EXECUTION COPY
EXHIBIT 10.6
GUARANTEE AND COLLATERAL AGREEMENT
made by
Rent-A-Center, Inc.
and certain of its Subsidiaries
in favor of
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
Dated as of May 28, 2003
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TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINED TERMS......................................................................................... 1
1.1. Definitions.................................................................................... 1
1.2. Other Definitional Provisions.................................................................. 7
SECTION 2. GUARANTEE............................................................................................. 8
2.1. Guarantee...................................................................................... 8
2.2. Rights of Reimbursement, Contribution and Subrogation.......................................... 8
2.3. Amendments, etc. with respect to the Borrower Obligations...................................... 10
2.4. Guarantee Absolute and Unconditional........................................................... 10
2.5. Reinstatement.................................................................................. 11
2.6. Payments....................................................................................... 11
SECTION 3. GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER COLLATERAL.................................... 11
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................................................ 12
4.1. Representations in Credit Agreement............................................................ 12
4.2. Title; No Other Liens.......................................................................... 13
4.3. Perfected First Priority Liens................................................................. 13
4.4. Name; Jurisdiction of Organization, Etc........................................................ 13
4.5. Acquisition of Equity Interests or Assets...................................................... 14
4.6. Inventory and Equipment........................................................................ 14
4.7. Farm Products.................................................................................. 14
4.8. Investment Property............................................................................ 14
4.9. Receivables.................................................................................... 15
4.10. Contracts...................................................................................... 15
4.11. Intellectual Property.......................................................................... 16
4.12. Letter of Credit Rights........................................................................ 17
4.13. Commercial Tort Claims......................................................................... 17
SECTION 5. COVENANTS............................................................................................. 17
5.1. Covenants in Credit Agreement.................................................................. 18
5.2. Delivery and Control of Instruments, Chattel Paper, Negotiable Documents and
Investment Property............................................................................ 18
5.3. Maintenance of Insurance....................................................................... 18
5.4. Payment of Obligations......................................................................... 19
5.5. Maintenance of Perfected Security Interest; Further Documentation.............................. 19
5.6. Changes in Locations, Name, Jurisdiction of Incorporation, Etc................................. 19
5.7. Notices........................................................................................ 20
5.8. Investment Property............................................................................ 20
5.9. Receivables.................................................................................... 21
5.10. Contracts...................................................................................... 21
5.11. Intellectual Property.......................................................................... 22
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PAGE
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SECTION 6. REMEDIAL PROVISIONS................................................................................... 24
6.1. Certain Matters Relating to Receivables........................................................ 24
6.2. Communications with Obligors; Grantors Remain Liable........................................... 24
6.3. Pledged Securities............................................................................. 25
6.4. Proceeds to be Turned Over To Administrative Agent............................................. 25
6.5. Application of Proceeds........................................................................ 26
6.6. Code and Other Remedies........................................................................ 26
6.7. Registration Rights............................................................................ 28
6.8. Waiver; Deficiency............................................................................. 29
SECTION 7. THE ADMINISTRATIVE AGENT.............................................................................. 29
7.1. Administrative Agent's Appointment as Attorney-in-Fact, Etc.................................... 29
7.2. Duty of Administrative Agent................................................................... 30
7.3. Execution of Financing Statements.............................................................. 30
7.4. Authority of Administrative Agent.............................................................. 31
7.5. Appointment of Co-Collateral Agents............................................................ 31
SECTION 8. MISCELLANEOUS......................................................................................... 31
8.1. Amendments in Writing.......................................................................... 31
8.2. Notices........................................................................................ 31
8.3. No Waiver by Course of Conduct; Cumulative Remedies............................................ 31
8.4. Enforcement Expenses; Indemnification.......................................................... 32
8.5. Successors and Assigns......................................................................... 32
8.6. Set-Off. 35
8.7. Counterparts................................................................................... 33
8.8. Severability................................................................................... 33
8.9. Section Headings............................................................................... 33
8.10. Integration.................................................................................... 33
8.11. GOVERNING LAW.................................................................................. 33
8.12. Submission to Jurisdiction; Waivers............................................................ 33
8.13. Acknowledgments................................................................................ 34
8.14. Additional Grantors............................................................................ 34
8.15. Releases....................................................................................... 34
8.16. WAIVER OF JURY TRIAL........................................................................... 35
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SCHEDULES:
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Investment Property
Schedule 3 Filings and Other Actions Required to Perfect Security
Interests
Schedule 4 Exact Legal Name, Jurisdiction of Organization and Location of
Chief Executive Office
Schedule 5 Location of Inventory and Equipment
Schedule 6 Copyrights, Patents, Trademarks, Intellectual Property
Licenses, Other Intellectual Property
Schedule 7 Acquisitions
Schedule 8 Letters of Credit
Schedule 9 Contracts
EXHIBITS:
Exhibit A Form of Acknowledgment and Consent
Exhibit B-1 Form of Intellectual Property Security Agreement
Exhibit B-2 Form of After-Acquired Intellectual Property Security
Agreement
Exhibit C Form of Control Agreement (Uncertificated Securities)
ANNEX:
Annex 1 Assumption Agreement
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GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 28, 2003,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of LEHMAN
COMMERCIAL PAPER INC., as Administrative Agent (in such capacity, the
"Administrative Agent") for (i) the banks and other financial institutions or
entities (the "Lenders") from time to time parties to the Credit Agreement,
dated as of May 28, 2003 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among RENT-A-CENTER, INC., a Delaware
corporation (the "Borrower"), Lenders, MORGAN STANLEY SENIOR FUNDING INC., as
documentation agent (in such capacity, the "Documentation Agent"), JPMORGAN
CHASE BANK and BEAR, STEARNS & CO. INC., each as syndication agent (in such
capacity, the "Syndication Agents"), WACHOVIA BANK, NATIONAL ASSOCIATION, UBS
WARBURG LLC, UNITED OVERSEAS BANK AND CREDIT LYONNAIS, each as managing agent
(in such capacity, the "Managing Agents") and the Administrative Agent, and (ii)
the other Secured Parties (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the
Credit Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Secured
Parties;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1. Definitions. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement, and the following terms which are defined
in the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Account Debtor, Authenticate,
Certificated Security, Chattel Paper, Commodity Account, Commodity Contract,
Commodity Intermediary,
Documents, Electronic Chattel Paper, Entitlement Order, Equipment, Farm
Products, Financial Asset, Fixtures, Goods, Instruments, Inventory, Letter of
Credit Rights, Money, Payment Intangibles, Securities Account, Securities
Intermediary, Security, Security Entitlement, Supporting Obligations, Tangible
Chattel Paper and Uncertificated Security.
(b) The following terms shall have the following
meanings:
"After-Acquired Intellectual Property": as defined in Section
5.11(k).
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented, replaced or otherwise modified from
time to time.
"Borrower Obligations": all Obligations (as defined in the
Credit Agreement) of the Borrower.
"Collateral": as defined in Section 3.
"Collateral Account": (i) any collateral account established
by the Administrative Agent as provided in Section 6.1 or 6.4 or (ii)
any cash collateral account established as provided in Section 8 of the
Credit Agreement.
"Contracts": the contracts and agreements listed in Schedule
9, as the same may be amended, supplemented or otherwise modified from
time to time, including, without limitation, (i) all rights of any
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of any Grantor to damages arising
thereunder and (iii) all rights of any Grantor to perform and to
exercise all remedies thereunder.
"Copyright Licenses": any written agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright, other than licenses to use
products of third parties accepted in ordinary course in connection
with purchases of software and similar items the absence of which would
not have a Material Adverse Effect on the Grantors taken as a whole.
"Copyrights": (i) all domestic and foreign copyrights, whether
or not the underlying works of authorship have been published,
including but not limited to copyrights in software and databases, all
Mask Works (as defined in 17 U.S.C. 901 of the U.S. Copyright Act) and
all works of authorship and other intellectual property rights therein,
all copyrights of works based on, incorporated in, derived from or
relating to works covered by such copyrights, all right, title and
interest to make and exploit all derivative works based on or adopted
from works covered by such copyrights, and all copyright registrations
and copyright applications, and any renewals or extensions thereof,
including, without limitation, each registration and application
identified in Schedule 6, (ii) the rights to print, publish and
distribute any of the foregoing, (iii) the right to sue or otherwise
recover for any and all past, present and future infringements and
misappropriations thereof, (iv) all income, royalties, damages and
other payments now and hereafter due and/or payable with respect
thereto (including, without limitation, payments under all Copyright
Licenses entered into in connection therewith, payments arising out of
any other sale, lease, license or other disposition thereof and damages
and payments for past, present or future infringements thereof), and
(v) all other rights of any kind whatsoever accruing thereunder or
pertaining thereto.
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"Deposit Account": (i) all "deposit accounts" as defined in
Article 9 of the UCC and (ii) all other accounts maintained with any
financial institution (other than Securities Accounts or Commodity
Accounts), together, in each case, with all funds held therein and all
certificates or instruments representing any of the foregoing.
"Excluded Assets": any lease, license, contract, property
right or agreement (other than any Contract) to which any Grantor is a
party or any of its rights or interests thereunder if and only for so
long as the grant of a security interest hereunder shall constitute or
result in a breach, termination or default under any such lease,
license, contract, property right or agreement (other than to the
extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant
jurisdiction or any other applicable law or principles of equity);
provided, however, that such security interest shall attach immediately
to any portion of such lease, license, contract, property rights or
agreement that does not result in any of the consequences specified
above.
"Excluded Foreign Subsidiary Voting Stock": the voting Capital
Stock of any Excluded Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-102(a)(42) of the Uniform Commercial Code in
effect in the State of New York on the date hereof and, in any event,
including, without limitation, with respect to any Grantor, all rights
of such Grantor to receive any tax refunds, all Hedge Agreements and
all contracts, agreements, instruments and indentures and all licenses,
permits, concessions, franchises and authorizations issued by
Governmental Authorities in any form, and portions thereof, to which
such Grantor is a party or under which such Grantor has any right,
title or interest or to which such Grantor or any property of such
Grantor is subject, as the same may from time to time be amended,
supplemented, replaced or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights
of such Grantor to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect thereto, (iii) all rights of such
Grantor to damages arising thereunder, and (iv) all rights of such
Grantor to terminate and to perform, compel performance and to exercise
all remedies thereunder.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement (including, without limitation,
Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to any Secured Party that are required to be paid by such
Guarantor pursuant to the terms of this Agreement or any other Loan
Document).
"Guarantors": the collective reference to each Grantor other
than the Borrower.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks, the
Trademark Licenses, the Trade Secrets and the Trade Secret Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and
damages therefrom.
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"Intellectual Property Collateral": all Intellectual Property
of the Loan Parties, now owned or hereafter acquired, upon which a Lien
is purported to be created by the Intellectual Property Security
Agreement or this Agreement.
"Intellectual Property Security Agreement": all Intellectual
Property Security Agreements to be executed and delivered by the Loan
Parties, each substantially in the form of Exhibit B-1 to this
Agreement, as the same may be amended, supplemented, replaced or
otherwise modified from time to time in accordance with this Agreement.
"Insurance" shall mean all insurance policies covering any or
all of the Collateral (regardless of whether the Administrative Agent
is the loss payee thereof).
"Intercompany Note": any promissory note evidencing loans made
by any Grantor to the Borrower or any of its Subsidiaries, including,
without limitation, the Subordinated Intercompany Note.
"Investment Property": the collective reference to (i) all
"investment property" as such term is defined in Section 9-102(a)(49)
of the Uniform Commercial Code in effect in the State of New York on
the date hereof including, without limitation, all Certificated
Securities and Uncertificated Securities, all Security Entitlements,
all Securities Accounts, all Commodity Contracts and all Commodity
Accounts (other than any Excluded Foreign Subsidiary Voting Stock
excluded from the definition of "Pledged Equity Interests"), (ii)
security entitlements, in the case of any United States Treasury
book-entry securities, as defined in 31 C.F.R. section 357.2, or, in
the case of any United States federal agency book-entry securities, as
defined in the corresponding United States federal regulations
governing such book-entry securities, and (iii) whether or not
constituting "investment property" as so defined, all Pledged Notes,
all Pledged Equity Interests, all Pledged Security Entitlements and all
Pledged Commodity Contracts.
"Issuers": the collective reference to each issuer of a
Pledged Security.
"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.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by a
Patent, including, without limitation, any of the foregoing referred to
in Schedule 6.
"Patents": (i) all domestic and foreign patents, patent
applications and patentable inventions, including, without limitation,
each issued patent and patent application identified in Schedule 6, all
certificates of invention or similar property rights, (ii) all
inventions and improvements described and claimed therein, (iii) the
right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations thereof, (iv) all income,
royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments
under all Patent Licenses entered into in connection therewith,
payments arising out of any other sale, lease, license or other
disposition thereof and damages and payments for past, present or
future infringement thereof), and (v) all reissues, divisions,
continuations, continuations-in-part, substitutes, renewals, and
extensions thereof, all
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improvements thereon and all other rights of any kind whatsoever
accruing thereunder or pertaining thereto.
"Permitted Liens" the collective reference to (i) in the case
of Collateral other than Pledged Equity Interests, Liens permitted by
Section 7.3 of the Credit Agreement and (ii) in the case of Collateral
consisting of Pledged Equity Interests, non-consensual Liens permitted
by Section 7.3 of the Credit Agreement to the extent arising by
operation of law and Liens permitted by Section 7.3(h) of the Credit
Agreement.
"Pledged Alternative Equity Interests" shall mean all
interests of any Grantor in participation or other interests in any
equity or profits of any business entity and the certificates, if any,
representing such interests and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
interests and any other warrant, right or option to acquire any of the
foregoing; provided, however, that Pledged Alternative Equity Interests
shall not include any Pledged Stock, Pledged Partnership Interests,
Pledged LLC Interests and Pledged Trust Interests.
"Pledged Commodity Contracts": all commodity contracts listed
on Schedule 2 (as such Schedule may be amended from time to time) and
all other commodity contracts to which any Grantor is party from time
to time.
"Pledged Debt Securities": all debt securities now owned or
hereafter acquired by any Grantor, including, without limitation, the
debt securities listed on Schedule 2, (as such Schedule may be amended
from time to time) together with any other certificates, options,
rights or security entitlements of any nature whatsoever in respect of
the debt securities of any Person that may be issued or granted to, or
held by, any Grantor while this Agreement is in effect.
"Pledged Equity Interests" shall mean all Pledged Stock,
Pledged LLC Interests, Pledged Partnership Interests, Pledged Trust
Interests and Pledged Alternative Equity Interests.
"Pledged LLC Interests" shall mean all interests of any
Grantor now owned or hereafter acquired in any limited liability
company including, without limitation, all limited liability company
interests listed on Schedule 2 hereto under the heading "Pledged LLC
Interests" (as such schedule may be amended from time to time) and the
certificates, if any, representing such limited liability company
interests and any interest of such Grantor on the books and records of
such limited liability company and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such limited
liability company interests and any other warrant, right or option to
acquire any of the foregoing.
"Pledged Notes": all promissory notes now owned or hereafter
acquired by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the
ordinary course of business) including, without limitation, those
listed on Schedule 2 (as such Schedule may be amended from time to
time) and all Intercompany Notes at any time issued to any Grantor.
"Pledged Partnership Interests" shall mean all interests of
any Grantor now owned or hereafter acquired in any general partnership,
limited partnership, limited liability partnership or other partnership
including, without limitation, all partnership interests listed on
Schedule 2 hereto under the heading "Pledged Partnership Interests" (as
such schedule may be amended from
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time to time) and the certificates, if any, representing such
partnership interests and any interest of such Grantor on the books and
records of such partnership and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
partnership interests and any other warrant, right or option to acquire
any of the foregoing.
"Pledged Securities": the collective reference to the Pledged
Debt Securities, the Pledged Notes and the Pledged Equity Interests.
"Pledged Security Entitlements": all security entitlements
with respect to the financial assets listed on Schedule 2 (as such
Schedule may be amended from time to time) and all other security
entitlements of any Grantor.
"Pledged Stock" shall mean all shares of capital stock now
owned or hereafter acquired by such Grantor, including, without
limitation, all shares of capital stock described on Schedule 2 hereto
under the heading "Pledged Stock" (as such schedule may be amended from
time to time), and the certificates, if any, representing such shares
and any interest of such Grantor in the entries on the books of the
issuer of such shares and all dividends, distributions, cash, warrants,
rights, options, instruments, securities and other property or proceeds
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares and any other
warrant, right or option to acquire any of the foregoing; provided,
however, that in no event shall (i) more than 65% of the total
outstanding Excluded Foreign Subsidiary Voting Stock be required to be
pledged hereunder and (ii) the capital stock of the Insurance
Subsidiary be required to be pledged hereunder.
"Pledged Trust Interests" shall mean all interests of any
Grantor now owned or hereafter acquired in a Delaware business trust or
other trust including, without limitation, all trust interests listed
on Schedule 2 hereto under the heading "Pledged Trust Interests" (as
such schedule may be amended from time to time) and the certificates,
if any, representing such trust interests and any interest of such
Grantor on the books and records of such trust or on the books and
records of any securities intermediary pertaining to such interest and
all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such trust interests and any other warrant,
right or option to acquire any of the foregoing; provided, however,
that in no event shall the interests of any Grantor in Legacy Trust be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section
9-102(a)(64) of the New York UCC on the date hereof and, in any event,
shall include, without limitation, all dividends or other income from
the Pledged Securities, collections thereon or distributions or
payments with respect thereto.
"Receivable": all Accounts and any other any right to payment
for goods or other property sold, leased, licensed or otherwise
disposed of or for services rendered, whether or not such right is
evidenced by an Instrument or Chattel Paper or classified as a Payment
Intangible and whether or not it has been earned by performance.
References herein to Receivables shall include any Supporting
Obligation or collateral securing such Receivable.
"Securities Act": the Securities Act of 1933, as amended.
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"Specified Collateral": all Collateral other than Collateral
referred to in Section 3(xv) and the Proceeds and products thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred
to in Schedule 6.
"Trademarks": (i) all domestic and foreign trademarks, service
marks, trade names, corporate names, company names, business names,
trade dress, trade styles, logos, or other indicia of origin or source
identification, Internet domain names, trademark and service mark
registrations, and applications for trademark or service mark
registrations and any renewals thereof, including, without limitation,
each registration and application identified in Schedule 6, (ii) the
right to sue or otherwise recover for any and all past, present and
future infringements and misappropriations 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 Trademark 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, together in each case with the
goodwill of the business connected with the use of, and symbolized by,
each of the above.
"Trade Secret License": any agreement, whether written or
oral, providing for the grant by or to any Grantor of any right to use
any Trade Secret.
"Trade Secrets": (i) all trade secrets and all confidential
and proprietary information, including know-how, manufacturing and
production processes and techniques, inventions, research and
development information, technical data, financial, marketing and
business data, pricing and cost information, business and marketing
plans, and customer and supplier lists and information, (ii) the right
to sue or otherwise recover for any and all past, present and future
infringements and misappropriations thereof, (iii) all income,
royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments
arising out of the sale, lease, license, assignment or other
disposition thereof, and damages and payments for past, present or
future infringements thereof), and (iv) all other rights of any kind
whatsoever of any Grantor accruing thereunder or pertaining thereto.
1.2. Other Definitional Provisions. (a) The words
"hereof", "herein", "hereto" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
(d) The expressions "payment in full," "paid in full" and
any other similar terms or phrases when used herein with respect to the Borrower
Obligations or the Guarantor Obligations shall mean the unconditional, final and
irrevocable payment in full, in immediately available funds, of all of the
Borrower Obligations or the Guarantor Obligations, as the case may be.
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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
ratable benefit of the Secured Parties and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) If and to the extent required in order for the
Obligations of any Guarantor to be enforceable under applicable federal, state
and other laws relating to the insolvency of debtors, the maximum liability of
such Guarantor hereunder shall be limited to the greatest amount which can
lawfully be guaranteed by such Guarantor under such laws, after giving effect to
any rights of contribution, reimbursement and subrogation arising under Section
2.2.
(c) Each Guarantor agrees that Borrower Obligations may
at any time and from time to time be incurred or permitted in an amount
exceeding the maximum liability of such Guarantor under Section 2.1(b) without
impairing the guarantee contained in this Section 2 or affecting the rights and
remedies of any Secured Party hereunder.
(d) The guarantee contained in this Section 2 shall
remain in full force and effect until payment in full of the Obligations,
notwithstanding that from time to time during the term of the Credit Agreement
the Borrower may be free from any Borrower Obligations.
(e) No payment made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received or collected by
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 which
shall, notwithstanding any such payment (other than any payment made by such
Guarantor in respect of the Borrower Obligations or any payment received or
collected from such Guarantor in respect of the Borrower Obligations), remain
liable for the Borrower Obligations up to the maximum liability of such
Guarantor hereunder until the Borrower Obligations (other than Obligations in
respect of any Hedge Agreement) are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated or have expired.
2.2. Rights of Reimbursement, Contribution and
Subrogation. In case any payment is made on account of the Obligations by any
Grantor or is received or collected on account of the Obligations from any
Grantor or its property:
(a) If such payment is made by the Borrower or from its
property, then, if and to the extent such payment is made on account of
Obligations arising from or relating to a Loan made to the Borrower or a Letter
of Credit issued for account of the Borrower, the Borrower shall not be entitled
(A) to demand or enforce reimbursement or contribution in respect of such
payment from any other Grantor or (B) 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; and
(b) If such payment is made by a Guarantor or from its
property, such Guarantor shall be entitled, subject to and upon payment in full
of the Obligations, (A) to demand and enforce
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reimbursement for the full amount of such payment from the Borrower and (B) to
demand and enforce contribution in respect of such payment from each other
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 Guarantor pays its fair share of the unreimbursed portion
of such payment. For this purpose, the fair share of each Guarantor as to any
unreimbursed payment shall be determined based on an equitable apportionment of
such unreimbursed payment among all Guarantors based on the relative value of
their assets and any other equitable considerations deemed appropriate by a
court of competent jurisdiction.
(c) If and whenever (after payment in full of the
Obligations) any right of reimbursement or contribution becomes enforceable by
any Grantor against any other Grantor under Sections 2.2(a) and 2.2(b), such
Grantor shall be entitled, subject to and upon payment in full of the
Obligations, to be subrogated (equally and ratably with all other Grantors
entitled to reimbursement or contribution from any other Grantor as set forth in
this Section 2.2) to any security interest that may then be held by the
Administrative Agent upon any Collateral granted to it in this Agreement. 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 by any Grantor, then (after payment in full of the
Obligations) 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 satisfactory to the Administrative Agent transferring, on a quitclaim
basis without 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.
(d) 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, 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.
(e) 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. 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 Grantor or its property. The Secured Parties make no representations
or warranties in respect of any such right and shall have no duty to assure,
protect, enforce or ensure any such right or otherwise relating to any such
right.
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(f) 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 Section 2.2(d) and (ii) neither the Administrative Agent nor
any other Secured Party shall ever have any duty or liability whatsoever in
respect of any such right, except as provided in Section 2.2(c).
2.3. Amendments, etc. with respect to the Borrower
Obligations. Each Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the
Borrower Obligations made by 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, increased,
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 Required Lenders under the Credit Agreement or
all Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by 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.
2.4. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by any Secured
Party upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Secured Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with respect to the
Borrower Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment and performance 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 hereunder) 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 for its Guarantor Obligations, 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
10
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 continue to be effective, or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any of the Borrower Obligations
is rescinded or must otherwise be restored or returned by any Secured Party upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.6. Payments. Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars in immediately available funds at the office of the
Administrative Agent located at the Payment Office specified in the Credit
Agreement.
SECTION 3. GRANT OF SECURITY INTEREST;
CONTINUING LIABILITY UNDER COLLATERAL
(a) Each Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Secured Parties, a security interest in, all of the
personal property of such Grantor, including, without limitation, the following
property, in each case, wherever located and 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:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Deposit Accounts;
(v) all Documents;
(vi) all Equipment;
(vii) all General Intangibles;
(viii) all Instruments;
(ix) Insurance
(x) all Intellectual Property;
(xi) all Inventory;
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(xii) all Investment Property;
(xiii) all Letter of Credit Rights;
(xiv) all Money;
(xv) all Goods not otherwise described above;
(xvi) any Collateral Account;
(xvii) all books, records, ledger cards, files,
correspondence, customer lists, blueprints, technical specifications,
manuals, computer software, computer printouts, tapes, disks and other
electronic storage media and related data processing software and
similar items that at any time evidence or contain information relating
to any of the Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon;
(xviii) the commercial tort claims set forth on
Schedule 10; and
(xix) to the extent not otherwise included, all
other property of the Grantor and all Proceeds and products accessions,
rents and profits of any and all of the foregoing and all collateral
security, Supporting Obligations and guarantees given by any Person
with respect to any of the foregoing.
Notwithstanding anything to the contrary in this Agreement,
none of the Excluded Assets shall constitute Collateral.
(b) Notwithstanding anything herein to the contrary, (i)
each Grantor shall remain liable for all obligations under the Collateral and
nothing contained herein is intended or shall be a delegation of duties to the
Administrative Agent or any Secured Party, (ii) each Grantor shall remain liable
under and each of the agreements included in the Collateral, including, without
limitation, any Receivables, any Contracts and any agreements relating to
Pledged Partnership Interests or Pledged LLC Interests, to perform all of the
obligations undertaken by it thereunder all in accordance with and pursuant to
the terms and provisions thereof and neither the Administrative Agent nor any
Secured Party shall have any obligation or liability under any of such
agreements by reason of or arising out of this Agreement or any other document
related thereto nor shall the Administrative Agent nor any Secured Party have
any obligation to make any inquiry as to the nature or sufficiency of any
payment received by it or have any obligation to take any action to collect or
enforce any rights under any agreement included in the Collateral, including,
without limitation, any agreements relating to any Receivables, any Contracts,
Pledged Partnership Interests or Pledged LLC Interests and (iii) the exercise by
the Administrative Agent of any of its rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral.
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 the Secured Parties that:
4.1. Representations in Credit Agreement. In the case of
each Guarantor, the representations and warranties set forth in Section 4 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
12
incorporated herein by reference, are true and correct in all material respects,
except for representations and warranties expressly stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date, and the
Secured Parties shall be entitled to rely on each of them as if they were fully
set forth herein, provided that each reference in each such representation and
warranty to the Borrower's knowledge shall, for the purposes of this Section
4.l, be deemed to be a reference to such Guarantor's knowledge.
4.2. Title; No Other Liens. Such Grantor owns each item of
the Collateral free and clear of any and all Liens or claims, including, without
limitation, liens arising as a result of such Grantor becoming bound (as a
result of merger or otherwise) as Grantor under a security agreement entered
into by another Person, except for Permitted Liens. No financing statement,
mortgage or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties pursuant to this Agreement or as are permitted by the Credit
Agreement and financing statements for which duly authorized termination
statements have been delivered to the Administrative Agent on or prior to the
Closing Date.
4.3. Perfected First Priority Liens. (a) The security
interests granted pursuant to this Agreement (i) upon completion of the filings
and other actions specified on Schedule 3 (all of which, in the case of all
filings and other documents referred to on such Schedule, have been delivered to
the Administrative Agent in duly completed and duly executed form, as
applicable, and may be filed by the Administrative Agent at any time) and
payment of all filing fees, will constitute valid fully perfected security
interests in all of the Specified Collateral (other than Collateral consisting
of Deposit Accounts, Commercial Tort Claims and the Proceeds thereof, leasehold
interests in real property and immaterial foreign Copyrights, immaterial foreign
Trademarks and immaterial foreign Patents, except to the extent such immaterial
foreign Copyrights, immaterial foreign Trademarks and immaterial foreign Patents
can be perfected by UCC filings) in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, as collateral security for such
Grantor's Obligations, enforceable in accordance with the terms hereof and (ii)
are prior to all other Liens on the Collateral except for Permitted Liens.
Without limiting the foregoing, each Grantor has taken all actions necessary or
desirable, including without limitation those specified in Section 5.2 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 and Uncertificated Securities (each as
defined in the UCC), (ii) establish the Administrative Agent's "control" (within
the meaning of Section 9-107 of the UCC) over all Letter of Credit Rights, (iii)
establish the Administrative Agent's control (within the meaning of Section
9-105 of the UCC) over all Electronic Chattel Paper and (v) establish the
Administrative Agent's "control" within the meaning of Section 16 of the Uniform
Electronic Transaction Act as in effect in the applicable jurisdiction (the
"UETA") over all "transferable records" (as defined in UETA).
4.4. Name; Jurisdiction of Organization, Etc. On the date
hereof, such Grantor's exact legal name (as indicated on the public record of
such Grantor's jurisdiction of formation or organization), jurisdiction of
organization, organizational i.d. number, if any, and the location of such
Grantor's chief executive office or sole place of business are specified on
Schedule 4. Each 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 specified on Schedule 4, such
Grantor has not changed its name, jurisdiction of organization, chief executive
office or sole place of business or its corporate structure in any way (e.g. by
merger, consolidation, change in corporate form or otherwise) within the past
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 has not heretofore been terminated, provided that
no representation is made to changes in locations of any Grantor prior to the
acquisition of such Grantor by any other Grantor.
13
4.5. Acquisition of Equity Interests or Assets. Within the
five years preceding execution of this Agreement, none of the Grantors has
acquired the equity interests of another Person or the assets of another Person
with a value in excess of $15,000,000 except as otherwise disclosed on Schedule
7.
4.6. Inventory and Equipment.(a) (a) On the date hereof,
the Inventory and the Equipment (other than mobile goods) are kept at the
locations (including addresses) listed on Schedule 5.
(b) None of the Inventory or Equipment is in the
possession of an issuer of a negotiable document (as defined in Section 7-104 of
the UCC) therefor or is otherwise in the possession of any bailee or
warehouseman.
4.7. Farm Products. None of the Collateral constitutes, or
is the Proceeds of, Farm Products.
4.8. Investment Property. (a) Schedule 2 hereto (as such
schedule may be amended from time to time) sets forth under the headings
"Pledged Stock, "Pledged LLC Interests," "Pledged Partnership Interests" and
"Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged LLC
Interests, Pledged Partnership Interests and Pledged Trust Interests owned by
any Grantor and such Pledged Equity Interests constitute the percentage of
issued and outstanding shares of stock, percentage of membership interests,
percentage of partnership interests or percentage of beneficial interest of the
respective issuers thereof indicated on such Schedule. Schedule 2 hereto (as
such schedule may be amended from time to time) sets forth under the heading
"Pledged Debt Securities" or "Pledged Notes" all of the Pledged Debt Securities
and Pledged Notes owned by any Grantor and all of such Pledged Debt Securities
and Pledged Notes has been duly authorized, authenticated or issued, and
delivered and is the legal, valid and binding obligation of the issuers thereof
enforceable in accordance with their terms and is not in default and constitutes
all of the issued and outstanding inter-company indebtedness evidenced by an
instrument or certificated security of the respective issuers thereof owing to
such Grantor. No Grantor has consented to, and no Grantor is otherwise aware of,
any Person (other than the Administrative Agent pursuant hereto) having
"control" (within the meanings of Sections 8-106, 9-106 and 9-104 of the UCC)
over, or any other interest in, any such Securities Account, Commodity Account
or Deposit Account or any securities, commodities or other property credited
thereto other than the securities intermediary or depository bank in respect
thereof which may have a lien on any such account being held by it to secure
only the payment of fees and expenses owed to it in respect of the maintenance
of such account.
(b) The shares of Pledged Equity Interests pledged by
such Grantor hereunder constitute all of the issued and outstanding shares of
all classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Excluded Foreign Subsidiary Voting Stock, if less, 65% of the
outstanding Excluded Foreign Subsidiary Voting Stock of each relevant Issuer.
(c) All the shares of the Pledged Equity Interests have
been duly and validly issued and are fully paid and nonassessable.
(d) The terms of any uncertificated Pledged LLC Interests
and Pledged Partnership Interests do not provide that they are securities
governed by Article 8 of the Uniform Commercial Code in effect in any
jurisdiction.
(e) The terms of any certificated Pledged LLC Interests
and Pledged Partnership Interests do not provide that they are securities
governed by Article 8 of the Uniform Commercial Code in effect in any
jurisdiction.
14
(f) Such Grantor is the record and beneficial owner of,
and has good and marketable title to, the Investment Property and Deposit
Accounts pledged by it hereunder, free of any and all Liens or options in favor
of, or claims of, any other Person, except Permitted Liens, and there are no
outstanding warrants, options or other rights to purchase, or shareholder,
voting trust or similar agreements outstanding with respect to, or property that
is convertible into, or that requires the issuance or sale of, any Pledged
Equity Interests except as described on Schedule 4.15 to the Credit Agreement.
(g) Each Issuer which is an Affiliate of the Borrower
that is not a Grantor hereunder has executed and delivered to the Administrative
Agent an Acknowledgment and Agreement, in substantially the form of Exhibit A,
to the pledge of the Pledged Securities pursuant to this Agreement.
4.9. Receivables. (a) No amount payable to such Grantor
under or in connection with any Receivable is evidenced by any Instrument or
Tangible Chattel Paper which has not been delivered to the Administrative Agent
or constitutes Electronic Chattel Paper that has not been subjected to the
control (within the meaning of Section 9-105 of the UCC) of the Administrative
Agent.
(b) The amounts represented by such Grantor to the
Lenders from time to time as owing to such Grantor in respect of the Receivables
will at such times be accurate, except for immaterial errors.
4.10. Contracts. (a) Schedule 9 sets forth all Contracts of
any Grantor on the date hereof.
(b) No Contract prohibits assignment or requires or
purports to require, consent of any party (other than such Grantor) to any
Contract in connection with the execution, delivery and performance of this
Agreement including, without limitation, the exercise of remedies by the
Administrative Agent with respect to such Contract.
(c) Each Contract is in full force and effect and
constitutes a valid and legally enforceable obligation of the parties thereto,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law).
(d) Neither such Grantor nor (to the best of such
Grantor's knowledge) any of the other parties to the Contracts is in default in
the performance or observance of any of the terms thereof in any manner that, in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
(e) The right, title and interest of such Grantor in, to
and under the Contracts are not subject to any defenses, offsets, counterclaims
or claims that, in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(f) Such Grantor has delivered to the Administrative
Agent a complete and correct copy of each Contract, including all amendments,
supplements and other modifications thereto.
(g) No amount payable to such Grantor under or in
connection with any Contract is evidenced by any Instrument or Tangible Chattel
Paper which has not been delivered to the Administrative Agent or constitutes
Electronic Chattel Paper that is not under the Control of the Administrative
Agent.
(h) None of the parties to any Contract is a Governmental
Authority.
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4.11. Intellectual Property. (a) Schedule 6 lists all
Intellectual Property (other than Trade Secrets) 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 Intellectual Property and is otherwise entitled to use all such
Intellectual Property, without limitation, subject only to the license terms of
the licensing or franchise agreements referred to in paragraph (c) below.
(b) On the date hereof, all material Intellectual
Property is valid, subsisting, unexpired and enforceable, has not been abandoned
and does not materially infringe the intellectual property rights of any other
Person in any material respect.
(c) Except as set forth in Schedule 6, on the date hereof
(i) none of the Intellectual Property 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 obligations, orders or judgments which
affect the use of any material Intellectual Property.
(d) The rights of such Grantor in or to the Intellectual
Property 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 could reasonably be expected to have a Material Adverse
Effect. There is currently no infringement or unauthorized use of any item of
Intellectual Property that could 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 Intellectual Property in any
respect that could reasonably be expected to have a Material Adverse Effect.
With respect to any item of Intellectual Property the invalidity or
unenforceability of which could reasonably be expected to have a Material
Adverse Effect, such Grantor is not aware of any uses of any item of
Intellectual Property that could reasonably be expected to lead to such item
becoming invalid or unenforceable, including, without limitation, unauthorized
uses by third parties and uses which were not supported by the goodwill of the
business connected with Trademarks and Trademark Licenses.
(f) No action or proceeding is pending, or, to the
knowledge of such Grantor, threatened, on the date hereof (i) seeking to limit,
cancel or question the validity of any material Intellectual Property or such
Grantor's ownership interest therein, (ii) alleging that any services provided
by, processes used by, or products manufactured or sold by such Grantor infringe
any patent, trademark, copyright, or any other right of any third party, (iii)
alleging that any material Intellectual Property is being licensed, sublicensed
or used in violation of any patent, trademark, copyright or any other right of
any third party, or (iv) which, if adversely determined, would have a material
adverse effect on the value of any Collateral taken as a whole. To the knowledge
of such Grantor, no Person is engaging in any activity that infringes upon the
Intellectual Property or upon the rights of such Grantor therein which could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Schedule 6 hereto, such Grantor has not granted any license, release, covenant
not to sue, non-assertion assurance, or other right to any person with respect
to any material part of the Intellectual Property. The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of any of the Intellectual Property.
(g) With respect to each Copyright License, Trademark
License and Patent License: (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 license will not cease to be valid and binding and in full force and effect
on terms identical to those
16
currently in effect as a result of the rights and interests granted herein, nor
will the grant of such rights and interests constitute a breach or default under
such license or otherwise give the licensor or licensee a right to terminate
such license; (iii) such Grantor has not received any notice of termination or
cancellation under such license; (iv) such Grantor has not received any notice
of a breach or default under such license, which breach or default has not been
cured; (v) such Grantor has not granted to any other third party any rights,
adverse or otherwise, under such license; and (vi) 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) Except as set forth in Schedule 6, such Grantor has
performed all acts and has paid all required fees and taxes to maintain each and
every item of material Intellectual Property in full force and effect and to
protect and maintain its interest therein. Such Grantor has used proper
statutory notice in connection with its use of each material Patent, Trademark
and Copyright included in the Intellectual Property.
(i) To the knowledge of such Grantor, none of the
material Trade Secrets of such Grantor has been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any other
Person; no employee, independent contractor or agent of such Grantor has
misappropriated any trade secrets of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent
of such Grantor; and no employee, independent contractor or agent of such
Grantor is in default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of inventions agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of such Grantor's material Intellectual Property.
(j) Such Grantor has made all filings and recordations
necessary to adequately protect its interest in its material Intellectual
Property including, without limitation, recordation of its interests in the
Patents and Trademarks with the United States Patent and Trademark Office and in
corresponding national and international patent offices, and recordation of any
of its interests in the Copyrights with the United States Copyright Office and
in corresponding national and international copyright offices.
(k) Such Grantor is not subject to any settlement,
consent, judgment, injunction, order, decree, covenant not to sue, non-assertion
assurance or release that would impair the validity or enforceability of, or
such Grantor's rights in, any material Intellectual Property.
4.12. Letter of Credit Rights. No Grantor is a beneficiary
or assignee under any letter of credit other than the letters of credit
described on Schedule 8 (as such schedule may be amended from time to time)
hereto. Each Grantor has caused all issuers and nominated persons under letters
of credit in which the Grantor is the beneficiary or assignee to consent to the
assignment provisions of such letter of credit to the Administrative Agent and
has agreed that upon the occurrence of an Event of Default it will cause all
payments thereunder to be made to the Collateral Account.
4.13. Commercial Tort Claims. No Grantor has any commercial
tort claims in excess of $25,000 individually or $250,000 in the aggregate other
than described in Schedule 10.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Secured Parties
that, from and after the date of this Agreement until the Obligations (other
than Obligations in respect of any Hedge Agreement) shall have been paid in
full, no Letter of Credit shall be outstanding and the Commitments shall have
terminated or expired:
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5.1. Covenants in Credit Agreement. Each Guarantor shall
take, or shall refrain from taking, as the case may be, each action that is
necessary to be taken or not taken, as the case may be, so that no Default or
Event of Default is caused by the failure to take such action or to refrain from
taking such action by such Guarantor or any of its Subsidiaries.
5.2. Delivery and Control of Instruments, Chattel Paper,
Negotiable Documents and Investment Property. (a) If any of the Collateral with
a value in excess of $25,000 individually is or shall become evidenced or
represented by any Instrument, Certificated Security, Negotiable Document or
Tangible Chattel Paper, such Instrument (other than checks received in the
ordinary course of business), Certificated Security, Negotiable Documents or
Tangible Chattel Paper shall be immediately delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative Agent, to be
held as Collateral pursuant to this Agreement.
(b) If any of the Collateral with a value in excess of
$25,000 individually or $200,000 in the aggregate 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.
(c) If any of the Collateral is or shall become evidenced
or represented by an Uncertificated Security, 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 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 substantially the form of
Exhibit C.
(d) 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, without limitation,
causing the issuer to register the pledge on its books and records, as may be
necessary or 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.
5.3. Maintenance of Insurance. (a) Such Grantor will
maintain, with financially sound and reputable insurance companies, insurance on
all its property (including, without limitation, all Inventory, Equipment and
Vehicles) in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business, and furnish to the Administrative Agent with copies
for each Secured Party, upon written request, full information as to the
insurance carried. All 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) be reasonably satisfactory in all other respects
to the Administrative Agent. The Administrative Agent shall be named as
additional insured on all such liability insurance policies of such Grantor and
the Administrative Agent shall be named as loss payee on all property and
casualty insurance policies of such Grantor.
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(b) The Borrower shall deliver annually to the
Administrative Agent and the Lenders a certificate of a reputable insurance
broker with respect to such insurance as promptly as practicable upon receipt
thereof from such insurance broker and such supplemental reports with respect
thereto as the Administrative Agent may from time to time reasonably request.
5.4. 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, assessments and governmental
charges or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all material claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect to
the Collateral, except that no such charge need be paid if the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been
provided on the books of such Grantor and such proceedings could not reasonably
be expected to result in the sale, forfeiture or loss of any material portion of
the Collateral or any material interest therein.
5.5. Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the assets and property
of such Grantor as the Administrative Agent may reasonably request, all in
reasonable detail.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly authorize, execute and deliver, and have
recorded, such further instruments and documents and take such further actions
as the Administrative Agent may reasonably request for the purpose of obtaining
or preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby.
5.6. Changes in Locations, Name, Jurisdiction of
Incorporation, Etc. (a) Such Grantor will not, except upon 15 days' prior
written notice to the Administrative Agent and delivery to the Administrative
Agent of duly authorized and, where required, executed copies of all additional
financing statements and other documents reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for herein:
(i) without limiting the prohibitions on mergers
involving the Grantors contained in the Credit Agreement, change its
legal name, jurisdiction of organization or the location of its chief
executive office or sole place of business from that referred to in
Section 4.4; or
(ii) change its legal name, identity or structure to such
an extent that any financing statement filed by the Administrative
Agent in connection with this Agreement would become seriously
misleading.
(b) Schedule 5 sets forth all locations where Inventory
or Equipment is located on the date hereof other than Inventory or Equipment in
transit or out on lease.
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(c) Such Grantor shall promptly, and in any event, within
30 days thereof, notify the Administrative Agent of new locations which
individually or in the aggregate contain material amounts of Inventory or
Equipment not previously set forth on Schedule 5, at which Inventory or
Equipment will be located (other than Inventory or Equipment in transit or out
on lease).
5.7. Notices. Such Grantor will advise the Administrative
Agent promptly, in reasonable detail, of:
(a) any Lien (other than any Permitted Lien) on any
material portion of the Collateral which would adversely affect the ability of
the Administrative Agent to exercise any of its remedies hereunder; and
(b) the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate value
of the Collateral or on the security interests created hereby taken as a whole.
5.8. Investment Property. (a) If such Grantor shall become
entitled to receive or shall receive any stock or other ownership certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock or other Pledged Equity Interest of
any Issuer, whether in addition to, in substitution of, as a conversion of, or
in exchange for, any shares of or other ownership interests in the Pledged
Securities, 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 endorsed by such Grantor to the Administrative Agent, if
required, together with an undated stock power covering such certificate duly
executed in blank by such Grantor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with respect to
the Pledged Securities 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 Pledged Securities 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.
(b) Without the prior written consent of the
Administrative Agent, such Grantor will not (i) vote to enable, or take any
other action to permit, any Issuer to issue any stock, partnership interests,
limited liability company interests 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, partnership interests, limited liability company
interests 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, any of the Investment Property or Proceeds thereof or any interest
therein (except, in each case, pursuant to a transaction expressly permitted by
the Credit Agreement), (iii) create, incur or permit to exist any Lien or option
in favor of, or any claim of any Person with respect to, any of the Investment
Property or Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement, (iv) enter into
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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 or any interest therein or (v) without (a) the
prior written notice to the Administrative Agent and (b) such Grantor taking all
steps necessary or advisable to establish the Administrative Agent's "control"
thereof, cause or permit any Issuer of any Pledged Partnership Interests or
Pledged LLC Interests which are not securities (for purposes of the UCC) on the
date hereof to elect or otherwise take any action to cause such Pledged
Partnership Interests or Pledged LLC Interests to be treated as securities for
purposes of the UCC.
(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement relating
to the Pledged Securities issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Pledged Securities issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Securities issued by it. In addition, each Grantor which
is either an Issuer or an owner of any Pledged Security hereby consents to the
grant by each other Grantor of the security interest hereunder in favor of the
Administrative Agent and to the transfer of any Pledged Security to the
Administrative Agent or its nominee upon the occurrence or during the
continuation of an Event of Default and to the substitution of the
Administrative Agent or its nominee as a partner, member or shareholder of the
Issuer of the related Pledged Security. The Administrative Agent agrees to
notify any Grantor before transferring the Pledged Securities pledged by such
Grantor into the name of the Administrative Agent pursuant to this section.
5.9. Receivables. (a) Other than in the ordinary course of
business consistent with its past practice, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could materially adversely affect the
value thereof.
(b) Such Grantor will deliver to the Administrative Agent
a copy of each material demand, notice or document received by it that questions
or calls into doubt the validity or enforceability of outstanding Receivables
constituting a material portion of the Collateral.
5.10. Contracts. (a) If requested by the Administrative
Agent in its sole discretion, such Grantor will cause each counterparty to a
Contract to which such Grantor is a party to consent to the collateral
assignment thereof of Grantor's rights, if any, to the Administrative Agent for
the benefit of the Secured Parties.
(b) Such Grantor will perform and comply in all material
respects with all its obligations under the Contracts.
(c) Such Grantor will not amend, modify, terminate, waive
or fail to enforce any provision of any Contract in any manner which could
reasonably be expected to materially adversely affect the value of such Contract
as Collateral or otherwise have a Material Adverse Effect.
(d) Such Grantor will exercise promptly and diligently
each and every material right which it may have under each Contract (other than
any right of termination).
(e) Such Grantor will deliver to the Administrative Agent
a copy of each material demand, notice or document received by it relating in
any way to any Contract.
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5.11. Intellectual Property. (a) Such Grantor (either
itself or through licensees) will (i) continue to use each material Trademark on
each and every trademark class of goods applicable to its current line as
reflected in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services
offered under such Trademark and take all necessary steps to ensure that all
licensed users of such Trademark maintain as in the past such quality, (iii) use
such Trademark with the appropriate notice of registration and all other notices
and legends required by applicable Requirements of Law, (iv) not adopt or use
any mark which is confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of the Secured Parties,
shall obtain a perfected security interest in such mark pursuant to this
Agreement and the Intellectual Property Security Agreement, and (v) not (and not
permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby such Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees)
will not do any act, or omit to do any act, whereby any material Patent may
become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i)
will employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such Grantor (either itself or through licensees)
will not do any act that knowingly uses any material Intellectual Property to
infringe the intellectual property rights of any other Person.
(e) Except with respect to any Patent, Trademark or
Copyright the invalidity of which would not have a Material Adverse Effect, such
Grantor (either itself or through licensees) will use proper statutory notice in
connection with the use of each Patent, Trademark and Copyright included in the
Intellectual Property.
(f) Such Grantor will notify the Administrative Agent as
promptly as practicable if it knows, or has reason to know, that any application
or registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(g) As promptly as practicable upon such Grantor's
acquisition or creation of any copyrightable work, invention, trademark or other
similar property that is material to the business of Grantor, apply for
registration thereof with the United States Copyright Office, the United States
Patent and Trademark Office and any other appropriate office. Whenever such
Grantor, either by itself or through any agent, employee, licensee or designee,
shall file an application for the registration of any Intellectual Property with
the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in any other country or any political
subdivision thereof, such Grantor shall report such filing to the Administrative
Agent within five Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Administrative Agent, such Grantor
shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Administrative Agent may request to
evidence the Secured Parties' security interest in any
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Copyright, Patent, Trademark or other Intellectual Property and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(h) Except as provided in Section 5.11(i), such Grantor
will take all reasonable and necessary steps, including, without limitation, in
any proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of
material Intellectual Property, including, without limitation, 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.
(i) Such Grantor (either itself or through licensees)
will not, without the prior written consent of the Administrative Agent,
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.
(j) 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, take such actions as are
reasonably appropriate under the circumstances, including, as appropriate, sue
for infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution and promptly notify the Administrative Agent after
it takes any action to sue for infringement, misappropriation or dilution, to
seek injunctive relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or promptly notify the
Administrative Agent of any decision not to pursue or take any such action.
(k) Such Grantor agrees that, should it obtain an
ownership interest in any item of intellectual property which is not now a part
of the Intellectual Property Collateral (the "After-Acquired Intellectual
Property"), (i) the provisions of Section 3 shall automatically apply thereto,
(ii) any such After-Acquired Intellectual Property, and in the case of
trademarks, the goodwill of the business connected therewith or symbolized
thereby, shall automatically become part of the Intellectual Property
Collateral, (iii) it shall give prompt (and, in any event within five Business
Days after the last day of the fiscal quarter in which such Grantor acquires
such ownership interest) written notice thereof to the Administrative Agent in
accordance herewith, and (iv) it shall provide the Administrative Agent promptly
(and, in any event within five Business Days after the last day of the fiscal
quarter in which such Grantor acquires such ownership interest) with an amended
Schedule 6 hereto and take the actions specified in Section 5.11(m).
(l) Such Grantor agrees to execute an Intellectual
Property Security Agreement with respect to its Intellectual Property in
substantially the form of Exhibit B-1 in order to record the security interest
granted herein to the Administrative Agent for the ratable benefit of the
Secured Parties with the United States Patent and Trademark Office, the United
States Copyright Office, and any other applicable Governmental Authority.
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(m) Such Grantor agrees to execute an After-Acquired
Intellectual Property Security Agreement with respect to its After-Acquired
Intellectual Property in substantially the form of Exhibit B-2 in order to
record the security interest granted herein to the Administrative Agent for the
ratable benefit of the Secured Parties with the United States Patent and
Trademark Office, the United States Copyright Office, and any other applicable
Governmental Authority.
(n) Such Grantor shall take all steps reasonably
necessary to protect the secrecy of all material Trade Secrets, including,
without limitation, entering into confidentiality agreements with employees and
labeling and restricting access to secret information and documents.
SECTION 6. REMEDIAL PROVISIONS
6.1. Certain Matters Relating to Receivables. (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 require in connection with such test verifications.
After an Event of Default has occurred and is continuing, at any time and from
time to time, upon the Administrative Agent's request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each
Grantor to collect such Grantor's Receivables, and each Grantor hereby agrees to
continue to collect all amounts due or to become due to such Grantor under the
Receivables and any Supporting Obligation and diligently exercise each material
right it may have under any Receivable and any Supporting Obligation, in each
case, at its own expense; provided, however, that the Administrative Agent may
curtail or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. If required by the Administrative Agent
at any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly endorsed 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 Secured Parties, segregated from other funds of such Grantor. Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.
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 during reasonable business hours after the occurrence and during the
continuance of an Event of Default communicate with obligors under the
Receivables and parties to the Contracts to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables or Contracts.
(b) If an Event of Default shall have occurred and be
continuing, the Administrative Agent may at any time notify, or require any
Grantor to so notify, the Account Debtor or counterparty on any Receivable or
Contract of the security interest of the Administrative Agent therein. In
addition, after the occurrence and during the continuance of an Event of
Default, the Administrative Agent may upon written notice to the applicable
Grantor, notify, or require any Grantor to notify, the Account Debtor or
counterparty to make all payments under the Receivables and/or Contracts
directly to the Administrative Agent.
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(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables and Contracts to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. No Secured Party shall have any obligation or liability
under any Receivable (or any agreement giving rise thereto) or Contract by
reason of or arising out of this Agreement or the receipt by 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.
6.3. Pledged Securities. (a) Unless an Event of Default
shall have occurred and be continuing and the Administrative Agent shall have
given notice to the relevant Grantor of the Administrative Agent's intent to
exercise its corresponding rights pursuant to Section 6.3(b), each Grantor shall
be permitted to receive all cash dividends paid in respect of the Pledged Equity
Interests and all payments made in respect of the Pledged Notes, in each case
paid in the normal course of business of the relevant Issuer and consistent with
past practice, to the extent permitted in the Credit Agreement, and to exercise
all voting and corporate rights with respect to the Pledged Securities not
inconsistent with the purposes of this Agreement; provided, however, that no
vote shall be cast or corporate or other ownership right exercised or other
action taken which, in the Administrative Agent's reasonable judgment, would
materially impair the Collateral or which would be inconsistent with or result
in any violation of any provision of the Credit Agreement, this Agreement or any
other Loan Document.
(b) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent to invoke the
provisions of this Section 6.3(b) to the relevant Grantor(s): (i) all rights of
each Grantor to exercise or refrain from exercising the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
hereto shall cease and all such rights shall thereupon become vested in the
Administrative Agent who shall thereupon have the sole right, but shall be under
no obligation, to exercise or refrain from exercising such voting and other
consensual rights and (ii) the Administrative Agent shall have the right to
transfer all or any portion of the Investment Property to its name or the name
of its nominee or agent. In addition, the Administrative Agent shall have the
right at any time to exchange any certificates or instruments representing any
Investment Property for certificates or instruments of smaller or larger
denominations. In order to permit the Administrative Agent to exercise the
voting and other consensual rights which it may be entitled to exercise pursuant
hereto and to receive all dividends and other distributions which it may be
entitled to receive hereunder each Grantor shall promptly execute and deliver
(or cause to be executed and delivered) to the Administrative Agent all proxies,
dividend payment orders and other instruments as the Administrative Agent may
from time to time reasonably request and each Grantor acknowledges that the
Administrative Agent may utilize the power of attorney set forth herein.
(c) Each Grantor hereby authorizes and instructs each
Issuer of any Pledged Securities pledged by such Grantor hereunder to (i) comply
with any instruction received by it from the Administrative Agent in writing
that (x) states that an Event of Default has occurred and is continuing and (y)
is otherwise in accordance with the terms of this Agreement, without any other
or further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.
6.4. Proceeds to be Turned Over To Administrative Agent.
In addition to the rights of the Secured Parties specified in Section 6.1 with
respect to payments of Receivables, if an Event of
25
Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, Cash Equivalents, checks and other near-cash items shall be
held by such Grantor in trust for the Secured Parties, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Administrative Agent in the exact form received by such
Grantor (duly endorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Secured Parties)
shall continue to be held as collateral security for all the Obligations and
shall not constitute payment thereof until applied as provided in Section 6.5.
6.5. Application of Proceeds. At such intervals as may be
agreed upon by the Borrower and the Administrative Agent, or, if an Event of
Default shall have occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent may, notwithstanding the provisions
of Section 2.11 of the Credit Agreement, apply all or any part of the net
Proceeds (after deducting fees and expenses as provided in Section 6.6)
constituting Collateral realized through the exercise by the Administrative
Agent of its remedies hereunder, whether or not held in any Collateral Account,
and any proceeds of the guarantee set forth in Section 2, in payment of the
Obligations in the following order:
First, to the Administrative Agent, to pay incurred and unpaid
fees and expenses of the Secured Parties under the Loan Documents
permitted under Section 10.5 of the Credit Agreement or Section 8.4
hereof;
Second, to the Administrative Agent, for application by it
towards payment of amounts then due and owing and remaining unpaid in
respect of the Obligations, pro rata among the Secured Parties
according to the amounts of the Obligations then due and owing and
remaining unpaid to the Secured Parties;
Third, to the Administrative Agent, for application by it
towards prepayment of the Obligations, pro rata among the Lenders
according to the amounts of the Obligations then held by the Lenders;
and
Fourth, any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated or expired shall
be paid over to the Borrower or to whomsoever may be lawfully entitled
to receive the same.
6.6. Code and Other Remedies. (a) If an Event of Default
shall occur and be continuing, the Administrative Agent, on behalf of the
Secured Parties, may exercise, in addition to all other rights and remedies
granted to them in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Obligations, all rights and remedies of
a secured party under the New York UCC (whether or not the New York UCC applies
to the affected Collateral) or its rights under any other applicable law or in
equity. Without limiting the generality of the foregoing, the Administrative
Agent, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon any Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, license,
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 Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem
26
best, for cash or on credit or for future delivery without assumption of any
credit risk. Each Secured Party shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in any Grantor, which right or equity is hereby
waived and released. Each purchaser at any such sale shall hold the property
sold absolutely free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by applicable law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Administrative Agent may sell the Collateral without giving any
warranties as to the Collateral. The Administrative Agent may specifically
disclaim or modify any warranties of title or the like. This procedure will not
be considered to adversely effect the commercial reasonableness of any sale of
the Collateral. Each Grantor agrees that it would not be commercially
unreasonable for the Administrative Agent to dispose of the Collateral or any
portion thereof by using Internet sites that provide for the auction of assets
of the types included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets. Each Grantor hereby
waives any claims against the Administrative Agent arising by reason of the fact
that the price at which any Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
the Administrative Agent accepts the first offer received and does not offer
such Collateral to more than one offeree. 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 have the right to enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process.
(b) 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 Secured Parties hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-615(a) of the New York UCC, need the Administrative Agent account for the
surplus, if any, to any Grantor. If the Administrative Agent sells any of the
Collateral upon credit, the Grantor will be credited only with payments actually
made by the purchaser and received by the Administrative Agent and applied to
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, the Administrative Agent may resell the Collateral and the Grantor
shall be credited with proceeds of the sale. 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 by them of any
rights hereunder.
(c) In the event of any Disposition of any of the
Intellectual Property and if an Event of Default shall have occurred and be
continuing, the goodwill of the business connected with and symbolized by any
Trademarks subject to such Disposition shall be included, and the applicable
Grantor shall supply the Administrative Agent or its designee with such
Grantor's know-how and expertise, and with documents and things embodying the
same, relating to the manufacture, distribution, advertising and sale of
products or the provision of services relating to any Intellectual Property
subject to such Disposition, and such Grantor's customer lists and other records
and documents relating to such
27
Intellectual Property and to the manufacture, distribution, advertising and sale
of such products and services.
6.7. Registration Rights. (a) If the Administrative Agent
shall determine to exercise its right to sell any or all of the Pledged Equity
Interests or the Pledged Debt Securities pursuant to Section 6.6, and if in the
opinion of the Administrative Agent it is necessary or advisable to have the
Pledged Equity Interests or the Pledged Debt Securities, or that portion thereof
to be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Equity Interests or the Pledged Debt Securities, 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 Equity Interests or the Pledged Debt
Securities, or that portion thereof to be sold, provided, that the
Administrative Agent shall furnish to the relevant Grantor such information
regarding the Administrative Agent as shall be required in connection with such
registration and requested by such Grantor in writing, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the SEC
applicable thereto. Each Grantor agrees to cause such Issuer to comply with the
provisions of the securities or "Blue Sky" laws of any and all jurisdictions
which the Administrative Agent shall designate and to make available to its
security holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
(b) Each Grantor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the Pledged Equity Interests
or the Pledged Debt Securities, 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 Equity Interests or the Pledged Debt
Securities 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 Equity Interests or the Pledged Debt
Securities 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 such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred and is
continuing under the Credit Agreement or a defense of payment.
28
6.8. Waiver; Deficiency. Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Obligations and the fees and
disbursements of any attorneys employed by any Secured Party to collect such
deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1. Administrative Agent's Appointment as
Attorney-in-Fact, Etc. (a) Each Grantor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, each Grantor hereby gives the Administrative Agent the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name,
or otherwise, take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or with respect to any other Collateral
and file any claim or take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by the Administrative
Agent for the purpose of collecting any and all such moneys due under
any Receivable or with respect to any other Collateral whenever
payable;
(ii) in the case of any Intellectual Property,
execute and deliver, and have recorded, any and all agreements,
instruments, documents and papers as the Administrative Agent may
request to evidence the Secured Parties' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral, effect any repairs or
any insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale
provided for in Section 6.6 or 6.7, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the
Collateral; and
(v) (1) direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (2) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising
out of any Collateral; (3) sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (4) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any
portion thereof and to enforce any other right in respect of any
Collateral; (5) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral; (6) settle, compromise or
adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or releases as the Administrative Agent
may deem appropriate; (7) assign any Copyright, Patent or Trademark
(along with the goodwill of the business to which any such Copyright,
Patent or Trademark
29
pertains), throughout the world for such term or terms, on such
conditions, and in such manner, as the Administrative Agent shall in
its sole discretion determine; and (8) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes,
and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which
the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Secured Parties' security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary
notwithstanding, the Administrative Agent agrees that, except as provided in
Section 7.1(b), it will not exercise any rights under the power of attorney
provided for in this Section 7.1(a) unless an Event of Default shall have
occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of
its agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement; provided, however, that unless
and Event of Default has occurred and is continuing or time is of the essence,
the Administrative Agent shall not exercise this power without first making
demand on the Grantor and the Grantor failing to immediately comply therewith.
(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 until this Agreement is terminated and the security
interests created hereby are released.
7.2. Duty of Administrative Agent. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the New
York UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, nor any other Secured Party nor any of their
respective officers, directors, partners, employees, agents, attorneys and other
advisors, attorneys-in-fact or affiliates 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 Party 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,
partners, employees, agents, attorneys and other advisors, attorneys-in-fact or
affiliates shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
7.3. Execution of Financing Statements. Each Grantor
hereby authorizes the Administrative Agent to file or record financing or
continuation statements, and amendments thereto, and
30
other filing or recording documents or instruments with respect to the
Collateral in such form and in such offices as the Administrative Agent
reasonably determines appropriate to perfect or maintain the perfection of the
security interests of the Administrative Agent under this Agreement. Each
Grantor agrees that such financing statements may describe the collateral in the
same manner as described in the Security documents or as "all assets" or "all
personal property" of the undersigned, whether now owned or hereafter existing
or acquired by the undersigned or such other description as the Administrative
Agent, in its sole judgment, determines is necessary or advisable. A
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction. Each Grantor hereby ratifies any such
financing statement filed prior to the date hereof by the Administrative Agent,
if any.
7.4. Authority of Administrative Agent. Each Grantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the other Secured Parties, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and no Grantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
7.5. Appointment of Co-Collateral Agents. At any time or
from time to time and upon written notice to the Grantors, in order to comply
with any Requirement of Law, the Administrative Agent may appoint another bank
or trust company or one of more other persons, either to act as co-agent or
agents on behalf of the Secured Parties with such power and authority as may be
necessary for the effectual operation of the provisions hereof and which may be
specified in the instrument of appointment (which may, in the discretion of the
Administrative Agent, include provisions for indemnification and similar
protections of such co-agent or separate agent).
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.
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,
31
may be exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
8.4. Enforcement Expenses; Indemnification. (a) Each
Grantor agrees to pay or reimburse each Lender and the Administrative Agent (in
the case of each Lender, after the occurrence and during the continuance of an
Event of Default) for all its costs and expenses incurred in collecting against
such Grantor 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 Grantor is a party, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel (but not both outside and in-house counsel)) to each Secured Party and
of counsel to the Administrative Agent.
(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 to the extent the Borrower
would be required to do so pursuant to Section 10.5 of the Credit Agreement.
(d) The agreements in this Section shall survive
repayment of the Obligations and all other amounts payable under the Credit
Agreement and the other Loan Documents.
(e) Each Grantor agrees that the provisions of Section
2.19 of the Credit Agreement are hereby incorporated herein by reference,
mutatis mutandis, and each Secured Party shall be entitled to rely on each of
them as if they were fully set forth herein.
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.
8.6. Set-Off. Each Grantor hereby irrevocably authorizes
each Secured Party at any time and from time to time while an Event of Default
pursuant to Section 8(a) of the Credit Agreement shall have occurred and be
continuing, without notice to such Grantor or any other Grantor, any such notice
being expressly waived by each Grantor, to set-off and appropriate and apply any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by 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
32
application. The rights of each Secured Party under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which such Secured Party may have.
8.7. Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
8.8. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.9. Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
8.10. Integration. This Agreement and the other Loan
Documents represent the agreement of the Grantors, the Administrative Agent and
the other 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 WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN APPLICATION
OF A DIFFERENT GOVERNING LAW.
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 sue in any other jurisdiction; and
33
(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. Acknowledgments. Each Grantor hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents to which
it is a party;
(b) 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 6.9 of
the Credit Agreement shall become a Grantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in the
form of Annex 1 hereto.
8.15. Releases. (a) At such time as the Loans, the
Reimbursement Obligations and the other Obligations (other than Obligations in
respect of any Hedge Agreement) shall have been paid in full, the Commitments
have been terminated or expired and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be Disposed of by any
Grantor in a transaction permitted by the Credit Agreement, then the
Administrative Agent, at the request and sole expense of such Grantor, shall
execute and deliver to such Grantor all releases or other documents reasonably
necessary or desirable for the release of the Liens created hereby on such
Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be Disposed of in a
transaction permitted by the Credit Agreement; provided that the Borrower shall
have delivered to the Administrative Agent, at least ten Business Days prior to
the date of the proposed release, a written request for release identifying the
relevant Subsidiary Guarantor and the terms of the 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 and that
the Proceeds of such Disposition will be applied in accordance therewith.
(c) Each Grantor acknowledges that it is not authorized
to file any financing statement or amendment or termination statement with
respect to any financing statement originally filed
34
in connection herewith without the prior written consent of the Administrative
Agent subject to such Grantor's rights under Section 9-509(d)(2) of the New York
UCC.
8.16. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE
ADMINISTRATIVE AGENT 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.
35
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.
RENT-A-CENTER, INC.
By: /s/ MARK E. SPEESE
----------------------------------------
Name: Mark E. Speese
Title: Chairman of the Board and
Chief Executive Officer
RENT-A-CENTER EAST, INC.
By: /s/ MARK E. SPEESE
----------------------------------------
Name: Mark E. Speese
Title: President
COLORTYME, INC.
By: /s/ MITCHELL E. FADEL
----------------------------------------
Name: Mitchell E. Fadel
Title: Vice President
RENT-A-CENTER WEST, INC.
By: /s/ MITCHELL E. FADEL
----------------------------------------
Name: Mitchell E. Fadel
Title: Vice President
REMCO AMERICA, INC.
By: /s/ MITCHELL E. FADEL
----------------------------------------
Name: Mitchell E. Fadel
Title: Vice President
GET IT NOW, LLC
By: /s/ MITCHELL E. FADEL
----------------------------------------
Name: Mitchell E. Fadel
Title: Vice President
[Signatures continued on the next page]
36
RENT-A-CENTER TEXAS, L.P.
By: /s/ MITCHELL E. FADEL
----------------------------------------
Name: Mitchell E. Fadel
Title: President and Chief Operating
Officer
RENT-A-CENTER TEXAS, L.L.C.
By: /s/ JAMES ASHWORTH
----------------------------------------
Name: James Ashworth
Title: President
[Signatures continued on the next page]
37
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ FRANCIS CHANG
----------------------------------------
Name: Francis Chang
Title: Authorized Signatory
38
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
1-1
Schedule 2
DESCRIPTION OF PLEDGED INVESTMENT PROPERTY
PLEDGED STOCK:
Issuer's Jurisdiction
Under New York
UCC Section 9- Stock Certificate Percentage of
Grantor Issuer 305(a)(2) Class of Stock No. Shares No. of Shares
- ------------------ -------- --------------------- -------------- ----------------- ---------------- -------------
PLEDGED NOTES:
Grantor Issuer Payee Principal Amount
- ------------------ -------- --------- ----------------
PLEDGED DEBT SECURITIES:
Issuer's Jurisdiction
Under New York UCC
Grantor Issuer Section 9-305(a)(2) Payee Principal Amount
- ------------------ -------- --------------------- ---------- ----------------
2-1
PLEDGED SECURITY ENTITLEMENTS:
Securities Securities Intermediary's
Issuer of Description of Intermediary Securities Account Jurisdiction Under New York UCC
Grantor Financial Asset Financial Asset (Name and Address) (Number and Location) Section 9-305(a)(3)
- ------------------ --------------- --------------- ------------------ --------------------- -------------------------------
PLEDGED COMMODITY CONTRACTS:
Commodity Intermediary's
Jurisdiction Under New
Description of Commodity Intermediary Commodity Account York UCC Section 9-
Grantor Commodity Contract (Name and Address) (Number and Location) 305(a)(4)
- ------------------ ------------------ ---------------------- --------------------- ------------------------
PLEDGED PARTNERSHIP INTERESTS:
Type of
Partnership Interest
(e.g., General or Certificated Certificate No. % of Outstanding Partnership
Grantor Issuer Limited) (Y/N) (if any) Interests of the Partnership
- -------------- ------ -------------------- ------------ --------------- ----------------------------
2-2
PLEDGED LLC INTERESTS:
Certificated Certificate No. No. of % of Outstanding LLC Interests
Grantor Issuer (Y/N) (if any) Pledged Units of the Issuer
- -------------- ------ ------------ --------------- ------------- ------------------------------
PLEDGED TRUST INTERESTS:
Class of Trust Certificated Certificate No. % of Outstanding Trust
Grantor Issuer Interests (Y/N) (if any) Interests of the Issuer
- -------------- ------ -------------- ------------ --------------- -----------------------
DEPOSIT ACCOUNTS:
Name of
Grantor Depositary Bank Account Number Account Name
- -------------- --------------- -------------- ------------
2-3
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a financing statement is to be filed]
Copyright, Patent and Trademark Filings
[List all filings]
Actions with respect to Investment Property
[Describe all actions required to obtain "control" of Investment Property]
Other Actions
[Describe other actions to be taken]
3-1
Schedule 4
EXACT LEGAL NAME, JURISDICTION OF ORGANIZATION AND LOCATION OF CHIEF
EXECUTIVE OFFICE
Location of
Chief
Executive
Exact Legal Name Jurisdiction of Organization Organizational I.D. Office
- ---------------- ---------------------------- ------------------- -----------
4-1
Schedule 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
- ------- ---------
5-1
Schedule 6
COPYRIGHTS
PATENTS
TRADEMARKS
INTELLECTUAL PROPERTY LICENSES
OTHER INTELLECTUAL PROPERTY
6-1
Schedule 7
ACQUISITIONS
7-1
Schedule 8
LETTERS OF CREDIT
8-1
Schedule 9
CONTRACTS
9-1
Schedule 10
COMMERCIAL TORT CLAIMS
2-2
Exhibit A to
Guarantee and Collateral Agreement
FORM OF ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Guarantee and Collateral Agreement dated as of May 28, 2003 (the "Agreement";
capitalized terms used but not defined herein have the meanings given such terms
therein), made by the Grantors parties thereto for the benefit of Lehman
Commercial Paper Inc., as administrative agent (in such capacity, the
"Administrative Agent") under the Credit Agreement dated as of May 28, 2003 (as
amended, supplemented or modified from time to time, the "Credit Agreement"),
among Rent-A-Center, Inc., a Delaware corporation, the several banks and other
financial institutions or entities from time to time parties to the Credit
Agreement, Morgan Stanley Senior Funding Inc., as documentation agent, JPMorgan
Chase Bank and Bear, Sterns & Co., Inc., each as syndication agent, Wachovia
Bank, National Association, UBS Warburg LLC, United Overseas Bank and Credit
Lyonnais, each as managing agent, and the Administrative Agent. The undersigned
agrees for the benefit of the Administrative Agent and the Secured Parties 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 confirms the statements made in the
Agreement with respect to the undersigned including, without limitation, in
Section 4.8 and Schedule 2.
3. 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.
4. The terms of Sections 5.8(c), 6.3(c) and 6.7 of the
Agreement shall apply to it, mutatis mutandis, with respect to all actions that
may be required of it pursuant to Section 5.8(c), 6.3(c) or 6.7 of the
Agreement.
[NAME OF ISSUER]
By __________________________________
Name:
Title:
Address for Notices:
_____________________________________
_____________________________________
Fax: ________________________________
A-1
Exhibit B-1 to
Guarantee and Collateral Agreement
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of May
[__], 2003 (as amended, supplemented or otherwise modified from time to time,
the "Intellectual Property Security Agreement"), is made by each of the
signatories hereto (collectively, the "Grantors") in favor of Lehman Commercial
Paper Inc., as administrative agent (in such capacity, the "Administrative
Agent") for the Secured Parties (as defined in the Credit Agreement referred to
below).
WHEREAS, Rent-A-Center, Inc., a Delaware corporation (the
"Borrower") has entered into a Credit Agreement dated as of May 28, 2003 (as
amended, supplemented or modified from time to time, the "Credit Agreement"),
among the Borrower, the several banks and other financial institutions or
entities from time to time parties to the Credit Agreement, Morgan Stanley
Senior Funding Inc., as documentation agent, JPMorgan Chase Bank and Bear,
Sterns & Co., Inc., each as syndication agent, Wachovia Bank, National
Association, UBS Warburg LLC, United Overseas Bank and Credit Lyonnais, each as
managing agent, and the Administrative Agent. Capitalized terms used and not
defined herein have the meanings given such terms in the Credit Agreement.
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered that
certain Guarantee and Collateral Agreement, dated as of May 28, 2003 in favor of
the Administrative Agent for the benefit of the Secured Parties (as amended,
supplemented, replaced or otherwise modified from time to time, the "Guarantee
and Collateral Agreement").
WHEREAS, under the terms of the Guarantee and Collateral
Agreement, the Grantors have granted a security interest in certain property,
including, without limitation, certain Intellectual Property of the Grantors to
the Administrative Agent for the ratable benefit of the Secured Parties, and
have agreed as a condition thereof to execute this Intellectual Property
Security Agreement for recording with the United States Patent and Trademark
Office, the United States Copyright Office, and other applicable Governmental
Authorities.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantors agree as
follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to
the Administrative Agent for the ratable benefit of the Secured Parties a
security interest in and to all of such Grantor's right, title and interest in
and to the following (the "Intellectual Property 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) (i) all trademarks, service marks, trade names,
corporate names, company names, business names, trade dress, trade styles,
logos, or other indicia of origin or source identification, trademark and
service mark registrations, and applications for trademark or service mark
registrations and any new renewals thereof, including, without limitation, each
registration and application identified in Schedule 1, (ii) the right to sue or
otherwise recover for any and all past, present and future infringements and
misappropriations 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 of such Grantor
accruing thereunder or
B-1
pertaining thereto, together in each case with the goodwill of the business
connected with the use of, and symbolized by, each of the above (collectively,
the "Trademarks");
(b) (i) all patents, patent applications and patentable
inventions, including, without limitation, each issued patent and patent
application identified in Schedule 1, (ii) all inventions and improvements
described and claimed therein, (iii) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (iv) 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
(v) all reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon and all other rights
of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Patents");
(c) (i) all copyrights, whether or not the underlying
works of authorship have been published, and all works of authorship and other
intellectual property rights therein, all copyrights of works based on,
incorporated in, derived from or relating to works covered by such copyrights,
all right, title and interest to make and exploit all derivative works based on
or adopted from works covered by such copyrights, and all copyright
registrations and copyright applications, and any renewals or extensions
thereof, including, without limitation, each registration and application
identified in Schedule 1, (ii) the rights to print, publish and distribute any
of the foregoing, (iv) the right to sue or otherwise recover for any and all
past, present and future infringements and misappropriations thereof, (iv) 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 (v) all other rights of any
kind whatsoever of such Grantor accruing thereunder or pertaining thereto
("Copyrights");
(d) (i) all trade secrets and all confidential and
proprietary information, including know-how, manufacturing and production
processes and techniques, inventions, research and development information,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (ii) the right to sue or otherwise recover for any and all past,
present and future infringements and misappropriations 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 of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Trade Secrets");
(e) (i) all licenses or agreements, whether written or
oral, providing for the grant by or to any Grantor of: (A) any right to use any
Trademark or Trade Secret, (B) any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, and (C) any right under any
Copyright including, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright including,
without limitation, any of the foregoing identified in Schedule 1, (ii) the
right to sue or otherwise recover for any and all past, present and future
infringements and misappropriations of any of the foregoing, (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 of such Grantor accruing thereunder or pertaining thereto; and
(f) any and all proceeds of the foregoing.
B-1-2
SECTION 2. Recordation. Each Grantor authorizes and requests
that the Register of Copyrights, the Commissioner of Patents and Trademarks and
any other applicable government officer record this Intellectual Property
Security Agreement.
SECTION 3. Execution in Counterparts. This Agreement may be
executed in any number of counterparts (including by telecopy), each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 4. Governing Law. This Intellectual Property Security
Agreement shall be governed by, and construed and interpreted in accordance
with, the law of the State of New York.
SECTION 5. Conflict Provision. This Intellectual Property
Security Agreement has been entered into in conjunction with the provisions of
the Guarantee and Collateral Agreement and the Credit Agreement. The rights and
remedies of each party hereto with respect to the security interest granted
herein are without prejudice to and are in addition to those set forth in the
Guarantee and Collateral Agreement and the Credit Agreement, all terms and
provisions of which are incorporated herein by reference. In the event that any
provisions of this Intellectual Property Security Agreement are in conflict with
the Guarantee and Collateral Agreement or the Credit Agreement, the provisions
of the Guarantee and Collateral Agreement or the Credit Agreement shall govern.
B-1-3
IN WITNESS WHEREOF, each of the undersigned has caused this
Intellectual Property Security Agreement to be duly executed and delivered as of
the date first above written.
[NAME OF GRANTOR]
By: __________________________________
Name:
Title:
B-1-4
Schedule 1
COPYRIGHTS
PATENTS
TRADEMARKS
INTELLECTUAL PROPERTY LICENSES
Exhibit B-2 to
Guarantee and Collateral Agreement
FORM OF AFTER-ACQUIRED INTELLECTUAL PROPERTY SECURITY AGREEMENT
([FIRST] SUPPLEMENTAL FILING)
This INTELLECTUAL PROPERTY SECURITY AGREEMENT ([FIRST]
SUPPLEMENTAL FILING), dated as of _____ __, 200_ (as amended, supplemented or
otherwise modified from time to time, the "[First] Supplemental Intellectual
Property Security Agreement"), is made by each of the signatories hereto
(collectively, the "Grantors") in favor of Lehman Commercial Paper Inc., as
administrative agent (in such capacity, the "Administrative Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, Rent-A-Center, Inc., a Delaware corporation (the
"Borrower"), has entered into a Credit Agreement dated as of May 28, 2003 (as
amended, supplemented or modified from time to time, the "Credit Agreement"),
among the Borrower, the several banks and other financial institutions or
entities from time to time parties to the Credit Agreement, Morgan Stanley
Senior Funding Inc., as documentation agent, JPMorgan Chase Bank and Bear,
Sterns & Co., Inc., each as syndication agent, Wachovia Bank, National
Association, UBS Warburg LLC, United Overseas Bank and Credit Lyonnais, each as
managing agent, and the Administrative Agent. Capitalized terms used and not
defined herein have the meanings given such terms in the Credit Agreement.
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered that
certain Guarantee and Collateral Agreement, dated as of May 28, 2003, in favor
of the Administrative Agent for the benefit of the Secured Parties (as amended,
supplemented, replaced or otherwise modified from time to time, the "Guarantee
and Collateral Agreement").
WHEREAS, under the terms of the Guarantee and Collateral
Agreement, the Grantors have granted a security interest in certain property,
including, without limitation, certain Intellectual Property, including but not
limited to After-Acquired Intellectual Property of the Grantors to the
Administrative Agent for the ratable benefit of the Secured Parties, and have
agreed as a condition thereof to execute this [First] Supplemental Intellectual
Property Security Agreement for recording with the United States Patent and
Trademark Office, the United States Copyright Office, and other applicable
Governmental Authorities.
WHEREAS, the Intellectual Property Security Agreement was
recorded against certain United States Intellectual Property at [INSERT
REEL/FRAME NUMBER] [IF SECOND OR LATER SUPPLEMENTAL, ADD PRIOR REEL/FRAME
NUMBERS].
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantors agree as
follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to
the Administrative Agent for the ratable benefit of the Secured Parties a
security interest in and to all of such Grantor's right, title and interest in
and to the following (the "Intellectual Property 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:
B-2-1
(a) (i) all trademarks, service marks, trade names,
corporate names, company names, business names, trade dress, trade styles,
logos, or other indicia of origin or source identification, trademark and
service mark registrations, and applications for trademark or service mark
registrations and any new renewals thereof, including, without limitation, each
registration and application identified in Schedule 1, (ii) the right to sue or
otherwise recover for any and all past, present and future infringements and
misappropriations 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 of such Grantor
accruing thereunder or pertaining thereto, together in each case with the
goodwill of the business connected with the use of, and symbolized by, each of
the above (collectively, the "Trademarks");
(b) (i) all patents, patent applications and patentable
inventions, including, without limitation, each issued patent and patent
application identified in Schedule 1, (ii) all inventions and improvements
described and claimed therein, (iii) the right to sue or otherwise recover for
any and all past, present and future infringements and misappropriations
thereof, (iv) 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
(v) all reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon and all other rights
of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Patents");
(c) (i) all copyrights, whether or not the underlying
works of authorship have been published, and all works of authorship and other
intellectual property rights therein, all copyrights of works based on,
incorporated in, derived from or relating to works covered by such copyrights,
all right, title and interest to make and exploit all derivative works based on
or adopted from works covered by such copyrights, and all copyright
registrations and copyright applications, and any renewals or extensions
thereof, including, without limitation, each registration and application
identified in Schedule 1, (ii) the rights to print, publish and distribute any
of the foregoing, (iii) the right to sue or otherwise recover for any and all
past, present and future infringements and misappropriations thereof, (iv) 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 (v) all other rights of any
kind whatsoever of such Grantor accruing thereunder or pertaining thereto
("Copyrights");
(d) (i) all trade secrets and all confidential and
proprietary information, including know-how, manufacturing and production
processes and techniques, inventions, research and development information,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (ii) the right to sue or otherwise recover for any and all past,
present and future infringements and misappropriations 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 of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Trade Secrets");
(e) (i) all licenses or agreements, whether written or
oral, providing for the grant by or to any Grantor of: (A) any right to use any
Trademark or Trade Secret, (B) any right under any Patent, and (C) any right
under any Copyright, (ii) the right to sue or otherwise recover for any and all
past, present and future infringements and misappropriations of any of the
foregoing, (iii) all income, royalties,
B-2-2
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 of such
Grantor accruing thereunder or pertaining thereto; and
(f) any and all proceeds of the foregoing.
SECTION 2. Recordation. Each Grantor authorizes and requests
that the Register of Copyrights, the Commissioner of Patents and Trademarks and
any other applicable government officer record this [First] Supplemental
Intellectual Property Security Agreement.
SECTION 3. Execution in Counterparts. This Agreement may be
executed in any number of counterparts (including by telecopy), each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 4. Governing Law. This [First] Supplemental
Intellectual Property Security Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
SECTION 5. Conflict Provision. This [First] Supplemental
Intellectual Property Security Agreement has been entered into in conjunction
with the provisions of the Guarantee and Collateral Agreement and the Credit
Agreement. The rights and remedies of each party hereto with respect to the
security interest granted herein are without prejudice to, and are in addition
to those set forth in the Guarantee and Collateral Agreement and the Credit
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this [First] Supplemental
Intellectual Property Security Agreement are in conflict with the Guarantee and
Collateral Agreement or the Credit Agreement, the provisions of the Guarantee
and Collateral Agreement or the Credit Agreement shall govern.
B-2-3
IN WITNESS WHEREOF, each of the undersigned has caused this
[First] Supplemental Intellectual Property Security Agreement to be duly
executed and delivered as of the date first above written.
[NAME OF GRANTOR]
By: _______________________
Name:
Title:
B-2-4
Schedule 1
COPYRIGHTS
PATENTS
TRADEMARKS
INTELLECTUAL PROPERTY LICENSES
Exhibit C to
Guarantee and Collateral Agreement
FORM OF CONTROL AGREEMENT
This CONTROL AGREEMENT (as amended, supplemented or otherwise
modified from time to time, the "Control Agreement") dated as of _______ ___,
200_, is made by and among _______________, a __________ (the "Grantor"), Lehman
Commercial Paper Inc., as administrative agent (in such capacity, the
"Administrative Agent") for the Secured Parties (as defined in the Guarantee and
Collateral Agreement referred to below), and ____________, a ____________ (the
"Issuer").
WHEREAS, the Grantor has granted to the Administrative Agent
for the benefit of the Secured Parties a security interest in the uncertificated
securities of the Issuer owned by the Grantor from time to time (collectively,
the "Pledged Securities"), and all additions thereto and substitutions and
proceeds thereof (collectively, with the Pledged Securities, the "Collateral")
pursuant to a Guarantee and Collateral Agreement, dated as of May 28, 2003 (as
amended, supplemented, replaced or otherwise modified from time to time, the
"Guarantee and Collateral Agreement"), among the Grantor and the other persons
party thereto as grantors in favor of the Administrative Agent for the benefit
of the Secured Parties.
WHEREAS, the following terms which are defined in Articles 8
and 9 of the Uniform Commercial Code in effect in the State of New York on the
date hereof (the "UCC") are used herein as so defined: Adverse Claim, Control,
Instruction, Proceeds and Uncertificated Security.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. Notice of Security Interest. The Grantor, the
Administrative Agent and the Issuer are entering into this Control Agreement to
perfect, and to confirm the priority of, the Administrative Agent's security
interest in the Collateral. The Issuer acknowledges that this Control Agreement
constitutes written notification to the Issuer of the Administrative Agent's
security interest in the Collateral. The Issuer agrees to promptly make all
necessary entries or notations in its books and records to reflect the
Administrative Agent's security interest in the Collateral and, upon request by
the Administrative Agent, to register the Administrative Agent as the registered
owner of any or all of the Pledged Securities. The Issuer acknowledges that the
Administrative Agent has control over the Collateral.
SECTION 2. Collateral. The Issuer hereby represents and
warrants to, and agrees with the Grantor and the Administrative Agent that (i)
the terms of any limited liability company interests or partnership interests
included in the Collateral from time to time shall expressly provide that they
are securities governed by Article 8 of the Uniform Commercial Code in effect
from time to time in the State of [__________], (ii) the Pledged Securities are
uncertificated securities, (iii) the issuer's jurisdiction is, and during the
term of this Control Agreement shall remain, the State of [____________], (iv)
Schedule 1 contains a true and complete description of the Pledged Securities as
of the date hereof and (v) except for the claims and interests of the
Administrative Agent and the Grantor in the Collateral, the Issuer does not know
of any claim to or security interest or other interest in the Collateral.
SECTION 3. Control. The Issuer hereby agrees, upon written
direction from the Administrative Agent who shall have provided the Grantor with
written notice to such written direction to the Issuer, and without further
consent from the Grantor, (a) to comply with all instructions and directions
C-1
of any kind originated by the Administrative Agent concerning the Collateral, to
liquidate or otherwise dispose of the Collateral as and to the extent directed
by the Administrative Agent and to pay over to the Administrative Agent all
proceeds without any setoff or deduction, and (b) except as otherwise directed
by the Administrative Agent, not to comply with the instructions or directions
of any kind originated by the Grantor or any other person.
SECTION 4. Other Agreements. The Issuer shall notify promptly
the Administrative Agent and the Grantor if any other person asserts any lien,
encumbrance, claim (including any adverse claim) or security interest in or
against any of the Collateral. In the event of any conflict between the
provisions of this Control Agreement and any other agreement governing the
Pledged Securities or the Collateral, the provisions of this Control Agreement
shall control.
SECTION 5. Protection of Issuer. The Issuer may rely and shall
be protected in acting upon any notice, instruction or other communication that
it reasonably believes to be genuine and authorized.
SECTION 6. Termination. This Control Agreement shall terminate
automatically upon receipt by the Issuer of written notice executed by the
Administrative Agent.
SECTION 7. Notices. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, to the Grantor's and the Administrative Agent's addresses
as set forth in the Guarantee and Collateral Agreement, and to the Issuer's
address as set forth below, or to such other address as any party may give to
the others in writing for such purpose:
[Name of Issuer]
[Address of Issuer]
Attention: ________________________
Telephone: (_____) _____- _________
Telecopy: (_____) _____- _________
SECTION 8. Amendments in Writing. None of the terms or
provisions of this Control Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the parties
hereto.
SECTION 9. Entire Agreement. This Control Agreement and the
Guarantee and Collateral Agreement constitute the entire agreement and supersede
all other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
SECTION 10. Execution in Counterparts. This Control Agreement
may be executed in any number of counterparts (including by telecopy), each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 11. Successors and Assigns. This Control Agreement
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Grantor may not assign,
transfer or delegate any of its rights or obligations under this Control
Agreement without the prior written consent of the Administrative Agent.
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SECTION 12. Governing Law and Jurisdiction. This Control
Agreement has been delivered to and accepted by the Administrative Agent and
will be deemed to be made in the State of New York. THIS CONTROL AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. Each of the parties hereto submits for itself and its
property in any legal action or proceeding relating to this Control Agreement,
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.
SECTION 13. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS CONTROL AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Control Agreement to be duly executed and delivered as of the date first above
written.
[NAME OF GRANTOR]
By: _________________________________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Administrative Agent
By: _________________________________________________
Name:
Title:
[NAME OF ISSUER]
By: _________________________________________________
Name:
Title:
C-4
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ____________, 200__, made by
______________________, a _______________ (the "Additional Grantor"), in favor
of Lehman Commercial Paper Inc., as administrative agent (in such capacity, the
"Administrative Agent") for (i) the banks and other financial institutions and
entities (the "Lenders") parties to the Credit Agreement referred to below, and
(ii) the other Secured Parties (as defined in the Guarantee and Collateral
Agreement (as hereinafter defined)). All capitalized terms not defined herein
shall have the meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, Rent-A-Center, Inc. (the "Borrower"), the Lenders and
the Administrative Agent have entered into a Credit Agreement dated as of May
28, 2003 (as amended, supplemented or modified from time to time, the "Credit
Agreement"), among the Borrower, the Lenders, Morgan Stanley Senior Funding
Inc., as documentation agent, JPMorgan Chase Bank and Bear, Sterns & Co., Inc.,
each as syndication agent, Wachovia Bank, National Association, UBS Warburg LLC,
United Overseas Bank and Credit Lyonnais, each as managing agent, and the
Administrative Agent;
WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its Subsidiaries (other than the Additional Grantor) have entered
into the Guarantee and Collateral Agreement, dated as of May 28, 2003 (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 Secured Parties;
WHEREAS, the Credit Agreement requires the Additional Grantor
to become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Guarantee
and Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and
delivering this Assumption Agreement, the Additional Grantor, as provided in
Section 8.14 of the Guarantee and Collateral Agreement, hereby becomes a party
to the Guarantee and Collateral Agreement as a Grantor and Guarantor thereunder
with the same force and effect as if originally named therein as a Grantor and
Guarantor and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Grantor and Guarantor
thereunder. The information set forth in Annex 1-A hereto is hereby added to the
information set forth in Schedules 1 to 8 to the Guarantee and Collateral
Agreement. The Additional Grantor hereby represents and warrants that each of
the representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date (except
for representations and warranties expressly stated to relate to a specific
earlier date, in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date).
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By: _______________________
Name:
Title:
2
Annex 1-A
SUPPLEMENTAL INFORMATION