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GUARANTEE AND COLLATERAL AGREEMENT
dated as of
December 16, 2002,
among
XXXXX'X CORPORATION,
XXXXX'X HOLDINGS, INC.,
DENNY'S, INC.,
XXXXX'X REALTY, INC.,
each other Subsidiary Loan Party
and
JPMORGAN CHASE BANK,
as Collateral Agent
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Table of Contents
Page
ARTICLE I
Definitions
SECTION 1.01. Credit Agreement...............................................1
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SECTION 1.02. Other Defined Terms............................................2
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ARTICLE II
Guarantee
SECTION 2.01. Guarantee......................................................7
SECTION 2.02. Guarantee of Payment...........................................7
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SECTION 2.03. No Limitations, Etc............................................7
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SECTION 2.04. Reinstatement.................................................11
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SECTION 2.05. Agreement To Pay; Subrogation.................................11
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SECTION 2.06. Information............................................. .....11
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ARTICLE III
Pledge of Securities
SECTION 3.01. Pledge........................................................12
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SECTION 3.02. Delivery of the Pledged Collateral............................13
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SECTION 3.03. Representations, Warranties and
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Covenants...............................................13
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SECTION 3.04. Certification of Limited Liability Company
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and Limited Partnership Interests.......................15
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SECTION 3.05. Registration in Nominee Name;
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Denominations...........................................15
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SECTION 3.06. Voting Rights; Dividends and
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Interest, etc...........................................15
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ARTICLE IV
Security Interests in Personal Property
SECTION 4.01. Security Interest.............................................17
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SECTION 4.02. Representations and Warranties................................19
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SECTION 4.03. Covenants.....................................................22
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SECTION 4.04. Other Actions.................................................27
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SECTION 4.05. Covenants Regarding Patent, Trademark and
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Copyright Collateral....................................32
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ARTICLE V
Remedies
SECTION 5.01. Remedies Upon Default.........................................34
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SECTION 5.02. Application of Proceeds.......................................36
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SECTION 5.03. Grant of License to Use Intellectual
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Property.................................37
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SECTION 5.04. Securities Act, etc...........................................38
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ARTICLE VI
Indemnity, Subrogation and Subordination
SECTION 6.01. Indemnity and Subrogation.....................................40
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SECTION 6.02. Contribution and Subrogation..................................40
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SECTION 6.03. Subordination.................................................41
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ARTICLE VII
Miscellaneous
SECTION 7.01. Notices.......................................................41
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SECTION 7.02. Security Interest Absolute....................................41
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SECTION 7.03. Survival of Agreement.........................................42
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SECTION 7.04. Binding Effect; Several Agreement.............................42
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SECTION 7.05. Successors and Assigns........................................42
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SECTION 7.06. Collateral Agent's Fees and Expenses;
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Indemnification.........................................43
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SECTION 7.07. Collateral Agent Appointed
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Attorney-in-Fact........................................43
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SECTION 7.08. GOVERNING LAW.................................................44
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SECTION 7.09. Waivers; Amendment............................................45
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SECTION 7.10. WAIVER OF JURY TRIAL..........................................45
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SECTION 7.11. Severability..................................................46
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SECTION 7.12. Counterparts..................................................46
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SECTION 7.13. Headings......................................................46
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SECTION 7.14. Jurisdiction; Consent to Service
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of Process..............................................46
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SECTION 7.15. Termination or Release........................................47
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SECTION 7.16. Additional Subsidiaries.......................................48
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SECTION 7.17. Right of Setoff...............................................48
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Schedules
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Schedule I Subsidiary Loan Parties
Schedule II Capital Stock; Debt Securities
Schedule III Intellectual Property
Schedule IV Insurance Requirements
Exhibits
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Exhibit I Form of Supplement to the Guarantee and
Collateral Agreement
Exhibit II Form of Perfection Certificate
Exhibit III Form Of Deposit Account Control Agreement
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GUARANTEE AND COLLATERAL AGREEMENT dated as of December 16,
2002 (this "Agreement"), among Denny's, Inc., a California corporation, and
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Xxxxx'x Realty, Inc., a Delaware corporation (each of the foregoing
individually, a "Borrower" and collectively, the "Borrowers"), Xxxxx'x
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Corporation, a Delaware corporation ("Parent"), Xxxxx'x Holdings, Inc., a New
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York corporation, each other Subsidiary Loan Party (as defined in the Credit
Agreement) and JPMORGAN CHASE BANK, a New York banking corporation ("JPMCB"),
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as Collateral Agent (in such capacity, the "Collateral Agent") for the
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Secured Parties (as defined below).
Reference is made to the Credit Agreement dated as of December
16, 2002 (as amended, supplemented, waived or otherwise modified from time to
time, the "Credit Agreement"), among the Borrowers, Parent, Denny's Holdings,
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Inc., a New York corporation ("Denny's Holdings"), and DFO, Inc., a Delaware
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corporation, as Guarantors, the Lenders party thereto (the "Lenders"), JPMCB, as
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Administrative Agent and Foothill Capital Corporation, a California corporation
("Foothill"), as Syndication Agent. The Lenders have agreed to extend credit to
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the Borrowers subject to the terms and conditions set forth in the Credit
Agreement. The obligations of the Lenders to extend such credit are conditioned
upon, among other things, the execution and delivery of this Agreement. Parent
and the Subsidiary Loan Parties are affiliates of the Borrowers, will derive
substantial benefits from the extension of credit to the Borrowers pursuant to
the Credit Agreement and are willing to execute and deliver this Agreement in
order to induce the Lenders to extend such credit. Accordingly, the parties
hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Credit Agreement.
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(a) Capitalized terms used in this Agreement and not
otherwise defined herein have the meanings specified in the Credit Agreement.
All terms defined in the New York UCC (as defined herein) and not defined in
this Agreement have the meanings specified therein; the term "instrument" shall
have the meaning specified in Article 9 of the New York UCC.
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(b) The rules of construction specified in Section 1.03 of the
Credit Agreement also apply to this Agreement.
SECTION 1.02. Other Defined Terms.
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As used in this Agreement, the following terms have the meanings specified
below:
"Account Debtor"
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means any Person who is or who may become obligated to any Grantor under, with
respect to or on account of an Account.
"Article 9 Collateral"
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has the meaning assigned to such term in Section 4.01.
"Claiming Guarantor"
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has the meaning assigned to such term in Section 6.02.
"Collateral"
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means Article 9 Collateral and Pledged Collateral.
"Concentration Account"
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means the cash collateral account established at the office of JPMCB located at
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, in the name of the Collateral Agent,
Account No. 323-089257.
"Contributing Guarantor"
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has the meaning assigned to such term in Section 6.02.
"Copyright License"
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means any written agreement, now or hereafter in effect, granting any right to
any third party under any copyright now or hereafter owned by any Grantor or
that any Grantor otherwise has the right to license, or granting any right to
any Grantor under any copyright now or hereafter owned by any third party, and
all rights of any Grantor under any such agreement.
"Copyrights"
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means all of the following now owned or hereafter acquired by any Grantor:
(a) all copyright rights in any work subject to the copyright laws of the
United States or any other country, whether as author, assignee, transferee or
otherwise; and (b) all registrations and applications for registration of any
such copyright in the United States or any other country, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule III.
"Credit Agreement"
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has the meaning assigned to such term in the preliminary statement of this
Agreement.
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"Deposit Account Bank"
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has the meaning assigned to such term in Section 4.04(b).
"Deposit Account Control Agreement"
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means an agreement substantially in the form of Exhibit III, or any other form
approved by the Collateral Agent, among a Grantor, the Collateral Agent and a
Sub-Agent.
"Equity Interests"
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means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person of whatever nature and rights, warrants or
options to acquire any of the foregoing.
"Federal Securities Laws"
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has the meaning assigned to such term in Section 5.04.
"General Fund Account"
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means the general fund account established at the office of JPMCB located at
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, in the name of Xxxxx'x Corporation,
Account No. 323-073360.
"General Intangibles"
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means all "General Intangibles" as defined in the New York UCC, including all
choses in action and causes of action and all other intangible personal
property of any Grantor of every kind and nature (other than Accounts) now
owned or hereafter acquired by any Grantor, including corporate or other
business records, indemnification claims, contract rights (including rights
under leases, whether entered into as lessor or lessee, Hedging Agreements,
Franchise Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts.
"Grantors"
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means Parent, the Borrowers and the Subsidiary Loan Parties.
"Guarantors"
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means Parent, the Borrowers and the Subsidiary Loan Parties.
"Intellectual Property"
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means all intellectual and similar property of every kind and nature now owned
or hereafter acquired by any Grantor, including inventions, designs, Patents,
Copyrights, Licenses, Trademarks, trade secrets, domain names, confidential or
proprietary technical and business information, know-how, show-how or other
data or information, software and databases and all embodiments
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or fixations thereof and related documentation, registrations and franchises,
and all additions, improvements and accessions to, and books and records
describing or used in connection with, any of the foregoing.
"Investment Property"
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means a security, whether certificated or uncertificated, security entitlement,
securities account, commodity contract or commodity account, provided, that for
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purposes of this Agreement, the capital stock of Xxxxxx Holdings, Inc. owned by
Denny's Holdings and scheduled on Schedule 6.04 to the Credit Agreement shall
not be Investment Property.
"License"
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means any Patent License, Trademark License, Copyright License or other license
or sublicense agreement to which any Grantor is a party, other than those
license or sublicense agreements (a) in existence on the date hereof and listed
on Schedule V and (b) entered into after the date hereof, in each case that by
their terms prohibit a grant of a security interest by such Grantor as licensee
thereunder provided, that (i) in the case of clause (b), such Grantor has used
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commercially reasonable efforts to prevent the inclusion of such a prohibition
over such license or sublicense and (ii) in the case of any licenses or
sublicenses excluded pursuant to clauses (a) and (b), such licenses or
sublicenses, individually or in the aggregate, are not material to the business
of such Grantor. For the avoidance of doubt, any money or property received in
respect of any license that is not a License shall not be excluded from the
Collateral solely as a result of the exclusion of such license from the
Collateral.
"Loan Document Obligations"
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means (a) the due and punctual payment by the Borrowers of (i) the principal of
and interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other monetary obligations
of the Borrowers to any of the Secured Parties under the Credit Agreement and
each of the other Loan Documents, including obligations to pay fees, expense and
reimbursement obligations and indemnification obligations, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
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insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and punctual performance
of all other obligations of the Borrowers under or pursuant to the Credit
Agreement and each of the other Loan Documents and (c) the due and punctual
payment and performance of all the obligations of each other Loan Party under or
pursuant to this Agreement and each of the other Loan Documents.
"New York UCC"
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means the Uniform Commercial Code as from time to time in effect in the State
of New York.
"Obligations"
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means (a) Loan Document Obligations, (b) the due and punctual payment and
performance of all obligations of each Loan Party under each Hedging Agreement
that, in either case, if and to the extent permitted by the Credit Agreement
(i) is in effect on the Closing Date with a counterparty that is a Lender or an
Affiliate of a Lender as of the Closing Date or (ii) is entered into after the
Closing Date with any counterparty that is a Lender or an Affiliate of a Lender
at the time such Hedging Agreement is entered into and (c) the due and punctual
payment and performance of all obligations in respect of overdrafts and related
liabilities owed to the Administrative Agent or any of its Affiliates and
arising from treasury, depositary and cash management services in connection
with any automated clearinghouse transfers of funds.
"Patent License"
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means any written agreement, now or hereafter in effect, granting to any third
party any right to make, use or sell any invention on which a patent, now or
hereafter owned by any Grantor or that any Grantor otherwise has the right to
license, is in existence, or granting to any Grantor any right to make, use or
sell any invention on which a patent, now or hereafter owned by any third party,
is in existence, and all rights of any Grantor under any such agreement.
"Patents"
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means all of the following now owned or hereafter acquired by any Grantor:
(a) all letters patent of the United States or the equivalent thereof in any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or the equivalent thereof in any other
country, including registrations, recordings and pending applications in the
United States Patent and Trademark Office or any similar offices in any other
country, including those listed on Schedule III; and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or extensions
thereof, and the inventions disclosed or claimed therein,
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including the right to make, use and/or sell the inventions
disclosed or claimed therein.
"Perfection Certificate"
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means a certificate substantially in the form of Exhibit II, completed and
supplemented with the schedules and attachments contemplated thereby, and duly
executed by a Financial Officer and the chief legal officer of Parent.
"Pledged Collateral"
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has the meaning assigned to such term in Section 3.01.
"Pledged Debt Securities"
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has the meaning assigned to such term in Section 3.01.
"Pledged Securities"
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means any promissory notes, stock certificates or other securities now or
hereafter included in the Pledged Collateral, including all certificates,
instruments or other documents representing or evidencing any Pledged
Collateral.
"Pledged Stock"
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has the meaning assigned to such term in Section 3.01.
"Secured Parties"
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means (a) the Lenders, (b) the Swingline Lenders, (c) the Administrative Agent
(and any Affiliate of the Administrative Agent to which any obligation referred
to in clause (c) of the definition of the term "Obligations" is owed), (d) the
Issuing Bank, (e) each counterparty to any Hedging Agreement entered into with
a Loan Party the obligations under which constitute Obligations, (f) the
beneficiaries of each indemnification obligation undertaken by any Loan Party
under any Loan Document and (g) the successors and assigns of each of the
foregoing.
"Security Interest"
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has the meaning assigned to such term in Section 4.01.
"Sub-Agent"
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means a financial institution that has delivered to the Collateral Agent an
executed Deposit Account Control Agreement.
"Trademark License"
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means any written agreement, now or hereafter in effect, granting to any third
party any right to use any trademark now or hereafter owned by any Grantor or
that any Grantor otherwise has the right to license, or granting to any Grantor
any right to use any trademark now or hereafter owned by any third party, and
all rights of any Grantor under any such agreement.
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"Trademarks"
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means all of the following now owned or hereafter acquired by any Grantor:
(a) all trademarks, service marks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
other source or business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all registration and recording applications filed in
connection therewith, including registrations and registration applications in
the United States Patent and Trademark Office or any similar offices in any
State of the United States or any other country or any political subdivision
thereof, and all extensions or renewals thereof, including those listed on
Schedule III; (b) all goodwill associated therewith or symbolized thereby; and
(c) all other assets, rights and interests that uniquely reflect or embody such
goodwill.
ARTICLE II
Guarantee
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SECTION 2.01. Guarantee.
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Each Guarantor unconditionally guarantees, jointly with the other Guarantors
and severally, as a primary obligor and not merely as a surety, the due and
punctual payment and performance of the Obligations. Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Obligation. Each
Guarantor waives presentment to, demand of payment from and protest to the
Borrowers or any other Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment.
SECTION 2.02. Guarantee of Payment.
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Each Guarantor further agrees that its guarantee hereunder constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Collateral Agent or any other Secured
Party to any security held for the payment of the Obligations or to any balance
of any deposit account or credit on the books of the Collateral Agent or any
other Secured Party in favor of the Borrowers or any other Person.
SECTION 2.03. No Limitations, Etc.
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(a) Except for termination of a Guarantor's obligations
hereunder as expressly provided in Section 7.15, the obligations of each
Guarantor hereunder shall not be subject to any reduction,
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limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by (i) the failure of the Administrative Agent, the Collateral Agent or
any other Secured Party to assert any claim or demand or to exercise or enforce
any right or remedy under the provisions of any Loan Document or otherwise; (ii)
any rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions of, any Loan Document or any other agreement, including
with respect to any other Guarantor under this Agreement; (iii) the failure to
perfect any security interest in, or the release of, any security held by the
Collateral Agent or any other Secured Party for the Obligations; (iv) any
default, failure or delay, wilful or otherwise, in the performance of the
Obligations; or (v) any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or otherwise operate as a discharge
of any Guarantor as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations). Each Guarantor expressly
authorizes the Secured Parties to take and hold security for the payment and
performance of the Obligations, to exchange, waive or release any or all such
security (with or without consideration), to enforce or apply such security and
direct the order and manner of any sale thereof in their sole discretion or to
release or substitute any one or more other guarantors or obligors upon or in
respect of the Obligations, all without affecting the obligations of any
Guarantor hereunder.
(b) (i) To the fullest extent permitted by applicable law,
each Guarantor waives any defense based on or arising out of any defense of the
Borrowers or any other Loan Party or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrowers or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral Agent may, at its
election, foreclose on any security held by it by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Borrowers or any other Loan Party or exercise any other
right or remedy available to them against the Borrowers or any other Loan Party,
without affecting or impairing in any
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way the liability of any Guarantor hereunder except to the extent the
Obligations have been fully and indefeasibly paid in full in cash. To the
fullest extent permitted by applicable law, each Guarantor waives any defense
arising out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrowers or
any other Loan Party, as the case may be, or any security.
Each Guarantor waives any right it may have to require the
Collateral Agent or the Lenders to proceed against any Borrower or any other
Guarantor, proceed against or exhaust any security held from any Borrower or any
other Guarantor, or pursue any other remedy in their respective power to pursue,
as well as any defense based on any claim that Guarantor's obligations exceed or
are more burdensome than those of any Borrower. To the extent that the laws of
the State of California may be deemed to apply to the Guarantees, the rights
which each Guarantor hereby waives include all rights of subordination,
reimbursement, indemnification and contribution and any other rights and
defenses that are or may become available to such Guarantor by reason of Section
2787 to 2855, inclusive, of the California Civil Code; provided that these
waivers shall not limit the express rights of the Guarantors that are set forth
in Sections 6.01 and 6.02 hereof.
Each Guarantor understands and acknowledges that if the
Collateral Agent forecloses judicially or nonjudicially against any real
property security for the Obligations, such foreclosure could impair or destroy
any right or ability that any Guarantor may have to seek reimbursement,
contribution or indemnification for any amounts paid by such Guarantor under its
Guarantee. To the extent that the laws of the State of California may be deemed
to apply to the Guarantees, each Guarantor further understands and acknowledges
that, in the absence of this waiver, such potential impairment or destruction of
the Guarantor's rights, if any, may entitle the Guarantor to assert a defense to
its Guarantee based on California Code of Civil Procedure ss.580d as interpreted
in Union Bank x. Xxxxxxx, (1968) 265 CA 2d 40, 71 CR 64, on the grounds, among
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others, that a lender should be estopped from pursuing a guarantor when the
lender's election to foreclose has impaired or destroyed the guarantor's rights
of subrogation, reimbursement, contribution or indemnification rights. By
execution of this Agreement, each Guarantor intentionally, freely, irrevocably,
and unconditionally: (A) waives and relinquishes that defense and agrees that
such Guarantor will be liable under its Guarantee even though the
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Collateral Agent had foreclosed judicially or nonjudicially against any real or
personal property collateral for the Obligations or any of the Guarantees; and
(B) agrees that such Guarantor will not assert that defense in any action or
proceeding which the Collateral Agent or the Lenders may commence to enforce its
Guarantee. Without limiting the foregoing, each Guarantor waives all rights and
defenses arising out of an election of remedies by the Collateral Agent or the
Lenders, even though that election of remedies, such as nonjudicial foreclosure
with respect to security for a guaranteed obligation, has destroyed such
Guarantor's rights of subrogation and reimbursement against the principal or
another Guarantor by the operation of Section 580d of the California Code of
Civil Procedure.
To the extent that the laws of the State of California may be
deemed to apply to the Guarantees, each Guarantor intentionally, freely,
irrevocably and unconditionally waives and relinquishes all rights which may be
available to it under any provision of California law or under any California
judicial decision, including Section 580a and 726(b) of the California Code of
Civil Procedure, to seek to limit the amount of any deficiency judgment or other
judgment which may be obtained against such Guarantor under its Guarantee to not
more than the amount by which the unpaid Obligations guaranteed hereby exceed
the fair market value or fair value of any real or personal property securing
said Obligations, including, without limitation, all rights to an appraisement
of, judicial or other hearing on, or other determination of the value of said
property.
(v) To the extent that the laws of the State of California may
be deemed to apply to the Guarantees, and without limiting any of the other
waivers and provisions set forth herein, if the debt of any Borrower or another
Guarantor's Guarantee is secured by real property, each Guarantor hereby
intentionally, freely, irrevocably and unconditionally waives all rights and
defenses that Guarantor may have because the debt of such Borrower or another
Guarantor's Guarantee is secured by real property; this means, among other
things: (A) the Collateral Agent and the Lenders may collect from that Guarantor
without first foreclosing on any real or personal property collateral pledged by
any Borrower or another Guarantor; (B) the amount of the Obligations may be
reduced only by the price for which that collateral is sold at the foreclosure
sale, even if the collateral is determined to be worth more than the sale price;
and (C) the Collateral Agent and the Lenders may collect from that Guarantor
even if the Collateral Agent, by foreclosing on the real property collateral,
has destroyed
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any right the Guarantor may have to collect from such Borrower or another
Guarantor. This is an unconditional and irrevocable waiver of any rights and
defenses that such Guarantor may have under circumstances where the debt of any
Borrower or another Guarantor's Guarantee is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
SECTION 2.04. Reinstatement.
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Each Guarantor agrees that its guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the
Administrative Agent or any other Secured Party upon the
bankruptcy or reorganization of the Borrowers, any other
Loan Party or otherwise.
SECTION 2.05. Agreement To Pay; Subrogation.
-----------------------------
In furtherance of the foregoing and not in limitation of any other right that
the Collateral Agent or any other Secured Party has at law or in equity against
any Guarantor by virtue hereof, upon the failure of the Borrowers or any other
Loan Party to pay any Obligation when and as the same shall become due, whether
at maturity, by acceleration, after notice of prepayment or otherwise, each
Guarantor hereby promises to and will forthwith pay, or cause to be paid, to
the Collateral Agent for distribution to the applicable Secured Parties in cash
the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums
to the Collateral Agent as provided above, all rights of such Guarantor against
the Borrowers or any other Guarantor arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subject to Article VI.
SECTION 2.06. Information.
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Each Guarantor assumes all responsibility for being and keeping itself informed
of the Borrowers' and each other Loan Party's financial condition and assets,
and of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that such Guarantor
assumes and incurs hereunder, and agrees that none of the Collateral Agent or
the other Secured Parties will have any duty to advise such Guarantor of
information known to it or any of them regarding such circumstances or risks.
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ARTICLE III
Pledge of Securities
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SECTION 3.01. Pledge.
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As security for the payment or performance, as the case may be, in full of the
Obligations, each Grantor hereby assigns and pledges to the Collateral Agent,
its successors and assigns, for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in all of such
Grantor's right, title and interest in, to and under (a) the shares of capital
stock and other Equity Interests owned by it and listed on Schedule II and any
other Equity Interests obtained in the future by such Grantor and the
certificates representing all such Equity Interests (the "Pledged Stock");
-------------
provided that the Pledged Stock shall not include (i) more than 65% of the
--------
issued and outstanding voting Equity Interests of any Foreign Subsidiary to the
extent the pledge of any greater percentage would result in adverse tax
consequences to Parent, (ii) to the extent applicable law requires that a
subsidiary of such Grantor issue directors' qualifying shares, such qualifying
shares or (iii) any Equity Interests received by Denny's Holdings in respect of
shares of Series A Cumulative Convertible Preferred Stock of Xxxxxx Holdings,
Inc. to the extent that on the date such Equity Interests are received the
Equity Rights Agreement entered into as of August 30, 2001, by and among Xxxxxx
Holdings, Inc. and Denny's Holdings restricts the pledge of such Equity
Interest; (b)(i) the debt securities listed opposite the name of such Grantor
on Schedule II, (ii) any debt securities in the future issued to such Grantor
and (iii) the promissory notes and any other instruments, if any, evidencing
such debt securities (the "Pledged Debt Securities"); (c) all other property
-----------------------
that may be delivered to and held by the Collateral Agent pursuant to the terms
of this Section 3.01; (d) subject to Section 3.06, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of, in exchange for or
upon the conversion of, and all other Proceeds received in respect of, the s
ecurities referred to in clauses (a) and (b) above and the property referred to
in clause (c) above; (e) subject to Section 3.06, all rights and privileges of
such Grantor with respect to the securities and other property referred to in
clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any of the
foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Pledged Collateral").
------- ----------
13
TO HAVE AND TO HOLD the Pledged Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, forever; subject, however, to the
----------------
terms, covenants and conditions hereinafter set forth.
SECTION 3.02. Delivery of the Pledged Collateral.
-----------------------------------
(a) Each Grantor agrees promptly to deliver or cause to be
delivered to the Collateral Agent any and all Pledged Securities.
(b) Each Grantor will cause any Indebtedness for borrowed
money owed to such Grantor by any Person to be evidenced by a duly executed
promissory note that is pledged and delivered to the Collateral Agent pursuant
to the terms hereof.
(c) Upon delivery to the Collateral Agent, (i) any Pledged
Securities shall be accompanied by stock powers duly executed in blank or other
instruments of transfer satisfactory to the Collateral Agent and by such other
instruments and documents as the Collateral Agent may reasonably request and
(ii) all other property composing part of the Pledged Collateral shall be
accompanied by proper instruments of assignment duly executed by the applicable
Grantor and such other instruments or documents as the Collateral Agent may
reasonably request. Each delivery of Pledged Securities shall be accompanied by
a schedule describing the securities, which schedule shall be attached hereto as
Schedule II and made a part hereof; provided that failure to attach any such
schedule hereto shall not affect the validity of such pledge of such Pledged
Securities. Each schedule so delivered shall supplement any prior schedules so
delivered.
SECTION 3.03. Representations, Warranties and
-------------------------------
Covenants. The Grantors jointly and severally represent,
----------
warrant and covenant to and with the Collateral Agent, for
the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the
issued and outstanding shares of each class of the Equity Interests of
the issuer thereof represented by such Pledged Stock and includes all
Equity Interests, debt securities and promissory notes required to be
pledged hereunder in order to satisfy the Collateral and Guarantee
Requirement;
14
(b) the Pledged Stock and Pledged Debt Securities have been
duly and validly authorized and issued by the issuers thereof and (i)
in the case of Pledged Stock, are fully paid and nonassessable (ii) in
the case of Pledged Debt Securities other than Pledged Debt Securities
issued by Parent, any Borrower or any other Subsidiary, to the
knowledge of the Grantor pledging any such Pledged Debt Securities, are
legal, valid and binding obligations of the issuers thereof and (iii)
in the case of Pledged Debt Securities issued by Parent, any Borrower
or any other Subsidiary, are legal, valid and binding obligations of
the issuer thereof;
(c) except for the security interests granted hereunder, each
Grantor (i) is and, subject to any transfers made in compliance with
the Credit Agreement, will continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II as owned by such Grantor, (ii) holds the same free and
clear of all Liens, other than Liens created by this Agreement and
Permitted Liens, (iii) will make no assignment, pledge, hypothecation
or transfer of, or create or permit to exist any security interest in
or other Lien on, the Pledged Collateral, other than Liens created by
this Agreement and Permitted Liens and (iv) will defend its title or
interest hereto or therein against any and all Liens (other than Liens
created by this Agreement and Permitted Liens), however arising, of all
Persons;
(d) except for restrictions and limitations imposed by the
Loan Documents, the Pledged Collateral is and will continue to be
freely transferable and assignable, and none of the Pledged Collateral
is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual
restriction of any nature that might prohibit, impair, delay or
otherwise affect the pledge of such Pledged Collateral hereunder, the
sale or disposition thereof pursuant hereto or the exercise by the
Collateral Agent of rights and remedies hereunder;
(e) each Grantor has the power and authority to
pledge the Pledged Collateral pledged by it hereunder
in the manner hereby done or contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the
validity of the pledge effected hereby (other than such as have been
obtained and are in full force and effect);
15
(g) by virtue of the execution and delivery by the Grantors of
this Agreement, when any Pledged Securities are delivered to the
Collateral Agent in accordance with this Agreement, the Collateral
Agent will obtain a legal, valid and perfected first priority lien upon
and security interest in such Pledged Securities as security for the
payment and performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the ratable benefit of the Secured Parties, the
rights of the Collateral Agent in the Pledged Collateral as set forth
herein.
SECTION 3.04. Certification of Limited Liability Company and
----------------------------------------------
Limited Partnership Interests.
-----------------------------
Each interest in any limited liability company or limited partnership
controlled by any Grantor and pledged hereunder shall be represented by a
certificate, shall be a "security" within the meaning of Article 8 of the New
York UCC and shall be governed by Article 8 of the New York UCC.
SECTION 3.05. Registration in Nominee Name; Denominations.
--------------------------------------------
The Collateral Agent, on behalf of the Secured Parties, shall have the right
(in its sole and absolute discretion) to hold the Pledged Securities in its own
name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the applicable Grantor, endorsed or assigned in blank or in favor of
the Collateral Agent. Each Grantor will promptly give to the Collateral Agent
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Grantor. The Collateral Agent
shall at all times have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
SECTION 3.06. Voting Rights; Dividends and Interest, etc.
-------------------------------------------
a) Unless and until an Event of Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any all voting
and/or other consensual rights and powers inuring to an owner of
Pledged Securities or any part thereof for any purpose consistent with
the terms of this Agreement, the Credit Agreement and the other Loan
Documents; provided that such rights and powers shall not be exercised
--------
in any manner that could materially and adversely affect the rights
inuring to a holder of any Pledged Securities, the rights and
16
remedies of any of the Collateral Agent or the other Secured Parties
under this Agreement, the Credit Agreement or any other Loan Document
or the ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each
Grantor, or cause to be executed and delivered to such Grantor, all
such proxies, powers of attorney and other instruments as such Grantor
may reasonably request for the purpose of enabling such Grantor to
exercise the voting and/or consensual rights and powers it is entitled
to exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.
(iii) Each Grantor shall be entitled to receive and retain any
and all dividends, interest, principal and other distributions paid on
or distributed in respect of the Pledged Securities to the extent and
only to the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable laws; provided that any noncash
--------
dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or
other exchange of assets to which such issuer may be a party or
otherwise, shall be and become part of the Pledged Collateral, and, if
received by any Grantor, shall not be commingled by such Grantor with
any of its other funds or property but shall be held separate and apart
therefrom, shall be held in trust for the benefit of the Collateral
Agent and shall be forthwith delivered to the Collateral Agent in the
same form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Grantor to dividends, interest, principal or other
distributions that such Grantor is authorized to receive pursuant to paragraph
(a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to receive and retain such
<
17
dividends, interest, principal or other distributions. All dividends, interest,
principal or other distributions received by any Grantor contrary to the
provisions of this Section 3.06 shall be held in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of such
Grantor and shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement). Any and all money and
other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of Section
5.02. After all Events of Default have been cured or waived and the Borrowers
have delivered to the Collateral Agent a certificate to that effect, the
Collateral Agent shall promptly repay to each Grantor (without interest) all
dividends, interest, principal or other distributions that such Grantor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of
this Section 3.06 and that remain in such account.
(c) Upon the occurrence and during the continuance of an Event
of Default, all rights of any Grantor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of
this Section 3.06, and the obligations of the Collateral Agent under paragraph
(a)(ii) of this Section 3.06, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers;
provided that, unless otherwise directed by the Required Lenders, the Collateral
--------
Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Grantors to exercise such
rights. After all Events of Default have been cured or waived and the Borrowers
have delivered to the Collateral Agent a certificate to that effect, each
Grantor will have the right to exercise the voting and consensual rights and
powers that such Grantor would otherwise be entitled to exercise pursuant to the
terms of paragraph (a)(i) above.
ARTICLE IV
Security Interests in Personal Property
---------------------------------------
SECTION 4.01. Security Interest.
------------------
(a) As security for the payment or performance, as the case may be,
18
in full of the Obligations, each Grantor hereby assigns and pledges to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, and hereby grants to the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, a security interest
(the "Security Interest") in all right, title and interest in or to any and all
-----------------
of the following assets and properties 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 "Article 9
---------
Collateral"):
----------
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all cash and Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all inventory
(ix) all Investment Property;
(x) all Letter-of-credit rights;
(xi) all books and records pertaining to the
Article 9 Collateral; and
(xiii) to the extent not otherwise included, all Proceeds,
Supporting Obligations and products of any and all of the foregoing and
all collateral security and guarantees given by any Person with respect
to any of the foregoing.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at
any time and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) with respect to the Article 9
Collateral or any part thereof and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (i) whether such Grantor is an organization, the type of organization
and any
19
organizational identification number issued to such Grantor, (ii) in the case of
a financing statement filed as a fixture filing, a sufficient description of the
real property to which such Article 9 Collateral relates and (iii) a description
of collateral that describes such property in any other manner as the Collateral
Agent may reasonably determine is necessary or advisable to ensure the
perfection of the security interest in the Article 9 Collateral granted to the
Collateral Agent, including describing such property as "all assets" or "all
property". Each Grantor agrees to provide such information to the Collateral
Agent promptly upon request.
Each Grantor also ratifies its authorization for the
Collateral Agent to file in any relevant jurisdiction any initial financing
statements or amendments thereto if filed prior to the date hereof.
The Collateral Agent is further authorized to file with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office or any similar office in any other country) such documents
as may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and
shall not subject the Collateral Agent or any other Secured Party to, or in any
way alter or modify, any obligation or liability of any Grantor with respect to
or arising out of the Article 9 Collateral.
SECTION 4.02. Representations and Warranties.
-------------------------------
The Grantors jointly and severally represent and warrant to
the Collateral Agent and the Secured Parties that:
(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant
to the Collateral Agent the Security Interest in such Article 9
Collateral pursuant hereto and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the
consent or approval of any other person other than any consent or
approval that has been obtained and is in full force and effect.
20
(b) The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein, including
the exact legal name of each Grantor, is correct and complete as of the
Closing Date. Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings,
recordings or registrations containing a description of the Article 9
Collateral have been prepared by the Collateral Agent based upon the
information provided to the Collateral Agent in the Perfection
Certificate for filing in each governmental, municipal or other office
specified in Schedule 6 to the Perfection Certificate (or specified by
notice from the Borrowers to the Collateral Agent after the Closing
Date in the case of filings, recordings or registrations required by
Section 5.12 or 5.14 of the Credit Agreement), and constitute all the
filings, recordings and registrations (other than filings required to
be made in the United States Patent and Trademark Office and the United
States Copyright Office in order to perfect the Security Interest in
Article 0 Xxxxxxxxxx xxxxxxxxxx xx Xxxxxx Xxxxxx Patents, Trademarks
and Copyrights) that are necessary to publish notice of and protect the
validity of and to establish a legal, valid and perfected security
interest in favor of the Collateral Agent (for the ratable benefit of
the Secured Parties) in respect of all Article 9 Collateral in which
the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision
thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as
provided under applicable law with respect to the filing of
continuation statements or amendments. Each Grantor represents and
warrants that a fully executed agreement in the form hereof containing
a description of all Article 9 Collateral consisting of Intellectual
Property with respect to United States registered Patents (and Patents
for which United States registration applications are pending), United
States registered Trademarks (and Trademarks for which United States
registration applications are pending) and United States registered
Copyrights (and Copyrights for which United States registration
applications are pending) has been delivered to the Collateral Agent
for recording with the United States Patent and Trademark Office and
the United States Copyright Office pursuant to 35 U.S.C. ss. 261, 15
U.S.C. ss. 1060 or 17 U.S.C. ss. 205 and the regulations thereunder, as
applicable, and
21
otherwise as may be required pursuant to the laws of any other
applicable jurisdiction and reasonably requested by the Collateral
Agent, to protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Article 9
Collateral consisting of such Intellectual Property in which a security
interest may be perfected by recording with the United States Patent
and Trademark Office and the United States Copyright Office, and no
further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary (other than such actions as
are necessary to perfect the Security Interest with respect to any
Article 9 Collateral consisting of Patents, Trademarks and Copyrights
(or registration or application for registration thereof) acquired or
developed after the date hereof).
(c) The Security Interest constitutes (i) a legal and valid
security interest in all the Article 9 Collateral securing the payment
and performance of the Obligations, (ii) subject to the filings
described in Section 4.02(b), a perfected security interest in all
Article 9 Collateral in which a security interest may be perfected by
filing, recording or registering a financing statement or analogous
document in the United States (or any political subdivision thereof)
and its territories and possessions pursuant to the Uniform Commercial
Code or other applicable law in such jurisdictions and (iii) a security
interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of
this Agreement with the United States Patent and Trademark Office and
the United States Copyright Office, as applicable, and otherwise as may
be required pursuant to the laws of any other applicable jurisdiction.
The Security Interest is and shall be prior to any other Lien on any of
the Article 9 Collateral, other than Liens expressly permitted to be
prior to the Security Interest pursuant to Section 6.02 of the Credit
Agreement.
(d) The Article 9 Collateral is owned by the Grantors free and
clear of any Lien, other than Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement. None of the Grantors has filed or
consented to the filing of (i) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable laws
covering any Article 9 Collateral, (ii) any assignment in which any
Grantor
22
assigns any Article 9 Collateral or any security agreement or similar
instrument covering any Article 9 Collateral with the United States
Patent and Trademark Office or the United States Copyright Office or
(iii) any assignment in which any Grantor assigns any Article 9
Collateral or any security agreement or similar instrument covering any
Article 9 Collateral with any foreign governmental, municipal or other
office, which financing statement or analogous document, assignment,
security agreement or similar instrument is still in effect, except, in
each case, for Liens expressly permitted pursuant to Section 6.02 of
the Credit Agreement.
(e) None of the Grantors holds any Commercial Tort Claim as of
the Closing Date except as indicated on the Perfection Certificate.
(f) All Accounts have been
originated by the Grantors and all Inventory has been
acquired by the Grantors in the ordinary course of
business.
SECTION 4.03. Covenants.
---------
(a) Each Grantor agrees promptly to notify the Collateral
Agent in writing of any change (i) in its corporate name, (ii) in the location
of any office in which it maintains books or records relating to Article 9
Collateral owned by it or any office or facility at which Article 9 Collateral
owned by it is located (including the establishment of any new such office or
facility), (iii) in its identity or type of organization or corporate
structure, (iv) in its Federal Taxpayer Identification Number or organizational
identification number or (v) in its jurisdiction of organization. Each Grantor
agrees promptly to provide the Collateral Agent with certified organizational
documents reflecting any of the changes described in the immediately preceding
sentence. Each Grantor agrees not to effect or permit any change referred to in
the first sentence of this paragraph (a) unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for
the Collateral Agent to continue at all times following such change to have a
valid, legal and perfected first priority security interest in all the Article
9 Collateral. Each Grantor agrees promptly to notify the Collateral Agent if
any material portion of the Article 9 Collateral owned or held by such Grantor
is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Article 9
Collateral owned by it as is
23
consistent with its current practices and in accordance with reasonably prudent
and standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Article 9 Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or schedules in form and detail
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Article 9 Collateral.
(c) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to Section 5.04(a)
of the Credit Agreement, the Borrower shall deliver to the Collateral Agent a
certificate executed by a Financial Officer and the chief legal officer of the
Borrower (i) setting forth the information required pursuant to Schedule 6 of
the Perfection Certificate or confirming that there has been no change in such
information since the date of such certificate or the date of the most recent
certificate delivered pursuant to this Section 4.03(c) and (ii) certifying that
all Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations, including
all refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) of
this Section 4.03(c) to the extent necessary to protect and perfect the Security
Interest for a period of not less than 18 months after the date of such
certificate (except as noted therein with respect to any continuation statements
to be filed within such period). Each certificate delivered pursuant to this
Section 4.03(c) shall identify in the format of Schedule III to this Agreement
all Intellectual Property of any Grantor in existence on the date thereof and
not then listed on such Schedules or previously so identified to the Collateral
Agent.
(d) Each Grantor shall, at its own expense, take any and all
actions necessary to defend title to the Article 9 Collateral against all
Persons and to defend the Security Interest of the Collateral Agent in the
Article 9 Collateral and the priority thereof against any Lien not expressly
permitted to be prior to the Security Interest pursuant to Section 6.02 of the
Credit Agreement.
24
(e) Each Grantor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time request to better assure, preserve, protect and perfect the Security
Interest and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Article 9 Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule III or adding
additional schedules hereto to specifically identify any asset or item that may
constitute Copyrights, Licenses, Patents or Trademarks; provided that any
--------
Grantor shall have the right, exercisable within 10 days after it has been
notified by the Collateral Agent of the specific identification of such Article
9 Collateral, to advise the Collateral Agent in writing of any inaccuracy of the
representations and warranties made by such Grantor hereunder with respect to
such Article 9 Collateral. Each Grantor agrees that it will use its commercially
reasonable efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Article 9 Collateral within 30 days after the date it has been notified
by the Collateral Agent of the specific identification of such Article 9
Collateral.
(f) The Collateral Agent and such Persons as the Collateral
Agent may reasonably designate shall have the right, at the Grantors' own cost
and expense, to inspect the Article 9 Collateral, all records related thereto
(and to make extracts and copies from such records) and the premises upon which
any of the Article 9 Collateral is located, at reasonable times and intervals
during normal business hours upon reasonable advance notice to the respective
Grantor, to discuss the Grantors' affairs with the officers of the Grantors and
their independent accountants and to verify under reasonable procedures, in
accordance with Section 5.07 of the Credit Agreement, the validity, amount,
quality, quantity, value, condition and status of, or any other
25
matter relating to, the Article 9 Collateral, including, in the case of Accounts
or Article 9 Collateral in the possession of any third person, by contacting
Account Debtors or the third person possessing such Article 9 Collateral for the
purpose of making such a verification. Subject to Section 9.12 of the Credit
Agreement, the Collateral Agent shall have the right to share any information it
gains from such inspection or verification with any Secured Party.
(g) At its option, the Collateral Agent may discharge past due
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Article 9 Collateral and not
permitted pursuant to Section 6.02 of the Credit Agreement, and may pay for the
maintenance and preservation of the Article 9 Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided, however, that nothing in
--------
this Section 4.03(g) shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Collateral Agent or any
Secured Party to cure or perform, any covenants or other promises of any Grantor
with respect to taxes, assessments, charges, fees, Liens, security interests or
other encumbrances and maintenance as set forth herein or in the other Loan
Documents.
(h) If at any time any Grantor shall take a security interest
in any property of an Account Debtor or any other Person to secure payment and
performance of an Account, such Grantor shall promptly assign such security
interest to the Collateral Agent to the extent permitted by any contracts or
arrangements to which such property is subject. Such assignment need not be
filed of public record unless necessary to continue the perfected status of the
security interest against creditors of and transferees from the Account Debtor
or other Person granting the security interest.
(i) Each Grantor shall remain liable to observe and perform
all the conditions and obligations to be observed and performed by it under each
contract, agreement or instrument relating to the Article 9 Collateral, all in
accordance with the terms and conditions thereof, and each Grantor jointly and
severally agrees to indemnify and hold harmless the Collateral Agent and the
Secured Parties from and against any and all liability for such performance.
26
(j) None of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as expressly
permitted by the Credit Agreement. None of the Grantors shall make or permit to
be made any transfer of the Article 9 Collateral and each Grantor shall remain
at all times in possession of the Article 9 Collateral owned by it, except that
(i) Inventory may be sold in the ordinary course of business and (ii) unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Article 9 Collateral (which notice may be given by telephone if
promptly confirmed in writing), the Grantors may use and dispose of the Article
9 Collateral in any lawful manner not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document. Without limiting the
generality of the foregoing, each Grantor agrees that it shall not permit any
Inventory to be in the possession or control of any warehouseman, bailee, agent
or processor at any time unless such warehouseman, bailee, agent or processor
shall have been notified of the Security Interest and shall have acknowledged in
writing, in form and substance reasonably satisfactory to the Collateral Agent,
that such warehouseman, agent, bailee or processor holds the Inventory for the
benefit of the Collateral Agent subject to the Security Interest and shall act
upon the instructions of the Collateral Agent without further consent from the
Grantor, and that such warehouseman, bailee, agent or processor further agrees
to waive and release any Lien held by it with respect to such Inventory, whether
arising by operation of law or otherwise; provided that such written
--------
acknowledgment shall not be required until the fair market value of all
Inventory in such possesion or under such control exceeds $1,000,000 in
aggregate amount.
(k) None of the Grantors will, without the Collateral Agent's
prior written consent, grant any extension of the time of payment of any
Accounts included in the Article 9 Collateral, compromise, compound or settle
the same for less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or settlements
granted or made in the ordinary course of business and consistent with its
current practices and in accordance with reasonably prudent and standard
practice used in industries that are the same as or similar to those in which
such Grantor is engaged.
27
(l) The Grantors, at their own expense, shall maintain or
cause to be maintained insurance covering physical loss or damage to the
Inventory and Equipment in accordance with the requirements set forth in
Schedule IV hereto and Section 5.02 of the Credit Agreement. Each Grantor
irrevocably makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent) as such
Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Article 9 Collateral under policies of insurance, endorsing the
name of such Grantor on any check, draft, instrument or other item of payment
for the proceeds of such policies of insurance and for making all determinations
and decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the Collateral
Agent may, without waiving or releasing any obligation or liability of the
Grantors hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Collateral Agent deems advisable. All sums
disbursed by the Collateral Agent in connection with this Section 4.03(l),
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby.
(m) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, its Chattel Paper and its books, records
and documents evidencing or pertaining thereto with an appropriate reference to
the fact that such Chattel Paper has been assigned to the Collateral Agent for
the benefit of the Secured Parties and that the Collateral Agent has a security
interest therein.
SECTION 4.04. Other Actions.
-------------
In order to further insure the attachment, perfection and priority of, and the
ability of the Collateral Agent to enforce, the Collateral Agent's security
interest in the Article 9 Collateral, each Grantor agrees, in each case at such
Grantor's own expense, to take the following actions with respect to the
following Article 9 Collateral:
(a) Instruments and Tangible Chattel Paper. If
---------------------------------------
any Grantor shall at any time hold or acquire any
Instruments or Tangible Chattel Paper, such Grantor
shall forthwith endorse, assign and deliver the same to
28
the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time
to time reasonably request.
(b) Deposit Accounts.
----------------
(i) Each Grantor shall pay or cause to
be paid, at or prior to the end of each Business Day, (x) to the
Collateral Agent for deposit in a Concentration Account or (y) to a
bank with which such Grantor maintains a deposit account (a "Deposit
Account Bank") for deposit in such deposit account (A) all Proceeds of
Collateral in which a security interest is granted hereunder and (B)
all other cash of such Grantor.
(ii) (x) For deposit accounts holding in the
aggregate at least 80% of all amounts held by all Grantors in
all deposit accounts that are maintained as of the Closing
Date, the applicable Grantors shall execute and deliver, and
cause the Deposit Account Bank in which any such deposit
account is maintained to execute and deliver, Deposit Account
Control Agreements and (y) for all deposit accounts that the
Grantors at any time open after the Closing Date, the
applicable Grantors shall execute and deliver, and use their
best efforts to cause the Deposit Account Bank in which any
such deposit account is maintained to execute and deliver, a
Deposit Account Control Agreement, provided, that the Grantors
--------
shall not permit the aggregate amount held in any deposit
account opened after the Closing Date for which the Deposit
Account Bank has not executed and delivered a Deposit Account
Control Agreement to exceed $10,000. The Grantors shall not
permit the aggregate amounts held in accounts for which no
Control Agreement has been executed by the Deposit Account
Bank and delivered to the Administrative Agent to exceed
$500,000. The provisions of this clause (ii) shall not apply
to (A) any Concentration Account and (B) any Deposit Account
Bank for which the Collateral Agent is the depositary bank.
(iii) Each Grantor shall instruct the Deposit Account
Banks with which such Grantor maintains deposit accounts
(whether or not any such Deposit Account Bank has a Deposit
Account Control Agreement) to pay to the Collateral Agent for
deposit in a Concentration Account, at the end of
29
each Business Day, in same day funds, an amount equal to the
balance of such deposit accounts.
(iv) The Concentration Account shall be under the
sole dominion and control of the Collateral Agent. Each
Grantor acknowledges and agrees that such Grantor has no right
of withdrawal from the Concentration Account. So long as no
Event of Default has occurred and is continuing, the
Collateral Agent shall promptly remit any funds on deposit in
the Concentration Account to the General Fund Account and
Parent shall have the right, at any time and from time to
time, to withdraw such amounts from the General Fund Account
that, in the exercise of its prudent business judgment, it
shall deem to be necessary or advisable for the conduct of its
business operations in the ordinary course.
(v) Effective upon notice to the Grantors from the
Collateral Agent after the occurrence and during the
continuance of an Event of Default (which notice may be given
by telephone if promptly confirmed in writing), the
Concentration Account will, without any further action on the
part of any Grantor or the Collateral Agent, convert into a
closed lockbox account under the sole dominion and control of
the Collateral Agent in which funds are held subject to the
rights of the Collateral Agent hereunder.
(vi) Each Grantor acknowledges and agrees that (x)
the funds on deposit in the deposit accounts (including in the
Concentration Account) shall continue to be collateral
security for all the Obligations and (y) upon the occurrence
and during the continuance of an Event of Default and if
expressly consented to in writing by all Lenders (which
consent may not be unreasonably withheld), the funds on
deposit in such deposit accounts (including in the
Concentration Account) shall be applied as provided in Section
5.02. Each Grantor irrevocably authorizes the Collateral Agent
to (A) notify each Sub-Agent of the occurrence of an Event of
Default and (B) following the occurrence of an Event of
Default and if expressly consented to in writing by all
Lenders (which consent may not be unreasonably withheld),
instruct each Sub-Agent to apply the funds on deposit in such
deposit account in accordance with Section 5.02. Each Grantor
hereby
30
agrees to irrevocably direct each Sub-Agent to comply with the
instructions of the Collateral Agent with respect to the
relevant deposit account without further consent from the
Grantor or any other Person.
(c) Investment Property.
-------------------
Except to the extent otherwise provided in Article III, if any Grantor
shall at any time hold or acquire any Certificated Securities, such
Grantor shall forthwith endorse, assign and deliver the same to the
Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from
time to time specify. If any securities now or hereafter acquired by
any Grantor are uncertificated and are issued to such Grantor or its
nominee directly by the issuer thereof, such Grantor shall immediately
notify the Collateral Agent thereof and, at the Collateral Agent's
request and option, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (i) cause the
issuer to agree to comply with instructions from the Collateral Agent
as to such securities, without further consent of any Grantor or such
nominee, or (ii) arrange for the Collateral Agent to become the
registered owner of the securities. If any securities, whether
certificated or uncertificated, or other investment property now or
hereafter acquired by any Grantor are held by such Grantor or its
nominee through a securities intermediary or commodity intermediary,
such Grantor shall immediately notify the Collateral Agent thereof
and, at the Collateral Agent's request and option, pursuant to an
agreement in form and substance reasonably satisfactory to the
Collateral Agent, either (A) cause such securities intermediary or
(as the case may be) commodity intermediary to agree to comply with
entitlement orders or other instructions from the Collateral Agent to
such securities intermediary as to such securities or other investment
property or (as the case may be) to apply any value distributed on
account of any commodity contract as directed by the Collateral Agent
to such commodity intermediary, in each case without further consent
of any Grantor or such nominee, or (B) in the case of Financial Assets
or other Investment Property held through a securities intermediary,
arrange for the Collateral Agent to become the entitlement holder with
respect to such investment property, with the Grantor being permitted,
only with the consent of the Collateral Agent, to exercise rights to
withdraw or otherwise deal with such investment property. The
31
Collateral Agent agrees with each of the Grantors that the Collateral
Agent shall not give any such entitlement orders or instructions or
directions to any such issuer, securities intermediary or commodity
intermediary, and shall not withhold its consent to the exercise of any
withdrawal or dealing rights by any Grantor, unless an Event of Default
has occurred and is continuing or, after giving effect to any such
investment and withdrawal rights, would occur. The provisions of this
paragraph (c) shall not apply to any financial assets credited to a
securities account for which the Collateral Agent is the securities
intermediary.
(d) Electronic Chattel Paper and Transferable Records.
-------------------------------------------------
If any Grantor at any time holds or acquires an interest in any
Electronic Chattel Paper or any "transferable record", as that term is
defined in Section 201 of the Federal Electronic Signatures in Global
and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, such
Grantor shall promptly notify the Collateral Agent thereof and, at the
request of the Collateral Agent, shall take such action as the
Collateral Agent may reasonably request to vest in the Collateral
Agent control under New York UCC Section 9-105 of such Electronic
Chattel Paper or control under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act, as so in effect
in such jurisdiction, of such transferable record. The Collateral
Agent agrees with such Grantor that the Collateral Agent will arrange,
pursuant to procedures reasonably satisfactory to the Collateral Agent
and so long as such procedures will not result in the Collateral
Agent's loss of control, for the Grantor to make alterations to the
Electronic Chattel Paper or transferable record permitted under UCC
Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section
16 of the Uniform Electronic Transactions Act for a party in control
to allow without loss of control, unless an Event of Default has
occurred and is continuing or would occur after taking into account
any action by such Grantor with respect to such Electronic Chattel
Paper or transferable record.
(e) Letter-of-Credit Rights.
------------------------
If any Grantor is at any time a beneficiary under a letter of credit
now or hereafter issued in favor of such Grantor, such
32
Grantor shall promptly notify the Collateral Agent thereof and, at the
request and option of the Collateral Agent, such Grantor shall,
pursuant to an agreement in form and substance satisfactory to the
Collateral Agent, either (i) arrange for the issuer and any confirmer
of such letter of credit to consent to an assignment to the Collateral
Agent of the proceeds of any drawing under the letter of credit or (ii)
arrange for the Collateral Agent to become the transferee beneficiary
of the letter of credit, with the Collateral Agent agreeing, in each
case, that the proceeds of any drawing under the letter of credit are
to be paid to the applicable Grantor unless an Event of Default has
occurred or is continuing.
(f) Commercial Tort Claims.
----------------------
If any Grantor shall at any time hold or acquire a Commercial Tort
Claim in an amount reasonably estimated to exceed $1,000,000, the
Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor, including a summary description of
such claim, and grant to the Collateral Agent in writing a security
interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Collateral Agent.
SECTION 4.05. Covenants Regarding Patent, Trademark and
-----------------------------------------
Copyright Collateral.
--------------------
(a) Each Grantor agrees that it will not do any act or omit
to do any act (and will exercise commercially reasonable efforts to prevent
its licensees from doing any act or omitting to do any act) whereby any Patent
that is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
xxxx any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.
(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such Trademark
with notice of Federal or foreign registration to the extent necessary and
sufficient to establish and preserve its maximum rights under applicable law and
(iv) not knowingly use or knowingly permit the use of such Trademark in
violation of any third-party rights.
33
(c) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each work covered by a Copyright material to the
conduct of such Grantor's business, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately
if it knows or has reason to know that any Patent, Trademark or Copyright
material to the conduct of such Grantor's business may become abandoned, lost or
dedicated to the public, or of any materially adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
United States Copyright Office or any court or similar office of any country)
regarding such Grantor's ownership of any such Patent, Trademark or Copyright,
its right to register the same or its right to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent or
for the registration of any Trademark or Copyright with the United States Patent
and Trademark Office, the United States Copyright Office or any office or agency
in any political subdivision of the United States or in any other country or any
political subdivision thereof, unless it promptly informs the Collateral Agent
thereof, and, upon the request of the Collateral Agent, executes and delivers
any and all agreements, instruments, documents and papers as the Collateral
Agent may reasonably request to evidence the Collateral Agent's security
interest in such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute and file such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any office or agency
in any political subdivision of the United States or in any other country or any
political subdivision thereof to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct of
such Grantor's
34
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancelation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that
any Article 9 Collateral consisting of a material Patent, Trademark or Copyright
has been or is about to be infringed, misappropriated or diluted by a third
party, such Grantor shall promptly notify the Collateral Agent and shall, if
consistent with good business judgment, promptly xxx for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as are
appropriate under the circumstances to protect such Article 9 Collateral.
(h) Upon and during the continuance of an Event of Default,
each Grantor shall use commercially reasonable efforts to obtain all requisite
consents or approvals from the licensor under each Copyright License, Patent
License or Trademark License to effect the assignment of all such Grantor's
right, title and interest thereunder to the Collateral Agent or its designee.
ARTICLE V
Remedies
--------
SECTION 5.01. Remedies Upon Default.
---------------------
Upon the occurrence and during the continuance of an Event of Default, each
Grantor agrees to deliver each item of Collateral to the Collateral Agent on
demand, and it is agreed that the Collateral Agent shall have the right to take
any of or all the following actions at the same or different times: (a) with
respect to any Article 9 Collateral consisting of Intellectual Property, on
demand, to cause the Security Interest to become an assignment, transfer and
conveyance of any of or all such Article 9 Collateral by the applicable
Grantors to the Collateral Agent or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or nonexclusive basis, any
such Article 9 Collateral throughout the world on such terms and conditions and
in such manner as the Collateral Agent shall determine (other than in violation
of any then-existing licensing arrangements to the extent that waivers cannot
be obtained); and (b) with or without legal process and with or without prior
notice or demand for
35
performance, to take possession of the Article 9 Collateral and without
liability for trespass to enter any premises where the Article 9 Collateral may
be located for the purpose of taking possession of or removing the Article 9
Collateral and, generally, to exercise any and all rights afforded to a secured
party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral at a public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale of securities (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale of Collateral the Collateral Agent shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives and releases (to the extent permitted by law) all
rights of redemption, stay, valuation and appraisal that such Grantor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10
days' written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall
36
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
be sold again upon like notice. At any public (or, to the extent permitted by
law, private) sale made pursuant to this Section 5.01, any Secured Party may bid
for or purchase for cash, free (to the extent permitted by law) from any right
of redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and such Secured Party may,
upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this Section 5.01 shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-610(b) of the New
York UCC or its equivalent in other jurisdictions.
SECTION 5.02. Application of Proceeds.
------------------------
The Collateral Agent shall apply the proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, as follows:
37
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent and the Collateral Agent in connection with
such collection or sale or otherwise in connection with this Agreement,
any other Loan Document or any of the Obligations, including all court
costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Administrative Agent or the
Collateral Agent hereunder or under any other Loan Document on behalf
of any Grantor and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder or under any other
Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the date
of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or purchasers
of the Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase money paid over
to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 5.03. Grant of License to Use Intellectual Property.
---------------------------------------------
For the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Agreement at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Article 9 Collateral consisting of Intellectual Property
now owned or hereafter acquired by such Grantor, wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer software
and programs used for the
38
compilation or printout thereof. The use of such license by the Collateral Agent
may be exercised, at the option of the Collateral Agent, upon the occurrence and
during the continuation of an Event of Default; provided that any license,
--------
sublicense or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
SECTION 5.04. Securities Act, etc.
--------------------
In view of the position of the Grantors in relation to the Pledged Collateral,
or because of other current or future circumstances, a question may arise under
the Securities Act of 1933, as now or hereafter in effect, or any similar
statute hereafter enacted analogous in purpose or effect (such Act and any such
similar statute as from time to time in effect being called the "Federal
-------
Securities Laws") with respect to any disposition of the Pledged Collateral
---------------
permitted hereunder. Each Grantor understands that compliance with the Federal
Securities Laws might very strictly limit the course of conduct of the
Collateral Agent if the Collateral Agent were to attempt to dispose of all or
any part of the Pledged Collateral, and might also limit the extent to which or
the manner in which any subsequent transferee of any Pledged Collateral could
dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to dispose of all or
part of the Pledged Collateral under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. Each Grantor
recognizes that in light of such restrictions and limitations the Collateral
Agent may, with respect to any sale of the Pledged Collateral, limit the
purchasers to those who will agree, among other things, to acquire such Pledged
Collateral for their own account, for investment, and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that in
light of such restrictions and limitations, the Collateral Agent, in its sole
and absolute discretion, (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Collateral
or part thereof shall have been filed under the Federal Securities Laws and (b)
may approach and negotiate with a single potential purchaser to effect such
sale. Each Grantor acknowledges and agrees that any such sale might result in
prices and other terms less favorable to the seller than if such sale were a
public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Collateral at a price that the Collateral Agent, in its
sole and absolute discretion, may in good xxxxx xxxx
39
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might have been realized if the sale were deferred
until after registration as aforesaid or if more than a single purchaser were
approached. The provisions of this Section 5.04 will apply notwithstanding the
existence of a public or private market upon which the quotations or sales
prices may exceed substantially the price at which the Collateral Agent sells.
SECTION 5.05. Registration, etc.
-----------------
Each Grantor agrees that, upon the occurrence and during the continuance of an
Event of Default, if for any reason the Collateral Agent desires to sell any of
the Pledged Collateral at a public sale, it will, at any time and from time to
time, upon the written request of the Collateral Agent, use its commercially
reasonable efforts to take or to cause the issuer of such Pledged Collateral to
take such action and prepare, distribute and/or file such documents, as are
required or advisable in the reasonable opinion of counsel for the Collateral
Agent to permit the public sale of such Pledged Collateral. Each Grantor
further agrees to indemnify, defend and hold harmless the Administrative Agent,
the Collateral Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling persons from and
against all loss, liability, expenses, costs of counsel (including, without
limitation, reasonable fees and expenses to the Collateral Agent of legal
counsel), and claims (including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of or is based
upon any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any notification or
offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information
furnished in writing to such Grantor or the issuer of such Pledged Collateral
by the Collateral Agent or any other Secured Party expressly for use therein.
Each Grantor further agrees, upon such written request referred to above, to
use its commercially reasonable efforts to qualify, file or register, or cause
the issuer of such Pledged Collateral to qualify, file or register, any of the
Pledged Collateral under the Blue Sky or other securities laws of such states
as may be requested by the Collateral Agent and keep effective, or cause to be
kept effective, all such qualifications, filings or registrations. Each Grantor
will bear all costs and expenses of carrying out its obligations under this
Section 5.05. Each Grantor acknowledges that
40
there is no adequate remedy at law for failure by it to comply with the
provisions of this Section 5.05 and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in
this Section 5.05 may be specifically enforced.
ARTICLE VI
Indemnity, Subrogation and Subordination
----------------------------------------
SECTION 6.01. Indemnity and Subrogation.
--------------------------
In addition to all such rights of indemnity and subrogation as the Guarantors
may have under applicable law (but subject to Section 6.03), the Borrowers
agree that (a) in the event a payment shall be made by any Guarantor under this
Agreement in respect of any Obligation, the Borrowers shall, jointly and
severally, indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the Person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Guarantor shall be sold pursuant to this Agreement or any
other Security Document to satisfy in whole or in part an Obligation, the
Borrowers shall, jointly and severally, indemnify such Guarantor in an amount
equal to the greater of the book value or the fair market value of the assets
so sold.
SECTION 6.02. Contribution and Subrogation.
----------------------------
Each Guarantor (a "Contributing Guarantor") agrees (subject to Section 6.03)
----------------------
that, in the event a payment shall be made by any other Guarantor hereunder in
respect of any Obligation or assets of any other Guarantor shall be sold
pursuant to any Security Document to satisfy any Obligation owed to any Secured
Party and such other Guarantor (the "Claiming Guarantor") shall not have been
------------------
fully indemnified by the Borrowers as provided in Section 6.01, the
Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value or the
fair market value of such assets, as the case may be, in each case multiplied
by a fraction of which the numerator shall be the net worth of the Contributing
Guarantor on the date hereof and the denominator shall be the aggregate net
worth of all the Guarantors on the date hereof (or, in the case of any
Guarantor becoming a party hereto pursuant to Section 7.16, the date of the
supplement hereto executed and delivered by such Guarantor). Any Contributing
Guarantor making any payment to a Claiming Guarantor pursuant to this Section
6.02 shall be subrogated to the rights of such
41
Claiming Guarantor under Section 6.01 to the extent of such payment.
SECTION 6.03. Subordination.
-------------
(a) Notwithstanding any provision
of this Agreement to the contrary, all rights of the Guarantors under Sections
6.01 and 6.02 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the part
of any Borrower or any Guarantor to make the payments required by Sections 6.01
and 6.02 (or any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities of any Guarantor with
respect to its obligations hereunder, and each Guarantor shall remain liable for
the full amount of the obligations of such Guarantor hereunder.
(b) Each Guarantor hereby agrees that all Indebtedness and
other monetary obligations owed by it to any other Guarantor or any Subsidiary
shall be fully subordinated to the indefeasible payment in full in cash of the
Obligations.
ARTICLE VII
Miscellaneous
-------------
SECTION 7.01. Notices.
-------
All communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 9.01 of the
Credit Agreement. All communications and notices hereunder to any Subsidiary
Loan Party shall be given to it in care of the Borrowers as provided in Section
9.01 of the Credit Agreement.
SECTION 7.02. Security Interest Absolute.
--------------------------
All rights of the Collateral Agent hereunder, the Security Interest, the
security interest in the Pledged Collateral and all obligations of each Grantor
and Guarantor hereunder shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of any
Lien on other collateral, or any release or amendment or
42
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Grantor or Guarantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement.
----------------------
All covenants, agreements, representations and warranties made by the Loan
Parties in the Loan Documents and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the Lenders
and shall survive the execution and delivery of the Loan Documents and the
making of any Loans and the issuance of any Letters of Credit, regardless of
any investigation made by any Lender or on its behalf and notwithstanding that
the Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended under the Credit Agreement, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under any
Loan Document is outstanding and unpaid or any Letter of Credit is outstanding
and so long as the Commitments have not expired or terminated.
SECTION 7.04. Binding Effect; Several Agreement.
---------------------------------
This Agreement shall become effective as to any Loan Party when a counterpart
hereof executed on behalf of such Loan Party shall have been delivered to the
Administrative Agent and a counterpart hereof shall have been executed on behalf
of the Collateral Agent, and thereafter shall be binding upon such Loan Party
and the Collateral Agent and their respective permitted successors and assigns,
and shall inure to the benefit of such Loan Party, the Collateral Agent and the
other Secured Parties and their respective permitted successors and assigns,
except that no Loan Party shall have the right to assign or transfer its rights
or obligations hereunder or any interest herein or in the Collateral (and any
such assignment or transfer shall be void) except as expressly contemplated by
this Agreement or the Credit Agreement. This Agreement shall be construed as a
separate agreement with respect to each Loan Party and may be amended, modified,
supplemented, waived or released with respect to any Loan Party without the
approval of any other Loan Party and without affecting the obligations of any
other Loan Party hereunder.
SECTION 7.05. Successors and Assigns.
-----------------------
Whenever in this Agreement any of the parties hereto is referred to,
43
such reference shall be deemed to include the permitted successors and assigns
of such party; and all covenants, promises and agreements by or on behalf of any
Grantor or the Collateral Agent that are contained in this Agreement shall bind
and inure to the benefit of their respective permitted successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses;
------------------------------------
Indemnification.
---------------
(a) The parties hereto agree that the Collateral Agent shall be
entitled to reimbursement of its expenses incurred hereunder as provided in
Section 9.03 of the Credit Agreement.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees (as defined in Section
9.03 of the Credit Agreement) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto, or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
--------
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.06 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 7.06 shall be payable on written
demand therefor.
SECTION 7.07. Collateral Agent Appointed
--------------------------
Attorney-in-Fact.
-----------------
Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement
44
and taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Grantor: (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to ask for, demand, xxx for, collect, receive and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral; (d) to sign the name of any Grantor on any invoice or xxxx of
lading relating to any of the Collateral; (e) to send verifications of Accounts
to any Account Debtor; (f) to commence and prosecute any and all suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to
collect or otherwise realize on all or any of the Collateral or to enforce any
rights in respect of any Collateral; (g) to settle, compromise, compound, adjust
or defend any actions, suits or proceedings relating to all or any of the
Collateral; (h) to notify, or to require any Grantor to notify, Account Debtors
to make payment directly to the Collateral Agent; and (i) to use, sell, assign,
transfer, pledge, make any agreement with respect to or otherwise deal with all
or any of the Collateral, and to do all other acts and things necessary to carry
out the purposes of this Agreement, as fully and completely as though the
Collateral Agent were the absolute owner of the Collateral for all purposes;
provided, that nothing herein contained shall be construed as requiring or
obligating the Collateral Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the Collateral Agent, or
to present or file any claim or notice, or to take any action with respect to
the Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor 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 wilful misconduct.
SECTION 7.08. GOVERNING LAW.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
45
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 7.09. Waivers; Amendment.
------------------
(a) No failure or delay by the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender in exercising any right, power
or remedy hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy, or any abandonment or discontinuance of steps to enforce such a right,
power or remedy, preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The rights, powers and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights, powers or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 7.09, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making
of a Loan or the issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, the
Collateral Agent, any Lender or the Issuing Bank may have had notice or
knowledge of such Default at the time. No notice or demand on any Loan Party in
any case shall entitle any Loan Party to any other or further notice or demand
in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Loan Party or Loan Parties
with respect to which such waiver, amendment or modification is to apply,
subject to any consent required in accordance with Section 9.02 of the Credit
Agreement.
SECTION 7.10. WAIVER OF JURY TRIAL.
---------------------
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF
46
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.
SECTION 7.11. Severability.
------------
Any provision of this Agreement held to be invalid, illegal or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity, illegality or unenforceability without affecting the
validity, legality and enforceability in such jurisdiction of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The
parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7.12. Counterparts.
------------
This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original but all
of which, when taken together, shall constitute a single contract, and shall
become effective as provided in Section 7.04. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement.
SECTION 7.13. Headings.
---------
Article and Section headings used herein are for the purpose of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
SECTION 7.14 Jurisdiction; Consent to Service of Process.
--------------------------------------------
(a) Each of the Loan Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
or, to the
47
extent permitted by law, such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against any Grantor or
Guarantor, or its proper ties, in the courts of any jurisdiction.
(b) Each of the Loan Parties hereby irrevocably and
unconditionally waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (a) of this Section 7.14. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement or any other Loan Document will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
SECTION 7.15. Termination or Release.
----------------------
(a) This Agreement, the guarantees made herein, the Security
Interest and all other security interests granted hereby shall terminate when
all the Loan Document Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the LC
Exposure has been reduced to zero and the Issuing Bank has no further
obligations to issue Letters of Credit under the Credit Agreement.
(b) A Subsidiary Loan Party shall automatically be released
from its obligations hereunder and the security interests in the Collateral of
such Subsidiary Loan Party shall be automatically released upon the consummation
of any transaction permitted by the Credit Agreement as a result of which such
Subsidiary Loan Party ceases to be a Subsidiary of the Parent; provided that the
--------
Required Lenders shall have consented to such transaction (to the extent
required by the Credit Agreement) and the terms of such consent did not provide
otherwise.
48
(c) Upon any sale or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement to any Person that is
not a Grantor, or upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to Section
9.02 of the Credit Agreement, the security interest in such Collateral shall be
automatically released, provided that the Proceeds resulting from such sale or
other transfer shall be included in the Collateral.
(d) In connection with any termination or release pursuant to
paragraph (a), (b) or (c) of this Section 7.15, the Collateral Agent shall
execute and deliver to any Grantor at such Grantor's expense all documents that
such Grantor shall reasonably request to evidence such termination or release.
Any execution and delivery of documents pursuant to this Section 7.15 shall be
without recourse to or warranty by the Collateral Agent.
SECTION 7.16. Additional Subsidiaries.
-----------------------
Pursuant to Section 5.11 of the Credit Agreement, each Subsidiary of a Loan
Party that was not in existence or not a Subsidiary on the date of the Credit
Agreement and is not a Foreign Subsidiary is required to enter into this
Agreement as a Subsidiary Loan Party upon becoming such a Subsidiary. Upon
execution and delivery by the Collateral Agent and a Subsidiary of an
instrument in the form of Exhibit I hereto, such Subsidiary shall become a
Subsidiary Loan Party hereunder with the same force and effect as if originally
named as a Subsidiary Loan Party herein. The execution and delivery of any such
instrument shall not require the consent of any other Loan Party hereunder. The
rights and obligations of each Loan Party hereunder shall remain in full force
and effect notwithstanding the addition of any new Loan Party as a party to
this Agreement.
SECTION 7.17. Right of Setoff.
----------------
Subject to Section 9.08 of the Credit Agreement, if an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of any Subsidiary Loan Party against any of and all the
obligations of such Subsidiary Loan Party now or hereafter existing under this
Agreement owed to such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured.
49
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
XXXXX'X CORPORATION,
by /s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
and Treasurer
DENNY'S, INC.,
by /s/ Xxxxxxx X. Xxxxx
-------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
and Treasurer
XXXXX'X REALTY, INC.,
by /s/ Xxxxxxx X. Xxxxx
-------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
and Treasurer
DENNY'S HOLDINGS, INC.,
by /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Secretary/
Vice-President
DFO, INC.,
by /s/ Xxxxxxx X. Xxxxx
-------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
and Treasurer
JPMORGAN CHASE BANK, as
Collateral Agent,
by /s/ Xxxx X. Xxxxxxx
------------------
Name: Xxxx X. Xxxxxxx
Title: XX Xxxxxx Xxxxx Bank
50
