1
EXHIBIT 10.19
EXECUTION COPY
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
RENTERS CHOICE, INC.
and certain of its Subsidiaries
in favor of
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of August 5, 1998
================================================================================
2
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS 1
1.1 Definitions 1
1.2 Other Definitional Provisions 5
SECTION 2. GUARANTEE 5
2.1 Guarantee 5
2.2 Right of Contribution 6
2.3 No Subrogation 6
2.4 Amendments, etc. with respect to the Borrower Obligations 6
2.5 Guarantee Absolute and Unconditional 7
2.6 Reinstatement 7
2.7 Payments 8
SECTION 3. GRANT OF SECURITY INTEREST 8
SECTION 4. REPRESENTATIONS AND WARRANTIES 8
4.1 Title; No Other Liens 9
4.2 Perfected First Priority Liens 9
4.3 Chief Executive Office 9
4.4 Inventory and Equipment 9
4.5 Farm Products 9
4.6 Investment Property 9
4.7 Receivables 10
4.8 Contracts 10
4.9 Intellectual Property 10
SECTION 5. COVENANTS 11
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper 11
5.2 Maintenance of Insurance 11
5.3 Payment of Obligations 11
5.4 Maintenance of Perfected Security Interest; Further Documentation 12
5.5 Changes in Locations, Name, etc. 12
5.6 Notices 12
5.7 Investment Property 13
5.8 Receivables 14
1
3
Page
----
5.9 Contracts 14
5.10 Intellectual Property 14
SECTION 6. REMEDIAL PROVISIONS 15
6.1 Certain Matters Relating to Receivables 15
6.2 Communications with Obligors; Grantors Remain Liable 16
6.3 Pledged Stock 16
6.4 Proceeds to be Turned Over To Administrative Agent 17
6.5 Application of Proceeds 17
6.6 Code and Other Remedies 18
6.7 Registration Rights 18
6.8 Waiver; Deficiency 19
SECTION 7. THE ADMINISTRATIVE AGENT 19
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc 20
7.2 Duty of Administrative Agent 21
7.3 Execution of Financing Statements 21
7.4 Authority of Administrative Agent 22
SECTION 8. MISCELLANEOUS 22
8.1 Amendments in Writing 22
8.2 Notices 22
8.3 No Waiver by Course of Conduct; Cumulative Remedies 22
8.4 Enforcement Expenses; Indemnification 22
8.5 Successors and Assigns 23
8.6 Set-Off 23
8.7 Counterparts 23
8.8 Severability 23
8.9 Section Headings 23
8.10 Integration 24
8.11 GOVERNING LAW 24
8.12 Submission To Jurisdiction; Waivers 24
8.13 Acknowledgements 24
8.14 Additional Grantors 25
8.15 Releases 25
8.16 WAIVER OF JURY TRIAL 25
2
4
Page
----
SCHEDULES
Schedule 1 Notice Addresses
Schedule 2 Investment Property
Schedule 3 Perfection Matters
Schedule 4 Jurisdictions of Organization and Chief Executive Offices
Schedule 5 Inventory and Equipment Locations
Schedule 6 Intellectual Property
Schedule 7 Contracts
3
5
GUARANTEE AND COLLATERAL AGREEMENT, dated as of August 5,
1998, 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
THE CHASE MANHATTAN BANK, 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 August
5, 1998 (as amended, waived, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Renters Choice, Inc. (the "Borrower"), the
Lenders, the Documentation Agent and Syndication Agent named therein 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, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
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 for the ratable benefit of the Lenders;
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 ratable benefit of the Lenders, as follows:
SECTION 1 .DEFINED TERMS
1.1 Definitions. 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,
Documents, Equipment, Farm Products, Instruments
and Inventory.
6
(b) The following terms shall have the
following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations
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
Reimbursement Obligations 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 (or, in the case of any Lender
Hedge Agreement, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, this Agreement, the other Loan Documents,
any Letter of Credit, any Lender Hedge Agreement or any other document
made, delivered or given in connection with any of the foregoing, 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).
"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.
"Contracts": the contracts and agreements listed in Schedule
7, as the same may be amended, supplemented or otherwise modified from
time to time, including, without limitation, (i) all rights of any
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of any Grantor to damages arising
thereunder and (iii) all rights of any Grantor to perform and to
exercise all remedies thereunder.
"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.
-2-
7
"Copyright Licenses": any written agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code
of any applicable jurisdiction and, in any event, including, without
limitation, any demand, time, savings, passbook or like account
maintained with a depositary institution.
"Foreign Subsidiary": any Subsidiary organized under the laws
of any jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of
any Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-106 of the New York UCC and, in any event,
including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or
any property of such Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights
of such Grantor to damages arising thereunder and (iii) all rights of
such Grantor to perform and to exercise all remedies thereunder, in
each case to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in
such contract, agreement, instrument or indenture is not prohibited by
such contract, agreement, instrument or indenture without the consent
of any other party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from
the other parties thereto (it being understood that the foregoing shall
not be deemed to obligate such Grantor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money or other
amounts due or to become due under any such contract, agreement,
instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement (including, without limitation,
Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are required
to
-3-
8
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.
"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 9-115 of the
New York UCC (other than any Foreign Subsidiary Voting Stock excluded
from the definition of "Pledged Stock") 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.
"Lender Hedge Agreements": all interest rate swaps, caps or
collar agreements or similar arrangements entered into by the Borrower
with any Lender (or any Affiliate of any Lender) providing for
protection against fluctuations in interest rates or currency exchange
rates or the exchange of nominal interest obligations, either generally
or under specific contingencies, for the purposes set forth in Section
6.9 of the Credit Agreement.
"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.
-4-
9
"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 Stock": the shares of Capital Stock listed on
Schedule 2, together with any other shares, stock certificates, options
or rights of any nature whatsoever in respect of the Capital Stock of
any Person that may be issued or granted to, or held by, any Grantor
while this Agreement is in effect; provided that in no event shall more
than 66% of the total outstanding Foreign Subsidiary Voting Stock of
any Foreign Subsidiary be required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Specified Collateral": all Collateral other than Collateral
referred to in Section 3(l) and the Proceeds and products thereof.
"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.
-5-
10
"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. 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.
(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. Each of the Guarantors hereby, jointly
and severally, unconditionally and irrevocably,
guarantees to the Administrative Agent, for the
ratable benefit of the Lenders and their
respective successors, indorsees, transferees and
assigns, the prompt and complete payment and
performance by the Borrower when due (whether at
the stated maturity, by acceleration or otherwise)
of the Borrower Obligations.
(b) Anything herein or in any other Loan
Document to the contrary notwithstanding,
the maximum liability of each Guarantor
hereunder and under the other Loan
Documents shall in no event exceed the
amount which can be guaranteed by such
Guarantor under applicable federal and
state laws relating to the insolvency of
debtors (after giving effect to the right
of contribution established in Section
2.2).
(c) Each Guarantor agrees that the Borrower
Obligations may at any time and from time
to time exceed the amount of the liability
of such Guarantor hereunder without
impairing the guarantee contained in this
Section 2 or affecting the rights and
remedies of the Administrative Agent or any
Lender hereunder.
-6-
11
(d) The guarantee contained in this Section 2
shall remain in full force and effect until
all the Borrower Obligations and the
obligations of each Guarantor under the
guarantee contained in this Section 2 shall
have been satisfied by payment in full, no
Letter of Credit shall be outstanding and
the Commitments shall be terminated,
notwithstanding that from time to time
during the term of the Credit Agreement the
Borrower may be free from any Borrower
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 Lender 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 shall be deemed to modify,
reduce, release or otherwise affect the
liability of any Guarantor hereunder which
shall, notwithstanding any such payment
(other than any payment made by such
Guarantor in respect of the Borrower
Obligations or any payment received or
collected from such Guarantor in respect of
the Borrower Obligations), remain liable
for the Borrower Obligations up to the
maximum liability of such Guarantor
hereunder until the Borrower Obligations
are paid in full, no Letter of Credit shall
be outstanding and the Commitments are
terminated.
2.2 Right of Contribution. Each Guarantor hereby
agrees that to the extent that a Guarantor shall
have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and
against any other Guarantor hereunder which has
not paid its proportionate share of such payment.
Each Guarantor's right of contribution shall be
subject to the terms and conditions of Section
2.3. The provisions of this Section 2.2 shall in
no respect limit the obligations and liabilities
of any Guarantor to the Administrative Agent and
the Lenders, and each Guarantor shall remain
liable to the Administrative Agent and the Lenders
for the full amount guaranteed by such Guarantor
hereunder.
2.3 No Subrogation. Notwithstanding any payment made
by any Guarantor hereunder or any set-off or
application of funds of any Guarantor by the
Administrative Agent or any Lender, no Guarantor
shall be entitled to be subrogated to any of the
rights of the
-7-
12
Administrative Agent or any Lender against the
Borrower or any other Guarantor or any collateral
security or guarantee or right of offset held by
the Administrative Agent or any Lender for the
payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by
such Guarantor hereunder, until all amounts owing
to the Administrative Agent and the Lenders by the
Borrower on account of the Borrower Obligations
are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If
any amount shall be paid to any Guarantor on
account of such subrogation rights at any time
when all of the Borrower Obligations shall not
have been paid in full, such amount shall be held
by such Guarantor in trust for the Administrative
Agent and the Lenders, segregated from other funds
of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by
such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether
matured or unmatured, in such order as the
Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower
Obligations. Each Guarantor shall remain obligated
hereunder notwithstanding that, without any
reservation of rights against any Guarantor and
without notice to or further assent by any
Guarantor, any demand for payment of any of the
Borrower Obligations made by the Administrative
Agent or any Lender may be rescinded by the
Administrative Agent or such Lender and any of the
Borrower Obligations continued, and the Borrower
Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived,
surrendered or released by the Administrative
Agent or any Lender, and the Credit Agreement and
the other Loan Documents and any other documents
executed and delivered in connection therewith may
be amended, modified, supplemented or terminated,
in whole or in part, as the Administrative Agent
(or the Required Lenders or all Lenders, as the
case may be) may deem advisable from time to time,
and any collateral security, guarantee or right of
offset at any time held by the Administrative
Agent or any Lender for the payment of the
Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any
obligation to
-8-
13
protect, secure, perfect or insure any Lien at any
time held by it as security for the Borrower
Obligations or for the guarantee contained in this
Section 2 or any property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each
Guarantor waives any and all notice of the
creation, renewal, extension or accrual of any of
the Borrower Obligations and notice of or proof of
reliance by the Administrative Agent or any Lender
upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this
Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all
dealings between the Borrower and any of the
Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other
hand, likewise shall be conclusively presumed to
have been had or consummated in reliance upon the
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. Each Guarantor understands and agrees
that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard
to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any
of the Borrower Obligations or any other
collateral security therefor or guarantee or right
of offset with respect thereto at any time or from
time to time held by the Administrative Agent or
any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or
performance) which may at any time be available to
or be asserted by the Borrower or any other Person
against the Administrative Agent or any Lender, or
(c) any other circumstance whatsoever (with or
without notice to or knowledge of 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 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 Lender
may, but shall be under no obligation to, make a
similar demand on or otherwise pursue such rights
and remedies as it may have against 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
-9-
14
by the Administrative Agent or any Lender to make
any such demand, to pursue such other rights or
remedies or to collect any payments from 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 hereunder, and shall not impair or
affect the rights and remedies, whether express,
implied or available as a matter of law, of the
Administrative Agent or any Lender against any
Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any
legal proceedings.
2.6 Reinstatement. The guarantee contained in this
Section 2 shall continue to be effective, or be
reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the
Borrower Obligations is rescinded or must
otherwise be restored or returned by the
Administrative Agent or any Lender 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. Each Guarantor hereby guarantees that
payments hereunder will be paid to the
Administrative Agent without set-off or
counterclaim in Dollars at the office of the
Administrative Agent located at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
SECTION 3 . GRANT OF SECURITY
INTEREST
Each Grantor hereby collaterally assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders, 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;
-10-
15
(b) all Chattel Paper;
(c) all Contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all 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 and all collateral security and
guarantees given by any Person with respect
to any of the foregoing.
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 thereunder, each Grantor hereby represents
and warrants to the Administrative Agent and each Lender that:
4.1 Title; No Other Liens. Except for the security
interest granted to the Administrative Agent for
the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to
exist on the Collateral by the Credit Agreement,
such Grantor owns each item of the Specified
Collateral free and clear of any and all Liens or
claims
-11-
16
of others. No financing statement or other public
notice with respect to all or any part of the
Specified 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 Lenders, pursuant to this
Agreement or as are permitted by the Credit
Agreement.
4.2 Perfected First Priority Liens. The security
interests granted pursuant to this Agreement 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 Specified
Collateral (other than Deposit Accounts and the
Proceeds thereof) in favor of the Administrative
Agent, for the ratable benefit of the Lenders, 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
Specified Collateral (other than Deposit Accounts
and the Proceeds thereof) from such Grantor and
are prior to all other Liens on the Specified
Collateral (other than Deposit Accounts and the
Proceeds thereof) in existence on the date hereof
except for unrecorded Liens permitted by the
Credit Agreement which have priority over the
Liens on such Specified Collateral by operation of
law.
4.3 Chief Executive Office. On the date hereof, such
Grantor's jurisdiction of organization and the
location of such Grantor's chief executive office
or sole place of business are specified on
Schedule 4.
4.4 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.
4.5 Farm Products. None of the Collateral constitutes,
or is the Proceeds of, Farm Products.
4.6 Investment Property. The shares of Pledged Stock
pledged by such Grantor hereunder constitute all
the issued and outstanding shares of all classes
of the Capital Stock of each Issuer owned by such
Grantor or, in the case of Foreign Subsidiary
Voting Stock, if less, 66% of the outstanding
Foreign Subsidiary Voting Stock of each relevant
Issuer.
-12-
17
(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 and any Liens in
favor of a "securities intermediary"
pursuant to and as defined in Article 8 of
the New York UCC.
4.7 Receivables. 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.
(b) None of the obligors on any Receivables is
a Governmental Authority.
(c) The amounts represented by such Grantor to
the Lenders from time to time as owing to
such Grantor in respect of the Receivables
will at such times be accurate.
4.8 Contracts. No consent of any party (other than
such Grantor) to any Contract is required, or
purports to be required, in connection with the
execution, delivery and performance of this
Agreement.
(b) Each Contract is in full force and effect
and constitutes a valid and legally
enforceable obligation of the parties
thereto, 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
-13-
18
equity or at law) and an implied covenant
of good faith and fair dealing.
(c) No consent or authorization of, filing with
or other act by or in respect of any
Governmental Authority is required in
connection with the execution, delivery,
performance, validity or enforceability of
any of the Contracts by any party thereto
other than those which have been duly
obtained, made or performed, are in full
force and effect and do not subject the
scope of any such Contract to any material
adverse limitation, either specific or
general in nature.
(d) Neither such Grantor nor (to the best of
such Grantor's knowledge) any of the other
parties to the Contracts is in default in
the performance or observance of any of the
terms thereof in any manner that, in the
aggregate, could reasonably be expected to
have a Material Adverse Effect.
(e) The right, title and interest of such
Grantor in, to and under the Contracts are
not subject to any defenses, offsets,
counterclaims or claims that, in the
aggregate, could reasonably be expected to
have a Material Adverse Effect.
(f) Such Grantor has delivered to the
Administrative Agent a complete and correct
copy of each Contract, including all
amendments, supplements and other
modifications thereto.
(g) No amount payable to such Grantor under or
in connection with any Contract is
evidenced by any Instrument or Chattel
Paper which has not been delivered to the
Administrative Agent.
(h) None of the parties to any Contract is a
Governmental Authority.
4.9 Intellectual Property. 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 is valid, subsisting,
unexpired and enforceable, has not been
abandoned and does not materially infringe
the intellectual property rights of any
other Person.
-14-
19
(c) Except as set forth in Schedule 6, on the
date hereof, none of the Intellectual
Property is the subject of any licensing or
franchise agreement pursuant to which such
Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been
rendered by any Governmental Authority
which would limit, cancel or question the
validity of, or such Grantor's rights in,
any Intellectual Property in any respect
that could reasonably be expected to have a
Material Adverse Effect.
(e) No action or proceeding is pending, or, to
the knowledge of such Grantor, threatened,
on the date hereof (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 Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 Delivery of Instruments, Certificated Securities
and Chattel Paper. If any material 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.
5.2 Maintenance of Insurance. Such Grantor will
maintain, with financially sound and reputable
companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire,
explosion, theft and such other casualties as may
be reasonably satisfactory to the Administrative
Agent and (ii) insuring such Grantor and, to the
extent requested by the Administrative Agent, the
Administrative Agent and the Lenders, against
liability for personal injury and property damage
relating to such Inventory and Equipment, such
policies to be in such form and amounts and having
such coverage as
-15-
20
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 and (iii) be reasonably
satisfactory in all other respects to the
Administrative Agent.
(c) The Borrower shall deliver annually to the
Administrative Agent and the Lenders a
certificate of a reputable insurance broker
with respect to such insurance as promptly
as practicable upon receipt thereof from
such insurance broker and such supplemental
reports with respect thereto as the
Administrative Agent may from time to time
reasonably request.
5.3 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 material taxes, assessments and
governmental charges or levies imposed upon the
Collateral or in respect of income or profits
therefrom, as well as all material 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 material interest in the
Collateral.
5.4 Maintenance of Perfected Security Interest;
Further Documentation. Such Grantor shall maintain
the security interest created by this Agreement as
a perfected security interest having at least the
priority described in Section 4.2 and shall defend
such security interest against the claims and
demands of all Persons whomsoever.
(b) Such Grantor will furnish to the
Administrative Agent from time to time
statements and schedules further
identifying and describing the assets and
property of such Grantor and such other
reports in connection therewith as the
Administrative Agent may reasonably
request, all in reasonable detail.
-16-
21
(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) filing 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, (ii)
in the case of Investment Property (other
than the Investment Property purchased with
the amounts referred to in clause (b) of
the definition of "Funded Debt" contained
in Section 1.1 of the Credit Agreement) and
any other relevant Collateral, taking any
actions necessary to enable the
Administrative Agent to obtain "control"
(within the meaning of the applicable
Uniform Commercial Code) with respect
thereto and (iii) in the case of Deposit
Accounts, taking any actions necessary to
enable the Administrative Agent to obtain a
perfected security interest in Deposit
Accounts.
5.5 Changes in Locations, Name, etc. Such Grantor will
not, except upon 15 days' prior written notice to
the Administrative Agent and delivery to the
Administrative Agent of (a) 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 and
(b) if applicable, a written supplement to
Schedule 5 showing any additional location at
which Inventory or Equipment shall be kept:
(i) permit any material portion of the Inventory or Equipment
to be kept at a location other than those listed on Schedule 5;
(ii) change its jurisdiction of organization or the location
of its chief executive office or sole place of business from that
referred to in Section 4.3; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative
Agent in connection with this Agreement would become misleading.
-17-
22
5.6 Notices. Such Grantor will advise the
Administrative Agent promptly, in reasonable
detail, of:
(a) any Lien (other than security interests
created hereby or Liens permitted under the
Credit Agreement) on any material portion
of the Collateral which would adversely
affect the ability of the Administrative
Agent to exercise any of its remedies
hereunder; and
(b) of the occurrence of any other event which
could reasonably be expected to have a
material adverse effect on the aggregate
value of the Collateral or on the security
interests created hereby.
5.7 Investment Property. If such Grantor shall become
entitled to receive or shall receive any stock
certificate (including, without limitation, any
certificate representing a stock dividend or a
distribution in connection with any
reclassification, increase or reduction of capital
or any certificate issued in connection with any
reorganization), option or rights in respect of
the Capital Stock of any Issuer, whether in
addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged
Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the
Administrative Agent and the Lenders, hold the
same in trust for the Administrative Agent and the
Lenders 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
-18-
23
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
Lenders, segregated from other funds of such
Grantor, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the
Administrative Agent, such Grantor will not
(i) vote to enable, or take any other
action to permit, any Issuer of Pledged
Stock 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, (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
or permitted by this Agreement or the
Credit 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 Investment Property 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 Investment Property issued
by it and will comply with such terms
insofar as such terms are applicable to it,
(ii) it will notify the Administrative
Agent promptly in writing of the occurrence
of any of the events described in Section
5.7(a) with respect to the Investment
Property issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to
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 Investment Property issued by it.
5.8 Receivables. 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)
-19-
24
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 demand,
notice or document received by it that
questions or calls into doubt the validity
or enforceability of any outstanding
Receivables constituting a material portion
of the Collateral.
5.9 Contracts. Such Grantor will perform and comply in
all material respects with all its obligations
under the Contracts.
(b) Such Grantor will not amend, modify,
terminate or waive any provision of any
Contract in any manner which could
reasonably be expected to materially
adversely affect the value of such Contract
as Collateral.
(c) Such Grantor will exercise promptly and
diligently each and every material right
which it may have under each Contract
(other than any right of termination).
(d) Such Grantor will deliver to the
Administrative Agent a copy of each
material demand, notice or document
received by it relating in any way to any
Contract that questions the validity or
enforceability of such Contract.
5.10 Intellectual Property. 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, (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 Lenders, 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
-20-
25
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 as promptly as practicable 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
-21-
26
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 Lenders' security interest
in any Copyright, Patent or Trademark and
the goodwill and general intangibles of
such Grantor relating thereto or
represented thereby.
(g) Such Grantor will take all reasonable and
necessary steps, including, without
limitation, in any proceeding before the
United States Patent and Trademark Office,
the United States Copyright Office or any
similar office or agency in any other
country or any political subdivision
thereof, to maintain and pursue each
application (and to obtain the relevant
registration) and to maintain each
registration of the material Intellectual
Property, including, without limitation,
filing of applications for renewal,
affidavits of use and affidavits of
incontestability.
(h) In the event that any material Intellectual
Property is infringed, misappropriated or
diluted by a third party, such Grantor
shall (i) take such actions as such Grantor
shall reasonably deem appropriate under the
circumstances to protect such Intellectual
Property and (ii) if such Intellectual
Property is of material economic value,
promptly notify the Administrative Agent
after it learns thereof and take such
actions as are reasonably appropriate under
the circumstances, including, as
appropriate, to 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. The
Administrative Agent shall have the right to make
test verifications of the Receivables in any
manner and through any medium that it reasonably
considers advisable, and each Grantor shall
furnish all such assistance and information as the
Administrative Agent may require in connection
with such test verifications. After an Event of
Default shall have occurred and be continuing, at
any time and from time to time, upon the
Administrative Agent's request and at the
-22-
27
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) At any time after the occurrence and during
the continuance of an Event of Default, the
Administrative Agent may curtail or
terminate the authority of each Grantor to
collect such Grantor's Receivables. 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 Lenders only as provided in
Section , and (ii) until so turned over,
shall be held by such Grantor in trust for
the Administrative Agent and the Lenders,
segregated from other funds of such
Grantor. 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, at
any time after the occurrence and during
the continuance of an Event of Default,
each Grantor shall deliver to the
Administrative Agent (to the extent such
Grantor has possession thereof) all
documents evidencing, and relating to, the
agreements and transactions which gave rise
to the Receivables, including, without
limitation, all original orders, invoices
and shipping receipts.
6.2 Communications with Obligors; Grantors Remain
Liable. The Administrative Agent in its own name
or in the name of others may at any time during
reasonable business hours after the occurrence and
during the continuance of an Event of Default
communicate with obligors under the Receivables
and parties to the Contracts to verify with them
to the Administrative Agent's satisfaction the
existence, amount and terms of any Receivables or
Contracts.
-23-
28
(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 and parties to the
Contracts that the Receivables and the
Contracts have been collaterally assigned
to the Administrative Agent for the ratable
benefit of the Lenders 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 and
Contracts to observe and perform all the
conditions and obligations to be observed
and performed by it thereunder, all in
accordance with the terms of any agreement
giving rise thereto. Neither the
Administrative Agent nor any Lender shall
have any obligation or liability under any
Receivable (or any agreement giving rise
thereto) or Contract by reason of or
arising out of this Agreement or the
receipt by the Administrative Agent or any
Lender of any payment relating thereto, nor
shall the Administrative Agent or any
Lender be obligated in any manner to
perform any of the obligations of any
Grantor under or pursuant to any Receivable
(or any agreement giving rise thereto) or
Contract, 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. 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, to the
extent permitted in the Credit Agreement, and to
exercise all voting and corporate rights with
respect to the Investment Property; provided,
however, that no vote shall be cast or corporate
right exercised or other action taken which, in
the Administrative Agent's reasonable
-24-
29
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 Investment Property
and make application thereof to the
Obligations in such order as the
Administrative Agent may determine, and
(ii) any or all of the Investment Property
shall be registered in the name of the
Administrative Agent or its nominee, and
the Administrative Agent or its nominee may
thereafter exercise (x) all voting,
corporate and other rights pertaining to
such Investment Property 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
Investment Property as if it were the
absolute owner thereof (including, without
limitation, the right to exchange at its
discretion any and all of the Investment
Property upon the merger, consolidation,
reorganization, recapitalization or other
fundamental change in the corporate
structure of any Issuer, or upon the
exercise by any Grantor or the
Administrative Agent of any right,
privilege or option pertaining to such
Investment Property, and in connection
therewith, the right to deposit and deliver
any and all of the Investment Property with
any committee, depositary, transfer agent,
registrar or other designated agency upon
such terms and conditions as the
Administrative Agent may determine), all
without liability except 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 Investment
Property pledged by such Grantor hereunder
to (i) comply with any instruction received
by it from the Administrative Agent in
writing that (x) states that an Event of
Default has occurred and is continuing and
(y) is otherwise in accordance with the
terms of this Agreement, without any
-25-
30
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 Investment Property directly to the
Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative
Agent. In addition to the rights of the
Administrative Agent and the Lenders specified in
Section 6.1 with respect to payments of
Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any
Grantor consisting of cash, checks and other
near-cash items shall be held by such Grantor in
trust for the Administrative Agent and the
Lenders, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such
Grantor, be turned over to the Administrative
Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the
Administrative Agent, if required). All 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 Lenders) shall
continue to be held as collateral security for all
the Obligations and shall not constitute payment
thereof until applied as provided in Section .
6.5 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 held in any Collateral Account in payment
of the then due and owing Obligations in such
order as the Administrative Agent may elect, and
any part of such funds which the Administrative
Agent elects not so to apply and deems not
required as collateral security for the
Obligations shall be paid over from time to time
by the Administrative Agent to the Borrower or to
whomsoever may be lawfully entitled to receive the
same. Any balance of such Proceeds remaining after
the Obligations shall have been paid in full, no
Letters of Credit shall be outstanding and the
Commitments shall have terminated shall be paid
over to the Borrower or to whomsoever may be
lawfully entitled to receive the same.
-26-
31
6.6 Code and Other Remedies. If an Event of Default
shall occur and be continuing, the Administrative
Agent, on behalf of the Lenders, may exercise, in
addition to all other rights and remedies granted
to them in this Agreement and in any other
instrument or agreement securing, evidencing or
relating to the 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 expressly
required by this Agreement or the other Loan
Documents or 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
Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future
delivery without assumption of any credit risk.
The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor,
which right or equity is hereby waived and
released. Each Grantor further agrees, at the
Administrative Agent's request, to assemble the
Collateral and make it available to the
Administrative Agent at places which the
Administrative Agent shall reasonably select,
whether at such Grantor's premises or elsewhere.
The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to
this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in
connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder,
including, without limitation, reasonable
attorneys' fees and disbursements, to the payment
in whole or in part of the then due and owing
Obligations, in such order as the Administrative
Agent may elect, 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
9-504(1)(c) of the New York UCC, need
-27-
32
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 Lender arising out of
the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition
of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other
disposition.
6.7 Registration Rights. 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,
provided, that the Administrative Agent shall
furnish to the relevant Grantor such information
regarding the Administrative Agent as shall be
required in connection with such registration and
requested by such Grantor in writing, 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
-28-
33
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
Lenders, that the Administrative Agent and
the Lenders have no adequate remedy at law
in respect of such breach and, as a
consequence, that each and every covenant
contained in this Section 6.7 shall be
specifically enforceable against such
Grantor, and such Grantor hereby waives and
agrees not to assert any defenses against
an action for specific performance of such
covenants except for a defense that no
Event of Default has occurred and is
continuing under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees
not to assert any rights or privileges which it
may acquire under Section 9-112 of the New York
UCC. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements
of any attorneys employed by the Administrative
Agent or any Lender to collect such deficiency.
-29-
34
SECTION 7 .THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as
Attorney-in-Fact, etc. 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 Contract 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 Contract 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 Lenders' security interest
in such Intellectual Property and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) (i) 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; ask or demand for, collect, and
receive payment of and receipt for, any and
all moneys,
-30-
35
claims and other amounts due or to become
due at any time in respect of or arising
out of any Collateral; 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;
commence and prosecute any suits, actions
or proceedings at law or in equity in any
court of competent jurisdiction to collect
the Collateral or any portion thereof and
to enforce any other right in respect of
any Collateral; defend any suit, action or
proceeding brought against such Grantor
with respect to any Collateral; 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;
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 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 Lenders' security interests
therein and to effect the intent of this
Agreement, all as fully and effectively as
such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
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
-31-
36
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 highest rate per
annum at which interest would then be
payable on any category of past due ABR
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
Lender nor any of their respective officers,
directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any
Grantor or any other Person or to take any other
action whatsoever with regard to the Collateral or
any part thereof. The powers conferred on the
Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and
the Lenders' interests in the Collateral and shall
not impose any duty upon the Administrative Agent
or any Lender to exercise any such powers. The
Administrative Agent and the Lenders shall be
accountable only for amounts that they actually
receive as a result of the exercise of such
powers, and neither 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.
-32-
37
7.3 Execution of Financing Statements. Pursuant to
Section 9-402 of the New York UCC and any other
applicable law, each Grantor authorizes the
Administrative Agent to file or record financing
statements and other filing or recording documents
or instruments with respect to the Collateral
without the signature of such Grantor in such form
and in such offices as the Administrative Agent
determines appropriate to perfect the security
interests of the Administrative Agent under this
Agreement. A photographic or other reproduction of
this Agreement shall be sufficient as a financing
statement or other filing or recording document or
instrument for filing or recording in any
jurisdiction.
7.4 Authority of Administrative Agent. Each Grantor
acknowledges that the rights and responsibilities
of the Administrative Agent under this Agreement
with respect to any action taken by the
Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other
right or remedy provided for herein or resulting
or arising out of this Agreement shall, as between
the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from
time to time among them, but, as between the
Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively
presumed to be acting as agent for the Lenders
with full and valid authority so to act or refrain
from acting, and no Grantor shall be under any
obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION 8 .MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or
provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except
in accordance with Section 10.1 of the Credit
Agreement.
8.2 Notices. All notices, requests and demands to or
upon the Administrative Agent or any Grantor
hereunder shall be effected in the manner provided
for in Section 10.2 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.
-33-
38
8.3 No Waiver by Course of Conduct; Cumulative
Remedies. Neither the Administrative Agent nor any
Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay,
indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to
have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or
privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which
the Administrative Agent or such Lender would
otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided
by law.
8.4 Enforcement Expenses; Indemnification. Each
Guarantor agrees to pay or reimburse each Lender
and the Administrative Agent (in the case of each
Lender, after the occurrence and during the
continuance of an Event of Default) 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 (but not
both outside and in-house counsel)) to each Lender
and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save
the Administrative Agent and the Lenders
harmless from, any and all liabilities with
respect to, or resulting from any delay 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 Lenders
harmless from, any and all liabilities,
obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses
or disbursements of any kind or nature
whatsoever with respect to the execution,
delivery,
-34-
39
enforcement, performance and administration
of this Agreement to the extent the
Borrower would be required to do so
pursuant to Section 10.5 of the Credit
Agreement.
(d) The agreements in this Section 8.4 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 Lenders and their
successors and assigns; provided that no Grantor
may assign, transfer or delegate any of its rights
or obligations under this Agreement without the
prior written consent of the Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably
authorizes the Administrative Agent and each
Lender at any time and from time to time while an
Event of Default 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 Lender to or for
the credit or the account of such Grantor, or any
part thereof in such amounts as the Administrative
Agent or such Lender may elect, against and on
account of the obligations and liabilities of such
Grantor to the Administrative Agent or such Lender
hereunder and claims of every nature and
description of the Administrative Agent or such
Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit
Agreement, any other Loan Document or otherwise,
as the Administrative Agent or such Lender may
elect, whether or not the Administrative Agent or
any Lender has made any demand for payment and
although such obligations, liabilities and claims
may be contingent or unmatured. The Administrative
Agent and each Lender shall notify such Grantor
promptly of any such set-off and the application
made by the Administrative Agent or such Lender of
the proceeds thereof, provided that the failure to
give such notice shall not affect the validity of
such set-off and application. The rights of the
Administrative Agent and each Lender under this
Section 8.6 are in addition to other rights and
remedies (including,
-35-
40
without limitation, other rights of set-off) which
the Administrative Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by
one or more of the parties to this Agreement on
any number of separate counterparts (including by
telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the
same instrument.
8.8 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the
remaining provisions hereof, and any such
prohibition or unenforceability in any
jurisdiction shall not invalidate or render
unenforceable such provision in any other
jurisdiction.
8.9 Section Headings. The Section headings used in
this Agreement are for convenience of reference
only and are not to affect the construction hereof
or be taken into consideration in the
interpretation hereof.
8.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Grantors,
the Administrative Agent and the Lenders with
respect to the subject matter hereof and thereof,
and there are no promises, undertakings,
representations or warranties by the
Administrative Agent or any Lender relative to
subject matter hereof and thereof not expressly
set forth or referred to herein or in the other
Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any
legal action or proceeding relating to this
Agreement and the other Loan Documents to
which it is a party, or for recognition and
enforcement of any judgment in respect
thereof, to the non-exclusive general
jurisdiction of the Courts of the State of
New York, the courts of the United States
of America for the
-36-
00
Xxxxxxxx Xxxxxxxx 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;
(d) agrees that nothing herein shall affect the
right to effect service of process in any
other manner permitted by law or shall
limit the right to xxx in any other
jurisdiction; and
(e) waives, to the maximum extent not
prohibited by law, any right it may have to
claim or recover in any legal action or
proceeding referred to in this Section any
special, exemplary, punitive or
consequential damages.
8.13 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
Lender has any fiduciary relationship with
or duty to any Grantor arising out of or in
connection with this Agreement or any of
the other Loan Documents, and the
relationship between the Grantors, on the
one hand, and the Administrative Agent and
Lenders, on the other hand, in connection
herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by
the other Loan Documents or otherwise
exists by virtue of the transactions
-37-
42
contemplated hereby among the Lenders or
among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of the
Borrower that is required to become a party to
this Agreement pursuant to Section 6.10 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.
8.15 Releases. (a) At such time as the Loans, the
Reimbursement Obligations and the other
Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of
Credit shall be outstanding, the Collateral shall
be released from the Liens created hereby, and
this Agreement and all obligations (other than
those expressly stated to survive such
termination) of the 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 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.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR 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.
-38-
43
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.
RENTERS CHOICE, INC.
By:
Title:
COLORTYME, INC.
By:
Title:
RENT-A-CENTER, INC.
By:
Title:
RAC RENTALS TRADING, INC.
By:
Title:
REMCO AMERICA, INC.
By:
Title:
ADVANTAGE COMPANIES, INC.
By:
Title:
-39-
44
RAC USA, INC.
By:
Title:
RAC FINANCE SERVICES, INC.
By:
Title:
RAC CHECK CASHING, INC.
By:
Title:
ADVANTEDGE AUTO, INC.
By:
Title:
ADVANTEDGE QUALITY CARS, L.L.C.
By:
Title:
-40-
45
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
-41-
46
Schedule 2
DESCRIPTION OF INVESTMENT PROPERTY
PLEDGED STOCK:
Issuer Class of Stock Certificate No. of
Stock No. Shares
PLEDGED NOTES:
Issuer Payee Principal Amount
* Stock is assumed to be common stock unless otherwise indicated.
47
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
[List all filings]
Actions with respect to Pledged Stock
Other Actions
[Describe other actions to be taken]
* Stock is assumed to be common stock unless otherwise indicated.
48
Schedule 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor Location
* Stock is assumed to be common stock unless otherwise indicated.
49
Schedule 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Location
* Stock is assumed to be common stock unless otherwise indicated.
50
Schedule 6
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
* Stock is assumed to be common stock unless otherwise indicated.
51
Schedule 7
CONTRACTS
* Stock is assumed to be common stock unless otherwise indicated.
52
ACKNOWLEDGEMENT AND CONSENT(1)
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of August __, 1998 (the "Agreement"), made by
the Grantors parties thereto for the benefit of The Chase Manhattan Bank, 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
5.7(a) of the Agreement.
3 . The terms of Sections 6.3(c) and 6.7 of the Agreement 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 of the Agreement.
[NAME OF ISSUER]
By
--------------------------------------
Name:
Title:
Address for Notices:
----------------------------------------
----------------------------------------
----------------------------------------
Fax:
----------
1 This consent is necessary only with respect to any Issuer which is not
also a Grantor.
* Stock is assumed to be common stock unless otherwise indicated.
53
1
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made
by ______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of THE CHASE MANHATTAN BANK, 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, Renters Choice, Inc. (the "Borrower"), the Lenders
and the Administrative Agent have entered into a Credit Agreement, dated as of
August 5, 1998 (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 August 5, 1998 (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 8.14 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 the
Schedules to the Guarantee and Collateral Agreement. The Additional Grantor
hereby represents and warrants that each of the representations and
54
2
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.
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:
* Stock is assumed to be common stock unless otherwise indicated.
55
1
Annex 1-A to
Assumption Agreement
Supplement to Schedule 1
Supplement to Schedule 2
Supplement to Schedule 3
Supplement to Schedule 4
Supplement to Schedule 5
Supplement to Schedule 6
Supplement to Schedule 7
