EXHIBIT 10.10
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CORINTHIAN SCHOOLS, INC.
SECURITY AGREEMENT
___________________________________________________
Dated as of June 30, 1995
TABLE OF CONTENTS
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PAGE
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BACKGROUND.................................................................................................... 1
A. Purchase Agreement........................................................................................ 1
B. Senior Loans.............................................................................................. 1
STATEMENT OF AGREEMENT.............................................................................................. 2
Section 1. Defined Terms............................................................................ 2
Section 2. Grant of Security Interest............................................................... 4
Section 3. Default, Enforcement, Remedies and Application of Proceeds............................... 5
3.1 Default.................................................................................. 5
3.2 Remedies................................................................................. 5
3.3 Power of Attorney........................................................................ 7
Section 4. Warranties, Covenants and Agreements..................................................... 7
4.1 Records.................................................................................. 7
4.2 Accounting............................................................................... 7
4.3 Cooperation.............................................................................. 7
4.4 Discharge Taxes, Assessments, Etc........................................................ 8
4.5 Inventory................................................................................ 8
4.6 Maintenance of Equipment................................................................. 8
4.7 Expenses................................................................................. 8
4.8 Limitations on Dispositions of Inventory and Equipment................................... 8
4.9 Limitations on Dispositions of Accounts and Contracts.................................... 8
4.10 Location of the Collateral............................................................... 9
4.11 Negative Pledge.......................................................................... 9
4.12 Notices.................................................................................. 9
Section 5. Termination.............................................................................. 9
Section 6. Financing Statements..................................................................... 9
Section 7. Waivers.................................................................................. 10
Section 8. Security Interest Absolute............................................................... 10
Section 9. Release.................................................................................. 10
Section 10. Indemnification.......................................................................... 11
Section 11. Equalization of Amounts Received by Secured Parties...................................... 11
Section 12. Subordination by Secured Parties......................................................... 11
Section 13. Miscellaneous............................................................................ 12
13.1 Entire Agreement......................................................................... 12
13.2 Amendments and Waivers................................................................... 12
13.3 Governing Law............................................................................ 12
13.4 Severability............................................................................. 12
13.5 Third Party Beneficiaries................................................................ 12
13.6 Rules of Construction.................................................................... 12
13.7 Notices.................................................................................. 13
13.8 Assignment............................................................................... 14
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13.9 Further Acts and Documents................................................................. 14
13.10 Counterparts............................................................................... 14
Section 14. No Personal Liability...................................................................... 14
Schedule A Additional Places of Business
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SECURITY AGREEMENT
This is a SECURITY AGREEMENT dated as of June 30, 1995 ("Agreement") made
by CORINTHIAN SCHOOLS, INC. ("Debtor"), a Delaware corporation, for the benefit
of BANC ONE CAPITAL PARTNERS II, LIMITED PARTNERSHIP ("BOCP II"), a Delaware
limited partnership under the Credit Facility Agreement dated as of the date
hereof ("Senior Credit Agreement") and for the benefit of BOCP II and PRIMUS
CAPITAL FUND III LIMITED PARTNERSHIP ("Primus"), an Ohio limited partnership,
under the Subordinated Secured Note and Warrant Purchase Agreement dated as of
the date hereof ("Purchase Agreement") by and among the Debtor, as seller and
BOCP II and Primus, as purchasers.
BOCP II in its capacity as lender under the Senior Credit Agreement is
referred to as the "Senior Lender." BOCP II in its capacity as a purchaser under
the Purchase Agreement and Primus are referred to collectively as the "Secured
Parties." The Debtor, Primus and BOCP II are referred to collectively as the
Parties and individually as a "Party."
BACKGROUND
A. PURCHASE AGREEMENT.
Upon the terms and subject to the conditions set forth in the Purchase
Agreement, (i) the Debtor has agreed to issue and sell Subordinated Secured
Notes due June 30, 2000 in the aggregate principal amount of $2,000,000 to BOCP
II and BOCP II has agreed to purchase such Notes; and the Debtor has agreed to
issue and sell Subordinated Secured Notes due June 30, 2000 in the aggregate
principal amount of $500,000 to Primus and Primus has agreed to purchase such
Notes (collectively, the "Notes" and individually, a "Note") and (ii) Debtor has
issued and sold warrants ("Warrants") to purchase 5,000 shares of its Class B
Common Stock, par value $.01 per share ("Class B Common"), and 1,250 shares of
its Class A Common Stock, par value $.01 per share ("Class A Common") to BOCP II
and Primus, respectively ("Warrant Shares"), and the Secured Parties have
purchased such Warrants. The Warrants are evidenced by certificates dated as of
the date hereof ("Warrant Certificates") issued to the Secured Parties.
B. SENIOR LOANS.
Pursuant to the Senior Credit Agreement, the Senior Lender has agreed to
advance up to a maximum of $2,000,000 aggregate principal amount at any one time
outstanding to the Debtor on a revolving credit basis (together with any
modifications, renewals or refinancings thereof, "Senior Loans"). Pursuant to
this Security Agreement, payment of the Senior Loans is secured by the grant by
the Debtor of a first priority security interest in all the assets herein and
all of the documents related thereto ("Collateral"), which constitute the
Collateral that is now or hereafter owned by the Debtor and payment of the
Obligations (as hereinafter defined) of the Debtor to the Secured Parties is
secured by the grant by the Debtor of a second priority security interest in
such Collateral. Pursuant to the terms of the Senior Credit Agreement, the
note evidencing the Senior Loans must be paid in full on or before June 30,
1996. It is anticipated, however, that the Debtor will refinance its Obligations
under the Senior Credit Agreement prior to June 30, 1996, pursuant to the terms
of an agreement with a third party bank or financial institution providing for
revolving credit loans secured by the Collateral. Such agreement shall be
subject to the consent of the Purchasers, which consent shall not be
unreasonably withheld, and the lender with respect thereto shall be granted a
first perfected security interest in the Collateral on terms substantially
equivalent to those set forth in this Agreement.
STATEMENT OF AGREEMENT
In consideration of the foregoing, the Parties hereby agree as follows:
SECTION 1. DEFINED TERMS.
As used in this Security Agreement the following terms shall have the
following meanings, unless the context otherwise requires:
1.1 "Accounts" means any "Account," as such term is defined in
Section 9-106 of the Code which Debtor may now have or hereafter acquire.
1.2 "Agreement" means this Security Agreement as modified, amended or
restated from time to time as provided for herein.
1.3 "BOCP II" means Banc One Capital Partners II, Limited Partnership, a
Delaware limited partnership, together with its successors and assigns.
1.4 "Class A Common" shall have the meaning set forth in Paragraph A.
1.5 "CLass B Common" shall have the meaning set forth in Paragraph A.
1.6 "Code" means the Uniform Commercial Code as the same may from time to
time be in effect in the State of Ohio. The section numbers used in this
Agreement in reference to particular sections of the Code are actually the
numbers of sections of the Uniform Commercial Code as approved by the National
Conference of Commissioners on Uniform State Laws but are meant as, and are to
be construed as, references to the corresponding sections of the Ohio Uniform
Commercial Code.
1.7 "Collateral" shall have the meaning set forth in Section 2 of this
Agreement.
1.8 "Contracts" means agreements, instruments, undertakings, documents,
any right of the Debtor to payment for the sale or lease of goods, the rendering
of services, or the loaning of money which is at this time unearned, and other
agreements in or under which the Debtor may now or hereafter have any right,
title or interest.
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1.9 "Debtor" means Corinthian Schools, Inc., a Delaware corporation,
together with its successors and assigns.
1.10 "Equipment" means any "equipment," as such term is defined in Section
9-109(2) of the Code, now or hereafter owned by the Debtor, and shall also mean
and include all machinery, equipment, furnishings and fixtures now owned or
hereafter acquired by the Debtor.
1.11 "General Intangibles" means any "general intangibles" as such term is
defined in Section 9-106 of the Code, including, without limitation, all
patents, trademarks, service marks, trade names, copyrights, permits, licenses,
computer software programs, customer lists and information, and any and all
rights in intellectual property and goodwill now owned or hereafter acquired by
the Debtor.
1.12 "Instruments" means any "instruments" as such term is defined in
Section 9-109(5) of the Code, now or hereafter owned by the Debtor, wherever
located.
1.13 "Inventory" means any "inventory," as such term is defined in Section
9-109(4) of the Code, now or hereafter owned by the Debtor, wherever located,
including Inventory now owned or hereafter acquired by the Debtor or in which
the Debtor now or hereafter may acquire any right, title or interest.
1.14 "Lock Box" shall have the meaning set forth in Section 3.2(a)(iv).
1.15 "Note(s)" shall have the meaning set forth in Paragraph A.
1.16 "Obligations" means (i) all amounts owed by the Debtor to the Senior
Lender under the Senior Credit Agreement, (ii) all amounts owed by the Debtor to
the Secured Parties evidenced by the Notes, (iii) any amounts owed by the Debtor
to the Secured Parties under the terms of the Purchase Agreement, and (iv) all
other present and future indebtedness and obligations however created, arising
or evidenced, direct or indirect, absolute or contingent, due or to become due,
now or hereafter existing (other than under the Warrant Certificates).
1.17 "Parties" means the Debtor, BOCP II and Primus, collectively, and
"Party" means any one of the Parties.
1.18 "Primus" means Primus Capital Fund III Limited Partnership, an Ohio
limited partnership, together with its successors and assigns.
1.19 "Proceeds" means any "proceeds" as such term is defined in Section 9-
306 of the Code and, in any event, shall include, but not be limited to, the
following at any time whatsoever arising or receivable: (i) whatever is received
upon any collection, exchange, sale or other disposition, of any of the
Collateral, and any property into which any of the Collateral is converted,
whether cash or non-cash proceeds, (ii) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Debtor from time to time with
respect to any of the Collateral, (iii) any and all payments (in any form
whatsoever) made or due and payable to the Debtor from time to time in
connection with any requisition, confiscation, condemnation,
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seizure or forfeiture of all or any part of the Collateral by any governmental
authority, and (iv) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
1.20 "Purchase Agreement" means the Subordinated Secured Note and Warrant
Purchase Agreement by and among the Debtor and the Secured Parties dated as of
the date hereof as modified, amended or restated from time to time as provided
for therein.
1.21 "Secured Parties" means BOCP II and Primus in their capacities as
purchasers of the Notes and the Warrant Certificates pursuant to the Purchase
Agreement.
1.22 "Senior Credit Agreement" the Credit Facility Agreement dated as of
the date hereof between the BOCP II and the Debtor and any extension, renewal or
refinancing thereof.
1.23 "Senior Lender" means BOCP II, in its capacity as lender under the
Senior Credit Agreement, together with its successors and assigns.
1.24 "Senior Loans" shall have the meaning set forth in Paragraph B.
1.25 "Warrant Certificates" shall have the meaning set forth in Paragraph
A.
1.26 "Warrant" shall have the meaning set forth in Paragraph A.
1.27 "Warrant Shares" shall have the meaning set forth in Paragraph A.
SECTION 2. GRANT OF SECURITY INTEREST.
As security for the prompt and complete payment and performance when due of
all the Obligations and in order to induce the Senior Lender to enter into the
Senior Credit Agreement and the Secured Parties to agree to purchase the Notes
and the Warrant Certificates, the Debtor hereby grants (i) to the Senior Lender
a first priority security interest in and (ii) to the Secured Parties a second
priority interest in all real and personal property of the Debtor, including but
not limited to each the Debtor's right, title and interest in, to and under the
following, whether now owned or hereafter acquired (collectively, the
"Collateral").
(a) all Accounts;
(b) all Contracts;
(c) all Equipment;
(d) all General Intangibles;
(e) all Inventory;
(f) all Instruments;
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(g) all books and records, data processing cards, tapes, tabulating
runs, programs and similar material evidencing, securing or relating to any of
the foregoing; and
(h) to the extent not otherwise included, all Proceeds and products
of any or all of the foregoing.
SECTION 3. DEFAULT, ENFORCEMENT, REMEDIES AND APPLICATION OF PROCEEDS.
3.1 DEFAULT. Upon the occurrence and during the continuation of any of
the following events (an "Event of Default"), Debtor shall be in default under
this Agreement:
(a) Any failure or neglect to comply with any of the terms,
provisions, representations, warranties or covenants of this Agreement and the
continuance of such failure or neglect for thirty (30) days after notice;
(b) Any Event of Default under the Senior Credit Agreement;
(c) Any Event of Default under the Notes;
(d) Any Event of Default under the Purchase Agreement; or
(e) Any loss, theft or destruction of, or substantial damage to,
any material portion of the Collateral not otherwise covered by insurance or the
issuance or filing of any attachment, levy, garnishment or other judicial
process of, upon, or in respect of, the Debtor or any material portion of the
Collateral, which issuance or filing is not dismissed within ninety (90) days.
3.2 REMEDIES.
(a) Upon the occurrence and during the continuation of any Event
of Default, the Senior Lender and Secured Parties may at their discretion, and
without presentment, demand, notice, protest or advertisement:
(i) declare any and all the Obligations (or any part thereof)
to be immediately due and payable, without notice or
demand; and/or
(ii) exercise any of the rights and remedies afforded to them
by this Agreement, by the Code, or by other provisions of
applicable law, including without limitation the right to
take possession and sell, lease, or otherwise dispose of
any or all of the Collateral and may offset against the
Obligations any amount which may be owing to the Debtor by
the Senior Lender or Secured Parties; and/or
(iii) direct the Debtor to assemble the Collateral and make it
available to the Senior Lender and Secured Parties at any
place designated
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by the Senior Lender or Secured Parties which is
reasonably convenient to the Debtor; and/or
(iv) request the Debtor, at the Debtor's sole expense, to
establish and maintain a United States Post Office lock
box (the "Lock Box"), to which the Senior Lender and
Secured Parties shall have exclusive access, and to which
the Debtor shall have no access. The Debtor expressly
authorize the Senior Lender and Secured Parties, from time
to time, to remove all contents from the Lock Box, for
disposition in accordance with this Agreement. The Debtor
agrees to notify all Account debtors for the receivables
and all obligors on Contracts and other parties obligated
to it that all payments made on any Account, Contract or
invoice shall be remitted, for the credit of the Debtor,
to the Lock Box, and Debtor shall include a like statement
on all invoices. The Debtor further shall execute all
documents, authorizations and other agreements necessary
to establish the Lock Box and the Senior Lender and
Secured Parties' exclusive access thereto.
(b) Nothing herein contained is intended, nor should it be
construed, to preclude the Senior Lender and Secured Parties from pursuing any
other remedy provided by law for the collection of the Obligations or any
portion thereof, or for the recovery of any other sums to which the Senior
Lender and Secured Parties may be or become entitled for the breach of this
Agreement by the Debtor.
(c) Until termination of this Agreement, the Senior Lender and
Secured Parties shall have and may exercise any and all of the rights and
remedies given by this Agreement or under any applicable law. This Agreement and
all such rights and remedies shall inure to the benefit of the Senior Lender's
and Secured Parties' successors and permitted assigns and to any other holder
who derives from the Senior Lender or Secured Parties title to or an interest in
the Obligations or any portion thereof, and shall bind the Debtor and the
successors and assigns of the Debtor.
(d) In the case of any sale or disposition of the Collateral, or
the realization of funds therefrom, the Proceeds thereof shall be applied in the
following order of priority: (i) to the payment of the reasonable expenses of
such sale, reasonable commissions, reasonable attorneys' fees and all reasonable
charges paid or incurred by the Senior Lender pertaining to said sale, including
any taxes or other charges imposed by law upon the Collateral and/or the owning,
holding or transferring thereof; (ii) to pay, satisfy and discharge Obligations
owing to the Senior Lender; (iii) to the payment of the reasonable expenses of
such sale, reasonable commissions, reasonable attorneys' fees and all reasonable
charges paid or incurred by the Secured Parties pertaining to said sale,
including any taxes or other charges imposed by law upon the Collateral and/or
the owning, holding or transferring thereof; (iv) to pay, satisfy and discharge
Obligations owing to the Secured Parties; and (v) to pay the surplus, if any, to
the Debtor; provided that the timing of any application of the Proceeds shall be
at the sole and absolute discretion of the Senior Lender and Secured Parties. To
the extent such Proceeds do
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not satisfy the foregoing items, the Debtor hereby promises and agrees to pay
any deficiency. Except for Collateral that is perishable or is of a type
customarily sold in a recognized market, the Senior Lender and Secured Parties
will give the Debtor at least ten (10) days written notice of the time and place
of any sale of the Collateral.
3.3 POWER OF ATTORNEY. The Debtor does hereby appoint the Senior Lender
and Secured Parties and their agents as the Debtor's attorney-in-fact upon the
occurrence and during the continuation of an Event of Default to: collect,
compromise, endorse, sell, service or otherwise deal with Collateral or Proceeds
thereof in their own name or in the name of the Debtor; to endorse the name of
the Debtor upon any notes, checks, drafts, money orders, or other instruments,
documents, receipts or Proceeds of the Collateral that may come into their
possession and to apply the same in full or part payment of any amounts owing to
the Senior Lender and Secured Parties.
SECTION 4. WARRANTIES, COVENANTS AND AGREEMENTS.
The Debtor warrants, covenants and agrees with the Senior Lender and
Secured Parties that from and after the date of this Agreement and until the
Obligations are fully satisfied:
4.1 RECORDS. The Debtor shall keep adequate records of the Collateral in a
manner consistent with the reasonable requirements of the Senior Lender and
Secured Parties and the requirements of any governmental agency and allow the
Senior Lender and Secured Parties, during regular business hours reasonable
access to examine, inspect and make abstracts from, or copy any of such books
and records.
4.2 ACCOUNTING. The Debtor shall at the reasonable request of the Senior
Lender or Secured Parties, which request shall be made no more frequently than
monthly, deliver to it all accounting and other records pertaining to, and all
writing evidencing, the Collateral or any portion thereof.
4.3 COOPERATION. The Debtor will do all acts and things, and will execute
all writings as may be reasonably requested by the Senior Lender or Secured
Parties to establish, maintain and continue perfected the security interest of
the Senior Lender and Secured Parties in the Collateral.
4.4 DISCHARGE TAXES, ASSESSMENTS, ETC. The Debtor will pay promptly and
within the time that they can be paid without interest or penalty, all taxes,
assessments and similar imposts and charges which are now, or hereafter during
the effective period of this Agreement may become, a lien, charge or encumbrance
upon any of the Collateral except to the extent contested in good faith. If the
Debtor fails to pay any such taxes, assessments or other charges as they become
due the Senior Lender or Secured Parties shall have the option to do so and the
Debtor agrees to repay, with interest, at the rate publicly established by Bank
One, Columbus, NA from time to time as its prime rate, all amounts so expended
by the Senior Lender or Secured Parties.
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4.5 INVENTORY. The Debtor will keep the Inventory in good condition and
shall safeguard and shall use all reasonable efforts to protect the same from
loss, damage or deterioration from any cause whatsoever, ordinary wear and tear
excepted.
4.6 MAINTENANCE OF EQUIPMENT. The Debtor will keep and maintain each item
of Equipment in good operating condition, ordinary wear and tear excepted, and
the Debtor will provide all maintenance and service and all repairs necessary
for such purpose.
4.7 EXPENSES. The Debtor will reimburse the Senior Lender and Secured
Parties in accordance with the provisions of the Code for all reasonable
expenses, including reasonable attorney fees and legal expenses incurred by the
Senior Lender and Secured Parties in seeking to collect the Obligations or any
part thereof, or in pursuing any of its rights or remedies hereunder.
4.8 LIMITATIONS ON DISPOSITIONS OF INVENTORY AND EQUIPMENT. The Debtor
will not at any time during a twelve-month period sell, transfer, lease or
otherwise dispose of any material portion of the Inventory or Equipment or
attempt, offer or contract to do so except for (i) sales of Inventory in the
ordinary course of its business and (ii) so long as no Event of Default has
occurred and is continuing, the disposition of Equipment which has become worn
out or obsolete in the ordinary course of business. For the purpose of this
paragraph 4.8, a sale, transfer, lease or other disposition will be deemed of a
material portion of Inventory (other than in the ordinary course of business) or
of Equipment if such sale, transfer, lease or other disposition of either
Inventory or Equipment, or a combination thereof, is in an amount equal to or in
excess of Two Hundred Fifty Thousand Dollars ($250,000).
4.9 LIMITATIONS ON DISPOSITIONS OF ACCOUNTS AND CONTRACTS. The Debtor will
not at any time during a twelve-month period sell, transfer or otherwise dispose
of any material portion of the Accounts or Contracts, or attempt, offer or
contract to do so except, so long as no Event of Default has occurred and is
continuing, for the disposition of Accounts and Contracts in the ordinary course
of business to third party purchasers without recourse to the Debtor. For the
purpose of this paragraph 4.9, a sale, transfer or other disposition will be
deemed of a material portion of Accounts and Contracts if such sale, transfer,
lease or other disposition (other than in the ordinary course of business) of
Accounts and Contracts is in an amount equal to or in excess of Five Hundred
Thousand Dollars ($500,000).
4.10 LOCATION OF THE COLLATERAL. The Debtor warrants that the Collateral
will be located only at those locations listed on Schedule A attached hereto and
incorporated herein by reference and that its principal place of business, and
the office where its records relating to the Collateral are kept, is presently
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and that it has
additional places of business as listed in Schedule A attached hereto and
incorporated by reference. The Debtor will notify the Senior Lender and Secured
Parties in writing of any change in the location of its principal place of
business and the office where the records relating to the Collateral and the
Collateral is kept within (10) days of any such change.
4.11 NEGATIVE PLEDGE. The Debtor will not create or permit to be created
any lien, encumbrance or security interest of any kind on any of the Collateral
other than for the benefit
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of the Senior Lender and Secured Parties except as permitted by the terms of the
Purchase Agreement or unless authorized by the Senior Lender and Secured Parties
in writing.
4.12 NOTICES.
The Debtor will advise the Senior Lender and Secured Parties promptly, in
reasonable detail:
(i) of any material change in the composition of the
Collateral;
(ii) the occurrence of any other event which is likely to have
a materially adverse effect on the aggregate value of the
Collateral or on the security interests created
hereunder; and
(iii) any other notices specifically referred to in this
Agreement.
SECTION 5. TERMINATION.
This Agreement shall be terminated only upon payment in full of the
Obligations. Until terminated, the security interests created hereby shall
continue in full force and effect and shall secure and be applicable to all
advances now or hereafter made by the Senior Lender or Secured Parties to the
Debtor. Upon termination, the Senior Lender and Secured Parties shall cooperate
with the Debtor to secure the release of the security interests created hereby,
including the execution of any releases of financing statements reasonably
requested by the Debtor.
SECTION 6. FINANCING STATEMENTS.
(a) The Debtor agrees to execute, deliver and pay the costs of
filing any financing statement, or other notices appropriate under applicable
law, in respect of the security interests created pursuant to this Agreement
which may at any time be required or be deemed by the Senior Lender or Secured
Parties to be necessary or desirable and to execute such other documents as the
Senior Lender or Secured Parties shall reasonably request with respect to the
security interests created hereunder. In the event that any re-recording or
refiling thereof (or the filing of any statements of continuation or assignment
of any financing statement) is required to protect and preserve such liens or
security interests, the Debtor shall, at its cost and expense, cause the same to
be re-recorded and/or refiled at the time and in the manner requested by the
Senior Lender or Secured Parties.
(b) A carbon, photostatic or other reproduction of this Agreement
shall be sufficient as a financing statement even though only the original
hereof contains an original signature.
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SECTION 7. WAIVERS.
The Debtor waives demand, presentment and protest. No delay or omission or
forbearance by the Senior Lender or Secured Parties in exercising any rights
under this Agreement, the Senior Credit Agreement, the Notes or the Purchase
Agreement shall operate as a waiver of the rights of the Senior Lender or
Secured Parties under this Agreement, the Senior Credit Agreement, the Notes or
the Purchase Agreement or of any other rights and shall not affect, discharge,
diminish or impair the Debtor's obligations hereunder or the Obligations. Waiver
on any one occasion shall not be construed as a bar to or waiver of any rights
or remedy on any future occasion. All the Senior Lender and Secured Parties'
rights and remedies, whether evidenced hereby or by any other agreement or note,
shall be cumulative and may be exercised singularly or concurrently.
SECTION 8. SECURITY INTEREST ABSOLUTE.
All rights of the Senior Lender and Secured Parties and all
obligations of the Debtor hereunder, shall be absolute and unconditional
irrespective of:
8.1 any lack of validity or enforceability of the Senior Credit Agreement,
the Notes or any other agreement or instrument governing or evidencing any
Obligations;
8.2 any exchange, release or non-perfection of any other collateral, or
any release or amendment or waiver of or consent to departure from any guaranty,
for all or any of the Obligations; or
8.3 any other circumstance which might otherwise constitute a defense
available to, or a discharge of the Debtor.
SECTION 9. RELEASE.
The Debtor consents and agrees that the Senior Lender or Secured Parties
may at any time, or from time to time, in its discretion exchange, release
and/or surrender all or any of the Collateral, or any part thereof, by
whomsoever deposited, which is now or may hereafter be held by the Senior Lender
or Secured Parties in connection with all or any of the Obligations, all in such
manner and upon such terms as the Senior Lender and Secured Parties may deem
proper, and without notice to or further assent from the Debtor; it being hereby
agreed that the Debtor shall be and remain bound upon this Agreement,
irrespective of the existence, value or condition of any of the Collateral, and
notwithstanding any such exchange, surrender or release. The Debtor hereby
waives notice of Debtor of this Agreement, and promptness in commencing suit
against any party hereto or liable hereon, and in giving any notice to or of
making any claim or demand hereunder upon the Debtor. No act or omission of any
kind on the Senior Lender or Secured Parties' part shall in any event affect or
impair this Agreement.
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SECTION 10. INDEMNIFICATION.
The Debtor agrees to indemnify and hold the Senior Lender and Secured
Parties harmless from and against any taxes, liabilities, claims and damages,
including reasonable attorney's fees and disbursements, and other expenses
incurred or arising by reason of the taking or the failure to take action by the
Senior Lender or Secured Parties, in good faith, in respect of any transaction
effected under this Agreement or in connection with the lien provided for
herein, including, without limitation, any taxes payable in connection with the
delivery or registration of any of the Collateral as provided herein; provided,
however, the Debtor shall not be liable for such indemnification to the Senior
Lender or Secured Parties to the extent that such indemnified liability results
from the Senior Lender's or Secured Parties' gross negligence or willful
misconduct. The Debtor agrees to pay to the Senior Lender and Secured Parties
all out-of-pocket costs and expenses, including fees and disbursements of
counsel, reasonably incurred by the Senior Lender and Secured Parties in
connection with the performance by the Senior Lender and Secured Parties of the
provisions of this Agreement and of any transactions effected pursuant to this
Agreement. The obligations of the Debtor under this Section shall survive the
termination of this Agreement.
SECTION 11. EQUALIZATION OF AMOUNTS RECEIVED BY SECURED PARTIES.
Each of the Secured Parties agrees with the other that, with respect
to all amounts received by either one of the Secured Parties whether under the
Purchase Agreement or this Agreement, will be shared ratably by the Secured
Parties in the proportion of 80% to BOCP II and 20% to Primus whether received
by voluntary payment, by realization upon security or any other source. Either
Secured Party receiving any such non-pro rata amount shall remit to the other
Secured Party an amount of cash as shall result in the ratable sharing by the
Secured Parties in all amounts so received.
SECTION 12. SUBORDINATION BY SECURED PARTIES.
Each of the Secured Parties shall, and hereby does, subordinate all
Obligations owed to either of them by the Debtor in favor of the Obligations
owing to the Senior Lender pursuant to the Senior Credit Agreement. Each of the
Secured Parties may, however, accept regularly scheduled payments due under the
Notes so long as the Debtor is not in default under the Senior Credit Agreement.
All payments on account of the Notes accepted by either of the Secured Parties
from the Debtor after the Debtor is in default under the Senior Credit Agreement
and after such Secured Party has received notice of such default, from whatever
source, shall be received by such Secured Party in trust for the benefit of the
Senior Lender, shall at all times be and remain the property of the Senior
Lender and shall be promptly paid over by such Secured Party to the Senior
Lender in exactly the form received.
SECTION 13. MISCELLANEOUS.
13.1 ENTIRE AGREEMENT. This Agreement including the Exhibits or Schedules
hereto, constitutes the entire agreement relating to the subject matter hereof
among the Parties hereto. Each Party acknowledges that no representation,
inducement, promise or agreement has been
11
made, orally or otherwise, by any other Party, or anyone acting on behalf of any
other Party, unless such representation, inducement, promise or agreement is
embodied in this Agreement expressly or by incorporation.
13.2 AMENDMENTS AND WAIVERS. This Agreement may not be amended and
compliance with any provision of this Agreement may not be waived except in a
writing signed by all of the Parties hereto.
13.3 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
13.4 SEVERABILITY. If any provision of this Agreement is held to be
invalid, void or unenforceable, the remaining provisions of this Agreement shall
nevertheless continue in full force and effect.
13.5 THIRD PARTY BENEFICIARIES. The obligations of each Party under this
Agreement shall inure solely to the benefit of the other Parties, and no other
person or entity shall be a third party beneficiary of this Agreement.
13.6 RULES OF CONSTRUCTION. Unless otherwise specified, the following rules
shall be applied in construing the provisions of this Agreement.
(a) Terms that imply gender shall be construed to imply all genders.
(b) References to Sections, Exhibits or Schedules refer to the
numbered Sections of, the Exhibits and the Schedules attached to this Agreement.
(c) Headings to the various Sections of this Agreement are included
solely for purposes of reference and shall be ignored in construing the
provisions of this Agreement.
(d) The Schedules or Exhibits attached to this Agreement are
incorporated herein by reference.
(e) "Herein," "hereto," "hereof" and words of similar import refer
to this Agreement.
(f) The word "and" connotes "each and every", and the word "or"
connotes "any one or more".
(g) The word "including" connotes "including without limitation".
(h) Any reference to any law or regulation refers to that law or
regulation as amended from time-to-time after the date of this Agreement and to
the corresponding provision of any successor law or regulation.
12
(i) Any reference to any agreement or other document in this
Agreement refers to that agreement or other document as amended from time-to-
time after the date of this Agreement.
(j) The recitals included in this Agreement are the mutual
representations of the Parties and are a part of this Agreement.
13.7 NOTICES. Any notice or other communication required or permitted to be
made or given under this Agreement, shall be in writing and shall be deemed to
have been received by the Party to whom it is addressed: (i) on the date
indicated on the certified mail return receipt if sent by certified mail return
receipt requested; (ii) on the date actually received if hand delivered or if
transmitted by telefax (receipt of which is confirmed to sender); (iii) three
business days after such notice was deposited in the United States Mail postage
prepaid; or (iv) one business day after such notice was delivered to an
overnight delivery service, addressed, delivered or transmitted in each case as
follows:
IF TO THE SENIOR LENDER AND SECURED PARTIES:
Banc One Capital Partners II, Limited Partnership
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
ATTENTION: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Primus Capital Fund III Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
ATTENTION: Loyal ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
13
IF TO THE DEBTOR:
Corinthian Schools, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
O'Melveny & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
A Party's address for notice may be changed from time-to-time only by
written notice given to each of the other Parties in accordance with this
Section.
13.8 ASSIGNMENT. Neither this Agreement nor any of the rights or duties
hereunder may be assigned by any Party without the prior written consent of the
other Party, and any assignment attempted without such prior consent shall be
null and void.
13.9 FURTHER ACTS AND DOCUMENTS. Each of the Parties hereby agrees to
execute and deliver such further instruments and to do such further acts and
things as may be necessary or desirable to carry out the purposes of this
Agreement.
13.10 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which shall
constitute one and the same agreement.
SECTION 14. No Personal Liability.
Except as specifically provided for in this Agreement, no recourse may be
taken, directly or indirectly, with respect to the obligation of the Debtor
under the Notes, the Purchase Agreement or this Agreement against any officer or
director of the Debtor, and no provision of the Notes, the Purchase Agreement or
this Agreement shall be construed as creating any personal liability on the part
of any of them, except as such liability may arise as a result of fraud or
willful misconduct on the part of such individual.
14
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
DEBTOR: SENIOR LENDER AND
SECURED PARTIES:
CORINTHIAN SCHOOLS, INC. BANC ONE CAPITAL PARTNERS II,
LIMITED PARTNERSHIP
By: Banc One Capital Partners II
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ Corporation
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Its: Senior Vice President
------------------------------
PRIMUS CAPITAL FUND III,
LIMITED PARTNERSHIP
By: Primus Venture Partners, Inc.
By:_______________________________
Its:______________________________
The Parties have caused this Agreement to be executed and delivered
effective as of the date first written above.
DEBTOR: SENIOR LENDER AND
SECURED PARTIES:
CORINTHIAN SCHOOLS, INC. BANC ONE CAPITAL PARTNERS II,
LIMITED PARTNERSHIP
By:____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, President By: Banc One Capital Partners II
Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Its: Senior Vice President
-----------------------------
PRIMUS CAPITAL FUND III, LIMITED
PARTNERSHIP
By: Primus Venture Partners, Inc.
By: /s/ Loyal ▇. ▇▇▇▇▇▇
-------------------------------
Its: President
------------------------------
SCHEDULE A
ADDITIONAL PLACES OF BUSINESS
1. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3. ▇▇▇▇ ▇. ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7. ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
8. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
9. ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
11. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
12. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
