EXHIBIT 10.22
SUBSIDIARY SECURITY AGREEMENT
This SUBSIDIARY SECURITY AGREEMENT (this "Agreement") is dated as
of __________ and entered into by and between [INSERT NAME OF GRANTOR IN
CAPS], a _____________________ corporation ("Grantor"), and FIRST UNION
NATIONAL BANK, as administrative agent for and representative of (in such
capacity herein called "Secured Party") the financial institutions
("Lenders") party to the Credit Agreement referred to below and any
Interest Rate Exchangers (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party, Syndication Agent and Lenders have entered
into a Credit Agreement dated as of October 23, 1997, which Credit
Agreement has been amended and restated by an Amended and Restated Credit
Agreement dated as of January 28, 1999 (said Credit Agreement, as it may
hereafter be further amended, supplemented or otherwise modified from time
to time, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined) with The
Pantry, Inc., Delaware corporation ("Company"), pursuant to which Lenders
have made certain commitments, subject to the terms and conditions set
forth in the Credit Agreement, to extend certain credit facilities to
Company.
B. Company may from time to time enter, or may from time to time
have entered, into one or more Interest Rate Agreements (collectively, the
"Lender Interest Rate Agreements") with one or more Lenders (in such
capacity, collectively, "Interest Rate Exchangers").
C. Grantor has executed and delivered that certain Subsidiary
Guaranty dated as of October 23, 1997 (said Subsidiary Guaranty, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "Guaranty") in favor of Secured Party for the benefit of Lenders
and any Interest Rate Exchangers, pursuant to which Grantor has guarantied
the prompt payment and performance when due of all obligations of Company
under the Credit Agreement and the other Loan Documents and all obligations
of Company under the Lender Interest Rate Agreements, including the
obligation of Company to make payments thereunder in the event of early
termination thereof.
D. It is a condition precedent to the extensions of credit by
Lenders under the Credit Agreement that Grantor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the
Credit Agreement and to induce Interest Rate Exchangers to enter into the
Lender Interest Rate Agreements,
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and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Grantor hereby agrees with Secured Party as
follows:
SECTION 1. Grant of Security. Grantor hereby grants to Secured
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Party a security interest in, all of Grantor's right, title and interest in
and to the following, in each case whether now or hereafter existing or in
which Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "Collateral"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being
the "Equipment");
(b) all inventory in all of its forms (including (i) all goods
held by Grantor for sale or lease or to be furnished under contracts of
service or so leased or furnished, (ii) all raw materials, work in process,
finished goods, and materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in Grantor's business, (iii) all
goods in which Grantor has an interest in mass or a joint or other interest
or right of any kind, (iv) all goods which are returned to or repossessed
by Grantor, and (v) all accessions thereto and products thereof (all such
inventory, accessions and products being the "Inventory") and all
negotiable documents of title (including warehouse receipts, dock receipts
and bills of lading) issued by any Person covering any Inventory (any such
negotiable document of title being a "Negotiable Document of Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, general intangibles and other rights and obligations of any
kind and all rights in, to and under all security agreements, leases and
other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, documents, instruments, general intangibles
or other obligations (any and all such accounts, contract rights, chattel
paper, documents, instruments, general intangibles and other obligations
being the "Accounts", and any and all such security agreements, leases and
other contracts being the "Related Contracts");
(d) the agreements listed in Part A of Schedule II annexed
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hereto, as each such agreement may be amended, supplemented or otherwise
modified from time to time (said agreements, as so amended, supplemented or
otherwise modified, being referred to herein individually as an "Assigned
Agreement" and collectively as the "Assigned Agreements"), including (i)
all rights of Grantor to receive moneys due or to become due under or
pursuant to the Assigned Agreements, (ii) all rights of Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to
the Assigned Agreements, (iii) all claims of Grantor for damages arising
out of any breach of or default under the Assigned Agreements, and (iv) all
rights of Grantor to terminate, amend, supplement, modify or exercise
rights or options under the Assigned Agreements, to perform thereunder and
to compel performance and otherwise exercise all remedies thereunder;
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(e) all deposit accounts, including the deposit accounts listed
in Part B of Schedule II annexed hereto and all other deposit accounts
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maintained with Secured Party;
(f) all trademarks, tradenames, tradesecrets, business names,
patents, patent applications, licenses, copyrights, registrations and
franchise rights, and all goodwill associated with any of the foregoing;
(g) to the extent not included in any other paragraph of this
Section 1, all other general intangibles (including tax refunds, rights to
payment or performance, choses in action and judgments taken on any rights
or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products
thereof;
(i) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that
at any time evidence or contain information relating to any of the
Collateral or are otherwise necessary or helpful in the collection thereof
or realization thereupon; and
(j) all proceeds, products, rents and profits of or from any and
all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss
payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral. For purposes of this Agreement, the term "proceeds" includes
whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Notwithstanding the foregoing, nothing in this Section 1 or
otherwise in this Agreement shall constitute a grant by Grantor of a
security interest in any contract, document, instrument, general
intangible, lease, license, right or other right of any kind to the extent
such a grant of a security interest would, after giving effect to the
provisions of subsection 9-318 of the Uniform Commercial Code for the
relevant jurisdiction, constitute a breach or violation of any term
thereof.
SECTION 2. Security for Obligations. This Agreement secures,
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and the Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
(S)362(a)), of all obligations and liabilities of every nature of Grantor
now or hereafter existing under or arising out of or in connection with the
Guaranty and all extensions or renewals thereof, whether for principal,
interest (including interest that, but for the filing of a petition in
bankruptcy with respect to Company, would accrue on such obligations,
whether or not a claim is allowed against Company for such interest in the
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related bankruptcy proceeding), reimbursement of amounts drawn under
Letters of Credit, payments for early termination of Lender Interest Rate
Agreements, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that
are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Secured Party, Syndication Agent,
Documentation Agent or any Lender or Interest Rate Exchanger as a
preference, fraudulent transfer or otherwise and all obligations of every
nature of Grantor now or hereafter existing under this Agreement (all such
obligations of Grantor being the "Secured Obligations").
SECTION 3. Grantor Remains Liable. Anything contained herein to
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the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to
the same extent as if this Agreement had not been executed, (b) the
exercise by Secured Party of any of its rights hereunder shall not release
Grantor from any of its duties or obligations under the contracts and
agreements included in the Collateral, and (c) Secured Party shall not have
any obligation or liability under any contracts and agreements included in
the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 4. Representations and Warranties. Grantor represents
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and warrants as follows:
(a) Ownership of Collateral. Except for the security interest
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created by this Agreement or any other Collateral Documents, Grantor owns
the Collateral free and clear of any Lien except for Permitted Encumbrances
and Liens permitted under subsection 7.2A(iv) and (v) of the Credit
Agreement (with regard to the Liens permitted under sections 7.2A(iv) and
(v) of the Credit Agreement, only to the extent such Liens relate to the
specific property subject to such Liens).
(b) Location of Equipment and Inventory. All of the Equipment
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and Inventory is, as of the date hereof, located in one of the states (and
counties thereof) specified in Schedule I annexed hereto.
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(c) Negotiable Documents of Title. No Negotiable Documents of
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Title are outstanding with respect to any of the Inventory (other than in
respect of (i) Inventory with an aggregate value not in excess of $500,000
or (ii) Inventory which, in the ordinary course of business, is in transit
either (A) from a supplier to Grantor, (B) between Grantor's retail
locations, or (C) to customers of Grantor).
(d) Office Locations; Other Names. The chief place of business,
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the chief executive office and the office where Grantor keeps its records
regarding the
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Accounts and all originals of all chattel paper that evidence
Accounts is, and has been for the four month period preceding the date
hereof, located at the location(s) specified in Schedule I. Grantor has not
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in the past five years done, and does not now do, business under any other
name (including any trade-name or fictitious business name), except as
described in Schedule I.
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(e) Delivery of Certain Collateral. All notes and other
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instruments (excluding checks) comprising any and all items of Collateral
have been delivered to Secured Party duly endorsed and accompanied by duly
executed instruments of transfer or assignment in blank.
SECTION 5. Further Assurances.
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(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to perfect and
protect any security interest granted or purported to be granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality
of the foregoing, Grantor will: (i) ▇▇▇▇ conspicuously each item of
chattel paper included in the Accounts, each Related Contract and, at the
request of Secured Party, each of its records pertaining to the Collateral,
with a legend, in form and substance satisfactory to Secured Party,
indicating that such Collateral is subject to the security interest granted
hereby, (ii) at the request of Secured Party, deliver and pledge to Secured
Party hereunder all promissory notes and other instruments (including
checks) and all original counterparts of chattel paper constituting
Collateral, duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Secured
Party, (iii) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby, (iv) upon the request of Secured Party, promptly after the
acquisition by Grantor of any item of Equipment which is covered by a
certificate of title under a statute of any jurisdiction under the law of
which indication of a security interest on such certificate is required as
a condition of perfection thereof, execute and file with the registrar of
motor vehicles or other appropriate authority in such jurisdiction an
application or other document requesting the notation or other indication
of the security interest created hereunder on such certificate of title,
(v) upon the request of Secured Party within 30 days after the end of each
calendar quarter, deliver to Administrative Agent copies of all such
applications or other documents filed during such calendar quarter and
copies of all such certificates of title issued during such calendar
quarter indicating the security interest created hereunder in the items of
Equipment covered thereby, (vi) at any reasonable time, upon request by
Secured Party, exhibit the Collateral to and allow inspection of the
Collateral by Secured Party, or persons designated by Secured Party, and
(vii) at Secured Party's request, appear in and defend any action or
proceeding that may affect Grantor's title to or Secured Party's security
interest in all or any part of the Collateral.
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(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of Grantor.
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any
and all jurisdictions.
(c) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party
may reasonably request, all in reasonable detail.
SECTION 6. Certain Covenants of Grantor. Grantor shall:
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(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name,
identity or corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or
residence or the office where Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes;
and
(e) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the
Collateral, except to the extent the validity thereof is being contested in
good faith; provided that Grantor shall in any event pay such taxes,
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assessments, charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or warrant of
attachment entered or filed against Grantor or any of the Collateral as a
result of the failure to make such payment.
SECTION 7. Special Covenants With Respect to Equipment and
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Inventory. Grantor shall:
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(a) keep the Equipment and Inventory in the jurisdictions
specified on Schedule I annexed hereto or, upon 30 days' prior written
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notice to Secured Party, at such other places in jurisdictions where all
action that may be necessary in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Secured
Party to exercise and enforce its rights and remedies hereunder, with
respect to such Equipment and Inventory shall have been taken;
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(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with Grantor's past practices. Grantor
shall promptly furnish to Secured Party a statement respecting any material
loss or damage to any of the Equipment;
(c) keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity of Inventory, Grantor's cost
therefor and (where applicable) the current list prices for the Inventory;
(d) if any Inventory is in possession or control of any of
Grantor's agents or processors, if the aggregate book value of all such
Inventory exceeds $500,000, and in any event upon the occurrence of an
Event of Default (as defined in the Credit Agreement), instruct such agent
or processor to hold all such Inventory for the account of Secured Party
and subject to the instructions of Secured Party; and
(e) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable
Documents of Title covering (i) Inventory with an aggregate value not in
excess of $500,000 or (ii) Inventory which, in the ordinary course of
business, is in transit either (A) from a supplier to Grantor, (B) between
Grantor's retail locations, or (C) to customers of Grantor), deliver such
Negotiable Document of Title to Secured Party.
SECTION 8. Insurance. Grantor shall, at its own expense,
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maintain insurance with respect to the Equipment and Inventory in
accordance with the terms of the Credit Agreement.
SECTION 9. Special Covenants with respect to Accounts and
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Related Contracts.
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(a) Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the location therefor specified in Section 4 or, upon
30 days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby, or to enable Secured
Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken.
Grantor will hold and preserve such records and chattel paper and will
permit representatives of Secured Party at any time during normal business
hours to inspect and make abstracts from such records and chattel paper,
and Grantor agrees to render to Secured Party, at Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested
with regard thereto. Promptly upon the request of Secured Party, Grantor
shall deliver to Secured Party complete and correct copies of each Related
Contract.
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(b) Grantor shall, for not less than 5 years from the date on
which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), Grantor
shall continue to collect, at its own expense, all amounts due or to become
due to Grantor under the Accounts and Related Contracts. In connection
with such collections, Grantor may take (and, at Secured Party's direction,
shall take) such action as Grantor or Secured Party may deem necessary or
advisable to enforce collection of amounts due or to become due under the
Accounts; provided, however, that Secured Party shall have the right at any
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time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to Grantor of its intention to do so, to
notify the account debtors or obligors under any Accounts of the assignment
of such Accounts to Secured Party and to direct such account debtors or
obligors to make payment of all amounts due or to become due to Grantor
thereunder directly to Secured Party, to notify each Person maintaining a
lockbox or similar arrangement to which account debtors or obligors under
any Accounts have been directed to make payment to remit all amounts
representing collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other arrangement directly to
Secured Party and, upon such notification and at the expense of Grantor, to
enforce collection of any such Accounts and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as
Grantor might have done. After receipt by Grantor of the notice from
Secured Party referred to in the proviso to the preceding sentence, (i) all
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amounts and proceeds (including checks and other instruments) received by
Grantor in respect of the Accounts and the Related Contracts shall be
received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any
necessary endorsement) to be held as cash Collateral and applied as
provided by Section 18, and (ii) Grantor shall not adjust, settle or
compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
SECTION 10. Special Provisions With Respect to the Assigned
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Agreements.
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(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions of the
Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to such
end as may be from time to time requested by Secured Party; and
(ii) furnish to Secured Party, promptly upon receipt
thereof, copies of all notices, requests and other documents received by
Grantor under or pursuant
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to the Assigned Agreements, and from time to time (A) furnish to Secured
Party such information and reports regarding the Assigned Agreements as
Secured Party may reasonably request and (B) upon request of Secured Party
make such demands and requests for information and reports or for action as
Grantor is entitled to make under the Assigned Agreements.
(b) Grantor shall not:
(i) cancel or terminate any of the Assigned Agreements or
consent to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or
give any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned
Agreements;
(iv) consent to or permit or accept any prepayment of
amounts to become due under or in connection with the Assigned Agreements,
except as expressly provided therein; or
(v) take any other action in connection with the Assigned
Agreements that would impair the value of the interest or rights of Grantor
thereunder or that would impair the interest or rights of Secured Party.
SECTION 11. Deposit Accounts. Upon the occurrence and during
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the continuation of an Event of Default, Secured Party may exercise
dominion and control over, and refuse to permit further withdrawals
(whether of money, securities, instruments or other property) from any
deposit accounts maintained with Secured Party constituting part of the
Collateral.
SECTION 12. License of Patents, Trademarks, Copyrights, etc.
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Grantor hereby assigns, transfers and conveys to Secured Party, effective
upon the occurrence of any Event of Default, the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by Grantor that relate to the Collateral and any
other collateral granted by Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the
extent necessary to enable Secured Party to use, possess and realize on the
Collateral and to enable any successor or assign to enjoy the benefits of
the Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Secured Party and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or
otherwise. Such right and license is granted free of charge, without
requirement that any monetary payment whatsoever be made to Grantor.
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SECTION 13. Transfers and Other Liens. Grantor shall not:
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(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except as permitted by the
Credit Agreement; provided that in the event Grantor makes an Asset Sale or
sale and lease-back transaction permitted by the Credit Agreement and the
assets subject to such Asset Sale or sale and lease-back transaction
constitute Collateral, Secured Party shall release the Collateral that is
the subject of such Asset Sale to Grantor free and clear of any Lien and
security interest under this Agreement or any other Collateral Document
concurrently with the consummation of such Asset Sale or sale and lease-
back transaction; provided, further that, as a condition precedent to such
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satisfactory to it that arrangements satisfactory to it have been made for
delivery to Secured Party of that amount of Net Asset Sale Proceeds
required to be delivered to Secured Party under the Credit Agreement; or
(b) except for the security interest created by this Agreement,
create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person,
except as otherwise permitted under subsections 7.2A(iv) and (v) of the
Credit Agreement (with regard to the Liens permitted under subsections
7.2A(iv) and (v) of the Credit Agreement, only to the extent such Liens
relate to the specific property subject to such Liens). If Grantor
proposes to obtain financing permitted under Section 7.1(iii) of the Credit
Agreement with respect to any asset acquired after the Closing Date
("Permitted CapEx Financing"), Secured Party will either (a) with respect
to such asset, subordinate the Lien and security interest created hereunder
to the Lien securing such Permitted CapEx Financing by a subordination
agreement reasonably acceptable to Secured Party and the provider thereof
or (b) if Grantor has not been able, after reasonable effort, to get the
provider of such Permitted CapEx Financing to agree to subordination,
Secured Party will release the Lien and security interest granted hereunder
in such asset.
SECTION 14. Secured Party Appointed Attorney-in-Fact. Grantor
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hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact,
with full authority in the place and stead of Grantor and in the name of
Grantor, Secured Party or otherwise, from time to time in Secured Party's
discretion, upon the occurrence and during the continuation of an Event of
Default or Potential Event of Default, to take any action and to execute
any instrument that Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to Section 8;
(b) to ask for, demand, collect, ▇▇▇ for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral;
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(c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clauses (a) and
(b) above;
(d) to file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens
permitted under this Agreement or the Credit Agreement) levied or placed
upon or threatened against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by Secured
Party in its sole discretion, any such payments made by Secured Party to
become obligations of Grantor to Secured Party, due and payable immediately
without demand;
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event
of Default, generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and Grantor's expense, at
any time or from time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the Collateral and Secured
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Grantor might do.
SECTION 15. Secured Party May Perform. If Grantor fails to
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perform any agreement contained herein within the period provided herein,
upon reasonable notice, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred
in connection therewith shall be payable by Grantor under Section 19.
SECTION 16. Standard of Care. The powers conferred on Secured
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Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property.
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SECTION 17. Remedies. If any Event of Default shall have
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occurred and be continuing, Secured Party may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the Uniform Commercial Code as in effect in
any relevant jurisdiction (the "Code") (whether or not the Code applies to
the affected Collateral), and also may (a) require Grantor to, and Grantor
hereby agrees that it will at its expense and upon request of Secured Party
forthwith, assemble all or part of the Collateral as directed by Secured
Party and make it available to Secured Party at a place to be designated by
Secured Party that is reasonably convenient to both parties, (b) enter onto
the property where any Collateral is located and take possession thereof
with or without judicial process, (c) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or
otherwise prepare the Collateral for disposition in any manner to the
extent Secured Party deems appropriate, (d) take possession of Grantor's
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of Grantor's equipment for the purpose of
completing any work in process, taking any actions described in the
preceding clause (c) and collecting any Secured Obligation, and (e) without
notice except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other terms as
Secured Party may deem commercially reasonable. Secured Party or any
Lender or Interest Rate Exchanger may be the purchaser of any or all of the
Collateral at any such public sale and, to the extent permitted by law,
private sale, and Secured Party, as agent for and representative of Lenders
and Interest Rate Exchangers (but not any Lender or Lenders or Interest
Rate Exchanger or Interest Rate Exchangers in its or their respective
individual capacities unless Requisite Obligees (as defined in Section
21(a)) shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Collateral payable by Secured Party at such sale.
Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of Grantor, and Grantor hereby
waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Grantor of the time and place
of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned. Grantor hereby waives any claims against
Secured Party arising by reason of the fact that the price at which any
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Collateral
to more than one offeree. If the proceeds of any sale or other
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disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
SECTION 18. Application of Proceeds. Except as expressly
-----------------------
provided elsewhere in this Agreement, all proceeds received by Secured
Party in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied as provided in
subsection 2.4D of the Credit Agreement.
SECTION 19. Indemnity and Expenses.
----------------------
(a) Grantor agrees to indemnify Secured Party, Syndication Agent,
Documentation Agent, each Lender and each Interest Rate Exchanger from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including enforcement of this Agreement), except to
the extent such claims, losses or liabilities result solely from Secured
Party's, Syndication Agent's, Documentation Agent's or such Lender's or
Interest Rate Exchanger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of
any and all costs and expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, that Secured Party may incur
in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Grantor to perform or observe any of the provisions hereof.
SECTION 20. Continuing Security Interest; Transfer of Loans.
-----------------------------------------------
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment
in full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters
of Credit, (b) be binding upon Grantor, its successors and assigns, and (c)
inure, together with the rights and remedies of Secured Party hereunder, to
the benefit of Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to
the provisions of subsection 10.1 of the Credit Agreement, any Lender may
assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Lenders herein or otherwise. Upon the payment
in full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters
of Credit, the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to Grantor. Upon any such
termination Secured Party will, at Grantor's expense, execute and deliver
to Grantor such documents as Grantor shall reasonably request to evidence
such termination.
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SECTION 21. Secured Party as Administrative Agent.
-------------------------------------
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders and, by their acceptance of the benefits hereof,
Interest Rate Exchangers. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking any
action (including the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement; provided that
--------
Secured Party shall exercise, or refrain from exercising, any remedies
provided for in Section 17 in accordance with the instructions of (i)
Requisite Lenders or (ii) after payment in full of all Obligations under
the Credit Agreement and the other Loan Documents, the holders of a
majority of the aggregate notional amount (or, with respect to any Lender
Interest Rate Agreement that has been terminated in accordance with its
terms, the amount then due and payable (exclusive of expenses and similar
payments but including any early termination payments then due) under such
Lender Interest Rate Agreement) under all Lender Interest Rate Agreements
(Requisite Lenders or, if applicable, such holders being referred to herein
as "Requisite Obligees"). In furtherance of the foregoing provisions of
this Section 21(a), each Interest Rate Exchanger, by its acceptance of the
benefits hereof, agrees that it shall have no right individually to realize
upon any of the Collateral hereunder, it being understood and agreed by
such Interest Rate Exchanger that all rights and remedies hereunder may be
exercised solely by Secured Party for the benefit of Lenders and Interest
Rate Exchangers in accordance with the terms of this Section 21(a).
(b) Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of
resignation by Administrative Agent pursuant to subsection 9.5 of the
Credit Agreement shall also constitute notice of resignation as Secured
Party under this Agreement; removal of Administrative Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as
Secured Party under this Agreement; and appointment of a successor
Administrative Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute appointment of a successor Secured Party under this
Agreement. Upon the acceptance of any appointment as Administrative Agent
under subsection 9.5 of the Credit Agreement by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to
such successor Secured Party all sums, securities and other items of
Collateral held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties
of the successor Secured Party under this Agreement, and (ii) execute and
deliver to such successor Secured Party such amendments to financing
statements, and take such other actions, as may be necessary or appropriate
in connection with the assignment to such successor Secured Party of the
security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under
this Agreement. After any
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retiring or removed Administrative Agent's resignation or removal hereunder
as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 22. Amendments; Etc. No amendment, modification,
---------------
termination or waiver of any provision of this Agreement, and no consent to
any departure by Grantor therefrom, shall in any event be effective unless
the same shall be in writing and signed by Secured Party and, in the case
of any such amendment or modification, by Grantor. Any such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which it was given.
SECTION 23. Notices. Any notice or other communication herein
-------
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or
by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage
prepaid and properly addressed. For the purposes hereof, the address of
each party hereto shall be as set forth under such party's name on the
signature pages hereof or, as to either party, such other address as shall
be designated by such party in a written notice delivered to the other
party hereto.
SECTION 24. Failure or Indulgence Not Waiver; Remedies
------------------------------------------
Cumulative. No failure or delay on the part of Secured Party in the
----------
exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 25. Severability. In case any provision in or
------------
obligation under this Agreement shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 26. Headings. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given
any substantive effect.
SECTION 27. Governing Law; Terms; Rules of Construction. THIS
-------------------------------------------
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
CONFLICTS OF
15
LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined
herein or in the Credit Agreement, terms used in Articles 8 and 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined. The rules of construction set forth in subsection 1.3 of the
Credit Agreement shall be applicable to this Agreement mutatis mutandis.
SECTION 28. Consent to Jurisdiction and Service of Process. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇. BY EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 23;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GRANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 28 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-
1402 OR OTHERWISE.
16
SECTION 29. Waiver of Jury Trial. GRANTOR AND SECURED PARTY
--------------------
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope
of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of
this transaction, including contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Grantor and Secured
Party each acknowledge that this waiver is a material inducement for
Grantor and Secured Party to enter into a business relationship, that
Grantor and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in
their related future dealings. Grantor and Secured Party further warrant
and represent that each has reviewed this waiver with its legal counsel,
and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN
BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 29 AND
EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
SECTION 30. Counterparts. This Agreement may be executed in one
------------
or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
[NAME OF GRANTOR], as Grantor
By: ____________________
Title:
Notice Address: _____________________
_____________________
_____________________
FIRST UNION NATIONAL BANK,
as Secured Party
By: ____________________
Title:
Notice Address: _____________________
_____________________
_____________________
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