EXHIBIT 10.2
GUARANTEE AND COLLATERAL AGREEMENT
made by
DLI HOLDING II CORP.
and
DEL LABORATORIES, INC.
and certain of its Subsidiaries
in favor of
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
Dated as of December 29, 2005
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINED TERMS.......................................................1
1.1. Definitions..................................................1
1.2. Other Definitional Provisions................................6
SECTION 2. GUARANTEE...........................................................7
2.1. Guarantee....................................................7
2.2. Reimbursement, Contribution and Subrogation..................8
2.3. Amendments, etc. with respect to the Borrower Obligations....9
2.4. Guarantee Absolute and Unconditional........................10
2.5. Reinstatement...............................................10
2.6. Payments....................................................10
SECTION 3. GRANT OF SECURITY INTEREST.........................................11
SECTION 4. REPRESENTATIONS AND WARRANTIES.....................................12
4.1. Representations in Credit Agreement.........................12
4.2. Title; No Other Liens.......................................12
4.3. Perfected Required Priority Liens...........................12
4.4. Jurisdiction of Organization; Chief Executive Office........13
4.5. Inventory and Equipment.....................................14
4.6. Farm Products...............................................14
4.7. Pledged Stock and Pledged Notes.............................14
4.8. Receivables.................................................14
4.9. Intellectual Property.......................................15
SECTION 5. COVENANTS..........................................................16
5.1. Covenants in Credit
Agreement............................................................16
5.2. Delivery and Control of Instruments, Certificated Securities,
Chattel Paper,
Negotiable Documents, Investment Property and Letter of
Credit Rights.........................................16
5.3. Maintenance of Insurance....................................18
5.4. Payment of Obligations......................................18
5.5. Maintenance of Perfected Security Interest; Further
Documentation.........................................18
5.6. Changes in Locations, Name, etc.............................18
5.7. Notices.....................................................19
5.8. Investment Property.........................................19
5.9. Receivables.................................................20
5.10. Intellectual Property.......................................20
5.11. Vehicles....................................................22
SECTION 6. REMEDIAL PROVISIONS................................................22
6.1. Certain Matters Relating to Receivables.....................22
i
6.2. Communications with Obligors; Grantors Remain Liable........23
6.3. Investment Property.........................................24
6.4. Proceeds to be Turned Over to Administrative Agent..........24
6.5. Application of Proceeds.....................................25
6.6. Code and Other Remedies.....................................25
6.7. Registration Rights.........................................25
6.8. Deficiency..................................................26
6.9. License.....................................................26
SECTION 7. THE ADMINISTRATIVE AGENT...........................................27
7.1. Administrative Agent's Appointment as Attorney-in-Fact, etc.27
7.2. Duty of Administrative Agent................................28
7.3. Financing Statements........................................29
7.4. Authority, Immunities and Indemnities of Administrative
Agent.................................................29
SECTION 8. MISCELLANEOUS......................................................29
8.1. Amendments in Writing.......................................29
8.2. Notices.....................................................29
8.3. No Waiver by Course of Conduct; Cumulative Remedies.........29
8.4. Enforcement Expenses; Indemnification.......................30
8.5. Successors and Assigns......................................30
8.6. Set-Off.....................................................30
8.7. Counterparts................................................31
8.8. Severability................................................31
8.9. Section Headings............................................31
8.10. Integration.................................................31
8.11. GOVERNING LAW...............................................31
8.12. Submission To Jurisdiction; Waivers.........................31
8.13. Acknowledgements............................................31
8.14. Additional Grantors.........................................32
8.15. Releases....................................................32
8.16. WAIVER OF JURY TRIAL........................................32
SCHEDULES
Schedule 1 Notice Addresses
Schedule 2 Investment Property
Schedule 3 Jurisdictions of Organization and Chief Executive Offices
Schedule 4 Filings and Other Actions required for Perfection
Schedule 5 Inventory and Equipment Locations
Schedule 6 Intellectual Property
Schedule 7 Commercial Tort Claims
ANNEXES
Annex I Form of Assumption Agreement
Annex II Form of Acknowledgement and Consent
Annex III Form of Intellectual Property Security Agreement
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GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 29, 2005, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "GRANTORS"), in favor of JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the "ADMINISTRATIVE
AGENT") for the banks, financial institutions and other entities (the "LENDERS")
from time to time party as Lenders to the Credit Agreement, dated as of December
29, 2005 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among DLI Holding II Corp., a Delaware corporation
("Holdings"), Del Laboratories, Inc., a Delaware corporation (the "BORROWER"),
the Lenders, X.X. Xxxxxx Securities Inc. as sole lead arranger and sole
bookrunner (in such capacities, the "ARRANGER"), and the Administrative Agent.
RECITALS
A. Pursuant to the Credit Agreement, the Lenders have severally agreed
to make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;
B. The Borrower is a member of an affiliated group of companies that
includes each other Grantor;
C. The proceeds of the extensions of credit under the Credit Agreement
will be used in part to enable the Borrower to make valuable transfers to one or
more of the other Grantors in connection with the operation of their respective
businesses;
D. The Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
E. It is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrower under the Credit Agreement
that the Grantors shall have executed and delivered this Agreement to the
Administrative Agent for the benefit of the Secured Parties.
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrower thereunder
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, each Grantor hereby agrees with the Administrative
Agent, for the benefit of the Agents and the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1. DEFINITIONS.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in the New York
UCC (and if defined in more than one Article of the New York UCC, shall have the
meaning given in Article 8 or 9 thereof): Accounts, Certificated Security,
Chattel Paper, Commercial Tort Claims, Documents, Electronic Chattel Paper,
Equipment, Farm Products, Fixtures, General Intangibles, Goods, Instruments,
Inventory, Letter-of-Credit Rights, Money, Negotiable Documents, Payment
Intangibles, Records, Securities Accounts, Securities Entitlements, Supporting
Obligations and Tangible Chattel Paper.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Guarantee and Collateral Agreement.
"BORROWER": Del Laboratories, Inc., a Delaware corporation.
"BORROWER CASH MANAGEMENT ARRANGEMENT OBLIGATIONS": all obligations and
liabilities of the Borrower to any Qualified Counterparty, whether direct or
indirect, absolute or contingent, due or to become due or now existing or
hereafter incurred, which may arise under, out of, or in connection with, any
Specified Cash Management Arrangement or any document made, delivered or given
in connection therewith or pursuant thereto, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including interest accruing at the then applicable rate
provided in the agreements governing such Specified Cash Management Arrangement
after the maturity of the obligations thereof and interest accruing at the then
applicable rate provided in the agreements governing any Specified Cash
Management Arrangement after the commencement of any bankruptcy case or
insolvency, reorganization or like proceeding relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding and all reasonable fees and disbursements of counsel to the Qualified
Counterparty that are required to be paid by the Borrower pursuant to the terms
of any Specified Cash Management Arrangement).
"BORROWER CREDIT AGREEMENT OBLIGATIONS": the unpaid principal of and
interest on the Loans and Reimbursement Obligations and all other obligations
and liabilities of the Borrower to any Agent, Lender or Indemnitee, whether
direct or indirect, absolute or contingent, due or to become due or now existing
or hereafter incurred, which may arise under, out of, or in connection with, the
Credit Agreement, this Agreement or the other Loan Documents, any Letter of
Credit or any other document made, delivered or given in connection therewith or
pursuant thereto, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including interest accruing at the then applicable rate provided in the Credit
Agreement after the maturity of the Loans and Reimbursement Obligations and
interest accruing at the then applicable rate provided in the Credit Agreement
after the commencement of any bankruptcy case or insolvency, reorganization,
liquidation or like proceeding relating to the Borrower, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding and all
expense reimbursement and indemnity obligations arising or incurred as provided
in the Loan Documents after the commencement of any such case or proceeding,
whether or not a claim for such obligations is allowed in such case or
proceeding).
"BORROWER HEDGE AGREEMENT OBLIGATIONS": all obligations and liabilities
of the Borrower to any Qualified Counterparty, whether direct or indirect,
absolute or contingent, due or to become due or now existing or hereafter
incurred, which may arise under, out of, or in connection with, any Specified
Hedge Agreement or any other document made, delivered or given in connection
therewith or pursuant thereto, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including interest accruing at the then applicable rate provided in
such Specified Hedge Agreement after the maturity of the obligations thereof and
interest accruing at the then applicable rate provided in any Specified Hedge
Agreement after the commencement of any bankruptcy case or insolvency,
reorganization or like proceeding relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding
and all reasonable fees and disbursements of counsel to the Qualified
Counterparty that are required to be paid by the Borrower pursuant to the terms
of any Specified Hedge Agreement).
"BORROWER OBLIGATIONS": the Borrower Credit Agreement Obligations,
Borrower Hedge Agreement Obligations, and Borrower Cash Management Arrangement
Obligations.
"CASH PROCEEDS": all Proceeds of any Collateral received by any Grantor
consisting of cash and checks.
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"COLLATERAL": as defined in Section 3.
"COLLATERAL ACCOUNT": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"COLLATERAL RECORDS": as defined in the Senior Secured Note Indenture.
"COLLATERAL SUPPORT": all property (real or personal) assigned,
hypothecated or otherwise securing any Collateral and shall include any security
agreement or other agreement granting a lien or security interest in such real
or personal property.
"COPYRIGHTS": (i) all United States and foreign copyrights, whether or
not the underlying works of authorship have been published, and all copyright
registrations and copyright applications, and any renewals or extensions
thereof, including each registration identified on Schedule 6, (ii) the right to
xxx or otherwise recover for any and all past, present and future infringements
thereof, (iii) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including, without
limitation, payments under all licenses entered into in connection therewith,
and damages and payments for past, present or future infringements thereof), and
(iv) all other rights of any kind whatsoever accruing thereunder or pertaining
thereto.
"COPYRIGHT LICENSES": with respect to any Grantor, all agreements
(whether or not in writing) naming such Grantor as licensor or licensee
(including those agreements listed in Schedule 6), granting any right under any
Copyright, including the grant of rights to print, publish, copy, distribute,
exploit and sell materials derived from any Copyright, subject in each case, to
the terms of such agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such agreements.
"DEPOSIT ACCOUNT": as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including any demand, time, savings,
passbook or like account maintained with a depositary institution.
"EQUITY INTERESTS": as defined in the Senior Secured Note Indenture.
"EXCLUDED PERFECTION ASSETS": (i) any Vehicle individually having a
value less than $100,000 individually or $1,000,000 in the aggregate for all
Vehicles; (ii) any foreign Intellectual Property; (iii) Goods included in
Collateral received by any Person for "sale or return within the meaning of
Section 2-326 of the Uniform Commercial Code of the applicable jurisdiction, to
the extent of claims of creditors of such Person; (iv) Money which has not been
transferred to or deposited in the Collateral Proceeds Account (if any) or a
Deposit Account in which the Administrative Agent maintains "control" as
described in the New York UCC and which does not constitute identifiable
proceeds of other Collateral and (v) other than any foreign Intellectual
Property and any Pledged Stock, any Collateral the aggregate value of which
shall not exceed at any time $500,000 and for which the perfection of Liens
thereon requires filings in or other actions under the laws of jurisdictions
outside the United States.
"FIXED COLLATERAL": as defined in the Senior Secured Note Indenture.
"FOREIGN SUBSIDIARY VOTING STOCK": the voting Capital Stock of any
Foreign Subsidiary.
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"GUARANTOR OBLIGATIONS": with respect to any Guarantor, all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including Section 2) or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including all expense reimbursement and indemnity obligations arising or
incurred as provided in the Loan Documents after the commencement of any
bankruptcy case or insolvency, reorganization, liquidation or like proceeding,
whether or not a claim for such obligations is allowed in such case or
proceeding)
"GUARANTORS": the collective reference to each Grantor other than the
Borrower.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including all
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses, Trade Secrets, and Trade Secret Licenses and all rights to xxx at law
or in equity for any past, present and future infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"INTERCOMPANY NOTE": any promissory note in a principal amount in
excess of $500,000, evidencing loans or other monetary obligations owing to any
Grantor by any Group Member.
"INVESTMENT PROPERTY": the collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49) of the New
York UCC (other than any Foreign Subsidiary Voting Stock excluded from
the definition of "Pledged Stock") and (ii) whether or not constituting
"investment
property" as so defined, all Pledged Notes and all Pledged Stock.
"ISSUERS": the collective reference to each issuer of any Investment
Property purported to be pledged hereunder.
"LIQUID COLLATERAL": as defined in the Senior Secured Note Indenture.
"NET AVAILABLE CASH ACCOUNT": as defined in the Senior Secured Note
Indenture.
"NEW YORK UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"OBLIGATIONS": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"ORDINARY COURSE TRANSFEREES": (i) with respect to Goods only, buyers
in the ordinary course of business and lessees in the ordinary course of
business to the extent provided in Section 9-320(a) and 9-321 of the Uniform
Commercial Code as in effect from time to time in the relevant jurisdiction and
(ii) with respect to General Intangibles only, licensees in the ordinary course
of business to the extent provided in Section 9-321 of the Uniform Commercial
Code as in effect from time to time in the relevant jurisdiction.
"PATENTS": (i) all United States and foreign patents, patent
applications and patentable inventions, including, without limitation, each
issued patent and patent application identified on Schedule 6, (ii) all
inventions and improvements described and claimed therein, (iii) the right to
xxx or otherwise recover for any and all past, present and future infringements
thereof, (iv) all income, royalties, damages and other payments now and
hereafter due and/or payable with respect thereto (including payments under all
licenses entered into in connection therewith, and damages and payments for
past, present or future infringements thereof), and (v) all reissues, divisions,
continuations, continuations-in-part, substitutes, renewals, and extensions
thereof, all improvements thereon and all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.
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"PATENT LICENSE": with respect to any Grantor, all agreements (whether
or not in writing) providing for the grant by or to such Grantor of any right to
manufacture, use, import, export, distribute, offer for sale or sell any
invention covered in whole or in part by a Patent (including those agreements
listed on Schedule 6), subject in each case, to the terms of such agreements,
and the right to prepare for sale, sell and advertise for sale, all Inventory
now or hereafter covered by such agreements.
"PLEDGED NOTES": all Intercompany Notes at any time issued to any
Grantor (including those listed on Schedule 2) and all other promissory notes in
excess of $500,000 in principal amount at any time issued to or owned, held or
acquired by any Grantor (including those listed on Schedule 2), except
promissory notes issued in connection with extensions of trade credit by any
Grantor in the ordinary course of business.
"PLEDGED STOCK": all shares, stock certificates, options, interests or
rights of any nature whatsoever in respect of the Capital Stock of any Person
(including those listed on Schedule 2) at any time issued or granted to or
owned, held or acquired by any Grantor; PROVIDED that in no event shall (i) more
than 65% of the total outstanding Foreign Subsidiary Voting Stock of any Foreign
Subsidiary be subject to the security interests granted hereby and (ii) any of
the Capital Stock of (x) Pade Mexicana, S.A. de C.V. or (y) DLI (Proprietary)
Ltd. be subject to the security interests granted hereby.
"PRIORITY LIENS": as defined in the Senior Secured Note Indenture.
"PROCEEDS": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC, including, in any event, all dividends,
returns of capital and other distributions from Investment Property and all
collections thereon and payments with respect thereto.
"RECEIVABLE": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including
all Accounts).
"SECURED PARTIES": the Agents, the Lenders and Indemnitees and, with
respect to any Specified Hedge Agreement or Specified Cash Management Agreement,
the Qualified Counterparty, party thereto and each of their respective
successors and transferees.
"SECURITIES": all "securities" as defined in Article 8 of the UCC, any
stock, shares, partnership interests, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing
"SECURITIES ACT": the Securities Act of 1933, as amended.
"TEMPORARY CASH INVESTMENTS": as defined in the Senior Secured Note
Indenture.
"TRADEMARKS": (i) all United States, state and foreign trademarks,
service marks, trade names, domain names, corporate names, company names,
business names, trade dress, trade styles, logos, or other indicia of origin or
source identification, and all registrations of and applications to register the
foregoing and any new renewals thereof, including each registration and
application identified in Schedule 6, (ii) the right to xxx or otherwise recover
for any and all past, present and future infringements and dilutions thereof,
(iii) all income, royalties, damages and other payments now and hereafter due
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and/or payable with respect thereto (including payments under all licenses
entered into in connection therewith, and damages and payments for past, present
or future infringements and dilutions thereof), and (iv) all other rights of any
kind whatsoever accruing thereunder or pertaining thereto, together in each case
with the goodwill of the business connected with the use of, and symbolized by,
each of the above.
"TRADEMARK LICENSE": with respect to any Grantor, any agreement
(whether or not in writing) providing for the grant by or to such Grantor of any
right to use any Trademark (including those agreements listed on Schedule 6),
subject in each case, to the terms of such agreements, and the right to prepare
for sale, sell and advertise for sale, all Inventory now or hereafter covered by
such agreements.
"TRADE SECRETS": (i) all trade secrets and all confidential
information, (ii) the right to xxx or otherwise recover for any and all past,
present and future misappropriations thereof, (iii) all income, royalties,
damages and other payments now and hereafter due and/or payable with respect
thereto (including payments under all licenses entered into in connection
therewith, and damages and payments for past, present or future
misappropriations thereof), and (iv) all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.
"TRADE SECRET LICENSE": with respect to any Grantor, any agreement,
whether written or oral, providing for the grant by or to such Grantor of any
right to use any Trade Secret, including any of the foregoing agreements
referred to in Schedule 6, subject in each case, to the terms of such
agreements, and the right to prepare for sale, sell and advertise for sale, all
Inventory now or hereafter covered by such agreements.
"UETA": the Uniform Electronic Transaction Act, as in effect in the
applicable jurisdiction.
"VEHICLES": all cars, trucks, trailers, construction and earth moving
equipment and other vehicles, vessels and aircrafts covered by a certificate of
title law of any jurisdiction and all appurtenances thereto.
1.2. OTHER DEFINITIONAL PROVISIONS.
(a) As used herein and in any certificate or other document made or
delivered pursuant hereto, (i) accounting terms relating to any Group Member not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP, (ii) the words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation", (iii) the word "incur" shall be
construed to mean incur, create, issue, assume, become liable in respect of or
suffer to exist (and the words "incurred" and "incurrence" shall have
correlative meanings), and (iv) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties of every type and nature, and (v)
references to agreements or other Contractual Obligations shall, unless
otherwise specified, be deemed to refer to such agreements or Contractual
Obligations as amended, supplemented, restated or otherwise modified from time
to time (subject to any applicable restrictions hereunder).
(b) The words "hereof," "herein", "hereto" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.
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(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(d) Where the context requires, terms relating to the Collateral or any
part thereof, when used in relation to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof.
(e) The expressions "payment in full," "paid in full" and any other
similar terms or phrases when used herein with respect to any Obligation shall
mean the payment in full of such Obligation in cash in immediately available
funds.
SECTION 2. GUARANTEE
2.1. GUARANTEE.
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
benefit of the Secured Parties, the prompt and complete payment and performance
by the Borrower when due (whether at the stated maturity, by acceleration or
otherwise) of each and all of the Borrower Obligations.
(b) Each Guarantor shall be liable under its guarantee set forth in
Section 2.1(a), without any limitation as to amount, for all present and future
Borrower Obligations, including specifically all future increases in the
outstanding amount of the Loans or Reimbursement Obligations and other future
increases in the Borrower Obligations, whether or not any such increase is
committed, contemplated or provided for by the Loan Documents on the date
hereof; PROVIDED, that (i) enforcement of such guarantee against such Guarantor
will be limited as necessary to limit the recovery under such guarantee to the
maximum amount which may be recovered without causing such enforcement or
recovery to constitute a fraudulent transfer or fraudulent conveyance under any
applicable law, including any applicable federal or state fraudulent transfer or
fraudulent conveyance law (giving effect, to the fullest extent permitted by
law, to the reimbursement and contribution rights set forth in Section 2.2) and
(ii) to the fullest extent permitted by applicable law, the foregoing clause
(ii) shall be for the benefit solely of creditors and representatives of
creditors of each Guarantor and not for the benefit of such Guarantor or the
holders of any equity interest in such Guarantor.
(c) The guarantee contained in this Section 2.1 (i) shall remain in
full force and effect until all the Borrower Obligations and the obligations of
each Guarantor under the guarantee contained in this Section 2.1 have been paid
in full, no Letter of Credit is outstanding and all commitments to extend credit
under the Loan Documents have terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from any
Borrower Obligations, (ii) unless released as provided in clause (iii) below,
shall survive the repayment of the Loans and Reimbursement Obligations, the
termination of commitments to extend credit under the Loan Documents, and the
release of the Collateral and remain enforceable as to all Borrower Obligations
that survive such repayment, termination and release and (iii) shall be released
when and as set forth in Section 8.15(b).
(d) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Secured Party from
the Borrower, any of the Guarantors, any other guarantor or any other Person by
virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Borrower Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder in respect of any other Borrower
Obligations then outstanding or thereafter incurred.
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2.2. REIMBURSEMENT, CONTRIBUTION AND SUBROGATION. In case any payment
is made on account of the Borrower Obligations by any Grantor or is received or
collected on account of the Borrower Obligations from any Grantor or its
property:
(a) If such payment is made by the Borrower or from its property, the
Borrower shall not be entitled (i) to demand or enforce reimbursement or
contribution in respect of such payment from any other Grantor or (ii) to be
subrogated to any claim, interest, right or remedy of any Secured Party against
any other Person, including any other Grantor or its property.
(b) If such payment is made by Holdings or from its property or if any
payment is made by Holdings or from its property in satisfaction of the
reimbursement right of any Subsidiary Guarantor set forth in Section 2.2(c),
such payment shall constitute a contribution by Holdings to the common equity
capital of the Borrower and Holdings shall not be entitled (i) to demand or
enforce reimbursement or contribution in respect of such payment from any other
Grantor or (ii) to be subrogated to any claim, interest, right or remedy of any
Secured Party against any other Person, including any other Grantor or its
property.
(c) If such payment is made by a Subsidiary Guarantor or from its
property, such Subsidiary Guarantor shall be entitled, subject to and upon
payment in full of all outstanding Obligations, discharge of all Letters of
Credit and termination of all commitments to extend credit under the Loan
Documents, (i) to demand and enforce reimbursement for the full amount of such
payment from the Borrower and from Holdings and (ii) to demand and enforce
contribution in respect of such payment from each other Subsidiary Guarantor
which has not paid its fair share of such payment, as necessary to ensure that
(after giving effect to any enforcement of reimbursement rights provided hereby)
each Subsidiary Guarantor pays its fair share of the unreimbursed portion of
such payment. For this purpose, the fair share of each Subsidiary Guarantor as
to any unreimbursed payment shall be determined based on an equitable
apportionment of such unreimbursed payment among all Subsidiary Guarantors based
on the relative value of their assets (net of their liabilities, other than
Obligations) and any other equitable considerations deemed appropriate by the
court.
(d) If and whenever any right of reimbursement or contribution becomes
enforceable by any Subsidiary Guarantor against any other Grantor under Section
2.2(c), such Subsidiary Guarantor shall be entitled, subject to and upon payment
in full of all outstanding Obligations, discharge of all Letters of Credit and
termination of all commitments to extend credit under the Loan Documents to be
subrogated (equally and ratably with all other Subsidiary Guarantors entitled to
reimbursement or contribution from any other Grantor under Section 2.2(c)) to
any security interest that may then be held by the Administrative Agent upon any
Collateral granted to it in this Agreement. To the fullest extent permitted
under applicable law, such right of subrogation shall be enforceable solely
against the Grantors, and not against the Secured Parties, and neither the
Administrative Agent nor any other Secured Party shall have any duty whatsoever
to warrant, ensure or protect any such right of subrogation or to obtain,
perfect, maintain, hold, enforce or retain any Collateral for any purpose
related to any such right of subrogation. If subrogation is demanded in writing
by any Grantor, then (subject to and upon payment in full of all outstanding
Obligations, discharge of all Letters of Credit and termination of all
commitments to extend credit under the Loan Documents) the Administrative Agent
shall deliver to the Grantors making such demand, or to a representative of such
Grantors or of the Grantors generally, an instrument reasonably satisfactory to
the Administrative Agent transferring, on a quitclaim basis without (to the
fullest extent permitted under applicable law) any recourse, representation,
warranty or obligation whatsoever, whatever security interest the Administrative
Agent then may hold in whatever Collateral may then exist that was not
previously released or disposed of by the Administrative Agent.
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(e) All rights and claims arising under this Section 2.2 or based upon
or relating to any other right of reimbursement, indemnification, contribution
or subrogation that may at any time arise or exist in favor of any Grantor as to
any payment on account of the Obligations made by it or received or collected
from its property shall be fully subordinated in all respects to the prior
payment in full of all of the Obligations. Until payment in full of the
Obligations, discharge of all Letters of Credit and termination of all
commitments to extend credit under the Loan Documents, no Grantor shall demand
or receive any collateral security, payment or distribution whatsoever (whether
in cash, property or securities or otherwise) on account of any such right or
claim. If any such payment or distribution is made or becomes available to any
Grantor in any bankruptcy case or receivership, insolvency or liquidation
proceeding, such payment or distribution shall be delivered by the person making
such payment or distribution directly to the Administrative Agent, for
application to the payment of the Obligations. If any such payment or
distribution is received by any Grantor, it shall be held by such Grantor in
trust, as trustee of an express trust for the benefit of the Secured Parties,
and shall forthwith be transferred and delivered by such Grantor to the
Administrative Agent, in the exact form received and, if necessary, duly
endorsed.
(f) The obligations of the Grantors under the Loan Documents, including
their liability for the Obligations and the enforceability of the security
interests granted thereby, are not contingent upon the validity, legality,
enforceability, collectibility or sufficiency of any right of reimbursement,
contribution or subrogation arising under this Section 2.2. To the fullest
extent permitted under applicable law, the invalidity, insufficiency,
unenforceability or uncollectibility of any such right shall not in any respect
diminish, affect or impair any such obligation or any other claim, interest,
right or remedy at any time held by any Secured Party against any Guarantor or
its property. The Secured Parties make no representations or warranties in
respect of any such right and shall, to the fullest extent permitted under
applicable law, have no duty to assure, protect, enforce or ensure any such
right or otherwise relating to any such right.
(g) Each Grantor reserves any and all other rights of reimbursement,
contribution or subrogation at any time available to it as against any other
Grantor, but (i) the exercise and enforcement of such rights shall be subject to
this Section 2.2 and (ii) to the fullest extent permitted by applicable law,
neither the Administrative Agent nor any other Secured Party shall ever have any
duty or liability whatsoever in respect of any such right.
2.3. AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS. To the
fullest extent permitted by applicable law, each Guarantor shall remain
obligated hereunder notwithstanding that, without any reservation of rights
against any Guarantor and without notice to or further assent by any Guarantor,
any demand for payment of any of the Borrower Obligations made by any Secured
Party may be rescinded by such Secured Party and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by any Secured Party, and the Credit Agreement and the
other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the requisite Lenders) may
deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by any Secured Party for the payment of the
Borrower Obligations may be sold, exchanged, waived, surrendered or released. No
Secured Party shall have any obligation to protect, secure, perfect or insure
any Lien at any time held by it as security for the Borrower Obligations or for
the guarantee contained in this Section 2 or any property subject thereto,
except to the extent required by applicable law.
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2.4. GUARANTEE ABSOLUTE AND UNCONDITIONAL. To the fullest extent
permitted by applicable law, each Guarantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Borrower Obligations and
notice of or proof of reliance by any Agent or any Lender upon the guarantee
contained in this Section 2 or acceptance of the guarantee contained in this
Section 2. The Borrower Obligations, and each of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon the guarantee contained in this Section 2.
All dealings between the Borrower and any of the Guarantors, on the one hand,
and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. To the fullest extent permitted by applicable law,
each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Borrower Obligations. Each Guarantor understands and agrees
that the guarantee contained in this Section 2 shall be construed, to the
fullest extent permitted by applicable law, as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any Secured Party, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Borrower or any other Person against any Secured Party, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of the
Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, any
Secured Party may, but shall be under no obligation to, make a similar demand on
or otherwise pursue such rights and remedies as it may have against the
Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by any Secured Party to make any such demand,
to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Secured Party against any Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
2.5. REINSTATEMENT. The guarantee contained in this Section 2 shall be
reinstated and shall remain in all respects enforceable to the extent that, at
any time, any payment of any of the Borrower Obligations is set aside, avoided
or rescinded or must otherwise be restored or returned by any Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
in whole or in part, and such reinstatement and enforceability shall, to the
fullest extent permitted by applicable law, be effective as fully as if such
payment had not been made.
2.6. PAYMENTS. Each Guarantor hereby agrees to pay all amounts payable
by it under this Section 2 to the Administrative Agent without set-off or
counterclaim in Dollars in immediately available funds at the Funding Office
specified in the Credit Agreement.
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SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby grants to the Administrative Agent, for the benefit
of the Secured Parties, a security interest in all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the "COLLATERAL"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Instruments;
(d) all identified Commercial Tort Claims;
(e) all Letter-of-Credit Rights;
(f) all Payment Intangibles;
(g) all Receivables;
(h) (a) all Deposit Accounts and all cash, checks, Temporary Cash
Investments, and other property held therein or credited thereto, (b) all Money
and (c) all Securities, Security Entitlements, and Securities Accounts and other
Investment Property, and all cash, checks, Temporary Cash Investments,
securities, financial assets or other property held therein or credited thereto;
(i) all Inventory;
(j) all books, Records, Receivables Records and Collateral Records
relating to the foregoing (including without limitation all books, databases,
customer lists, engineer drawings, Records, Receivables Records and Collateral
Records, whether tangible or electronic, which contain any information relating
to any of the foregoing);
(k) all Intellectual Property, to the extent of each Grantor's right,
title or interest therein (except for "intent-to-use" applications for trademark
or service xxxx registrations filed pursuant to Section 1(b) of the Xxxxxx Act,
15 U.S.C. ss. 1051, unless and until an Amendment to Allege Use or a Statement
of Use under Sections 1(c) and 1(d) of said Act has been filed, to the extent
that any assignment of an "intent-to-use" application prior to such filing would
violate the Xxxxxx Act);
(l) the Net Available Cash Account;
(m) all Equipment;
(n) all Fixtures;
(o) all General Intangibles;
(p) all Equity Interests;
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(q) to the extent relating to any of the items referred to in the
preceding clauses, all Documents;
(r) to the extent relating to any of the items referred to in the
preceding clauses, all Supporting Obligations; and
(s) all identifiable Cash Proceeds and non-Cash Proceeds, products,
accessions, rents and profits of or in respect of any of the foregoing
(including without limitation, all insurance proceeds) and all collateral
security, guarantees and other Collateral Support given by any Person with
respect to any of the foregoing;
PROVIDED, that (i) this Agreement shall not constitute a grant of a security
interest in any property to the extent that and for as long as such grant of a
security interest (A) is prohibited by any Requirement of Law, (B) requires a
filing with or consent from any Governmental Authority pursuant to any
Requirement of Law that has not been made or obtained, or (C) constitutes a
breach or default under or results in the termination of, or requires any
consent not obtained under, any lease, license or agreement, except to the
extent that such Requirement of Law or provisions of any such lease, license or
agreement is ineffective under applicable law or would be ineffective under
Sections 9-406, 9-407, 9-408 or 9-409 of the New York UCC to prevent the
attachment of the security interest granted hereunder or (D) is in Capital Stock
which is specifically excluded from the definition of Pledged Stock by virtue of
the proviso to such definition; and (ii) the security interest granted hereby
(A) shall attach at all times to all proceeds of such property, (B) shall attach
to such property immediately and automatically (without need for any further
grant or act) at such time as the condition described in clause (i) ceases to
exist and (C) to the extent severable shall in any event attach to all rights in
respect of such property that are not subject to the applicable condition
described in clause (i).
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit Agreement
and to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby represents and warrants to each Agent
and Lender that:
4.1. REPRESENTATIONS IN CREDIT AGREEMENT. In the case of each
Guarantor, the representations and warranties set forth in Section 5 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct in all material respects, and each Agent and
each Lender shall be entitled to rely on each of them as if they were fully set
forth herein; PROVIDED that each reference in each such representation and
warranty to the Borrower's knowledge or Holdings' knowledge shall, for the
purposes of this Section 4.1, be deemed to be a reference to such Guarantor's
knowledge.
4.2. TITLE; NO OTHER LIENS. Except for the security interest granted to
the Administrative Agent for the benefit of the Secured Parties pursuant to this
Agreement and the other Liens permitted to exist on such Grantor's Collateral by
the Credit Agreement, such Grantor owns each item of Collateral granted by it
free and clear of any and all Liens. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed in favor of the
Administrative Agent, for the benefit of the Secured Parties, pursuant to this
Agreement or in respect of Liens that are permitted by the Credit Agreement or
any other Loan Document or for which termination statements will be delivered on
the Closing Date.
4.3. PERFECTED REQUIRED PRIORITY LIENS.
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(a) Upon completion of the filings and other actions specified on
Schedule 4 (which, in the case of all filings and other documents referred to on
said Schedule, have been delivered to the Administrative Agent in completed and,
where required, duly executed form), the payment of all applicable fees, the
delivery to and continuing possession by the Administrative Agent of all
Certificated Securities, all Instruments, all Tangible Chattel Paper and all
Documents a security interest in which is perfected by possession, and the
obtaining and maintenance of "control" (as described in the Uniform Commercial
Code as in effect in the applicable jurisdiction) by the Administrative Agent of
all Deposit Accounts, the Collateral Accounts, all Securities Accounts, all
Electronic Chattel Paper, Letter of Credit Rights, all Uncertificated Securities
and all Securities Accounts, in each case a security interest in which is
perfected by such "control", the security interests granted in Section 3 will
constitute valid perfected security interests in all of the Collateral (except
for Excluded Perfection Assets) in favor of the Administrative Agent, for the
benefit of the Secured Parties, as collateral security for such Grantor's
Obligations, enforceable in accordance with the terms hereof against all
creditors of such Grantor and any Persons purporting to purchase any such
Collateral from such Grantor other than Ordinary Course Transferees, except as
(x) enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) or by an implied
covenant of good faith and fair dealing, and (y) to the extent that the
recording or an assignment or other transfer of title to the Administrative
Agent or the recording of other applicable documents in the United States Patent
and Trademark Office or the United States Copyright Office may be necessary for
enforceability, and is and will be, subject to the Required Priority, prior to
all other Liens on such Collateral except for Liens permitted by the Credit
Agreement which have priority over the Liens on such Collateral by operation of
law. Without limiting the foregoing and except as otherwise permitted or
provided in Section 5 hereof, each Grantor has taken all actions necessary or
desirable to: (i) establish the Administrative Agent's "control" (within the
meanings of Sections 8-106 and 9-106 of the UCC) over any portion of the
Investment Property constituting Certificated Securities, Uncertificated
Securities, Securities Accounts, Securities Entitlements or Commodity Accounts
(each as defined in the UCC), (ii) establish the Administrative Agent's
"control" (within the meaning of Section 9-104 of the UCC) over all Deposit
Accounts of such Grantor, (iii) establish the Administrative Agent's "control"
(within the meaning of Section 9-107 of the UCC) over all Letter of Credit
Rights of such Grantor, (iv) establish the Administrative Agent's control
(within the meaning of Section 9-105 of the UCC) over all Electronic Chattel
Paper of such Grantor and (v) establish the Administrative Agent's "control" (as
defined in UETA) over all "transferable records" (as defined in UETA) of such
Grantor.
(b) Each Grantor consents to the grant by each other Grantor of the
security interests granted hereby and the transfer of any Capital Stock or
Investment Property to the Administrative Agent or its designee following an
Event of Default and to the substitution of the Administrative Agent or its
designee or the purchaser upon any foreclosure sale as the holder and beneficial
owner of the interest represented thereby.
4.4. JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE. On the date
hereof, such Grantor's exact legal name, jurisdiction of organization,
identification number from the jurisdiction of organization (if any), and the
location of such Grantor's chief executive office or sole place of business or
principal residence, as the case may be, are specified on Schedule 3. On the
date hereof, such Grantor is organized solely under the law of the jurisdiction
so specified and has not filed any certificates of domestication, transfer or
continuance in any other jurisdiction. Except as otherwise indicated on Schedule
3, the jurisdiction of such Grantor's organization or formation is required to
maintain a public record showing the Grantor to have been organized or formed.
On the date hereof, except as specified on Schedule 3, such Grantor has not
changed its name, jurisdiction of organization, chief executive office or sole
place of business or its corporate or organizational form in any way (e.g. by
merger, consolidation, change in corporate form or otherwise) within the past
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five years and has not within the last five years become bound (whether as a
result of merger or otherwise) as grantor under a security agreement entered
into by another person, which (x) has not heretofore been terminated or (y) is
in respect of a Lien that is not permitted by the Credit Agreement. Such Grantor
has furnished to the Administrative Agent its Organizational Documents as in
effect as of a date which is recent to the date hereof.
4.5. INVENTORY AND EQUIPMENT.
(a) On the date hereof Schedule 5 sets forth all locations where any
Inventory and Equipment (other than mobile goods) in excess of $100,000 in value
are kept.
(b) All Inventory now or hereafter produced by any Grantor included in
the Collateral has been and will be produced in compliance with the requirements
of the Fair Labor Standards Act, as amended.
(c) Except as specifically indicated on Schedule 5, to the knowledge of
such Grantor none of the Inventory or Equipment of such Grantor with a value in
excess of $100,000 is in possession of a bailee.
4.6. FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7. PLEDGED STOCK AND PLEDGED NOTES.
(a) The shares of Pledged Stock pledged by such Grantor hereunder
constitute all the issued and outstanding shares of all classes of the Capital
Stock of each Issuer owned by such Grantor or, in the case of Foreign Subsidiary
Voting Stock, if less, 65% of the outstanding Foreign Subsidiary Voting Stock of
each relevant Issuer.
(b) All the shares of the Pledged Stock pledged by such Grantor
hereunder have been duly and validly issued and are fully paid and
nonassessable.
(c) To such Grantor's knowledge, each of the Pledged Notes constitutes
the legal, valid and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(d) Such Grantor is the record and beneficial owner of, and has good
and valid title to, the Pledged Stock and Pledged Notes pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement and Liens
permitted by the Credit Agreement.
(e) The Organizational Documents applicable to each interest in any
domestic partnership or limited liability company included in the Collateral
expressly provide that they are securities governed by Article 8 of the Uniform
Commercial Code.
4.8. RECEIVABLES. The amounts represented by such Grantor to the
Administrative Agent or the other Secured Parties from time to time as owing to
such Grantor in respect of such Grantor's Receivables will at such time be the
correct amount, in all material respects, actually owing thereunder, except to
the extent that appropriate reserves therefor have been established on the books
of such Grantor in accordance with GAAP.
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4.9. INTELLECTUAL PROPERTY.
(a) Schedule 6 lists all Patents, registrations and applications to
register Trademarks and registered Copyrights owned by such Grantor in its own
name on the date hereof. Except as set forth in Schedule 6, such Grantor is the
exclusive owner of the entire and unencumbered right, title and interest in and
to such applications, registrations and issuances.
(b) On the date hereof, all Intellectual Property of such Grantor
described on Schedule 6 is subsisting and unexpired and, to the knowledge of
such Grantor, has not been abandoned and is valid and enforceable. Except as
would not reasonably be expected to have a Material Adverse Effect, to the
knowledge of such Grantor, neither the operation of such Grantor's business as
currently conducted nor the use of the Intellectual Property in connection
therewith conflicts with, infringes, misappropriates, dilutes, misuses or
otherwise violates the Intellectual Property rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof, (i) none of
the material Patents, Trademarks, Copyrights and Trade Secrets owned by any
Grantor is the subject of any licensing or franchise agreement pursuant to which
such Grantor is the licensor or franchisor and (ii) there are no other material
agreements, obligations, orders or judgments to which such Grantor is subject
which affect the use of any Intellectual Property owned by such Grantor.
(d) The rights of such Grantor in or to the Patents, Trademarks,
Copyrights and Trade Secrets owned by such Grantor do not conflict with or
infringe upon the rights of any third party, and no claim has been asserted that
the use of such Intellectual Property does or may infringe upon the rights of
any third party, in either case, which conflict or infringement would reasonably
be expected to have a Material Adverse Effect. There is currently no
infringement or unauthorized use of any item of such Intellectual Property owned
by such Grantor that, either individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(e) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity or
enforceability of, or such Grantor's rights in, any Patent, Trademark, Copyright
or Trade Secret owned by such Grantor in any respect that would reasonably be
expected to have a Material Adverse Effect. Such Grantor is not aware of any
uses of any item of such Intellectual Property owned by such Grantor that could
reasonably be expected to lead to such item becoming invalid or unenforceable
including unauthorized uses by third parties and uses which would reasonably be
expected to damage the goodwill of the business associated with any of the
Trademarks owned by such Grantor and Trademark Licenses, which uses, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(f) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof seeking to limit, cancel or question the
validity of any material Patent, Trademark, Copyright or Trade Secret owned by
such Grantor or such Grantor's ownership interest therein, which, if adversely
determined, would have a Material Adverse Effect on the value of any
Intellectual Property. Except as would not reasonably be expected to have a
Material Adverse Effect, the consummation of the transactions contemplated by
this Agreement will not result in the termination or impairment of any of the
Intellectual Property owned or licensed by such Grantor.
(g) With respect to each Copyright License, Trademark License and
Patent License, except as would not reasonably be expected to have a Material
Adverse Effect: (i) such license is valid and binding and in full force and
effect and represents the entire agreement between the respective licensor and
licensee with respect to the subject matter of such license; (ii) such Grantor
has not received any notice of termination or cancellation under such license;
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(iii) such Grantor has not received any notice of a breach or default under such
license, which breach or default has not been cured; and (iv) such Grantor is
not in breach or default in any material respect, and no event has occurred
that, with notice and/or lapse of time, would constitute such a breach or
default or permit termination, modification or acceleration under such license.
(h) To the extent such Grantor has reasonably determined that it is
commercially practicable to do so, such Grantor has used proper statutory notice
in connection with its use of each material Patent, Trademark and Copyright
owned by such Grantor.
(i) Such Grantor has taken commercially reasonable steps to protect the
confidentiality of its Trade Secrets in accordance with industry standards.
(j) Such Grantor has made all material filings and recordations and
paid all fees necessary in its reasonable business judgment to adequately
protect its interest in its United States Patents, Trademarks and Copyrights and
material non-United States Patents, Trademarks and Copyrights owned by such
Grantor including recordation of its interests in the material Patents and
Trademarks owned by such Grantor with the United States Patent and Trademark
Office and in similar offices or agencies in other countries and groups of
countries, and recordation of any of its interests in the Copyrights owned by
such Grantor with the United States Copyright Office and in similar offices or
agencies in other countries and groups of countries.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Agents and Lenders
that, from and after the date of this Agreement until the Collateral is released
pursuant to Section 8.15(a):
5.1. COVENANTS IN CREDIT AGREEMENT. Such Grantor shall take, or refrain
from taking, as the case may be, each action that is necessary to be taken or
not taken, so that no breach of the covenants in the Credit Agreement pertaining
to actions to be taken, or not taken, by such Grantor will result.
5.2. DELIVERY AND CONTROL OF INSTRUMENTS, CERTIFICATED SECURITIES,
CHATTEL PAPER, NEGOTIABLE DOCUMENTS, INVESTMENT PROPERTY AND LETTER OF CREDIT
RIGHTS.
(a) If any of the Collateral of such Grantor is or shall become
evidenced or represented by any Instrument, Negotiable Document or Tangible
Chattel Paper, upon the request of the Administrative Agent such Instrument,
Negotiable Documents or Tangible Chattel Paper shall be immediately delivered to
the Administrative Agent, duly indorsed in a manner reasonably satisfactory to
the Administrative Agent, to be held as Collateral pursuant to this Agreement.
(b) If any of the Collateral of such Grantor is or shall become
"Electronic Chattel Paper" such Grantor shall ensure that (i) a single
authoritative copy exists which is unique, identifiable, unalterable (except as
provided in clauses (iii), (iv) and (v) of this paragraph), (ii) such
authoritative copy identifies the Administrative Agent as the assignee and is
communicated to and maintained by the Administrative Agent or its designee,
(iii) copies or revisions that add or change the assignee of the authoritative
copy can only be made with the participation of the Administrative Agent, (iv)
each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy and not the authoritative copy and (v) any revision of
the authoritative copy is readily identifiable as an authorized or unauthorized
revision.
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(c) If any of the Collateral of such Grantor is or shall become
evidenced or represented by an Uncertificated Security in excess of $500,000,
upon the request of the Administrative Agent, such Grantor shall cause the
issuer thereof either (i) to register the Administrative Agent as the registered
owner of such Uncertificated Security, upon original issue or registration of
transfer or (ii) to promptly (but in any event with in 60 days of such request)
agree in writing with such Grantor and the Administrative Agent that such Issuer
will comply with instructions with respect to such Uncertificated Security
originated by the Administrative Agent without further consent of such Grantor,
such agreement to be in form and substance reasonably satisfactory to the
Administrative Agent.
(d) Such Grantor shall maintain Securities Entitlements, Securities
Accounts and Deposit Accounts (other than with respect to all of the Grantors,
(x) Deposit Accounts maintained outside the United States with a combined
aggregate balance at any time outstanding of less than $250,000, (y) Securities
Accounts or Deposit Accounts maintained within the United States with an
individual aggregate balance or value, as applicable, at any time of less than
$100,000 and a combined aggregate balance or value, as applicable, at any time
of less than $200,000) only with financial institutions that have agreed to
comply with entitlement orders and instructions issued or originated by the
Administrative Agent without further consent of such Grantor, such agreement to
be in form and substance reasonably satisfactory to the Administrative Agent.
(e) if any of the Collateral of such Grantor is or shall become
evidenced or represented by any Certificated Security (other than any Capital
Stock which is specifically excluded from the definition of Pledged Stock by
virtue of the proviso to such definition and any promissory note that does not
qualify as a Pledged Note pursuant to the definition thereof), such Certificated
Security shall be promptly delivered to the Administrative Agent, duly indorsed
in a manner reasonably satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Agreement.
(f) In addition to and not in lieu of the foregoing, if any issuer of
any Investment Property is organized under the law of, or has its chief
executive office in, a jurisdiction outside of the United States, each Grantor
shall take such additional actions, including causing the issuer to register the
pledge on its books and records, as may be reasonably requested by the
Administrative Agent, under the laws of such jurisdiction to insure the
validity, perfection and priority of the security interest of the Administrative
Agent.
(g) In the case of any Letter-of-Credit Rights in any letter of credit
exceeding $250,000 in value, upon the reasonable request of the Administrative
Agent, each Grantor shall promptly (but in any event with in 60 days of such
request or such later date to which the Administrative Agent may consent in
writing) obtain the consent of the issuer thereof and any nominated person
thereon to the assignment of the proceeds of the related letter of credit in
accordance with Section 5-114(c) of the New York UCC, pursuant to an agreement
in form and substance reasonably satisfactory to the Administrative Agent.
(h) If any of the Collateral of such Grantor is or shall become
"transferable records" as defined in UETA, such Grantor shall promptly notify
the Administrative Agent thereof and, at the request of the Administrative
Agent, shall take such action as the Administrative Agent may reasonably request
to vest in the Administrative Agent "control" under Section 16 of UETA over such
transferable records. The Administrative Agent agrees with such Grantor that the
Administrative Agent will arrange, pursuant to procedures reasonably
satisfactory to the Administrative Agent and so long as such procedures will not
result in the Administrative Agent's loss of control, for the Grantor to make
alterations to the transferable records permitted under Section 16 of UETA 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 transferable records.
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5.3. MAINTENANCE OF INSURANCE.
(a) Such Grantor will maintain, with financially sound and reputable
companies, insurance policies (i) insuring the Collateral against loss by fire,
explosion, theft or other risks as may be required by the Credit Agreement and
(ii) naming the Administrative Agent on behalf of the Secured Parties as
additional insureds under liability insurance policies to the extent reasonably
requested by the Administrative Agent.
(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Administrative Agent of written
notice thereof and (ii) name the Administrative Agent as additional insured
party and/or loss payee in respect of property (other than casualty insurance
for Fixed Collateral Property) and business interruption insurance. All proceeds
of business and interruption insurance received by the Administrative Agent
shall be released by the Administrative Agent to the Borrower for account of the
Grantor entitled thereto, unless (i) an Event of Default has occurred and is
continuing or (ii) otherwise provided in the Credit Agreement.
5.4. PAYMENT OF OBLIGATIONS. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes and other material assessments and governmental
charges or levies imposed upon such Grantor's Collateral or in respect of income
or profits therefrom, as well as all claims of any kind (including claims for
labor, materials and supplies) against or with respect to such Grantor's
Collateral, except such claims as to which the failure to pay or discharge would
not reasonably be expected to result in a Material Adverse Effect.
5.5. MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER DOCUMENTATION.
(a) Such Grantor shall maintain the security interest created by this
Agreement in such Grantor's Collateral as a security interest having at least
the perfection and priority described in Section 4.3 and shall defend such
security interest against the claims and demands of all Persons whomsoever,
subject to the rights of such Grantor under the Loan Documents to dispose of the
Collateral.
(b) Such Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the assets and
property of such Grantor in reasonable detail and such other reports in
connection therewith as the Administrative Agent may reasonably request.
(c) At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of creating, perfecting, ensuring
the priority of, protecting or enforcing the Administrative Agent's security
interest in the Collateral or otherwise conferring or preserving the full
benefits of this Agreement and of the interests, rights and powers herein
granted.
5.6. CHANGES IN LOCATIONS, NAME, ETC. Such Grantor will not, except
upon not less than 30 days' prior written notice to the Administrative Agent and
delivery to the Administrative Agent of (a) all additional financing statements
and other documents (executed where appropriate) reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for herein and (b) if applicable, a written
supplement to Schedule 5 showing any additional location at which Inventory or
Equipment shall be kept:
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(i) change its jurisdiction of organization or the location of
its chief executive office or sole place of business or principal
residence from that referred to in Section 4.4;
(ii) change its name; or
(iii) permit any Inventory or Equipment (other than mobile goods)
in excess of $250,000 in value to be kept at a location other than
those listed on Schedule 5.
5.7. NOTICES. Such Grantor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) the occurrence of any other event which would reasonably be
expected to have a material adverse effect on the aggregate
value of the Collateral or on the security interests created
hereby.
5.8. INVESTMENT PROPERTY.
(a) If such Grantor shall become entitled to receive or shall receive
any stock certificate (including any certificate representing a stock dividend
or a distribution in connection with any reclassification, increase or reduction
of capital or any certificate issued in connection with any reorganization),
option or rights in respect of the Capital Stock of any Issuer, whether in
addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Stock, or otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Secured Parties, hold the same in trust for
the Secured Parties and deliver the same forthwith to the Administrative Agent
in the exact form received, duly indorsed by such Grantor to the Administrative
Agent, if required, together with an undated stock power or equivalents covering
such certificate duly executed in blank by such Grantor and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations; PROVIDED, that in no event shall there be pledged
more than 65% of any of the outstanding Foreign Subsidiary Voting Stock of any
Foreign Subsidiary. Unless permitted to be retained pursuant to the Credit
Agreement, any sums paid upon or in respect of the Investment Property upon the
liquidation or dissolution of any Issuer shall be paid over to the
Administrative Agent (unless otherwise agreed in the Credit Agreement) to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be made on or in respect of the
Investment Property or any property shall be distributed upon or with respect to
the Investment Property pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property in trust for the
Secured Parties, segregated from other funds of such Grantor, as additional
collateral security for the Obligations.
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(b) Without the prior written consent of the Administrative Agent, such
Grantor will not, except as permitted by the Credit Agreement, (i) vote to
enable, or take any other action to permit, any Issuer of Pledged Stock to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Investment Property or Proceeds thereof, (iii) create, incur or
permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Investment Property or Proceeds thereof, or any interest
therein, except for the security interests created by this Agreement or Liens
permitted by the Credit Agreement or (iv) enter into any agreement or
undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Investment Property
or Proceeds thereof (unless such restriction is permitted by the Credit
Agreement).
(c) In the case of each Grantor which is an Issuer, such Grantor agrees
that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Investment Property issued by it and (iii) it will
take all actions required or reasonably requested by the Administrative Agent to
enable or permit each Grantor to comply with Sections 6.3(c) and 6.7 as to all
Investment Property issued by it.
5.9. RECEIVABLES.
(a) Other than in the ordinary course of business or as permitted by
the Loan Documents, such Grantor will not (i) grant any extension of the time of
payment of any Receivable, (ii) compromise or settle any Receivable for less
than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any Receivable
in any manner that would materially adversely affect the value of the
Receivables constituting Collateral taken as a whole.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10. INTELLECTUAL PROPERTY(a) . (a) Except as permitted in the Credit
Agreement:
(i) With respect to each material Trademark owned by such
Grantor, such Grantor (either itself or through licensees) will take
all reasonably necessary steps to (i) continue to use such Trademark on
each and every trademark class of goods applicable to its current line
as reflected in its current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark and take all
reasonably necessary steps to ensure that all licensed users of such
Trademark maintain as in the past such quality, (iii) not adopt or use
any xxxx which is confusingly similar or a colorable imitation of such
Trademark unless the Administrative Agent, for the benefit of the
Agents and the Lenders, shall obtain a perfected security interest in
such xxxx (if a United States xxxx) pursuant to this Agreement, and
(iv) not (and not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any material respect.
(ii) Such Grantor (either itself or through licensees) will not
do any act, or knowingly omit to do any act, whereby any material
Patent may become forfeited, abandoned or dedicated to the public.
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(iii) Such Grantor (either itself or through licensees) will not
(and will not permit any licensee or sublicensee thereof to) do any act
or knowingly omit to do any act whereby any material Copyright owned by
such Grantor may become invalidated or otherwise impaired.
(iv) Such Grantor (either itself or through licensees) will not
do any act that knowingly uses any material Intellectual Property to
infringe the Intellectual Property rights of any other Person.
(v) To the extent such Grantor has reasonably determined that it
is commercially practicable to do so, such Grantor (either itself or
through licensees) will use proper statutory notice in connection with
the use of each material Patent, Trademark and Copyright owned by such
Grantor.
(vi) Such Grantor will notify the Administrative Agent and the
Lenders promptly if it knows, or has reason to know, that any
application or registration relating to any material Patent, Trademark
or Copyright of such Grantor may become forfeited, abandoned or
dedicated to the public, or of any material 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, the United States Copyright Office or any court or
tribunal in any country) regarding such Grantor's ownership of, or the
validity of, any material Patent, Trademark or Copyright owned by such
Grantor or such Grantor's right to register the same or to own and
maintain the same.
(vii) Such Grantor will take all reasonable and necessary steps,
including in any proceeding before the United States Patent and
Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or group of countries or any
political subdivision of any of the foregoing, to maintain and pursue
each application (and to obtain the relevant registration) and to
maintain each registration of the material Patents, Trademarks and
Copyrights owned by such Grantor, including the payment of required
fees and taxes, the filing of responses to office actions issued by the
United States Patent and Trademark Office and the United States
Copyright Office, the filing of applications for renewal or extension,
the filing of affidavits of use and affidavits of incontestability, the
filing of divisional, continuation, continuation-in-part, reissue, and
renewal applications or extensions, the payment of maintenance fees,
and the participation in interference, reexamination, opposition,
cancellation, infringement and misappropriation proceedings.
(viii) Such Grantor (either itself or through licensees) will
not, without the prior written consent of the Administrative Agent,
such consent not to be unreasonably withheld, discontinue use of or
otherwise abandon any Intellectual Property, or abandon any application
or any right to file an application for letters patent, trademark, or
copyright, unless such Grantor shall have previously determined that
such use or the pursuit or maintenance of such Intellectual Property is
no longer desirable in the conduct of such Grantor's business and that
the loss thereof could not reasonably be expected to have a Material
Adverse Effect and, in which case, such Grantor shall give prompt
notice of any such abandonment to the Administrative Agent in
accordance herewith.
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(ix) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor
shall (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual
Property and (ii) if such Intellectual Property is of material economic
value, promptly notify the Administrative Agent after it learns thereof
and, following consultation with the Administrative Agent, shall take
such actions as it deems reasonable, which may include suing for
infringement, misappropriation or dilution, seeking injunctive relief
where appropriate and seeking to recover any and all damages for such
infringement, misappropriation or dilution.
(x) Such Grantor shall take all steps reasonably necessary to
protect the secrecy of all material Trade Secrets of such Grantor.
(b) After the date hereof, whenever such Grantor (i) shall acquire any
Patent, Trademark or Copyright or (ii) either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Patent, Trademark or Copyright owned by such Grantor with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, such Grantor shall report such acquisition or filing to the
Administrative Agent within 90 days after the last day of the fiscal year in
which such filing occurs. Such Grantor agrees that the provisions of Section 3
shall automatically apply to such Intellectual Property.
(c) Such Grantor agrees (i) to execute an Intellectual Property
Security Agreement with respect to certain of its Intellectual Property in
substantially the form of Annex III in order to record the security interest
granted herein to the Administrative Agent for the benefit of the Secured
Parties with the United States Patent and Trademark Office or the United States
Copyright Office and (ii) to provide to the Administrative Agent, within 90 days
after the last day of the fiscal year in which any Intellectual Property
registered in such offices is acquired or registered by such Grantor, all
documents necessary to record the security interest of the Administrative Agent
in such Intellectual Property with such offices.
(d) Upon the reasonable request of the Administrative Agent, such
Grantor shall execute and deliver, and use its best efforts to cause to be
filed, registered or recorded, any and all agreements, instruments, documents,
and papers which the Administrative Agent may reasonably request to evidence,
register, record or perfect the Administrative Agent's security interest in any
Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby, in any office anywhere in the
world in which filing, registration or recorded may be appropriate, except that
(so long as no Default has occurred and is continuing) the Administrative Agent
shall not request such filing, registration or recording in any office in any
jurisdiction outside of the United States in which the Group Members had, during
the preceding 12-month period, net sales constituting less than 10% of the
consolidated worldwide net sales of the Group Members.
5.11. VEHICLES. Grantor will cause the Administrative Agent's security
interest in each Vehicle having a value greater than $100,000 to be duly
perfected, by notation on the certificate of title or as otherwise required by
applicable law, within 30 days after such security interest attaches to such
Vehicle.
SECTION 6. REMEDIAL PROVISIONS
6.1. CERTAIN MATTERS RELATING TO RECEIVABLES.
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(a) The Administrative Agent shall have the right to make test
verifications of the Receivables in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the Administrative Agent may reasonably require in
connection with such test verifications. At any time and from time to time, upon
the Administrative Agent's reasonable request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants or others
reasonably satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to collect
such Grantor's Receivables, and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days of receipt by such
Grantor) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Administrative Agent if required, in a Collateral Account
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Secured
Parties only as provided in Section 6.5, and (ii) until so turned over, shall be
held by such Grantor in trust for the Administrative Agent and the Secured
Parties, segregated from other funds of such Grantor. If so requested by the
Administrative Agent, each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) At any time and from time to time after the occurrence and during
the continuation of an Event of Default, if so requested by the Administrative
Agent, each Grantor shall deliver to the Administrative Agent all original and
other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including all original orders, invoices and
shipping receipts.
6.2. COMMUNICATIONS WITH OBLIGORS; GRANTORS REMAIN LIABLE.
(a) The Administrative Agent in its own name or in the name of others
may at any time after the occurrence and during the continuance of an Event of
Default communicate with obligors under the Receivables to verify with them to
the Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) At any time after the occurrence and during the continuance of an
Event of Default, the Administrative Agent may (and each Grantor at the request
of the Administrative Agent shall) notify obligors on the Receivables that the
Receivables have been assigned to the Administrative Agent for the benefit of
the Secured Parties and that payments in respect thereof shall be made directly
to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of such Grantor's Receivables to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. No Secured Party shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by any Secured Party of any payment relating
thereto, nor shall any Secured Party be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
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6.3. INVESTMENT PROPERTY.
(a) Unless an Event of Default has occurred and is continuing and the
Administrative Agent has given notice to the relevant Grantor of the
Administrative Agent's intent to exercise its rights pursuant to Section 6.3(b),
each Grantor may receive all cash dividends paid in respect of the Pledged Stock
and all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer, to the extent permitted in the
Credit Agreement, and may exercise all voting and corporate or other
organizational rights with respect to Investment Property; PROVIDED, that no
vote shall be cast or corporate or other organizational right exercised or other
action taken (other than in connection with a transaction permitted by the
Credit Agreement) which would impair the Collateral or be inconsistent with or
result in any violation of any provision of any Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Investment Property shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (B) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including the
right to exchange at its discretion any and all of the Investment Property upon
the merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate or other organizational structure of any Issuer, or upon
the exercise by any Grantor or the Administrative Agent of any right, privilege
or option pertaining to such Investment Property, and in connection therewith,
the right to deposit and deliver any and all of the Investment Property with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may reasonably determine),
all without liability except to account for property actually received by it,
but the Administrative Agent shall have no duty to any Grantor to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing; PROVIDED, that the Administrative Agent shall not
exercise any voting or other consensual rights pertaining to any such Investment
in a manner that constitutes an exercise of the remedies described in Section
6.6 other than in accordance with Section 6.6.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (A)
states that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) after receipt by an Issuer or
obligor of any instructions pursuant to Section 6.3(c)(i) hereof, pay any
dividends or other payments with respect to the Investment Property directly to
the Administrative Agent.
6.4. PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE AGENT. In addition to
the rights of the Agents and the Lenders specified in Section 6.1 with respect
to payments of Receivables, if an Event of Default shall occur and be continuing
and the Administrative Agent has instructed any Grantor to do so, all Proceeds
received by such Grantor consisting of cash, checks and other near-cash items
shall be held by such Grantor in trust for the Agents and the Lenders,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required). All Proceeds received by the Administrative Agent hereunder
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shall be held by the Administrative Agent in a Collateral Account maintained
under its sole dominion and control. All Proceeds while held by the
Administrative Agent in a Collateral Account (or by such Grantor in trust for
the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5. APPLICATION OF PROCEEDS. If and whenever any Event of Default has
occurred and is continuing, the Administrative Agent may apply all or any part
of Proceeds constituting Collateral, whether or not held in any Collateral
Account, in payment of the Obligations in such order as may be required by the
Credit Agreement and otherwise as the Administrative Agent may elect. Any
balance of such Proceeds remaining after the Obligations have been paid in full,
all Letters of Credit are discharged and all commitments to extend credit under
the Loan Documents have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.
6.6. CODE AND OTHER REMEDIES. If an Event of Default shall occur and be
continuing, the Administrative Agent may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other Loan
Document, all rights and remedies of a secured party under the New York UCC or
any other applicable law or in equity. Without limiting the generality of the
foregoing, to the fullest extent permitted by applicable law, the Administrative
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon any Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of any Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Any Agent or any Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees, at the Administrative Agent's request, to
assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as may be
required by the Credit Agreement and otherwise as the Administrative Agent may
elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including Section 9-615(a)(3) of the New York UCC, need the Administrative Agent
account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against any Secured Party arising out of the exercise of any rights
hereunder other than any such claims, damages and demands that may arise from
the gross negligence or willful misconduct of such Secured Party. If any notice
of a proposed sale or other disposition of Collateral is required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.
6.7. REGISTRATION RIGHTS.
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(a) If the Administrative Agent shall determine to exercise its right
to sell any or all of the Pledged Stock pursuant to Section 6.6, and if in the
reasonable opinion of the Administrative Agent it is necessary or reasonably
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor will
use its best efforts to cause the Issuer thereof to (i) execute and deliver, and
use its best efforts to cause the directors and officers of such Issuer to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the reasonable opinion of the
Administrative Agent, necessary or reasonably advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus which, in the reasonable opinion of the Administrative Agent,
are necessary or reasonably advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. Each Grantor agrees to use its best
efforts to cause such Issuer to comply with the provisions of the securities or
"Blue Sky" laws of any and all jurisdictions which the Administrative Agent
shall reasonably designate and to make available to its security holders, as
soon as practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be unable
to effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Secured Parties, that the
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and to the fullest extent
permitted by applicable law, such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred or is continuing under the
Credit Agreement.
6.8. DEFICIENCY. Each Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Obligations and the reasonable fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such
deficiency.
6.9. LICENSE
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Each Grantor hereby grants to the Administrative Agent, to the extent
it has the right to do so and subject to pre-existing rights and licenses, a
non-exclusive royalty-free license to use any or all of the Intellectual
Property of such Grantor, to the extent the use of such Intellectual Property is
necessary or appropriate, in the good faith opinion of the Administrative Agent,
to process, ship, produce, store, complete, supply, lease, sell or otherwise
dispose of any Inventory of such Grantor in any lawful manner in connection with
the enforcement of a security interest on such Inventory; provided that the
Administrative Agent, as licensee, complies with all of the standards of the
owner of the Trademarks included in such Intellectual Property relating to the
nature and quality of the goods and services to be offered in connection with
such Trademarks; and, provided, further, that such license may be exercised
solely in connection with the enforcement of a security interest held by the
Administrative Agent upon any Inventory of a Grantor at such time as the
Administrative Agent shall be lawfully entitled to enforce such security
interest.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC.
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be reasonably necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, each Grantor hereby gives the Administrative Agent the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Receivable of such Grantor or with respect to any other Collateral
of such Grantor and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting
any and all such moneys due under any Receivable of such Grantor or
with respect to any other Collateral of such Grantor whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may reasonably request
to evidence the Secured Parties' security interest in such Intellectual
Property and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section
6.6 or 6.7, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (A) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (B) ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising
out of any Collateral of such Grantor; (C) sign and indorse any
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invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral of
such Grantor; (D) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral of such Grantor; (E) defend
any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (F) settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem
appropriate; (G) subject to any permitted licenses and reserved rights
permitted under the Loan Documents, assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such
Copyright, Patent or Trademark pertains), throughout the world for such
term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (H)
generally, sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral of such Grantor as
fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral of such
Grantor and the Secured Parties' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
The Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of Default
has occurred and is continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply with, or cause
performance or compliance with, such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Loans that are Base Rate Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall lawfully
do or cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable as
to each Grantor until all security interests created hereby with respect to the
Collateral of such Grantor are released.
7.2. DUTY OF ADMINISTRATIVE AGENT. The Administrative Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Secured Party nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Secured Parties hereunder are solely to protect the Secured
Parties' interests in the Collateral and shall not impose any duty upon any
Secured Parties to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except, in the case of the Administrative Agent only in
respect of its own gross negligence or willful misconduct, to the extent
required by applicable law (subject to Section 10.12(e) of the Credit Agreement
and other applicable provisions of the Loan Documents).
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7.3. FINANCING STATEMENTS. Each Grantor hereby authorizes the filing of
any financing statements or continuation statements, and amendments to financing
statements, or any similar document in any jurisdictions and with any filing
offices as the Collateral Agent may determine, in its sole discretion, are
necessary or advisable to perfect or otherwise protect the security interest
granted to the Collateral Agent herein. Such financing statements may describe
the Collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such property in any
other manner as the Collateral Agent may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security
interest in the Collateral granted to the Collateral Agent herein, including
describing such property as "all assets" or "all personal property" and may (but
need not) add thereto "whether now owned or hereafter acquired." Each Grantor
hereby ratifies and authorizes the filing by the Administrative Agent of any
financing statement with respect to the Collateral made prior to the date
hereof.
7.4. AUTHORITY, IMMUNITIES AND INDEMNITIES OF ADMINISTRATIVE AGENT.
Each Grantor acknowledges, and, by acceptance of the benefits hereof, each
Secured Party agrees, that the rights and responsibilities of the Administrative
Agent under this Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, voting right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Agreement shall, as among the
Secured Parties, be governed by the Credit Agreement and that the Administrative
Agent shall have, in respect thereof, all rights, remedies, immunities and
indemnities granted to it in the Credit Agreement. By acceptance of the benefits
hereof, each Secured Party that is not a Lender agrees to be bound by the
provisions of the Credit Agreement applicable to the Administrative Agent,
including Article X thereof, as fully as if such Secured Party were a Lender.
The Administrative Agent shall be conclusively presumed to be acting as agent
for the Secured Parties with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1. AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2. NOTICES. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; PROVIDED that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1 or to such other address
as such Guarantor may notify the Administrative Agent in writing.
8.3. NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES. No Secured
Party shall by any act (except by a written instrument pursuant to Section 8.1),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which such Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
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8.4. ENFORCEMENT EXPENSES; INDEMNIFICATION.
(a) Each Grantor agrees to pay, or reimburse each Secured Party for,
all its costs and expenses incurred in collecting against such Guarantor under
the guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such Guarantor
is a party, including the reasonable fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to the
Administrative Agent and counsel to the Lenders.
(b) Each Grantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
(c) Each Grantor agrees to pay, and to save the Secured Parties
harmless from, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement on the terms set forth in
Section 10.5 of the Credit Agreement.
(d) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Secured Parties and their successors and assigns; PROVIDED that no Grantor may
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent and,
unless so consented to, each such assignment, transfer or delegation by any
Grantor shall be void.
8.6. SET-OFF. Each Grantor hereby irrevocably authorizes each Agent and
each Lender at any time and from time to time while an Event of Default shall
have occurred and be continuing, without notice to such Grantor or any other
Grantor, any such notice being expressly waived by each Grantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Secured
Party to or for the credit or the account of such Grantor, or any part thereof
in such amounts as such Secured Party may elect, against and on account of the
obligations and liabilities of such Grantor to such Secured Party hereunder and
claims of every nature and description of such Secured Party against such
Grantor, in any currency, whether arising hereunder, under the Credit Agreement,
any other Loan Document or otherwise, as such Secured Party may elect, whether
or not any Secured Party has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. Each Secured
Party shall notify such Grantor promptly of any such set-off and the application
made by such Secured Party of the proceeds thereof, PROVIDED that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Secured Party under this Section are in addition to other
rights and remedies (including other rights of set-off) which such Agent or such
Lender may have.
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8.7. COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8. SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9. SECTION HEADINGS. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10. INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Grantors and the Secured Parties with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by any Secured Party relative to subject matter
hereof and thereof not expressly set forth or referred to herein or in the other
Loan Documents.
8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12. SUBMISSION TO JURISDICTION; WAIVERS. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 8.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to xxx
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
8.13. ACKNOWLEDGEMENTS. Each Grantor hereby acknowledges that:
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(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) no Secured Party has any fiduciary relationship with or duty to any
Grantor arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Grantors, on the one hand, and
the Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Grantors and the Secured Parties.
8.14. ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15. RELEASES.
(a) At such time as the Loans, the Reimbursement Obligations and all
other Obligations (other than contingent surviving indemnity obligations in
respect of which no claim or demand has been made, Borrower Hedge Agreement
Obligations and Borrower Cash Management Arrangement Obligations) have been paid
in full, all commitments to extend credit under the Loan Documents have
terminated and all Letters of Credit have been discharged, the Collateral shall
be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Administrative Agent
shall deliver to such Grantor any Collateral held by the Administrative Agent
hereunder and execute and deliver to such Grantor such documents (in form and
substance reasonably satisfactory to the Administrative Agent) as such Grantor
may reasonably request to evidence such termination.
(b) If any of the Collateral is sold, transferred or otherwise disposed
of by any Grantor in a transaction permitted by the Credit Agreement, then the
Lien created pursuant to this Agreement in such Collateral shall be released,
and the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of such Collateral (not
including Proceeds thereof) from the security interests created hereby. At the
request and sole expense of the Borrower, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the Capital Stock
of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of
in a transaction permitted by the Credit Agreement; PROVIDED that the Borrower
shall have delivered to the Administrative Agent, at least five Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Subsidiary Guarantor and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any expenses
in connection therewith, together with a certification by the Borrower stating
that such transaction is in compliance with the Credit Agreement and the other
Loan Documents.
8.16. WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, THE ADMINISTRATIVE AGENT AND EACH OTHER SECURED PARTY, HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
DLI HOLDING II CORP.
By:
Title:
DEL LABORATORIES, INC.
By:
Title:
DEL PHARMACEUTICALS, INC.
By:
Title:
DEL PROFESSIONAL PRODUCTS, INC.
By:
Title:
ROYCE & XXXXX, INC.
By:
Title:
565 BROAD HOLLOW REALTY CORP.
By:
Title:
PARFUMS SCHIAPARELLI, INC.
By:
Title:
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JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT
By:
Title:
SCHEDULE 1
NOTICE ADDRESSES OF GUARANTORS
SCHEDULE 2
DESCRIPTION OF INVESTMENT PROPERTY
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of
Shares
-------------------------------------------- ------------------------ -------------------------- ---------------------
PLEDGED NOTES:
Issuer Payee Principal Amount
---------------------------------------------------------- ----------------------------- -----------------------------
SCHEDULE 3
EXACT LEGAL NAME; LOCATION OF JURISDICTION OF ORGANIZATION;
CHIEF EXECUTIVE OFFICE
EXACT LEGAL JURISDICTION OF ORGANIZATION LOCATION OF CHIEF
NAME OF GRANTOR EXECUTIVE OFFICE
SCHEDULE 4
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
[List each office where a financing statement is to be filed]*
COPYRIGHT, PATENT AND TRADEMARK FILINGS
[List all filings]
ACTIONS WITH RESPECT TO PLEDGED STOCK**
OTHER ACTIONS
[Describe other actions to be taken]
----------------
* Note that perfection of security interests in patents and trademarks
requires filings under the UCC in the jurisdictions where filings would be
made for general intangibles, as well as filings in the U.S Copyright
Office and the U.S. Patent & Trademark Office.
** If the interest of a Grantor in Pledged Stock appears on the books of a
financial intermediary, a control agreement as described in Section 8-106
of the New York UCC may be required by the Administrative Agent.
SCHEDULE 5
LOCATIONS OF INVENTORY AND EQUIPMENT
GRANTOR LOCATIONS
SCHEDULE 6
INTELLECTUAL PROPERTY
I. Copyrights and Copyright Licenses:
II. Patents and Patent Licenses:
III. Trademarks and Trademark Licenses:
SCHEDULE 7
COMMERCIAL TORT CLAIMS
ANNEX I
TO
GUARANTEE AND COLLATERAL AGREEMENT
ASSUMPTION AGREEMENT, dated as of ________________, 200_, made
by ______________________________, a ______________ corporation (the "ADDITIONAL
GRANTOR"), in favor of JPMorgan Chase Bank, N.A., as administrative agent (in
such capacity, the "ADMINISTRATIVE AGENT") for the banks and other financial
institutions (the "LENDERS") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
RECITALS
A. Del Laboratories, Inc., the Lenders and the Administrative
Agent have entered into a Credit Agreement, dated as of December 29, 2005 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT");
B. In connection with the Credit Agreement, Del Laboratories,
Inc. and certain of its Affiliates (other than the Additional Grantor) have
entered into the Guarantee and Collateral Agreement, dated as of December 29,
2005 (as amended, supplemented or otherwise modified from time to time, the
"GUARANTEE AND COLLATERAL AGREEMENT") in favor of the Administrative Agent for
the benefit of the Agents and the Lenders;
C. WHEREAS, the Credit Agreement requires the Additional
Grantor to become a party to the Guarantee and Collateral Agreement; and
D. WHEREAS, the Additional Grantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. GUARANTEE AND COLLATERAL AGREEMENT. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.14 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly guarantees the
Borrower Obligations as set forth in Section 2 thereof, grants the
Administrative Agent, for the benefit of the Secured Parties, a security
interest in its property as set forth in Section 3 thereof, and assumes all
other obligations and liabilities of a Grantor set forth therein. The
information set forth in Annex 1-A hereto is hereby added to the information set
forth in Schedules ____________* to the Guarantee and Collateral Agreement. The
Additional Grantor hereby represents and warrants that each of the
representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct in all material respects on and as the
date hereof (after giving effect to this Assumption Agreement) as if made on and
as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK. THE PROVISIONS OF SECTIONS 8.1, 8.3, 8.4, 8.5, 8.7, 8.8, 8.9, 8.10,
8.12, 8.13 AND 8.16 OF THE GUARANTEE AND COLLATERAL AGREEMENT SHALL APPLY WITH
LIKE EFFECT TO THIS ASSUMPTION AGREEMENT, AS FULLY AS IF SET FORTH AT LENGTH
HEREIN.
* Refer to each Schedule which needs to be supplemented.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:
Title:
ANNEX II
TO
GUARANTEE AND COLLATERAL AGREEMENT
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee
and Collateral Agreement dated as of December 29, 2005 (the "AGREEMENT"), made
by the Grantors parties thereto for the benefit of JPMorgan Chase Bank, N.A., as
Administrative Agent. The undersigned agrees for the benefit of the Agents and
the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) of the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall
apply to it with respect to all actions that may be required of it pursuant to
Section 6.3(a) or 6.7 of the Agreement.
[NAME OF ISSUER]
By
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Title
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Address for Notices:
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Fax:
ANNEX III
TO
GUARANTEE AND COLLATERAL AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
[SEE ATTACHED.]
