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Exhibit 4.20
SUBSIDIARY SECURITY AGREEMENT
SUBSIDIARY SECURITY AGREEMENT, dated as of August 25, 2000,
made by RA FACTORS, L.L.C., a Delaware limited liability company (the
"Grantor"), in favor of THE CHASE MANHATTAN BANK, a New York banking
corporation, as administrative agent (in such capacity, the "Administrative
Agent") for the several banks and other financial institutions (the "Lenders")
from time to time parties to the Amended and Restated Credit Agreement, dated as
of April 28, 2000 (as the same may be amended, supplemented, waived or otherwise
modified from time to time, the "Credit Agreement"), among the Remington Arms
Company, Inc. (the "Borrower"), Chase Securities Inc. and Banc of America
Securities LLC, as joint lead arrangers, Bank of America, N.A., as Syndication
agent, Xxxxxxx Xxxxx Credit Partners, L.P., as documentation agent (collectively
the "Other Representatives") and the Administrative Agent.
W I T N E S S E T H :
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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; and
WHEREAS, pursuant to Section 8.17(b) of the Credit Agreement,
the Borrower agreed not to create any new Subsidiary unless such Subsidiary
shall have executed and delivered a security agreement to the Administrative
Agent for the benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent, the Other Representatives and the Lenders to continue
to make their respective Extensions of Credit to the Borrower under the Credit
Agreement, the Grantor hereby agrees with the Administrative Agent, for the
benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, capitalized terms
defined in the Credit Agreement are used herein as defined therein. The
following terms are used herein as defined in the Uniform Commercial Code in
effect in the State of New York from time to time: Accounts, Chattel Paper,
Documents, Equipment, Farm Products, Fixtures, General Intangibles, Instruments,
Inventory and Proceeds. The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be amended,
supplemented, waived or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Collateral": as defined in Section 2 of this Agreement.
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"Contracts": all contracts, agreements, instruments and indentures in
any form, and portions thereof, to which the Grantor is a party or under
which the Grantor has any right, title or interest or to which the Grantor
or any property of the Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (a) all rights of the Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (b) all rights of
the Grantor to damages arising out of, or for, breach or default in respect
thereof and (c) all rights of the Grantor to perform and to exercise all
remedies thereunder, in each case to the extent the grant by the 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 the Grantor to obtain such consents); provided, that the
foregoing limitation shall not affect, limit, restrict or impair the grant
by the Grantor of a security interest pursuant to this Agreement in any
Account or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"Copyright Licenses": all United States written license agreements
with any unaffiliated Person in connection with any of the Copyrights or
such other Person's copyrights, whether the Grantor is a licensor or a
licensee under any such license agreement, subject, in each case, to the
terms of such license agreements, and the right to prepare for sale, sell
and advertise for sale, all Inventory now or hereafter covered by such
licenses.
"Copyrights": all United States copyrights, whether or not the
underlying works of authorship have been published, and whether or not the
copyrights have been registered, copyright registrations and applications,
and all works of authorship and other intellectual property rights therein,
including, without limitation, (a) all renewals thereof, (b) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past or future infringements thereof), (c) the right to xxx for past,
present and future infringements and misappropriations thereof, and (d) all
rights corresponding thereto throughout the world and all other rights of
any kind whatsoever of the Grantor accruing thereunder or pertaining
thereto.
"Obligations": the obligations and liabilities of the Grantor under
the Subsidiary Guarantee, the Subsidiary Patent and Trademark Security
Agreement and this Security Agreement.
"Patent License": all United States written license agreements with
any unaffiliated Person in connection with any of the Patents or such other
Person's patents, whether the Grantor is a licensor or a licensee under any
such license agreement, including, without limitation, the license
agreements listed in Schedule II attached hereto and made a part hereof,
subject, in each case, to the terms of such license agreements, and the
right to prepare for sale, sell and advertise for sale, all Inventory now
or hereafter covered by such licenses.
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"Patents": all United States patents, patents applications and
patentable inventions, including, without limitation, all patents and
patent applications identified in Schedule II attached hereto and made a
part hereof, and including without limitation (a) all inventions and
improvements described and claimed therein, and patentable inventions, (b)
the right to xxx or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (c) all income,
royalties, damages and other payments now and hereafter due and/or payable
with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for
past or future infringements thereof), and (d) all rights corresponding
thereto in the United States and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof, all
improvements thereon, and all other rights of any kind whatsoever of the
Grantor accruing thereunder or pertaining thereto.
"Trademark License": all United States written license agreements with
any unaffiliated Person in connection with any of the Trademarks or such
other Person's names or trademarks, whether the Grantor is a licensor or a
licensee under any such license agreement, including, without limitation,
the license agreements listed in Schedule I attached hereto and made a part
hereof, subject, in each case, to the terms of such license agreements, and
the right to prepare for sale, sell and advertise for sale, all Inventory
now or hereafter covered by such licenses.
"Trademarks": all United States trademarks, service marks, trade
names, trade dress or other indicia of trade origin, trademark and service
xxxx registrations, and applications for trademark or service xxxx
registrations (except for "intent to use" applications for trademark or
service xxxx registrations filed pursuant to Section 1(b) of the Xxxxxx
Act, unless and until an Amendment to Allege Use or a Statement of Use
under Sections 1(c) and 1(d) of said Act has been filed), and any renewals
thereof, including, without limitation, each registration and application
identified in Schedule I attached hereto and made a part hereof, and
including without limitation (a) the right to xxx or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (b) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection
therewith, and damages and payments for past or future infringements
thereof), and (c) all rights corresponding thereto in the United States and
all other rights of any kind whatsoever of the Grantor accruing thereunder
or pertaining thereto, together in each case with the goodwill of the
business connected with the use of, and symbolized by, each such trademark,
service xxxx, trade name, trade dress or other indicia of trade origin.
"Work": any work which is subject to copyright protection pursuant to
Title 17 of the United States Code.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
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(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Grantor hereby assigns,
pledges and grants, subject to existing licenses to use Patents or Trademarks
granted by the Grantor in the ordinary course of business, to the Administrative
Agent, for the benefit of the Lenders, a security interest in and Lien on all of
the following property now owned or at any time hereafter acquired by the
Grantor or in which the Grantor now has or at any time in the future may acquire
any right, title or interest (collectively, the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment (other than motor vehicles covered by certificate of
title statutes);
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Patent Licenses;
(x) all Patents;
(xi) all Trademark Licenses;
(xii) all Trademarks; and
(xiii) to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing;
provided, that the foregoing grant of a security interest with respect to
General Intangibles, Patent Licenses and Trademark Licenses shall not include a
security interest in, and the Collateral shall not include, any license or
permit with a Governmental Authority or Patent License or Trademark License with
or issued by Persons other than a Subsidiary of the Grantor that would otherwise
be included in the Collateral to the extent that the grant by the Grantor of
such security interest is prohibited by the terms and provisions of the written
agreement or document or instrument creating or evidencing such license or
permit or Patent License or Trademark License (or, if such grant of a security
interest is permitted with the consent of a Governmental Authority or any other
party thereto, to the extent all necessary consents to such grant have not been
obtained therefrom, it being understood that the Grantor shall not be deemed
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to be obliged to obtain such consents), or such agreement, document or
instrument gives the other party thereto the right to terminate such license or
permit with a Governmental Authority or Patent License or Trademark License in
the event of the grant of a security interest with respect thereto. The Grantor
shall use its reasonable best efforts to (i) avoid entering into agreements or
contracts which would prohibit the Grantor from granting a security interest in
such licenses or permits, Patent Licenses or Trademark Licenses pursuant to the
terms of this Agreement and (ii) cause each such license, permit, Patent License
or Trademark License entered into, created or made by it after the Effective
Date to be subject to the Lien and security interest created pursuant to this
Agreement.
3. Rights of Administrative Agent, Other Representatives and Lenders;
Limitations on Administrative Agent's, Other Representative's and Lenders'
Obligations.
(a) No Liability of Administrative Agent or Lenders under Accounts or
Contracts. None of the Administrative Agent, any Other Representative nor
any Lender shall have any obligation or liability under any Account (or any
agreement giving rise thereto) or Contract by reason of or arising out of
this Agreement or the receipt by the Administrative Agent, any Other
Representative or any such Lender of any payment relating to such Account
or Contract pursuant hereto, nor shall the Administrative Agent, any Other
Representative or any Lender be obligated in any manner to perform any of
the obligations of the Grantor under or pursuant to any Account (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 under any
Account (or any agreement giving rise thereto) or Contract, 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.
(b) Notice to Account Debtors. Upon the request of the Administrative
Agent at any time after the occurrence and during the continuance of an
Event of Default, the Grantor shall notify the account debtors on the
Accounts and the parties to the Contracts that the Accounts and Contracts
have been assigned to the Administrative Agent, for the benefit of the
Lenders, and that payments in respect thereof shall be made directly to the
Administrative Agent. At any time and from time to time after the
occurrence and during the continuance of an Event of Default, the
Administrative Agent may in its own name or in the name of others
communicate with account debtors on the Accounts and the parties to the
Contracts to verify with them to its satisfaction the existence, amount and
terms of any Accounts or Contracts.
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(c) Collections on Accounts. If required by the Administrative Agent
at any time when an Event of Default has occurred and is continuing, any
payments of Accounts, when collected by the Grantor, shall be forthwith
(and, in any event, within two Business Days of receipt by the Grantor)
transferred by the Grantor to the Administrative Agent, subject to
disposition by the Administrative Agent for the account of the Lenders
only, as hereinafter provided. Until so turned over, all such payments
shall be held by the Grantor in trust for the benefit of the Administrative
Agent and the Lenders, segregated from other funds of the Grantor. All
Proceeds constituting collections of Accounts while held by the
Administrative Agent (or by the Grantor in trust for the benefit of the
Administrative Agent, the Other Representatives and the Lenders) shall
continue to be collateral security for all of the Obligations and shall not
constitute payment thereof until applied as hereinafter provided. At any
time when an Event of Default has occurred and is continuing, at the
Administrative Agent's election, the Administrative Agent shall hold all or
any part of such funds on account of the Obligations (whether matured or
unmatured) and may apply such funds to the obligations then due and owing,
and any part of such funds which the Administrative Agent does not so apply
shall be paid over from time to time by the Administrative Agent to the
Grantor or to whomsoever may be lawfully entitled to receive the same. At
any time when an Event of Default has occurred and is continuing, at the
Administrative Agent's request, the Grantor shall deliver to the
Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the
Accounts, including, without limitation, all statements relating to the
Accounts.
4. Representations and Warranties. The Grantor hereby represents and
warrants that:
(a) Title; No Other Liens. Except for the Lien granted to the
Administrative Agent, for the benefit of the Lenders, pursuant to this
Agreement and the other Liens permitted to exist on the Collateral pursuant
to the Credit Agreement and the other Loan Documents, ( including without
limitation Liens permitted to exist pursuant to Section 8.3 of the Credit
Agreement), the Grantor owns each item of the Collateral free and clear of
any and all Liens. No security agreement, financing statement or other
public notice similar in effect with respect to all or any part of the
Collateral is on file or of record in any public office, except such as may
have been filed in favor of the Administrative Agent, for the benefit of
the Lenders, pursuant to this Agreement, or as may be permitted pursuant to
the Loan Documents.
(b) Perfected First Priority Liens. (i) This Agreement is effective to
create, as collateral security for the Obligations, valid and enforceable
Liens on the Collateral in favor of the Administrative Agent, for the
benefit of the Lenders, except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditor's 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.
(ii) Except with regard to Liens (if any) on Specified Assets, upon
the completion of the Filings, and the delivery to and continuing
possession by the Administrative Agent of all Instruments, Chattel Paper
and Documents a security interest in which is perfected by possession, the
Liens created pursuant to this Agreement will constitute valid Liens on and
(to the extent provided herein) perfected security interests in the
Collateral in favor of
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the Administrative Agent for the benefit of the Lenders, and will be prior
to all other Liens of all other Persons other than Permitted Liens, and
enforceable as such as against all other Persons other than Ordinary Course
Buyers, except to the extent that the recording of an assignment or other
transfer of title to the Administrative Agent or the recording of other
applicable documents in the United States Patent and Trademark Office or
United States Copyright Office may be necessary for perfection or
enforceability, and except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in
equity or at law) or by an implied covenant of good faith and fair dealing.
As used in this Section 4(b)(ii), the following terms shall have the
following meanings:
"Filings": the filing or recording of the Financing Statements,
any Patent and Trademark Security Agreement and any filings after the
Closing Date in any other jurisdiction as may be necessary under any
Requirement of Law.
"Financing Statements": the financing statements delivered to the
Administrative Agent by the Borrower on the Closing Date for filing in
the jurisdictions listed in Schedule 6.1(e) to the Credit Agreement.
"Ordinary Course Buyers": with respect to goods only, buyers in
the ordinary course of business to the extent provided in Section
9-307(1) of the Uniform Commercial Code as in effect from time to time
in the relevant jurisdiction.
"Permitted Liens": Liens permitted pursuant to the Loan
Documents, including without limitation those permitted to exist
pursuant to subsection 8.3 of the Credit Agreement.
"Specified Assets": the following property and assets of the
Grantor:
(1) Equipment constituting Fixtures;
(2) Patents, Patent Licenses, Trademarks and Trademark
Licenses to the extent that (a) Liens thereon which cannot be
perfected by the filing of financing statements under the Uniform
Commercial Code or by the filing and acceptance thereof in the
United States Patent and Trademark Office or (b) such Patents,
Patent Licenses, Trademarks and Trademark Licenses are not,
individually or in the aggregate, material to the business of
Grantor and its Subsidiaries taken as a whole;
(3) Copyrights and Copyright Licenses and Accounts or
receivables arising therefrom to the extent that the Uniform
Commercial Code as in effect from time to time in the relevant
jurisdiction is not applicable to the creation or perfection of
Liens thereon;
(4) Collateral for which the perfection of Liens thereon
requires filings in or other actions under the laws of
jurisdictions outside the United
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States of America, any State, territory or dependency thereof or
the District of Columbia;
(5) Contracts, Accounts or receivables subject to the
Assignment of Claims Act;
(6) goods included in Collateral received by any Person for
"sale or return" within the meaning of Section 2-326 of the
Uniform Commercial Code of the applicable jurisdiction, to the
extent of claims of creditors of such Person;
(7) Proceeds of Accounts, receivables of Inventory which do
not themselves constitute Collateral or which have not been
transferred to or deposited in the Collateral Proceeds Account
(if any); and
(8) Equipment at various sales offices with a fair market
value of less than $10,000 per sales office and mobile goods.
(c) Accounts. The places where the Grantor keeps its records
concerning the Accounts constituting Collateral are 000 Xxxxxxxxx Xxxxx,
Xxxxxxx, X.X. 00000 or such other location or locations of which the
Grantor shall have provided prior written notice to the Administrative
Agent pursuant to Section 5(p).
(d) Consents. Except as set forth in Schedules I and II hereto no
consent of any party (other than the Grantor) to any Patent --------
License or Trademark License constituting Collateral or any obligor in
respect of any material Account constituting Collateral or which owes in
the aggregate a material portion of all the Accounts constituting
Collateral is required, or purports to be required, to be obtained by or on
behalf of the Grantor in connection with the execution, delivery and
performance of this Agreement that has not been obtained. Each Patent
License, Trademark License and Account constituting Collateral is in full
force and effect and constitutes a valid and legally enforceable obligation
of the Grantor and (to the knowledge of the Grantor) each other party
thereto except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and except to the
extent the failure of any such Patent License, Trademark License or Account
to be in full force and effect or valid or legally enforceable would not be
reasonably expected, in the aggregate, to have a material adverse effect on
the value of the Collateral (as defined in the Credit Agreement). Except as
set forth in Schedules I and II hereto, 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 Patent Licenses, Trademark Licenses or
Accounts constituting Collateral by any party thereto other than those
which have been duly obtained, made or performed and are in full force and
effect and those the failure of which to make or obtain would not be
reasonably expected, in the aggregate, to have a material adverse effect on
the value of the Collateral (as defined in the Credit Agreement). Except as
set forth in Schedules I and II hereto, neither the Grantor nor (to the
knowledge of the Grantor) any other party to any Patent License, Trademark
License or Account constituting Collateral is in default in the performance
or observance of any of the terms thereof, except for such defaults as
would not reasonably be expected, in the
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aggregate, to have a material adverse effect on the value of the Collateral
(as defined in the Credit Agreement). The right, title and interest of the
Grantor in, to and under each Patent License, Trademark License and Account
constituting Collateral are not subject to any defense, offset,
counterclaim or claim which would be reasonably expected, either
individually or in the aggregate, to have a material adverse effect on the
value of the Collateral (as defined in the Credit Agreement).
(e) Location of Tangible Property. The Inventory constituting
Collateral and the Equipment constituting Collateral are kept at the
locations listed in Schedule III hereto and/or such other locations of
which the Grantor shall provide written notice to the Administrative Agent
pursuant to Section 5(p).
(f) Chief Executive Office. The Grantor `s chief executive office and
chief place of business is located at 000 Xxxxxxxxx Xxxxx, Xxxxxxx, X.X.
00000 or such other location of which the Grantor shall have provided
written notice to the Administrative Agent pursuant to Section 5(p).
(g) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(h) Patents and Trademarks. Schedules I and II hereto include all
Trademarks and Patents owned by the Grantor in its own name as of the date
hereof and all material Trademark Licenses and all material Patent Licenses
owned by the Grantor in its own name as of the date hereof.
(i) Governmental Obligors. As of the Effective Date, none of the
Obligors on any Accounts, and none of the parties to any Contracts
constituting Collateral, is a Governmental Authority, except for any such
Accounts or Contracts that are not material in relation to the business of
the Grantor.
(j) Copyrights. As of the date hereof, the Grantor does not own any
Copyrights and is not a party to any Copyright Licenses which are material
to the business of the Grantor.
The Grantor agrees that the foregoing representations and warranties shall
be deemed to have been made by the Grantor on and as of each date on which an
Extension of Credit is made by the Lenders to the Borrower under the Credit
Agreement, in each case as though made on and as of each such date (or, if any
such representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).
5. Covenants. The Grantor covenants and agrees with the Administrative
Agent and the Lenders and, with respect to Section 5(a), the Administrative
Agent covenants and agrees with the Grantor, that, from and after the date of
this Agreement until the payment in full of the Notes, the Reimbursement
Obligations and the other Obligations then due and owing, the termination of the
Commitments and the expiration, termination or return to the Issuing Lender of
the Letters of Credit:
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(a) Further Documentation; Pledge of Instruments and Chattel Paper. At
any time and from time to time, upon the written request of the
Administrative Agent or the Grantor, as the case may be, and at the sole
expense of the Grantor, the Grantor or the Administrative Agent, as the
case may be, will promptly and duly execute and deliver such further
instruments and documents and take such further action as the
Administrative Agent or the Grantor 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, the filing
of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created
hereby. The Grantor also hereby authorizes the Administrative Agent to file
any such financing or continuation statement without the signature of the
Grantor to the extent permitted by applicable law. A carbon, photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement for filing in any jurisdiction. The Administrative Agent agrees
to notify the Grantor and the Grantor agrees to notify the Administrative
Agent of any financing or continuation statement filed by it pursuant to
this Section 5(a), provided that any -------- failure to give any such
notice shall not affect the validity or effectiveness of any such filing.
Unless an Event of Default shall have occurred and be continuing, the
Grantor shall be entitled to retain possession of all Collateral evidenced
by any Instrument or Chattel Paper, and shall hold all such Collateral in
trust for the Administrative Agent, for the benefit of the Lenders, and
shall not commingle any of such Collateral with any other assets of the
Grantor. In the event an Event of Default shall have occurred and be
continuing, upon the request of the Administrative Agent, such Collateral
shall be immediately delivered to the Administrative Agent, duly endorsed
in a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement. The Grantor shall not permit any
other Person to possess any such Collateral at any time other than in
connection with a transaction permitted under Section 8.14 of the Credit
Agreement.
(b) Indemnification. The Grantor agrees to pay, and to save the
Administrative Agent, the Other Representatives and the Lenders harmless
from, any and all liabilities and reasonable costs and expenses (including,
without limitation, reasonable legal fees and expenses) (i) with respect
to, or resulting from, any delay by the Grantor in paying, any and all
excise, sales or other similar taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay by the Grantor in complying with any material
Requirement of Law applicable to any of the Collateral or (iii) in
connection with any of the transactions contemplated by this Agreement,
provided that such indemnity shall not, as to the Administrative
Agent, any Other Representative or any Lender, be available to the extent
that such liabilities, costs and expenses resulted from the gross
negligence or willful misconduct of the Administrative Agent, any Other
Representative or any Lender. In any suit, proceeding or action brought by
the Administrative Agent, any Other Representative or any Lender under any
Account for any sum owing thereunder, or to enforce any provisions of any
Account, the Grantor will save, indemnify and keep the Administrative
Agent, such Other Representative and such Lender harmless from and against
all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the
account debtor thereunder, arising out of a material breach by the Grantor
of any obligation thereunder.
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(c) Maintenance of Records. The Grantor will keep and maintain at its
own cost and expense reasonably satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Accounts constituting
Collateral. For the Administrative Agent's and the Lenders' further
security, the Administrative Agent, for the benefit of the Lenders, shall
have a security interest in all of the Grantor's books and records
pertaining to the Collateral, and the Grantor shall permit the
Administrative Agent or its representatives to review such books and
records upon reasonable advance notice during normal business hours at the
location where such books and records are kept and at the reasonable
request of the Administrative Agent.
(d) Right of Inspection. Upon reasonable advance notice to the Grantor
and at reasonable intervals, or at any time and from time to time after the
occurrence and during the continuance of an Event of Default, the
Administrative Agent and the Lenders shall have reasonable access during
normal business hours to all the books, correspondence and records of the
Grantor, and the Administrative Agent and the Lenders and their respective
representatives may examine the same, and to the extent reasonable take
extracts therefrom and make photocopies thereof, and the Grantor agrees to
render to the Administrative Agent and the Lenders, at the Grantor's
reasonable cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Administrative Agent and the
Lenders and their respective representatives shall also have the right upon
reasonable advance notice to the Grantor to enter during normal business
hours into and upon any premises where any of the Inventory or Equipment
constituting Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(e) Compliance with Laws, etc. The Grantor will comply in all material
respects with all Requirements of Law applicable to the Collateral or any
part thereof, except to the extent that the failure to so comply would not
be reasonably expected to materially adversely affect, in the aggregate,
the Administrative Agent's or the Lenders' rights hereunder, the priority
of their Liens on the Collateral or the value of the Collateral (as defined
in the Credit Agreement).
(f) Compliance with Contractual Obligations. The Grantor will perform
and comply in all material respects with all its Contractual Obligations
relating to the Collateral, unless (i) such performance or compliance is
fully excused by breach by the other party or parties thereto or (ii) such
failure to comply or perform would not be reasonably expected, in the
aggregate, to have a material adverse effect on the value of the Collateral
(as defined in the Credit Agreement).
(g) Payment of Obligations. The Grantor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Collateral, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such tax, assessment, charge or
levy need be paid if (i) the validity thereof is being contested in good
faith by appropriate proceedings diligently conducted and (ii) such tax,
assessment, charge or levy is adequately reserved against on the Grantor's
books in accordance with GAAP.
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(h) Limitation on Liens on Collateral. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take
such other action as is reasonably necessary to remove, any Lien or
material adverse claim on or to any of the Collateral, other than the Liens
created hereby and other than as permitted pursuant to the Loan Documents,
and will defend the right, title and interest of the Administrative Agent
and the Lenders in and to any of the Collateral against the claims and
demands of all Persons whomsoever.
(i) Limitations on Dispositions of Collateral. Without the prior
written consent of the Administrative Agent, the Grantor will not sell,
assign, transfer, exchange or otherwise dispose of, or grant any option
with respect to, the Collateral, or attempt, offer or contract to do so,
except with respect to exclusive licenses in the ordinary course of
business or as permitted by this Agreement or the Loan Documents.
(j) Limitations on Modifications, Waivers, Extensions of Contracts,
Licenses and Accounts. The Grantor will not, except in the ordinary course
of business, amend, modify, terminate or waive any provision of any
material Trademark License or any agreement giving rise to a material
Account constituting Collateral in any manner which would reasonably be
expected to materially adversely affect the value of such Trademark License
or Account as Collateral.
(k) Limitations on Discounts, Compromises, Extensions of Accounts. At
all times, the Grantor will not, except in the ordinary course of business,
grant any extension of the time of payment of any material Account
constituting Collateral, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partially, any Person
liable for the payment thereof, or allow any credit or discount whatsoever
thereon, unless such extensions, compromises, compoundings, settlements,
releases, credits or discounts are permitted by the Loan Documents.
(l) Maintenance of Equipment. The Grantor will maintain each material
item of Equipment constituting Collateral in good operating condition,
ordinary wear and tear and immaterial impairments of value and damage by
the elements excepted, and will provide all maintenance, service and
repairs necessary for such purpose, except to the extent that the failure
to do any of the foregoing would not be reasonably expected to have a
Material Adverse Effect.
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(m) Maintenance of Insurance. The Grantor will maintain, with
financially sound and reputable insurance companies, (i) insurance
(including property insurance) in at least such amounts and against at
least such risks (but including in any event public liability, product
liability and business interruption where reasonably obtainable) as are
usually insured against in the same general area by companies engaged in
the same or a similar business; and furnish to the Administrative Agent,
upon written request, information in reasonable detail as to the insurance
carried and (ii) insurance policies relating to the Inventory and Equipment
constituting Collateral (A) insuring the Inventory and Equipment
constituting Collateral against loss by fire, explosion, theft and such
other casualties as are usually insured against by companies engaged in the
same or a similar business, (B) insuring the Grantor against liability for
personal injury and property damage relating to such Inventory and
Equipment, (C) providing that no cancellation, material reduction in amount
or material change in the coverage referred to in clause (A) shall be
effective until at least 15 days after receipt by the Administrative Agent
of written notice thereof, (D) naming the Administrative Agent and the
Lenders as additional insured parties and (E) being otherwise reasonably
satisfactory in all material respects to the Administrative Agent.
(n) Further Identification of Collateral. The Grantor will furnish to
the Administrative Agent and the Lenders from time to time such statements
and schedules further identifying and describing the Collateral, and such
other reports in connection with the Collateral, as the Administrative
Agent may reasonably request, all in reasonable detail.
(o) Notices. The Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, at their respective addresses set
forth in the Credit Agreement, (i) of any Lien (other than Liens created
hereby or permitted under the Loan Documents) on, or material adverse claim
asserted against, any of the Collateral and (ii) of the occurrence of any
other event which would reasonably be expected, in the aggregate, to have a
material adverse effect on the aggregate value of the Collateral (as
defined in the Credit Agreement) or the Liens created hereunder.
(p) Changes in Locations, Name, etc. The Grantor will not (i) change
the location of its chief executive office/chief place of business from
that specified in Section 4(f) or remove its books and records from the
locations specified in Section 4(c), (ii) permit any of the Inventory or
Equipment constituting Collateral to be kept at locations other than those
listed in Schedule III hereto, unless such Inventory or Equipment is
conveyed, sold, leased, transferred, assigned or otherwise disposed of as
permitted by Section 8.6 of the Credit Agreement 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 seriously misleading, unless the Grantor shall have
complied with the following:
(A) with respect to clauses (i) and (iii) above, the Grantor (x)
shall have given the Administrative Agent at least 30 days' prior
written notice thereof and (y) prior to effecting any such change,
shall have taken such actions as may be necessary or, upon the
reasonable request of the Administrative Agent, advisable to continue
the perfection and priority of the Liens granted pursuant hereto, and
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(B) with respect to clause (ii) above, the Grantor (x) shall have
given the Administrative Agent at least fifteen days' prior written
notice of the location thereof and (y) prior to keeping any Inventory
or Equipment constituting Collateral at such new location shall have
taken such actions as may be necessary or, upon the reasonable request
of the Administrative Agent, advisable to perfect the Liens granted
pursuant hereto with respect to such Inventory or Equipment;
provided in each case under clauses (A)(y) and (B)(y), that the
Administrative Agent shall have taken all actions required by Section
5(a) hereof in connection with such actions of the Grantor.
(q) Copyrights. The Grantor will not own nor at any time in the future
acquire any right, title or interest in or to any Copyright or Copyright
License which is material to the business of the Grantor and its
Subsidiaries, taken as a whole, other than (i) with respect to computer
software or hardware licenses or other Copyright licenses granted to the
Grantor in the ordinary course of business, (ii) in connection with any
rights of the Grantor in respect of security interests in collateral or
(iii) with respect to which (A) the Administrative Agent shall have been
given prior written notice of the acquisition of any right, title or
interest therein or thereto and (B) if reasonably requested by the
Administrative Agent, a security agreement reasonably satisfactory to the
Administrative Agent shall have been executed by the Grantor.
6. Administrative Agent's Appointment as Attorney-in-Fact.
(a) Powers. The 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 the Grantor and
in the name of the Grantor or in its own name, from time to time in the
Administrative Agent's discretion, 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, the Grantor hereby gives the
Administrative Agent the power and right, on behalf of the Grantor, without
notice to or assent by the Grantor, to do the following at any time when
any Event of Default shall have occurred and be continuing, and to the
extent permitted by law:
(i) in the name of the Grantor or its own name, or otherwise, to take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Contract, Instrument or General Intangible (to the extent that any
of the foregoing constitute Collateral) or with respect to any other
Collateral and to file any claim or to take any other action or institute
any 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 such Account, Contract, Instrument or
General Intangible or with respect to any such other Collateral whenever
payable;
(ii) to pay or discharge taxes and Liens levied or placed on the
Collateral, other than Liens permitted under this Agreement or the Loan
Documents, to effect any
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repairs or any insurance required by the terms of this Agreement and to pay
all or any part of the premiums therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (B) to ask for, or demand, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C)
to 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; (D) to commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
the Grantor with respect to any of the Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or releases as
the Administrative Agent may deem appropriate; (G) subject to any
pre-existing rights or licenses, to assign any Patent or Trademark
constituting Collateral (along with the goodwill of the business to which
any such Patent or Trademark pertains), for such term or terms, on such
conditions, and in such manner, as the Administrative Agent shall in its
sole discretion determine; and (H) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Administrative Agent were
the absolute owner thereof for all purposes, and to do, at the
Administrative Agent's option and the 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' Liens thereon and to effect the
intent of this Agreement, all as fully and effectively as the Grantor might
do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until payment in full of the Notes, the
Reimbursement Obligations and the other Obligations then due and owing, the
termination of the Commitments and the expiration, termination or return to the
Issuing Lender of the Letters of Credit.
(b) Other Powers. The Grantor also authorizes the Administrative
Agent, from time to time if an Event of Default shall have occurred and be
continuing, to execute, in connection with any sale provided for in Section
9 hereof, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Collateral.
(c) No Duty on the Part of Administrative Agent, Other Representatives
or Lenders. The powers conferred on the Administrative Agent, the Other
Representatives and the Lenders hereunder are solely to protect the
Administrative Agent's, the Other Representatives' and the Lenders'
interests in the Collateral and shall not impose any duty upon the
Administrative Agent, any Other Representative or any Lender to exercise
any such powers. The Administrative Agent, the Other Representatives 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 the Grantor for any act or failure to act hereunder, except for their
own gross negligence or willful misconduct.
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7. Performance by Administrative Agent of Grantor's Obligations. If the
Grantor fails to perform or comply with any of its agreements contained herein
and the Administrative Agent, as provided for by the terms of this Agreement,
shall itself perform or comply, or otherwise cause performance or compliance,
with such agreement, the reasonable expenses of the Administrative Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum 2% above the rate applicable to ABR Loans,
shall be payable by the Grantor to the Administrative Agent on demand and shall
constitute Obligations secured hereby.
8. Proceeds. It is agreed that if an Event of Default shall occur and be
continuing, (a) all Proceeds of any Collateral received by the Grantor
consisting of cash, checks and other near-cash items shall be held by the
Grantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of the Grantor, and at the request of the Administrative Agent
shall, forthwith upon receipt by the Grantor, be turned over to the
Administrative Agent in the exact form received by the Grantor (duly indorsed by
the Grantor to the Administrative Agent, if required by the Administrative
Agent), and (b) any and all such Proceeds received by the Administrative Agent
(whether from the Grantor or otherwise) may, in the sole discretion of the
Administrative Agent, be held by the Administrative Agent, for the benefit of
the Lenders, as collateral security for the Obligations (whether matured or
unmatured), and/or then or at any time thereafter may be applied by the
Administrative Agent against, the Obligations then due and owing. Any balance of
such Proceeds remaining after the payment in full of the Notes, the
Reimbursement Obligations and the other Obligations then due and owing, the
termination of the Commitments and the expiration, termination or return to the
Issuing Lender of the Letters of Credit shall be paid over to the Grantor or to
whomsoever may be lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be continuing, the
Administrative Agent, on behalf of the Lenders, may exercise all rights and
remedies of a secured party under the Code, and, to the extent permitted by law,
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.
Without limiting the generality of the foregoing, the Administrative Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances, to the extent permitted by law, 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), but subject to any pre-existing rights or licenses, in one or
more parcels at public or private sale or sales, at any exchange, broker's board
or office of the Administrative Agent, any Other Representative 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, any Other
Representative or any Lender shall have the right, to the extent permitted by
law, upon any such sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Grantor,
which right or equity is hereby waived or released. The Grantor further agrees,
at the Administrative Agent's request, upon the occurrence and during the
continuance of an Event of Default, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at the Grantor's premises or elsewhere. The
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Administrative Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein 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, the Other Representatives
and the Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations
then due and owing, 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 Code, need the
Administrative Agent account for the surplus, if any, to the Grantor. To the
extent permitted by applicable law, the Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent, any Other
Representative or any Lender arising out of the repossession, retention or sale
of the Collateral, other than any such claims, damages and demands that may
arise from the gross negligence or willful misconduct of any of them. 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. The Grantor shall remain liable for
any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the then outstanding Obligations, including
the reasonable fees and disbursements of any attorneys employed by the
Administrative Agent, any Other Representative or any Lender to collect such
deficiency.
10. Limitation on Duties Regarding Preservation of Collateral. 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 Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. None of
the Administrative Agent, any Other Representative, any Lender, nor any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon all or any part 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 the Grantor or any other Person.
11. Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are powers coupled with an interest and
are irrevocable until payment in full of the Notes, the Reimbursement
Obligations and the other Obligations then due and owing, the termination of the
Commitments and the expiration, termination or return to the Issuing Lender of
the Letters of Credit.
12. 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.
13. 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.
14. No Waiver; Cumulative Remedies. None of the Administrative Agent, any
Other Representative nor any Lender shall by any act (except by a written
instrument pursuant to Section 15 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of
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any of the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent, any Other Representative 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,
any Other Representative 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, such Other Representative 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
rights or remedies provided by law.
15. Amendments in Writing; No Waiver; Cumulative Remedies; Successors and
Assigns. None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by the Grantor and the Administrative Agent in accordance with Section
11.1 of the Credit Agreement. This Agreement shall be binding upon the
successors and assigns of the Grantor and shall inure to the benefit of the
Administrative Agent, the Other Representatives and the Lenders and their
respective successors and assigns, except that the Grantor may not assign,
transfer or delegate any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent.
16. Notices. All notices, requests and demands to or upon the respective
parties hereto shall be made in accordance with Section 11.2 of the Credit
Agreement.
17. Authority of Administrative Agent. The 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 among the Administrative Agent, the Other
Representatives and the Lenders, be governed by the Loan Documents 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 Grantor, 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 the Grantor shall
not be under any obligation to make any inquiry respecting such authority.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
19. Release of Collateral and Termination. (a) At such time as the payment
in full of the Notes, the Reimbursement Obligations and the other Obligations
then due and owing shall have occurred, the Commitments have been terminated and
the Letters of Credit have expired, terminated or been returned to the Issuing
Lender, 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 the 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 Grantor. Upon
request of the Grantor following any such termination, the Administrative Agent
shall deliver (at the sole cost and expense of the Grantor) to the Grantor any
Collateral held by the Administrative Agent hereunder, and execute
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and deliver (at the sole cost and expense of the Grantor) to the Grantor such
documents as the Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by the Grantor in a transaction permitted by the
Credit Agreement, then the Administrative Agent shall execute and
deliver to the Grantor (at the sole cost and expense of the Grantor)
all releases or other documents reasonably necessary or desirable for
the release of the Liens created hereby on such Collateral.
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IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be duly executed and delivered as of the date first above written.
RA FACTORS, L.L.C.
By:/s/Xxxxxx X. Apple
--------------------------------
Name: Xxxxxx X. Apple
Title: Vice President
ACKNOWLEDGED AND AGREED AS OF
THE DATE HEREOF BY:
THE CHASE MANHATTAN BANK, as Administrative Agent
By:/s/Xxxxx X. Xxxxxx
---------------------------------
Title: Vice President
