in, all Collateral now
owned by such Grantor, including the issued and outstanding shares of all
classes of the Capital Stock of the undersigned, as collateral security for the
prompt and complete payment and performance when due of such Grantor's
Obligations. As provided by Section 8.13 of the Agreement, the Administrative
Agent may not take any action pursuant to the Agreement that would constitute or
result in a direct or indirect act of control of [INSURANCE COMPANY] without
first obtaining the approval of the Applicable Regulatory Authority.
[NAME OF ISSUER]
By: _______________________________
Name:
Title:
Address for Notices:
___________________________________
___________________________________
___________________________________
Fax: ______________________________
