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EXECUTION COPY
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Exhibit 10.2
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GUARANTEE AND COLLATERAL AGREEMENT
made by
BALLY TOTAL FITNESS HOLDING CORPORATION
and certain of its Subsidiaries
in favor of
THE CHASE MANHATTAN BANK,
as Collateral Agent
Dated as of November 18, 1997
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TABLE OF CONTENTS
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SECTION 1. DEFINED TERMS....................................................................................... 1
1.1 Definitions....................................................................................... 2
1.2 Other Definitional Provisions..................................................................... 6
SECTION 2. GUARANTEE........................................................................................... 6
2.1 Guarantee......................................................................................... 6
2.2 Right of Contribution............................................................................. 7
2.3 No Subrogation.................................................................................... 7
2.4 Amendments, etc. with respect to the Borrower Obligations......................................... 7
2.5 Guarantee Absolute and Unconditional.............................................................. 8
2.6 Reinstatement..................................................................................... 8
2.7 Payments.......................................................................................... 9
SECTION 3. GRANT OF SECURITY INTEREST.......................................................................... 9
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................................................... 10
4.1 Representations in Credit Agreement............................................................... 10
4.2 Title; No Other Liens............................................................................. 10
4.3 Perfected First Priority Liens.................................................................... 10
4.4 Chief Executive Office............................................................................ 10
4.5 Inventory and Equipment........................................................................... 11
4.6 Farm Products..................................................................................... 11
4.7 Pledged Securities................................................................................ 11
4.8 Receivables....................................................................................... 11
4.9 Contracts......................................................................................... 11
4.10 Intellectual Property............................................................................ 12
SECTION 5. COVENANTS........................................................................................... 12
5.1 Covenants in Credit Agreement..................................................................... 12
5.2 Delivery of Instruments and Chattel Paper......................................................... 12
5.3 Maintenance of Insurance.......................................................................... 12
5.4 Payment of Obligations............................................................................ 12
5.5 Maintenance of Perfected Security Interest; Further Documentation................................. 13
5.6 Changes in Locations, Name, etc................................................................... 13
5.7 Notices........................................................................................... 13
5.8 Pledged Securities................................................................................ 14
5.9 Contracts......................................................................................... 14
5.10 Intellectual Property............................................................................ 15
SECTION 6. REMEDIAL PROVISIONS................................................................................. 16
6.1 Certain Matters Relating to Receivables........................................................... 16
6.2 Communications with Obligors; Grantors Remain Liable.............................................. 16
6.3 Pledged Securities................................................................................ 17
6.4 Proceeds to be Turned Over To Collateral Agent.................................................... 18
6.5 Application of Proceeds........................................................................... 18
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6.6 Code and Other Remedies........................................................................... 18
6.7 Registration Rights............................................................................... 19
6.8 Waiver; Deficiency................................................................................ 19
SECTION 7. THE COLLATERAL AGENT................................................................................ 20
7.1 Collateral Agent's Appointment as Attorney-in-Fact, etc........................................... 20
7.2 Duty of Collateral Agent.......................................................................... 21
7.3 Execution of Financing Statements................................................................. 21
7.4 Authority of Collateral Agent..................................................................... 22
SECTION 8. MISCELLANEOUS....................................................................................... 22
8.1 Amendments in Writing............................................................................. 22
8.2 Notices........................................................................................... 22
8.3 No Waiver by Course of Conduct; Cumulative Remedies............................................... 22
8.4 Enforcement Expenses; Indemnification............................................................. 22
8.5 Successors and Assigns............................................................................ 23
8.6 Set-Off........................................................................................... 23
8.7 Counterparts...................................................................................... 23
8.8 Severability...................................................................................... 23
8.9 Section Headings.................................................................................. 23
8.10 Integration...................................................................................... 24
8.11 GOVERNING LAW.................................................................................... 24
8.12 Submission To Jurisdiction; Waivers.............................................................. 24
8.13 Acknowledgements................................................................................. 24
8.14 WAIVER OF JURY TRIAL............................................................................. 25
8.15 Additional Grantors.............................................................................. 25
8.16 Releases; Exercise of Remedies................................................................... 25
8.17 Operating Bank Obligations....................................................................... 26
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GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of November 18,
1997, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "GRANTORS"), in favor of
THE CHASE MANHATTAN BANK, as Collateral Agent (in such capacity, the "COLLATERAL
AGENT") pursuant to the Collateral Agency Agreement dated as of November 18,
1997.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of
November 18, 1997 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among Bally Total Fitness Holding Corporation
(the "BORROWER"), the several banks and other financial institutions (the
"BANKS") from time to time parties thereto and The Chase Manhattan Bank, as
agent, the Banks 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;
WHEREAS, the Operating Banks (as defined in the Credit
Agreement) have provided, and may from time to time provide, independently of
the Banks and the Credit Agreement, customary banking deposit and disbursement
services to the Borrower and/or its Subsidiaries in connection with the Demand
Deposit Accounts (as defined in the Credit Agreement) established by the
Borrower and/or its Subsidiaries with such Operating Banks;
WHEREAS, it is a condition precedent to the obligation of the
Banks 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 Collateral Agent for the benefit of the Banks and the Operating
Banks;
NOW, THEREFORE, in consideration of the premises and to induce
the Collateral Agent and the Banks to enter into the Credit Agreement and to
induce the Banks to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Collateral Agent, for the
benefit of the Banks and the Operating Banks, as follows:
SECTION 1. DEFINED TERMS
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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: Chattel Paper, Documents, Equipment, Farm
Products, Instruments, Investment Property and Inventory; excluding in each case
the Receivables Program Receivables.
(b) The following terms shall have the following meanings:
"ACCOUNTS": as defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof including accounts,
accounts receivable and other rights of any Grantor to payment for
goods sold or leased or for services rendered (except for Receivables
Program Receivables (as defined in the Credit Agreement)), whether now
existing or hereafter arising and wherever arising, and whether or not
they have been earned by performance.
"AGREEMENT": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"BORROWER OBLIGATIONS": the collective reference to the unpaid
principal of and interest on the Advances and reimbursement obligations
in respect of Letters of Credit and all other obligations and
liabilities of the Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Advances and reimbursement obligations in
respect of Letters of Credit and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in
such proceeding) to the Agent, the Collateral Agent or any Bank (or, in
the case of any Hedge Agreement referred to below, any Affiliate of any
Bank), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement, this
Agreement, the other Credit Documents, any Letter of Credit or any
Hedge Agreement entered into by the Borrower with any Bank (or any
Affiliate of any Bank) or any other document made, delivered or given
in connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements
of counsel to the Collateral Agent or to the Banks that are required to
be paid by the Borrower pursuant to the terms of any of the foregoing
agreements).
"COLLATERAL": as defined in Section 3.
"COLLATERAL ACCOUNT": any collateral account established by
the Collateral Agent as provided in Section 6.1 or 6.4.
"CONTRACTS": all contracts and agreements to which the Grantor
is a party on the date hereof or becomes a party subsequent to the date
hereof, 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; excluding in each case the
Receivables Program Receivables.
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"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound; excluding in each case the Receivables
Program Receivables.
"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.
"COPYRIGHTS": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed in SCHEDULE 6), all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office, and
(ii) the right to obtain all renewals thereof.
"GENERAL INTANGIBLES": all "general intangibles" as such term
is defined in Section 9-106 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 contracts,
agreements, instruments and indentures in any form, and portions
thereof, to which such Grantor is a party or under which such Grantor
has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same may from time to time
be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights
of such Grantor to damages arising thereunder and (iii) all rights of
such Grantor to perform and to exercise all remedies thereunder, in
each case to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in
such contract, agreement, instrument or indenture is not prohibited by
such contract, agreement, instrument or indenture without the consent
of any other party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from
the other parties thereto (it being understood that the foregoing shall
not be deemed to obligate such Grantor to obtain such consents);
PROVIDED, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money or other
amounts due or to become due under any such contract, agreement,
instrument or indenture; excluding in each case the Receivables Program
Receivables.
"GUARANTOR OBLIGATIONS": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and the Operating
Bank Obligations and (ii) all obligations and liabilities of such
Guarantor which may arise under or in connection with this Agreement or
any other Credit 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 reasonable fees and disbursements
of counsel to the Collateral Agent or to the Banks that are required to
be paid by such Guarantor pursuant to the terms of this Agreement or
any other Credit Document).
"GUARANTORS": the collective reference to each Grantor other
than the Borrower.
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"HEDGE AGREEMENTS": as to any Person, all interest rate swaps,
caps or collar agreements or similar arrangements entered into by such
Person providing for protection against fluctuations in interest rates
or currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"INTELLECTUAL PROPERTY": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to xxx at law or in equity for any
infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
"INTERCOMPANY NOTE": any promissory note evidencing loans made
by any Grantor to the Borrower or any of its Subsidiaries.
"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 the Operating Bank Obligations and (ii) in the case of
each Guarantor, its Guarantor Obligations.
"OPERATING BANK OBLIGATIONS": as defined in the Credit
Agreement.
"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 letters patent of the United States, any
other country or any political subdivision thereof, all reissues and
extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to in SCHEDULE 6,
(ii) all applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of
the foregoing referred to in SCHEDULE 6, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"PLEDGED NOTES": all promissory notes listed on SCHEDULE 2,
all Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than
promissory notes issued in connection with extensions of trade credit
by any Grantor in the ordinary course of business).
"PLEDGED PARTNERSHIP INTERESTS": in each case, whether now
existing or hereafter acquired, all of each Grantor's right, title and
interest in and to:
(i) any Issuer listed on Schedule 2 that is a
partnership, but not any of such Grantor's obligations from
time to time as a general or limited partner, as the case may
be, in any such Issuer (unless the Collateral Agent or its
designee, on behalf of the Collateral Agent, the Banks and the
Operating Banks, shall elect to become a
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general or limited partner, as the case may be, in any such
Issuer in connection with its exercise of remedies pursuant to
the terms hereof);
(ii) any and all moneys due and to become due to
such Grantor now or in the future by way of a distribution
made to such Grantor in its capacity as a general partner or
limited partner, as the case may be, in any such Issuer or
otherwise in respect of such Grantor's interest as a general
partner or limited partner, as the case may be, in any such
Issuer;
(iii) any other Property of any such Issuer to
which such Grantor now or in the future may be entitled in
respect of its interests as a general partner or limited
partner, as the case may be, in any such Issuer by way of
distribution, return of capital or otherwise;
(iv) any other claim or right which such Grantor
now has or may in the future acquire in respect of its general
or limited partnership interests in any such Issuer;
(v) the partnership agreement or other
organizational documents of any such Issuer;
(vi) all certificates, options or rights of any
nature whatsoever that may be issued or granted by any such
Issuer to such Grantor while this Agreement is in effect; and
(vii) to the extent not otherwise included, all
Proceeds of any or all of the foregoing.
"PLEDGED SECURITIES": the collective reference to the Pledged
Notes, the Pledged Stock and the Pledged Partnership Interests.
"PLEDGED STOCK": the shares of Capital Stock listed on
SCHEDULE 2 (which, in the case of Foreign Subsidiaries, shall not
exceed 65% of the Capital Stock of such Foreign Subsidiaries and which
shall not include Lincoln Indemnity Company), together with any other
shares, stock certificates, options or rights of any nature whatsoever
in respect of the Capital Stock of any Person that may be issued or
granted to, or held by, any Grantor after the date hereof, while this
Agreement is in effect (which, in the case of Foreign Subsidiaries,
shall not exceed 65% of the Capital Stock of such Foreign Subsidiaries
and which shall not include Lincoln Indemnity Company).
"PROCEEDS": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New
York 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;
excluding in each case the Receivables Program Receivables.
"RECEIVABLES": any right to payment for goods sold or leased
or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance, including without limitation, any Account; excluding in
each case Receivables Program Receivables.
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"SECURITIES ACT": the Securities Act of 1933, as amended.
"TRADEMARKS": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, excluding "Intent to Use"
filings, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise,
and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, and (ii)
the right to obtain all renewals thereof.
"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; excluding "Intent to Use" filings.
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.
SECTION 2. GUARANTEE
2.1 GUARANTEE. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Collateral Agent,
for the benefit of the Banks and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Borrower Obligations.
(b) Anything herein or in any other Credit Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Credit Documents shall in no event exceed the amount which can
be guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section 2
or affecting the rights and remedies of the Collateral Agent or any Bank
hereunder.
(d) The guarantee contained in this Section 2 shall remain in
full force and effect until all the Borrower Obligations and the obligations of
each Guarantor under the guarantee contained in
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this Section 2 shall have been satisfied by payment in full, no Letter of Credit
shall be outstanding and the Commitments shall be terminated, notwithstanding
that from time to time during the term of the Credit Agreement the Borrower may
be free from any Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the
Collateral Agent or any Bank from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations, remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full, no Letter of Credit shall be outstanding and the Commitments are
terminated.
2.2 RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 2.3. The
provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of any Guarantor to the Collateral Agent and the Banks, and each
Guarantor shall remain liable to the Collateral Agent and the Banks for the full
amount guaranteed by such Guarantor hereunder.
2.3 NO SUBROGATION. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Collateral Agent or any Bank, no Guarantor shall be entitled to be
subrogated to any of the rights of the Collateral Agent or any Bank against the
Borrower or any other Guarantor or any collateral security or guarantee or right
of offset held by the Collateral Agent or any Bank for the payment of the
Borrower Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Collateral Agent and the Banks by the Borrower on account of the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated. If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Collateral Agent and the Banks, segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Collateral Agent in the exact form received by such Guarantor
(duly indorsed by such Guarantor to the Collateral Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such
order as the Collateral Agent may determine.
2.4 AMENDMENTS, ETC. WITH RESPECT TO THE BORROWER OBLIGATIONS.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Collateral Agent or any Bank may be rescinded by the
Collateral Agent or such Bank and any of the Borrower Obligations continued, and
the Borrower Obligations or the liability of any other Person upon or for any
part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or
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released by the Collateral Agent or any Bank, and the Credit Agreement and the
other Credit 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 Collateral Agent (or the Required Banks or all Banks,
as the case may be) may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the Collateral Agent
or any Bank for the payment of the Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Collateral Agent nor any Bank 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.
2.5 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the Collateral
Agent or any Bank 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 Collateral Agent and the Banks,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each
Guarantor waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Borrower Obligations. Each Guarantor understands and agrees that
the guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Credit Document,
any of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Collateral Agent or any Bank, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Collateral Agent or any Bank, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, the Collateral Agent or any Bank 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 the Collateral Agent or any Bank to make any such demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Collateral Agent or any Bank against any Guarantor. For
the purposes hereof "demand" shall include the commencement and continuance of
any legal proceedings.
2.6 REINSTATEMENT. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Collateral Agent or
any Bank upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the
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Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 PAYMENTS. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Collateral Agent without set-off or counterclaim
in Dollars at the office of the Collateral Agent located at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
SECTION 3. GRANT OF SECURITY INTEREST
3.1 GRANT OF SECURITY INTEREST. Each Grantor hereby assigns
and transfers to the Collateral Agent, and hereby grants to the Collateral
Agent, for the benefit of the Banks and the Operating Banks, a security interest
in all of the following property now owned or at any time hereafter acquired by
such Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the "COLLATERAL"), as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all Investment Property;
(k) all Pledged Securities;
(l) all Receivables;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
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Notwithstanding the foregoing, "Collateral" shall not include
any right, title or interest of any Grantor, now owned or at any time hereafter
acquired, in the Receivables Program Receivables.
3.2 FORMALITIES. (a) STOCK POWERS. Concurrently with the
delivery to the Collateral Agent of each certificate representing one or more
shares of Pledged Stock to the Collateral Agent, the Grantor owning such Pledged
Stock shall deliver an undated stock power covering such certificate, duly
executed in blank by such Grantor.
(b) POWERS; REGISTRATION OF PARTNERSHIP PLEDGE. (i)
Concurrently with the delivery to the Collateral Agent of any certificate
representing any Pledged Partnership Interests, the Grantor owning such Pledged
Partnership Interests shall, if requested by the Collateral Agent, deliver an
undated power covering such certificate, duly executed in blank by such Grantor;
and
(ii) Concurrently with the execution of this Agreement, each
Grantor will send to each Issuer of Pledged Partnership Interests written
instructions substantially in the form of Exhibit A hereto and shall cause such
Issuer to, and such Issuer shall, deliver to the Collateral Agent the
transaction statement in the form of Exhibit B hereto confirming that such
Issuer has registered the pledge effected by this Agreement on its books.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Collateral Agent and the Banks to enter into the
Credit Agreement and to induce the Banks to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Collateral Agent and each Bank that:
4.1 REPRESENTATIONS IN CREDIT AGREEMENT. In the case of each
Guarantor, the representations and warranties set forth in Article V of the
Credit Agreement as they relate to such Guarantor or to the Credit Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct in all material respects, and the Collateral
Agent and each Bank 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
4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 TITLE; NO OTHER LIENS. Except for the security interest
granted to the Collateral Agent for the benefit of the Banks and the Operating
Banks pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Collateral Agent, for the benefit of the Banks and
the Operating Banks, pursuant to this Agreement or as are permitted by the
Credit Agreement.
4.3 PERFECTED FIRST PRIORITY LIENS. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on SCHEDULE 3 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the Collateral
Agent in completed and duly executed form) will constitute valid perfected
security interests in all of the Collateral in favor of the Collateral Agent,
for the benefit of the Banks and the Operating Banks, as collateral security for
such Grantor's Obligations, enforceable in accordance with the terms hereof
against all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and (b) are prior to all other Liens on the
Collateral in existence on the date hereof
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except for (i) unrecorded Liens permitted by the Credit Agreement which have
priority over the Liens on the Collateral by operation of law and (ii) Permitted
Liens as defined in the Credit Agreement.
4.4 CHIEF EXECUTIVE OFFICE. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on SCHEDULE 4.
4.5 INVENTORY AND EQUIPMENT. On the date hereof, the Inventory
and the Equipment (other than mobile goods) are kept at the locations listed on
SCHEDULE 5.
4.6 FARM PRODUCTS. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
4.7 PLEDGED SECURITIES. (a) The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each domestic corporate Issuer
owned by such Grantor (and 65% of all the issued and outstanding classes of the
Capital Stock of each Foreign Subsidiary Issuer).
(b) The Pledged Partnership Interests pledged by each Grantor
constitute all of the issued and outstanding partnership interests of each
Issuer that is a partnership in which such Grantor has any right, title and
interest.
(c) All the shares of the Pledged Stock and all of the Pledged
Partnership Interests have been duly and validly issued and are fully paid and
nonassessable.
(d) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(e) Such Grantor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any
other Person, except the security interest created by this Agreement and as set
forth on SCHEDULE 4.7.
4.8 RECEIVABLES. (a) No amount in excess of $250,000 payable
to such Grantor under or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Collateral
Agent.
(b) None of the obligors on any Receivables is a Governmental
Authority.
(c) The amounts represented by such Grantor to the Banks from
time to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.9 CONTRACTS. (a) 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.
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(b) 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.
(c) No amount in excess of $250,000 payable to such Grantor
under or in connection with any Contract is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Collateral Agent.
(d) None of the parties to any Contract is a Governmental
Authority.
4.10 INTELLECTUAL PROPERTY. (a) SCHEDULE 6 lists all
Intellectual Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property is
valid, subsisting, unexpired and enforceable, has not been abandoned and does
not infringe the intellectual property rights of any other Person.
(c) Except as set forth in SCHEDULE 6, on the date hereof,
none of the Intellectual Property is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge
of such Grantor, threatened, on the date hereof (i) seeking to limit, cancel or
question the validity of any Intellectual Property or such Grantor's ownership
interest therein, or (ii) which, if adversely determined, would have a material
adverse effect on the value of any Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Collateral Agent
and the Banks that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 COVENANTS IN CREDIT AGREEMENT. In the case of each
Guarantor, such 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 OF INSTRUMENTS AND CHATTEL PAPER. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper
(other than any Instrument or Chattel which evidences an amount payable which
does not exceed $250,000) shall within 14 days be delivered (unless a Default or
Event of Default has occurred and is continuing, in which case delivery shall be
immediate) to the Collateral Agent, duly indorsed in a manner satisfactory to
the Collateral Agent, to be held as Collateral pursuant to this Agreement.
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5.3 MAINTENANCE OF INSURANCE. The Grantors agree to maintain
insurance as required by the Credit Agreement.
5.4 PAYMENT OF OBLIGATIONS. Such Grantor will pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such 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 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 Collateral Agent and the
Banks from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral 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, ETC. Such Grantor will not,
except upon 15 days' prior written notice to the Collateral Agent and delivery
to the Collateral Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to SCHEDULE 5 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at
a location other than those listed on SCHEDULE 5;
(ii) change the location of its chief executive office or
sole place of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to
such an extent that any financing statement filed by the Collateral
Agent in connection with this Agreement would become misleading.
5.7 NOTICES. Such Grantor will advise the Collateral Agent and
the Banks promptly, in reasonable detail, of:
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(a) any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of the Collateral
which would materially adversely affect the ability of the Collateral
Agent to exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests created
hereby.
5.8 PLEDGED SECURITIES. (a) If such Grantor shall become
entitled to receive or shall receive any certificate or instrument (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer, whether in addition to,
in substitution of, as a conversion of, or in exchange for, any shares or units
of the Pledged Stock or the Pledged Partnership Interests, or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the
Collateral Agent and the Banks, hold the same in trust for the Collateral Agent
and the Banks and deliver the same forthwith to the Collateral Agent in the
exact form received, duly indorsed by such Grantor to the Collateral Agent, if
required, together with an undated stock or other power covering such
certificate duly executed in blank by such Grantor and with, if the Collateral
Agent so requests, signature guaranteed, to be held by the Collateral 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 during the continuation of a Default or
Event of Default shall be paid over to the Collateral 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 Collateral Agent, be delivered to the Collateral 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 during the continuation of a
Default or Event of Default, such Grantor shall, until such money or property is
paid or delivered to the Collateral Agent, hold such money or property in trust
for the Banks, segregated from other funds of such Grantor, as additional
collateral security for the Obligations.
(b) Without the prior written consent of the Collateral Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock, partnership 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 or other equity securities of any
nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Pledged
Securities or Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement or set forth on SCHEDULE 4.7 or (iv) enter
into any agreement or undertaking restricting the right or ability of such
Grantor or the Collateral Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement relating
to the Pledged Securities issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Collateral Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to
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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.
5.9 CONTRACTS. Such Grantor will perform and comply in all
material respects with all its obligations under the Contracts.
5.10 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 in all material respects free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark unless the
Collateral Agent, for the benefit of the Banks and the Operating Banks, shall
obtain a perfected security interest in such xxxx pursuant to this Agreement,
and (v) not (and not permit any licensee or sublicensee thereof to) do any act
or knowingly omit to do any act whereby such Trademark may become invalidated or
impaired in any way.
(b) Such Grantor (either itself or through licensees) will not
do any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such Grantor (either itself or through licensees) will not
do any act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
(e) Such Grantor will notify the Collateral Agent and the
Banks immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, such Grantor
shall report such filing to the Collateral Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs. Upon request of
the Collateral Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Collateral
Agent may request to evidence the Collateral Agent's and the Banks' security
interest in any Copyright, Patent or Trademark and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.
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(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Collateral Agent after it learns thereof and xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
SECTION 6. REMEDIAL PROVISIONS
6.1 CERTAIN MATTERS RELATING TO RECEIVABLES. (a) At any time
after the occurrence and during the continuation of a Default or an Event of
Default, (x) the Collateral 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 Collateral Agent may require in connection
with such test verifications; and (y) upon the Collateral Agent's request and at
the expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others satisfactory to the Collateral Agent to furnish to the
Collateral Agent reports showing reconciliations, aging and test verifications
of, and trial balances for, the Receivables.
(b) The Collateral Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the Collateral Agent's direction
and control, and the Collateral 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 Collateral Agent at any time after the occurrence and during
the continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Collateral Agent if required, in a Collateral
Account maintained under the sole dominion and control of the Collateral Agent,
subject to withdrawal by the Collateral Agent for the account of the Banks only
as provided in Section , and (ii) until so turned over, shall be held by such
Grantor in trust for the Collateral Agent and the Banks, segregated from other
funds of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) At the Collateral Agent's request at any time after the
occurrence and during the continuation of an Event of Default, each Grantor
shall deliver to the Collateral Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including, without limitation, all original orders, invoices
and shipping receipts.
6.2 COMMUNICATIONS WITH OBLIGORS; GRANTORS REMAIN LIABLE. (a)
The Collateral Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables and parties to
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the Contracts to verify with them to the Collateral Agent's satisfaction the
existence, amount and terms of any Receivables or Contracts.
(b) Upon the request of the Collateral Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Collateral Agent for the
benefit of the Banks and the Operating Banks and that payments in respect
thereof shall be made directly to the Collateral Agent.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables and Contracts to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. Neither the Collateral Agent nor any Bank shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) or Contract by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any Bank of any payment relating thereto, nor
shall the Collateral Agent or any Bank be obligated in any manner to perform any
of the obligations of any Grantor under or pursuant to any Receivable (or any
agreement giving rise thereto) or Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as
to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 PLEDGED SECURITIES. (a) Unless an Event of Default shall
have occurred and be continuing and the Collateral Agent shall have given notice
to the relevant Grantor of the Collateral Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends or distributions or other amounts paid in respect
of the Pledged Stock, all distributions in respect of the Pledged Partnership
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 and partnership rights with respect to the Pledged
Securities; PROVIDED, HOWEVER, that no vote shall be cast or corporate or
partnership right exercised or other action taken which, in the Collateral
Agent's reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Credit Document.
(b) If an Event of Default shall occur and be continuing and
the Collateral Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Collateral Agent shall have the right
to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Collateral Agent may determine, and (ii) any or
all of the Pledged Securities shall be registered in the name of the Collateral
Agent or its nominee, and the Collateral Agent or its nominee may thereafter
exercise (x) all voting, corporate, partnership and other rights pertaining to
such Pledged Securities at any meeting of shareholders or partners (as the case
may be) of the relevant Issuer or Issuers or otherwise and (y) any and all
rights of conversion, exchange and subscription and any other rights, privileges
or options pertaining to such Pledged Securities as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate or
partnership structure (as the case may be) of any Issuer, or upon the exercise
by any Grantor or the Collateral Agent of any right, privilege or option
pertaining to such Pledged Securities, and in connection therewith, the right to
deposit and deliver any and all of the Pledged
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Securities with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Collateral Agent may
determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer
of any Pledged Securities pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Collateral 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, distributions or other payments with
respect to the Pledged Securities directly to the Collateral Agent.
6.4 PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT. In
addition to the rights of the Collateral Agent and the Banks specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default
shall occur and be continuing, all Proceeds (other than Receivables Program
Receivables) received by any Grantor consisting of cash, checks and other
near-cash items shall be held by such Grantor in trust for the Collateral Agent
and the Banks, segregated from other funds of such Grantor, and shall, forthwith
upon receipt by such Grantor, be turned over to the Collateral Agent in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Collateral Agent, if required). All Proceeds received by the Collateral Agent
hereunder shall be held by the Collateral Agent in a Collateral Account
maintained under its sole dominion and control. All Proceeds while held by the
Collateral Agent in a Collateral Account (or by such Grantor in trust for the
Collateral Agent and the Banks) shall continue to be held as collateral security
for all the Obligations and shall not constitute payment thereof until applied
as provided in Section .
6.5 APPLICATION OF PROCEEDS. At such intervals as may be
agreed upon by the Borrower and the Collateral Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Collateral Agent's
election, the Collateral Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Obligations in such order as the Collateral
Agent may elect, and any part of such funds which the Collateral Agent elects
not so to apply and deems not required as collateral security for the
Obligations shall be paid over from time to time by the Collateral Agent to the
Borrower or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds remaining after the Obligations shall have been paid in
full, no Letters of Credit shall be outstanding and the Commitments shall have
terminated shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive the same.
6.6 CODE AND OTHER REMEDIES. If an Event of Default shall
occur and be continuing, the Collateral Agent, on behalf of the Banks, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the
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Collateral Agent or any Bank or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Collateral
Agent or any Bank shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall reasonably select, whether at such Grantor's premises or
elsewhere. The Collateral 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 Collateral Agent and the Banks hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the
Collateral Agent may elect, and only after such application and after the
payment by the Collateral Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the New York UCC,
need the Collateral Agent account for the surplus, if any, to any Grantor. To
the extent permitted by applicable law, each Grantor waives all claims, damages
and demands it may acquire against the Collateral Agent or any Bank arising out
of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.7 REGISTRATION RIGHTS. (a) Each Grantor recognizes that the
Collateral Agent may be unable to effect a public sale of any or all the Pledged
Stock or Pledged Partnership Interests, 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 Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Stock or Pledged Partnership
Interests 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.
(b) Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock or Pledged Partnership Interests
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 Collateral Agent and the Banks, that the Collateral
Agent and the Banks 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 under the Credit Agreement.
6.8 WAIVER; DEFICIENCY. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
New York UCC. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are
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insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Collateral Agent or any Bank to collect such
deficiency.
SECTION 7. THE COLLATERAL AGENT
7.1 COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral
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 Collateral Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or Contract or with respect to any
other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Collateral Agent for the purpose of collecting any
and all such moneys due under any Receivable or Contract or with
respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Collateral Agent may request to evidence
the Collateral Agent's and the Banks' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or any
part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) (i) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Collateral Agent or as the
Collateral Agent shall direct; (ii) 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; (iii) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (iv) 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; (v) defend any suit, action or proceeding brought against
such Grantor with respect to any Collateral; (vi) settle, compromise or
adjust any such suit, action or proceeding and, in connection
therewith, give such discharges or
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releases as the Collateral Agent may deem appropriate; (vii) assign any
Copyright, Patent or Trademark (along with the goodwill of the business
to which any such Copyright, Patent or Trademark pertains), throughout
the world for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine;
and (viii) 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 Collateral Agent were the absolute owner
thereof for all purposes, and do, at the Collateral Agent's option and
such Grantor's expense, at any time, or from time to time, all acts and
things which the Collateral Agent deems necessary to protect, preserve
or realize upon the Collateral and the Collateral Agent's and the
Banks' 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
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Collateral Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.
(c) The expenses of the Collateral 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 Reference Rate Advances under the
Credit Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Collateral 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 COLLATERAL AGENT. The Collateral 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 Collateral Agent
deals with similar property for its own account. Neither the Collateral Agent,
any Bank nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Collateral Agent and
the Banks hereunder are solely to protect the Collateral Agent's and the Banks'
interests in the Collateral and shall not impose any duty upon the Collateral
Agent or any Bank to exercise any such powers. The Collateral Agent and the
Banks shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
7.3 EXECUTION OF FINANCING STATEMENTS. Pursuant to Section
9-402 of the New York UCC and any other applicable law, each Grantor authorizes
the Collateral Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Collateral
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Agent reasonably determines appropriate to perfect the security interests of the
Collateral Agent under this Agreement. A photographic or other reproduction of
this Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
The Collateral Agent shall furnish Borrower with a copy of any documents filed
or recorded pursuant to this SECTION 7.3; provided that failing to furnish such
copies shall not affect the validity or effectiveness of such filing or
recordation.
7.4 AUTHORITY OF COLLATERAL AGENT. Each Grantor acknowledges
that the rights and responsibilities of the Collateral Agent under this
Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral 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 Collateral Agent and the
Banks, 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
Collateral Agent and the Grantors, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Banks with full and valid authority so to
act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS IN WRITING. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in accordance with Section 10.06 of the Credit Agreement.
8.2 NOTICES. All notices, requests and demands to or upon the
Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 9.01 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.
Neither the Collateral Agent nor any Bank shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Collateral Agent or any Bank, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Collateral Agent or any Bank of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent or such Bank would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
8.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. (a) Each Guarantor
agrees to pay or reimburse each Bank and the Collateral Agent and the Operating
Banks, as the case may be, for all its costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement and the other Credit
Documents to which such Guarantor is a party, including, without limitation, the
reasonable fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to each Bank and of counsel to the Collateral
Agent and the Operating Banks.
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(b) Each Guarantor agrees to pay, and to save the Collateral
Agent and the Banks and the Operating Banks harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
(c) Each Guarantor agrees to pay, and to save the Collateral
Agent and the Banks and the Operating Banks 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 9.08 of the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment
of the Obligations and all other amounts payable under the Credit Agreement and
the other Credit Documents.
8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Collateral Agent and the Banks 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
Collateral Agent.
8.6 SET-OFF. Each Grantor hereby irrevocably authorizes the
Collateral Agent and each Bank at any time and from time to time without notice
to such Grantor or any other Grantor, any such notice being expressly waived by
each Grantor, to set-off and appropriate and apply any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Collateral Agent or such Bank to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the Collateral
Agent or such Bank may elect, against and on account of the obligations and
liabilities of such Grantor to the Collateral Agent or such Bank hereunder and
claims of every nature and description of the Collateral Agent or such Bank
against such Grantor, in any currency, whether arising hereunder, under the
Credit Agreement, any other Credit Document or otherwise, as the Collateral
Agent or such Bank may elect, whether or not the Collateral Agent or any Bank
has made any demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. The Collateral Agent and each Bank shall
notify such Grantor promptly of any such set-off and the application made by the
Collateral Agent or such Bank of the proceeds thereof, PROVIDED that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Collateral Agent and each Bank under this Section
8.6 are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Collateral Agent or such Bank 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.
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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 Credit
Documents and the documents and agreements entered into with respect to the
Operating Bank Obligations represent the agreement of the Grantors, the
Collateral Agent and the Banks with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or warranties
by the Collateral Agent or any Bank relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Credit
Documents or such other documents and agreements.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit 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 States of New York and Illinois, the courts of the United
States of America for the Southern District of New York and for
Chicago, Illinois, 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 Collateral Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.
8.13 ACKNOWLEDGEMENTS. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents
to which it is a party;
(b) neither the Collateral Agent nor any Bank has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Credit Documents,
and the relationship between the Grantors, on the one hand, and the
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Collateral Agent and Banks, 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 Credit
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Banks or among the Grantors and the
Banks.
8.14 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.15 ADDITIONAL GRANTORS. Each Subsidiary of the Borrower that
is required to become a party to this Agreement pursuant to Section 3.04 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.
8.16 RELEASES; EXERCISE OF REMEDIES. (a) At such time as the
Advances, reimbursement obligations in respect of Letters of Credit and the
other Obligations shall have been paid in full, the Commitments have been
terminated and no Letters of Credit shall be outstanding, the Collateral shall
be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Collateral 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 Collateral Agent
shall deliver to such Grantor any Collateral held by the Collateral Agent
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Collateral Agent, at the request and sole expense of such
Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Borrower, a
Subsidiary Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Subsidiary Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the Collateral
Agent, at least ten Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Subsidiary Guarantor and
the terms of the sale or other disposition in reasonable detail, including the
price thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Credit Documents.
(c) The Collateral Agent hereby acknowledges and agrees, on
behalf of itself and each holder of the Obligations, for the benefit of each
holder of a Receivables Program Certificate and the trustee under the Pooling
and Servicing Agreement acting on behalf of such holders, and for the benefit of
Texas Commerce Bank National Association ("TCB"), in its capacity as back-up
servicer under that certain back-up servicing agreement dated as of June 26,
1995, as amended and restated as of December 16, 1996 (the "Back-Up Servicing
Agreement") (which was entered into as part of the Receivables Program
Documents), that (i) pursuant to the Back-Up Servicing Agreement, TCB has agreed
to become the "Successor Servicer" under the Pooling and Servicing Agreement
upon any
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resignation or termination of HTCA as the "Servicer" thereunder; (ii) if TCB is
appointed as Successor Servicer, in performing its obligations under the Pooling
and Servicing Agreement, TCB would receive and process payments and collections
from customers of Borrower and its Subsidiaries, which payments and collections
may include amounts not attributable or allocable to the Receivables Program
Receivables, which amounts would constitute Released Amounts (as defined in the
Pooling and Servicing Agreement) upon identification thereof, and upon
identification as Released Amounts would be subject to the Liens provided for
herein which secure the Obligations; and (iii) notwithstanding the interest of
the Collateral Agent and the holders of the Obligations in such Released
Amounts, the Collateral Agent and such holders will take no action to impair or
impede TCB from acting as Successor Servicer in accordance with the Back-Up
Servicing Agreement and the Pooling and Servicing Agreement, or which would
otherwise interfere with TCB receiving and processing such payments and
collections from such customers; PROVIDED, HOWEVER, that nothing contained in
this Section 8.16 is intended or shall construed as releasing, subordinating or
otherwise waiving the Liens or other interests of the Collateral Agent and the
holders of Obligations in Released Amounts upon identification thereof, or the
rights of the Collateral Agent and such holders which otherwise exist at any
time under the Collateral Documents or applicable law, to receive any such
Released Amounts.
(d) The Collateral Agent, in accepting the pledge of shares of
Funding Corp., acknowledges the bankruptcy remote structure created by the
Receivables Program Documents.
8.17 OPERATING BANK OBLIGATIONS. No Operating Bank shall be
entitled to the benefits of this Agreement or the Operating Bank Guaranty unless
it has signed and delivered to the Agent an executed counterpart of the
Collateral Agency Agreement in its capacity as an Operating Bank and thereby
become a party thereto.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
BALLY TOTAL FITNESS HOLDING CORPORATION
By: /s/ Xxxx X. Xxxxx
--------------------------------------------------
Title: Senior Vice President
and Chief Financial Officer
BALLY'S FITNESS AND RACQUET CLUBS, INC.
BALLY FITNESS FRANCHISING, INC.
BALLY FRANCHISE RSC, INC.
BALLY FRANCHISING HOLDINGS, INC.
BALLY TOTAL FITNESS CORPORATION
BALLY'S PACWEST, INC.
BALLY'S S.C. MANAGEMENT, INC.
BFIT REHAB OF BOCA RATON, INC.
BFIT REHAB OF CORAL GABLES, INC.
BFIT REHAB OF XXXXXXX, INC.
BFIT REHAB OF SUNRISE, INC.
BFIT REHAB OF WEST PALM BEACH, INC.
BFIT REHABILITATION SERVICES, INC.
CONNECTICUT COAST FITNESS CENTERS, INC.
CONNECTICUT VALLEY FITNESS CENTERS, INC.
GREATER PHILLY XX. 0 XXXXXXX XXXXXXX
XXXXXXX XXXXXX XX. 0 HOLDING COMPANY
HEALTH & TENNIS CORPORATION OF NEW YORK
HOLIDAY HEALTH & FITNESS CENTERS OF NEW YORK, INC.
HOLIDAY HEALTH CLUBS AND FITNESS CENTERS, INC.
HOLIDAY HEALTH CLUBS OF THE EAST COAST, INC.
HOLIDAY HEALTH CLUBS OF THE SOUTHEAST, INC.
HOLIDAY SPA HEALTH CLUBS OF CALIFORNIA
HOLIDAY/SOUTHEAST HOLDING CORP.
HOLIDAY UNIVERSAL, INC.
HOUSTON HEALTH CLUBS INC.
XXXX XX XXXXX FITNESS CENTERS, INC.
XXXX XX XXXXX HOLDING CORP.
MANHATTAN SPORTS CLUB, INC.
NEW FITNESS HOLDING CO., INC.
NYCON HOLDING CO., INC.
PENN HILLS SPA LIMITED PARTNERSHIP
PHYSICAL FITNESS CENTERS OF PHILADELPHIA, INC.
PROVIDENCE FITNESS CENTERS, INC.
RHODE ISLAND HOLDING COMPANY
SCANDINAVIAN DEVELOPMENT COMPANY
SCANDINAVIAN HEALTH SPA, INC.
SCANDINAVIAN U.S. SWIM & FITNESS, INC.
SO. CAL. NAUTILUS FITNESS CENTERS, INC.
31
SPA ASSOCIATES LIMITED PARTNERSHIP
TIDELANDS HOLIDAY HEALTH CLUBS, INC.
U.S. HEALTH, INC.
VERTICAL FITNESS AND RACQUET CLUB, LTD.
XXX XXXXX OF GREATER MICHIGAN, INC.
XXX XXXXX INTERNATIONAL, INC.
XXX XXXXX INTERNATIONAL OF CLEVELAND, INC.
XXX XXXXX INTERNATIONAL OF MISSOURI, INC.
XXX XXXXX INTERNATIONAL OF TOLEDO, INC.
By: /s/ Xxxx X. Xxxxx
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Title: Senior Vice President and Chief
Financial Officer
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for each of the Guarantors listed above
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