1
EXHIBIT 4.3 (l)
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT dated as of April 11, 2001 (this
"AGREEMENT"), made by Telex Communications, Inc., a Delaware corporation
("TELEX" or the "COMPANY"), Telex Communications Group, Inc., a Delaware
Corporation ("HOLDINGS"), and Telex Communications International, Ltd., a
Delaware corporation (together with Telex, Holding and each other Subsidiary of
the Company that becomes a party hereto from time to time after the date hereof,
(the "GRANTORS"), in favor of TCI Investments LLC and GoldenTree High Yield
Opportunities I, L.P., as co-agents "CO-AGENTS") for the Purchasers (as defined
in the Note Purchase Agreement referred to below). The Co-Agents together with
the Purchasers are referred to hereto collectively as the "SECURED PARTIES".
W I T N E S S E T H:
WHEREAS, pursuant to the Note Purchase Agreement dated as of April 11,
2001 (the "NOTE PURCHASE AGREEMENT"; terms used herein and not defined herein
have the meanings ascribed thereto in the Note Purchase Agreement), among the
Company, as issuer, the Co-Agents, and the Purchasers from time to time parties
thereto, the Purchasers have severally agreed to purchase Senior Secured Notes
from the Company upon the terms and subject to the conditions set forth therein;
WHEREAS, it is a condition to the obligation of the Purchasers to make
their respective purchases of Senior Secured Notes from the Company under the
Note Purchase Agreement that the Grantors shall have executed and delivered and
granted the assignments and security interests and made the pledges contemplated
by, this Agreement, in each case to the Co-Agents for the benefit of the
Purchasers; and
WHEREAS, the Co-Agents and the Company are parties to the Intercreditor
Agreement, which provides, inter alia, that the Liens granted to the
Administrative Agent for the benefit of the Senior Lenders (as defined in the
Intercreditor Agreement) are senior in priority on the terms and conditions set
forth in the Intercreditor Agreement to the Liens granted hereunder for the
Co-Agents for the ratable benefit of the Secured Parties;
NOW, THEREFORE, in consideration of the foregoing premises and to
induce the Secured Parties to enter into the Note Purchase Agreement and to
induce the Purchasers to make their respective purchases of Senior Secured Notes
from the Company thereunder, each Grantor hereby agrees with the Co-Agents, for
the ratable benefit of the Secured Parties, as follows:
SECTION 1. DEFINED TERMS
1.1. Definitions. The following terms shall have the following
meanings:
"ACCOUNT COLLATERAL" means, with respect to any Grantor, Collateral
Proceeds Account and General Funds Account of such Grantor, all financial assets
from time to time credited
2
thereto and all dividends, interest, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such financial assets.
"ACCOUNTS" has the meaning ascribed thereto in the Code.
"CO-AGENTS" has the meaning ascribed thereto in the preamble of this
Agreement.
"CHATTEL PAPER" has the meaning ascribed thereto in the Code.
"CODE" means the Uniform Commercial Code as from time to time in effect
in the State of New York.
"COLLATERAL" has the meaning ascribed thereto in Section 3 hereof.
"COLLATERAL ACCOUNT BANK" means the "Collateral Account Bank"
designated as such from time to time under the Senior Credit Documents, and any
successor Person designated as such from time to time by the Co-Agents.
"COLLATERAL PROCEEDS ACCOUNT" means the cash collateral account
established by the relevant Grantor at an office of the Collateral Account Bank
in the name of the Administrative Agent, and any successor depository account
maintained at a Person directed by the Co-Agents in the name of the Co-Agents.
"COMPANY OBLIGATIONS" means, collectively, the unpaid Principal Amount
and accrued and unpaid interest, on the Senior Secured Notes and all other
Obligations of the Company (including, without limitation, interest accruing at
the then applicable rate provided in the Note Purchase Agreement after the
maturity of the Senior Secured Notes and interest accruing at the then
applicable rate provided in the Note Purchase Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Company, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) to the Co-Agents or any
other Secured Party, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, the Note Purchase Agreement, this Agreement or any
other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Co-Agents or to any other Secured Party
that are required to be paid by the Company hereunder or under any other Note
Document.
"CONTRACTS" means, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof (except
for the contracts listed on Schedule 8), to which such Grantor is a party or
under which such Grantor has any right, title or interest or to which such
Grantor or any property of such Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of such Grantor to receive moneys due and to become
due to it thereunder or in connection
2
3
therewith, (ii) all rights of such Grantor to damages arising thereunder and
(iii) all rights of such Grantor to perform and to exercise all remedies
thereunder.
"COPYRIGHT LICENSES" means, with respect to any Grantor, all United
States written license agreements of such Grantor providing for the grant by or
to such Grantor of any right to use any Copyright of such Grantor, other than
intercompany agreements, including, without limitation, any license agreements
listed on Schedule 5 hereto means subject, in each case, to the terms of such
license agreements, and the right to prepare for sale, sell and advertise for
sale, all Inventory now or hereafter covered by such licenses.
"COPYRIGHTS" means, with respect to any Grantor, all of such Grantors
right, title and interest in and to all United States copyrights, whether or not
the underlying works of authorship have been published or registered, United
States copyright registrations and copyright applications, and (a) all renewals
thereof, (b) all income, royalties, damages and payments now and hereafter due
and/or payable with respect thereto, including, without limitation, payments
under all licenses entered into in connection therewith, and damages and
payments for past or future infringement thereof and (c) the right to xxx or
otherwise recover for past, present and future infringement and misappropriation
thereof.
"DOCUMENTS" has the meaning ascribed thereto in the Code.
"EQUIPMENT" has the meaning ascribed thereto in the Code.
"FARM PRODUCTS" has the meaning ascribed thereto in the Code.
"FIXTURES" has the meaning ascribed thereto in the Code.
"GENERAL FUND ACCOUNT" means, with respect to any Granter, the general
fund account of such Grantor established at the same office of the Collateral
Account Bank as the Collateral Proceeds Account.
"GENERAL INTANGIBLES" has the meaning ascribed thereto in the Code.
"GRANTORS" has the meaning ascribed thereto in the preamble of this
Agreement.
"GUARANTOR OBLIGATIONS" means with respect to any Guarantor,
collectively the Company Obligations and all Obligations and liabilities of such
Guarantor that may arise under or in connection with this Agreement or any other
Note Document, in each case whether on account of guarantee obligations,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Co-Agents or to the Secured Parties that are required to be paid by any
Guarantor hereunder under any other Note Document).
"GUARANTORS" means, collectively, each Grantor other than the Company.
"INSTRUMENTS" has the meaning ascribed thereto in the Code.
3
4
"INTELLECTUAL PROPERTY" means, with respect to any Grantor, such
Grantor's Copyrights, Copyright Licenses, Patents, Patent Licenses, Trade
Secrets, Trademarks and Trademark Licenses.
"INTERCOMPANY NOTE" means, with respect to any Grantor, any promissory
note evidencing loans made by such Grantor to the Company or any of its
Subsidiaries.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of
April __, 2001, among the Administrative Agent, the Co-Agents and each other
party thereto, a copy of which is attached hereto as Exhibit A, as the same
shall be amended, supplemented and otherwise modified from time to time in
accordance with its terms.
"INVENTORY" has the meaning ascribed thereto in the Code.
"INVESTMENTS" has the meaning ascribed thereto in the Code.
"ISSUERS" means, collectively, the Persons identified on Schedule 2
hereof as the issuers of the Pledged Stock.
"PATENT LICENSES" means, with respect to any Grantor, all United States
written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Patents of such Grantor
or such other Person's patents, whether such Grantor is a licensor or a licensee
under any such agreement, including, without limitation, the license agreements
listed on Schedule 5 hereto, subject, in each case, to the terms of such license
agreements, and the right to prepare for sale, sell and advertise for sale, all
Inventory now or hereafter covered by such licenses.
"PATENTS" means, with respect to any Grantor, all of such Grantor's
right, title and interest in and to all United States patents, patent
applications and patentable inventions and all reissues and extensions thereof,
including, without limitation, all patents and patent applications identified in
Schedule 5 hereto, and including, without limitation, (a) all inventions and
improvements described and claimed therein, and patentable inventions, (b) the
right to xxx or otherwise recover for any and all past, present and future
infringement and misappropriation thereof, (c) all income, royalties, damages
and other payments now and hereafter due and/or payable, with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future infringements
thereof), and (d) all other rights corresponding thereto in the United States
and all reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon, and all other rights
of any kind whatsoever of such Grantor accruing thereunder or pertaining
thereto.
"PLEDGED COLLATERAL" has the meaning ascribed thereto in Section 3
hereof.
"PLEDGED NOTES" means, with respect to any Pledgor, all Intercompany
Notes at any time issued to such Pledgor and all other promissory notes issued
to or held by such Pledgor (other than promissory notes issued in connection
with extensions of trade credit by any Pledgor in the ordinary course of
business).
4
5
"PLEDGED SECURITIES" means, collectively, the Pledged Notes and the
Pledged Stock.
"PLEDGED STOCK" means, with respect to any Pledgor, the shares of
Capital Stock listed on Schedule 2 hereto as held by such Pledgor, together with
any other shares, stock certificates, options or rights of any nature whatsoever
in respect of the Capital Stock of any Issuer that may be issued or granted to,
or held by, such Pledgor while this Agreement is in effect (provided that in no
event shall there be pledged, nor shall any Pledgor be required to pledge,
directly or indirectly, more than 65% of any series of the outstanding Capital
Stock of any Foreign Subsidiary pursuant to this Agreement).
"PLEDGOR" means Holdings (with respect to Pledged Stock of the
Company), the Company (with respect to Pledged Stock of the corporations listed
on Schedule 2 hereto under the name of the Company and any other Subsidiary of
the Company and any other Pledged Securities held by the Company) and any other
Grantor (with respect to Pledged Securities held by such Grantor).
"PROCEEDS" means all "proceeds" as such term is defined in Section
9-306(1) of the Code and, in any event, Proceeds of Pledged Securities shall
include, without limitation, all dividends or other income from the Pledged
Securities, collections thereon or distributions or payments with respect
thereto.
"SECURED OBLIGATIONS" means (i) in the case of the Company, the Company
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"SECURED PARTIES" has the meaning ascribed thereto in the preamble to
this Agreement.
"SECURITY COLLATERAL" means, with respect to any Grantor, such
Grantor's Collateral and Pledged Security.
"TRADE SECRETS" means, with respect to any Grantor, all of such
Grantor's right, title and interest in and to all United States trade secrets,
including, without limitation, know-how, processes, formulae, compositions,
designs, and confidential business and technical information, and all rights of
any kind whatsoever accruing thereunder or pertaining thereto, including,
without limitation, (a) all income, royalties, damages and payments now and
hereafter due and/or payable with respect thereto, including, without
limitation, payments under all licenses, non-disclosure agreements and memoranda
of understanding entered into in connection therewith, and damages and payments
for past or future misappropriation thereof, and (b) the right to xxx or
otherwise recover for past, present or future misappropriation thereof.
"TRADEMARK LICENSES" means, with respect to any Grantor, all United
States written license agreements of such Grantor with any Person who is not an
Affiliate or a Subsidiary in connection with any of the Trademarks of such
Grantor or such other Person's names or trademarks, whether such Grantor is a
licensor or a licensee under any such agreement, including, without limitation;
the license agreements listed on Schedule 5, subject, in each case, to the terms
of such license agreements, and the right to prepare for sale, sell and
advertise for sale, all Inventory now or hereafter covered by such licenses.
5
6
"TRADEMARKS" means, with respect to any Grantor, all of such Grantor's
right, title and interest in and to all United States trademarks, service marks,
trade names, trade dress or other indicia of trade origin or business
identifiers, trademark and service xxxx registrations, and applications for
trademark or service xxxx registrations (except for "intent to use" applications
for trademark or service xxxx registrations filed pursuant to Section 1(b) of
the Xxxxxx Act, 15 U.S.C. ss. 1051, unless and until an Amendment to Allege Use
or a Statement of Use under Sections 1(c) and 1(d) of said Act has been filed),
and any renewals thereof, including, without limitation, each registration and
application identified in Schedule 5, and including, without limitation, (a) the
right to xxx or otherwise recover for any and all past, present and future
infringements and misappropriation thereof, (b) all income, royalties, damages
and other payments now and hereafter due and/or payable with respect thereto
(including, without limitation, payments under all licenses entered into in
connection therewith, and damages and payments for past or future infringements
thereof), and (c) all other rights corresponding thereto in the United States
and all other rights of any kind whatsoever of such Grantor accruing thereunder
or pertaining thereto, together in each case with the goodwill of the business
connected with the use of, and symbolized by, each such trademark, service xxxx,
trade name, trade dress or other indicia of trade origin or business
identifiers.
"VEHICLES" means all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title law of any
state and all tires and other appurtenances to any of the foregoing.
1.2. Other Definitional Provisions.
(a) The words "hereof," "herein", "hereto" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Annex references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the
Collateral, Pledged Collateral or Security Collateral, or any part thereof, when
used in relation to a Grantor shall refer to such Grantor's Collateral, Pledged
Collateral or Security Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1. Guarantee. Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Co-Agents, for the ratable
benefit of the Secured Parties and their respective successors, endorsees,
transferees and assigns, the prompt and complete payment and performance by the
Company when due and payable (whether at the stated maturity, by acceleration or
otherwise) of the Company Obligations.
2.2. Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder,
6
7
such Guarantor shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder, which has not paid its proportionate
share of such payment. Each Guarantor's right of contribution shall be subject
to the terms and conditions of Section 2.3. The provisions of this Section 2.2
shall in no respect limit the obligations and liabilities of any Guarantor to
the Co-Agents and the other Secured Parties, and each Guarantor shall remain
liable to the Co-Agents and the other Secured Parties for the full amount
guaranteed by such Guarantor hereunder.
2.3. No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the
Co-Agents or any other Secured Party, no Guarantor shall be entitled to be
subrogated to any of the rights of the Co-Agents or any other Secured Party
against the Company or any other Guarantor or any collateral security or
guarantee or right of offset held by the Co-Agents or any other Secured Party
for the payment of the Company Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Co-Agents and the other Secured Parties by the Company on
account of the Senior Secured Notes are paid in full. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when all
of the Company Obligations shall not have been paid in full, such amount shall
be held by such Guarantor in trust for the Co-Agents and the other Secured
Parties, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Co-Agents in the exact
form received by such Guarantor (duly indorsed by such Guarantor to the
Co-Agents, if required), to be applied against the Company Obligations, whether
matured or unmatured, in such order as the Co-Agents may determine.
2.4. Amendments, etc. with respect to the Company Obligations. To the
maximum extent permitted by law, each Guarantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against any Guarantor
and without notice to or further assent by any Guarantor, any demand for payment
of any of the Company Obligations made by the Co-Agents or any other Secured
Party may be rescinded by the Co-Agents or such other Secured Party and any of
the Company Obligations continued, and the Company Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Co-Agents or any other
Secured Party, and the Note Purchase Agreement and the other Note Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Co-Agents (or the Required Purchasers, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Co-Agents or any other Secured Party for the payment of the
Company Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Co-Agents nor any other Secured Party shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Company Obligations or for the guarantee contained in this Section 2 or
any property subject thereto, except to the extent required by applicable Law.
2.5. Guarantee Absolute and Unconditional. Each Guarantor waives, to
the maximum extent permitted by applicable Law, any and all notice of the
creation, renewal, extension or
7
8
accrual of any of the Company Obligations and notice of or proof of reliance by
the Co-Agents or any other Secured Party upon the guarantee contained in this
Section 2 or acceptance of the guarantee contained in this Section 2. The
Company Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2, and all dealings
between the Company and any of the Guarantors, on the one hand, and the
Co-Agents and the other Secured Parties, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives, to the maximum
extent permitted by applicable Law, diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Company or any of the
other Guarantors with respect to the Company Obligations. Each Guarantor
understands and agrees, to the extent permitted by law, that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment. Each Guarantor hereby waives, to the maximum
extent permitted by applicable Law, any and all defenses that it may have
arising out of or in connection with any and all of the following: (a) the
validity or enforceability of the Note Purchase Agreement or any other Loan
Document, any of the Company Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Co-Agents or any other Secured Party; (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the Company
against the Co-Agents or any other Secured Party; (c) any change in the time,
place, manner or place of payment, amendment, or waiver or increase in the
Secured Obligations; (d) any exchange, taking, or release of Collateral; (e) any
change in the corporate structure or existence of the Company; (f) any
application of Collateral to the Secured Obligations; or (g) any other
circumstance whatsoever (with or without notice to or knowledge of the Company
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Company Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, the Co-Agents or any
other Secured Party may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Company, any other Guarantor or any other Person or against any collateral
security or guarantee for the Company Obligations or any right of offset with
respect thereto, and any failure by the Co-Agents or any other Secured Party to
make any such demand, to pursue such other rights or remedies or to collect any
payments from the Company, any other Guarantor or any other Person or to realize
upon any such collateral security or guarantee or to exercise any such right of
offset, or any release of the Company, any other Guarantor or any other Person
or any such collateral security, guarantee or right of offset, shall not relieve
any Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Co-Agents or any other Secured Party against any
Guarantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
2.6. Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Company Obligations is rescinded or
must otherwise be restored or returned by the Co-Agents or any other Secured
Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or any Guarantor, or upon or as a result of the
appointment of a
8
9
receiver, intervenor or conservator of, or trustee or similar officer for, the
Company or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7. Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Co-Agents without set-off or counterclaim in Dollars at the
such address as shall be specified from time to time by the Co-Agents.
SECTION 3. GRANT OF SECURITY INTEREST
3.1. Grant of Security Interest.
Each Grantor hereby grants to the Co-Agents, for the ratable benefit of
the Secured Parties, a security interest in all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the "COLLATERAL"), as security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations of such Grantor:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment (other than Vehicles);
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all Account Collateral; and
(k) all books and records pertaining to any of the
foregoing; and
(l) to the extent not otherwise included, all Proceeds
and products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
3.2. Pledge. Each Pledgor hereby grants to the Co-Agents, for the
ratable benefit of the Secured Parties, a security interest in, and pledges, all
of the Pledged Securities now owned or at any time hereafter acquired by such
Pledgor, and any Proceeds thereof (the "PLEDGED
9
10
COLLATERAL"), as security for the prompt and complete performance when due
(whether at the stated maturity by acceleration or otherwise) of the Secured
Obligation of such Pledgor; provided however, that (x) the Collateral shall not
include any Pledged Collateral, or any property or assets specifically excluded
from Pledged Collateral (including any Capital Stock of any Foreign Subsidiary
in excess of 65% of any series of such stock); (y) in the case of any
Instruments, Contracts, Chattel Paper, General Intangibles, Copyright Licenses,
Patent Licenses, Trademark Licenses or other contracts or agreements with or
issued by Persons (other than a Subsidiary of the Company) that would otherwise
be included in the Security Collateral, no security interest in the right, title
and interest of any Grantor thereunder or therein will be granted pursuant to
this Section 2 (and such Instruments, Contracts, Chattel Paper, General
Intangibles, Copyright Licenses, Patent Licenses, Trademark Licenses or other
contracts or agreements shall not be deemed to constitute a part of the Security
Collateral) for so long as, and to the extent that, the granting of a security
interest in the right, title and interest of such Grantor thereunder or therein
pursuant to the terms hereof would result in a breach, default or termination of
such Instruments, Contracts, Chattel Paper, General Intangibles, Copyright
Licenses, Patent Licenses, Trademark Licenses or other contracts or agreements;
and (z) in the case of the Equipment that would otherwise be included in the
foregoing Collateral, the foregoing will not be deemed to grant a security
interest therein under this Agreement (and such Equipment shall not be deemed to
constitute a part of the Collateral) if such Equipment is subject to a Lien
permitted by Section 8.3(h) of the Note Purchase Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1. Representations and Warranties of Each Guarantor. To induce the
Co-Agents and the Purchasers to enter into the Note Purchase Agreement and to
induce the Purchasers to purchase Senior Secured Notes from the Company
thereunder, each Guarantor hereby represents and warrants to the Co-Agents and
each other Secured Party that the representations and warranties set forth in
Article 5 of the Note Purchase Agreement as they relate to such Guarantor or to
the Note Documents to which such Guarantor is a party, each of which
representations and warranties is hereby incorporated herein by reference, are
true and correct in all material respects, and the Co-Agents and each other
Secured Party shall be entitled to rely on each of such representations and
warranties as if fully set forth herein; provided that each reference in each
such representation and warranty to the Company's knowledge shall, for the
purposes of this Section 4.1, be deemed to be a reference to such Guarantor's
knowledge.
4.2. Representations and Warranties of Each Grantor. To induce the
Co-Agents and the Purchasers to enter into the Note Purchase Agreement and to
induce the Purchasers to purchase Senior Secured Notes from the Company
thereunder, each Grantor hereby represents and warrants to the Co-Agents and
each other Secured Party as set forth in Sections 4.3 through 4.9 hereof.
4.3. Title: No Other Liens. Except for the security interest granted
under the Senior Credit Documents or to the Co-Agents, for the ratable benefit
of the Secured Parties, pursuant to this Agreement and the other Liens permitted
to exist on such Grantor's Collateral by the Note Purchase Agreement (including
without limitation Section 8.3 thereof), such Grantor owns each item of such
Grantor's Collateral free and clear of any and all Liens. Except as set forth on
10
11
Schedule 6, no financing statement or other similar public notice with respect
to all or any part of such Grantor's Collateral is on file or of record in any
public office, except such as have been filed in favor of the Co-Agents, for the
ratable benefit of the Secured Parties, pursuant to this Agreement or as are
permitted by the Note Purchase Agreement (including without limitation Section
8.3 thereof) or any other Loan Document or for which termination statements will
be delivered on the Closing Date.
4.4. Perfected Priority Liens.
(a) This Agreement is effective to create, as collateral
security for the Secured Obligations of such Grantor, valid and enforceable
Liens on such Grantor's Collateral in favor of the Co-Agents, for the benefit of
the Secured Parties, except as enforceability may be affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(b) Except with respect to (i) Liens on Equipment constituting
Fixtures, (ii) any rights reserved in favor of the United States government as
required under law, (iii) Liens upon Patents, Patent Licenses, Trademarks and
Trademark Licenses to the extent that (A) such Liens cannot be perfected by the
filing of financing statements under the Uniform Commercial Code or by the
filing and acceptance thereof in the United States Patent and Trademark Office
or (B) such Patents, Patent Licenses, Trademarks and Trademark Licenses are not,
individually or in the aggregate, material to the business of the Company and
its Subsidiaries taken as a whole, (iv) Liens on uncertificated securities, (v)
Liens on Collateral the perfection of which requires filings in or other actions
under the laws of jurisdictions outside of the United States of America, any
State, territory or dependency thereof or the District of Columbia (except to
the extent that such filings or other actions have been made or taken), (vi)
Liens on contracts or receivables on which the United States of America or any
department, agency, or instrumentality thereof is the obligor, (vii) Liens on
Proceeds of receivables and Inventory, until transferred to or deposited in the
Collateral Proceeds Account (if any), and (viii) claims of creditors of Persons
receiving goods included as Collateral for "sale or return" within the meaning
of Section 2-326 of the Uniform Commercial Code of the applicable jurisdiction,
upon filing of the financing statements delivered to the Co-Agents by such
Grantor on the Closing Date in the jurisdictions listed on Schedule 5.24 to the
Note Purchase Agreement (which financing statements are in proper form for
filing in such jurisdictions), the recording of the Mortgages (and the recording
of any Patent and Trademark Security Agreement, as set forth therein, and the
making of filings after the Closing Date in any other jurisdiction as may be
necessary under any Requirement of Law) and the delivery to, and continuing
possession by, the Administrative Agent, as agent for the Secured Parties and
the holders of the Senior Loans, of all Instruments, Chattel Paper and Documents
a security interest in which is perfected by possession, the Liens created
pursuant to this Agreement will constitute valid Liens on and, to the extent
provided herein, perfected security interests in such Grantor's Collateral (with
respect to Copyrights and Copyright Licenses and accounts arising therefrom,
perfected security interests only to the extent the Uniform Commercial Code of
the relevant jurisdiction, from time to time in effect, is applicable) in favor
of the Co-Agents for the ratable benefit of the Secured Parties, which Liens
will be prior to all other Liens of all other Persons, except Liens granted
11
12
under the Senior Credit Documents and except for Liens in favor of the
Administrative Agent and holders of the Senior Loans pursuant to the Senior
Credit Documents, and which Liens are enforceable as such as against all other
Persons (except to the extent that the recording of an assignment or other
transfer of title to the Co-Agents in the United States Patent and Trademark
Office may be necessary for enforceability, and except, with respect to goods
only, buyers in the ordinary course of business to the extent provided in
Section 9-307(1) of the Code), except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law) or by an implied covenant of good faith and fair dealing.
4.5. Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 3.
4.6. Inventory and Equipment. On the date hereof, such Grantor's Goods,
Inventory and Equipment (other than mobile goods) are kept at the locations
listed on Schedule 4 hereto.
4.7. Farm Products. None of such Grantor's Collateral constitutes, or
is the Proceeds of, Farm Products.
4.8. Accounts. The amount represented by such Grantor to the Co-Agents
or the other Secured Parties from time to time as owing by each account debtor
or by all account debtors in respect of such Grantor's Accounts will at such
time be the correct amount, in all material respects, actually owing by such
account debtor or debtors thereunder, except to the extent that appropriate
reserves therefor have been established on the books of such Grantor in
accordance with GAAP. The places where such Grantor keeps its records concerning
such Grantor's Accounts are listed on Schedule 7 hereto or such other location
or locations of which such Grantor shall have provided prior written notice to
the Co-Agents pursuant to Section 5.7 hereof. Unless otherwise indicated in
writing to the Co-Agents, each Account of such Grantor arises out of a bona fide
sale and delivery of goods or rendition of services by such Grantor. Such
Grantor has not given any account debtor any deduction in respect of the amount
due under any such Account, except as such Grantor may otherwise advise the
Co-Agents in writing.
4.9. Intellectual Property. Schedule 5 hereto lists all material
Trademarks and material Patents (including, without limitation, Trademarks and
Patents registered in the United States Patent and Trademark Office) owned by
such Grantor in its own name as of the date hereof and all material Trademark
Licenses and all material Patent Licenses (including, without limitation,
material Trademark Licenses for registered Trademarks and material Patent
Licenses for registered Patents) owned by such Grantor in its own name as of the
date hereof.
4.10. Representations and Warranties of Each Pledgor. To induce the
Co-Agents and the Purchasers to enter into the Note Purchase Agreement and to
induce the Purchasers to make their respective extensions of credit to the
Company thereunder, each Pledgor hereby represents and warrants to the Co-Agents
and each other Secured party as follows:
12
13
(a) The shares of Pledged Stock pledged by such Pledgor
hereunder constitute (i) in the case of each Domestic Subsidiary, all the issued
and outstanding shares of all classes of the Capital Stock of each such Domestic
Subsidiary owned by such Pledgor and (ii) in the case of each Foreign Subsidiary
such percentage (not more than 65%) as is specified on Schedule 2 of all the
issued and outstanding shares of all classes of the Capital Stock of each such
Foreign Subsidiary.
(b) All the shares of the Pledged Stock pledged by such
Pledgor hereunder have been duly and validly issued and are fully paid and
nonassessable.
(c) Such Pledgor is the record and beneficial owner of, and
has good and valid title to, the Pledged Securities pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created under the Senior Credit Documents,
and by this Agreement and Liens imposed by operation of Law.
(d) Upon execution and delivery of the Intercreditor Agreement
or delivery to the Co-Agents of the certificates evidencing the Pledged
Securities and the instruments evidencing the Pledged Notes held by such
Pledgor, the security interest created by this Agreement in such Pledged
Collateral, assuming the continuing possession of such Pledged Securities by the
Administrative Agent pursuant to the terms of the Intercreditor Agreement or by
the Co-Agents, will constitute a valid, perfected security interest in such
Pledged Collateral to the extent provided in the Code prior to all other Liens
of all other Persons except for Liens in favor of the Administrative Agent and
holders of Senior Loans pursuant to the Senior Credit Documents, enforceable in
accordance with its terms against all creditors of such Pledgor and any persons
purporting to purchase such Pledged Collateral from such Pledgor, except as
enforceability may be affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
SECTION 5. COVENANTS
5.1. Covenants of Each Guarantor. Each Guarantor covenants and agrees
with the Co-Agents and the other Secured Parties that, from and after the date
of this Agreement until the Senior Secured Notes, and all other Obligations then
due and owing, shall have been paid in full, such Guarantor shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by such Guarantor or any of its Subsidiaries.
5.2. Covenants of Each Grantor. Each Grantor covenants and agrees with
the Co-Agents and the other Secured Parties that, from and after the date of
this Agreement until the Senior Secured Notes, and all other Secured Obligations
then due and owing, shall have been paid in full, as set forth in Sections 5.3
through 5.13.
13
14
5.3. Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of such Grantor's Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper
shall be promptly delivered to the Administrative Agent or the Co-Agents, as the
case may be, duly indorsed in a manner satisfactory to, the Administrative Agent
or the Co-Agents, as the case may be, to be held as Collateral pursuant to this
Agreement.
5.4. Maintenance of Insurance.
(a) Such Grantor will maintain, with financially sound and
reputable companies, insurance policies (i) insuring such Grantor's Inventory
and Equipment against loss by fire, explosion, theft and such other casualties
as may be reasonably satisfactory to the Co-Agents and (ii) insuring such
Grantor, the Co-Agents and the other Secured Parties against liability for
personal injury and property damage relating to such Inventory and Equipment,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Co-Agents.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Co-Agents of written
notice thereof, (ii) name the Co-Agents as an additional insured party or loss
payee, (iii) include deductibles consistent with past practice or otherwise
reasonably satisfactory to the Co-Agents and (iv) be reasonably satisfactory in
all other respects to the Co-Agents.
(c) Such Grantor (if the Company) shall deliver to the
Co-Agents and the other Secured Parties reports of one or more reputable
insurance brokers of the individual insurance companies with respect to such
insurance as the Co-Agents may from time to time reasonably request.
5.5. Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon such Grantor's Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to such Grantor's Collateral,
except that no such tax, assessment, charge or levy need be paid or satisfied if
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings, reserves in conformity with GAAP with respect thereto
have been provided on the books of such Grantor and such proceedings would not
reasonably be expected to result in the sale, forfeiture or loss of any material
portion of the Collateral or any interest therein.
5.6. Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor shall maintain the security interest created
by this Agreement in such Grantor's Collateral as a perfected security interest
having at least the priority described in Section 4.4 hereof and shall defend
such security interest against the claims and demands of all Persons whomsoever.
14
15
(b) Such Grantor will furnish to the Co-Agents from time to
time statements and schedules further identifying and describing such Grantor's
Collateral and such other reports in connection with such Grantor's Collateral
as the Co-Agents may reasonably request in writing, all in reasonable detail.
(c) At any time and from time to time, upon the written
request of the Co-Agents, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Co-Agents may reasonably request
for the purpose of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted by such Grantor, including, without
limitation, the filing of any financing or continuation statements under the
Uniform Commercial Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby.
5.7. Changes in Locations, Name, etc. Such Grantor will not, except
upon not less than 30 days' prior written notice to the Co-Agents and delivery
to the Co-Agents, if applicable, of a written supplement to Schedule 4 hereto
showing any additional location at which such Grantor's Inventory or Equipment
shall be kept:
(i) permit any of such Grantor's Inventory or
Equipment to be kept at a location other than the location(s)
applicable to such Grantor listed on Schedule 4 hereto (other than
Inventory or Equipment being conveyed, sold, leased, assigned,
transferred or otherwise disposed of as permitted by the Note Purchase
Agreement);
(ii) change the location of its chief executive
office or sole place of business from that referred to in Section 4.5
hereof; or
(iii) change its name, identity or corporate
structure to such an extent that any financing statement filed by the
Co-Agents in connection with this Agreement would become misleading;
provided that, prior to taking any such action, or promptly after receiving a
written request therefor from the Co-Agents, such Grantor shall deliver to the
Co-Agents all additional executed financing statements and other documents
reasonably requested by the Co-Agents to maintain the validity, perfection and
priority of the security interests provided for herein.
5.8. Notices. Such Grantor will advise the Co-Agents promptly, in
reasonable detail, of
(a) any Lien (other than security interests created hereby or
Liens permitted under the Note Purchase Agreement) on any of such Grantor's
Collateral that would adversely affect the ability of the Co-Agents to exercise
any of its remedies hereunder; and
(b) of the occurrence of any other event that could reasonably
be expected to have a material adverse effect on the aggregate value of such
Grantor's Collateral or on the security interests created hereby.
15
16
5.9. Pledged Securities. In the case of each Grantor that is
an Issuer, such Issuer agrees that (i) it will be bound by the terms of this
Agreement relating to the Pledged Stock issued by it and will comply with such
terms insofar as such terms are applicable to it, (ii) it will notify the
Co-Agents promptly in writing of the occurrence of any of the events described
in Section 5.14 hereof with respect to the Pledged Stock issued by it, and (iii)
the terms of Sections 6.3(c) and 6.7 hereof shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it pursuant to Section
6.3(c) or 6.7 hereof with respect to the Pledged Stock issued by it.
5.10. Accounts.
(a) Other than in the ordinary course of business, such
Grantor will not (i) grant any extension of the time of payment of any of such
Grantor's Accounts, (ii) compromise or settle any such Account for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Account, (iv) allow any credit or discount whatsoever on any
such Account or (v) amend, supplement or modify any Account in any manner that
could adversely affect the value thereof.
(b) Such Grantor will deliver to the Co-Agents a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 10% of the aggregate amount of
the then outstanding validity Accounts.
5.11. Maintenance of Records. Such Grantor will keep and maintain at
its own cost and expense reasonably satisfactory and complete records of its
Collateral, including, without limitation, a record of all payment received and
all credits granted with respect to such Collateral, and shall xxxx such records
to evidence this Agreement and the Liens and the security interests created
hereby. For the Co-Agents' and the other Secured Parties' further security, the
Co-Agents, for the benefit of the Secured Parties, shall have a security
interest in all of such Grantor's books and records pertaining to such Grantor's
Collateral.
5.12. Acquisition of Intellectual Property. Within 45 days after the
end of each calendar quarter, such Grantor will notify the Co-Agents of any
acquisition by such Grantor of (i) any material registration of Copyright,
Patent or Trademark or (ii) any exclusive rights under a material copyright
License, Patent License or Trademark License, and shall take such actions as may
be reasonably requested by the Co-Agents (but only to the extent such actions
are within such Grantor's control) to perfect the security interest granted to
the Co-Agents and the other Secured Parties therein (including, without
limitation, (x) the execution and delivery of a Patent and Trademark Security
Agreement (or amendments to any such agreement previously executed or delivered
by such or Copyright Licenses Grantor) or other comparable agreements with
respect to Copyrights and (y) the making of appropriate filings (I) of financing
statements under the Uniform commercial Code of any applicable jurisdiction
and/or (II) in the United States patent and Trademark Office, or with respect to
Copyrights and Copyright Licenses, other applicable office).
16
17
5.13. Protection of Trade Secrets. Such Grantor shall take all steps
that it deems commercially reasonable to preserve and protect the secrecy of all
material Trade Secrets of such Grantor.
5.14. Covenants of Each Pledgor. Each Pledgor covenants and agrees with
the Co-Agents and the other Secured Parties that, from and after the date of
this Agreement until the Senior Secured Notes and all Secured Obligations then
due and owing shall have beep paid in full:
(a) If such Pledgor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether m addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Pledgor shall accept the same as the agent of the Co-Agents and
the other Secured Parties, hold the same in trust for the Co-Agents and deliver
the same forthwith to the Administrative Agent, as agent for the Secured Parties
pursuant to the terms of the Intercreditor Agreement, or the Co-Agents, in the
exact form received, duly indorsed by such Pledgor to the Administrative Agent
or the Co-Agents, as the case may be, if required, together with an undated
stock power covering such certificate duly executed in blank by such Grantor and
with, if the Administrative Agent or the Co-Agents, as the case may be, so
requests, signature guaranteed, to be held by the Administrative Agent or the
Co-Agents, as the case may be, subject to the terms hereof (and of the
Intercreditor Agreement, as applicable), as additional security for the Secured
Obligations; provided that in no event shall there be pledged, nor shall any
Pledgor be required to pledge, more than 65% of any series of the outstanding
Capital Stock of any Foreign Subsidiary pursuant to this Agreement. Any sums
paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer or Maker (except any liquidation or dissolution of any
Subsidiary of the Company in accordance with the Note Purchase Agreement) shall
be paid over to the Administrative Agent or the Co-Agents, as the case may be,
to be held by it hereunder as additional security for the Secured Obligations,
and in case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to the
Pledged Stock pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Co-Agents, be delivered to the Administrative Agent or the
Co-Agents, as the case may be, to be held thereby hereunder as additional
security for the Secured Obligations. If any sums of money or property so paid
or distributed in respect of the Pledged Securities shall be received by such
Pledgor, such Pledgor shall, until such money or property is so paid or so
delivered, hold such money or property in trust for the Secured Parties,
segregated from other funds of such Pledgor, is additional collateral security
for the Secured Obligations.
(b) Without the prior written consent of the Administrative
Agent or the Co-Agents, as the case may be, such Pledgor will not (except
pursuant to a transaction permitted by the Note Purchase Agreement) (i) vote to
enable, or take any other action to permit, any Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any
17
18
nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except in connection with any Asset Sale permitted under the
Note Purchase Agreement) or (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Securities or Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or Liens arising by operation of
Law.
(c) Such Pledgor shall maintain the security interest created
by this Agreement in such Pledgor's Pledged Collateral as a perfected security
interest having at least the priority described in Section 4.10(d) hereof and
shall defend such security interest against the claims and demands of all
Persons whomsoever. At any time and from time to time, upon the written request
of the Co-Agents, and at the sole expense of such Pledgor, subject to the terms
of the Intercreditor Agreement, such Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Co-Agents may reasonably request for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted
by such Pledgor.
5.15. Covenants of Holdings. Holdings covenants and agrees with the
Co-Agents and the other Secured Parties that, from and after the date of this
Agreement until the Senior Secured Notes and all other Secured Obligations then
due and owing have been paid in full:
(a) Holdings shall not conduct or otherwise engage, in any
business or operations other than (i) transactions contemplated by the Note
Documents or the provision of administrative, legal, accounting and management
services to or on behalf of the Company or any of its Subsidiaries, (ii) the
ownership of the Capital Stock of the Company (or any successor thereto), and
the exercise of rights and performance of obligations in connection therewith,
(iii) the entry into, and exercise of rights and performance of obligations in
respect of, (A) the Senior Credit Documents, the Transaction Documents (as
defined in the Senior Credit Documents) and the Senior Subordinated Notes
Documents to which Holdings is a party, this Guarantee and Collateral Agreement
and the other Note Documents to which Holdings is a party, and any other
agreement to which Holdings is a party on the date hereof, in each case as
amended, supplemented, waived or otherwise modified from time to time, and any
refinancings, refundings, renewals or extensions thereof, (B) contracts and
agreements with officers, directors and employees of the Holdings or a
Subsidiary thereof relating to their employment or directorships, (C) insurance
policies and related contracts and agreements, and (D) equity subscription
agreements, registration rights agreements, voting and other stockholder
agreements, engagement letters, underwriting agreements and other agreements in
respect of its equity securities or any offering, issuance or sale thereof, (iv)
the offering, issuance and sale of its equity securities, (v) the filing of
registration statements, and compliance with applicable reporting and other
obligations, under federal, state or other securities laws, (vi) the listing of
its equity securities and compliance with applicable reporting and other
obligations in connection therewith, (vii) the retention of transfer agents,
private placement agents, underwriters, counsel, accountants and other advisors
and consultants, (viii) the performance of obligations under and compliance with
its certificate of incorporation and by-laws, or any applicable Law or
Governmental Order, including, without limitation, as a result of or in
connection with the activities of the Company and its Subsidiaries, (ix) the
incurrence and payment of its operating
18
19
and business expenses and any taxes for which it may be liable, and (x) other
activities incidental or related to the foregoing.
(b) Holdings shall not own, lease, manage or otherwise operate
any properties or assets (other than in connection with the activities described
in Section 5.15(a) above), or incur, create, assume or suffer to exist any
Indebtedness or Guarantee Obligations of Holdings (other than such as may be
incurred, created or assumed or exist in connection with the activities
described in Section 5.15(a) above).
SECTION 6. REMEDIAL PROVISIONS
6.1. Certain Matters Relating to Accounts.
(a) At any time and from time to time after the occurrence and
during the continuance of an Event of Default, the Co-Agents shall have the
right to make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and the relevant Grantor shall
furnish all such assistance and information as the Co-Agents may require in
connection with such test verifications. At any time and from time to time if an
Event of Default has occurred and is continuing, upon the Co-Agents' reasonable
request, subject to the terms of the Intercreditor Agreement and at the expense
of the relevant Grantor, such Grantor shall cause independent public accountants
or others reasonably satisfactory to the Co-Agents to furnish to the Co-Agents
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts.
(b) The Co-Agents hereby authorizes each Grantor to collect
such Grantor's Accounts and the Co-Agents may curtail or terminate said
authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Co-Agents at any time after the occurrence
and during the continuation of an Event of Default, but subject in all cases to
the Intercreditor Agreement, any Proceeds constituting collections of such
Accounts, when collected by such Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent, as agent
for the Senior Lenders (as defined in the Intercreditor Agreement) or the
Secured Parties, as the case may be, and the holders of Senior Loans under the
Senior Credit Documents pursuant to the Intercreditor Agreement, or the
Co-Agents, as the case may be, if required, in the Collateral Proceeds Account
established by such Grantor maintained under the sole dominion and control of
the Administrative Agent or the Co-Agents, as the case may be, subject to
withdrawal by the Administrative Agent or the Co-Agents, as the case may be, for
the account of the Senior Lenders (as defined in the Intercreditor Agreement) or
the Secured Parties, as the case may be, as provided in Section 6.5 below, and
(ii) until so turned over, shall be held by such Grantor in trust for the
Administrative Agent or the Co-Agents, as the case may be, and the other Secured
Parties, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Accounts shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit. All
Proceeds constituting collections of Accounts while held by the Collateral
Account Bank (or by any Guarantor in trust for the benefit of the Co-Agents and
the other Secured Parties) shall continue to be security for all of the Secured
Obligations and shall not constitute payment thereof until applied as
19
20
hereinafter provided. At any time that an Event of Default has occurred and is
continuing, at the Co-Agents' election, subject to the terms of the
Intercreditor Agreement, the Co-Agents may apply all or any part of the funds on
deposit in the Collateral Proceeds Account established by the relevant Grantor
to the payment of the Secured Obligations of such Grantor then due and owing,
such application to be made as set forth in Section 6.5 hereof. So long as no
Event of Default has occurred and is continuing, subject to the terms of the
Intercreditor Agreement, the funds on deposit in the Collateral Proceeds Account
shall be remitted as provided herein. At any time when an Event of Default has
occurred and is continuing, at the Administrative Agent's or the Co-Agents'
request, as the case may be, each Grantor shall deliver to the Administrative
Agent or the Co-Agents, as the case may be, all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to
such Grantor's Accounts, including, without limitation, all statements relating
to such Grantor's Accounts.
(c) Subject to the terms of the Intercreditor Agreement, at
any time and from time to time that an Event of Default has occurred and is
continuing, at the Administrative Agent's or the Co-Agents' request, as the case
may be, each Grantor shall deliver to the Administrative Agent or the Co-Agents,
as the case may be, all original and other documents evidencing, and relating
to, the agreements and transactions which gave rise to such Grantors' Accounts,
including, without limitation, all original orders, invoices and shipping
receipts.
(d) General Fund Account. So long as no Event of Default has
occurred and is continuing the Co-Agents may, subject to the terms of the
Intercreditor Agreement, instruct the Collateral Account Bank to promptly remit
any funds on deposit in each Grantor's Collateral Proceeds Account to such
Grantor's General Fund Account. In the event that an Event of Default has
occurred and is continuing, the Co-Agents and the Grantors agree that the
Co-Agents, at their option and subject to the terms of the Intercreditor
Agreement, may designate the Collateral Account Bank and require that each
Collateral Proceeds Account be established and maintained at such new Collateral
Account Bank. Each Grantor shall have the right, at any time and from time to
time, to withdraw such of its own funds from its own General Fund Account, and
to maintain such balances in its General Fund Account, as it shall deem to be
necessary or desirable.
(e) Restructuring of Deposit Accounts. Subject to the
Intercreditor Agreement, if (a) any Collateral Proceeds Account is maintained at
a Collateral Account Bank located in a state within the United States in which
Article 9 of the Uniform Commercial Code in effect in such state has been
expressly made applicable to (and only for so long as it is applicable to)
demand deposit accounts and all filings have been made in such state that are
necessary to perfect the Secured Parties' security interest in such Collateral
Proceeds Account or (b) after the Closing Date the relevant Grantor demonstrates
to the Co-Agents, and the Co-Agents agree, that the costs associated with
maintaining both a Collateral Proceeds Account and a General Fund Account
outweigh any benefits to the Secured Parties in terms of any additional
protection to their rights in such Grantor's Collateral that could not be
achieved with the use of a single account, then upon the request of such
Grantor, the Co-Agents may (but in no circumstance shall be required to) amend
this Agreement to end the requirement that a separate General Fund Account be
maintained and to provide that such Grantor be entitled to withdraw funds on
deposit in such Collateral Proceeds Account at any time so long as no Event of
Default has occurred and is continuing.
20
21
6.2. Communications with Obligors, Grantors Remain Liable.
(a) The Co-Agents in their own name or in the name of others
may at any time and from time to time that an Event of Default has and is
continuing, communicate with obligors under the Accounts and parties to the
Contracts (in each case, to the extent constituting Collateral) to verify with
them to the Co-Agents' satisfaction the existence, amount and terms of any
Receivables or Contracts.
(b) Subject to the terms of the Intercreditor Agreement, upon
the request of the Administrative Agent or the Co-Agents, as the case may be, at
any time that an Event of Default has occurred and is continuing, each Grantor
shall notify obligors on such Grantor's Accounts and parties to such Grantor's
Contracts (in each case, to the extent constituting Collateral) that such
Accounts and such Contracts have been assigned to the Co-Agents, for the ratable
benefit of the Secured Parties and that payments in respect thereof shall be
made directly to the Administrative Agent or the Co-Agents, as the case may be.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of such Grantor's Accounts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Co-Agents nor any other Secured Party shall have any
obligation or liability under any Account (or any agreement giving rise thereto)
by reason of or arising out of this Agreement or the receipt by the Co-Agents or
any other Secured Party of any payment relating thereto, nor shall the Co-Agents
or any other Secured Party be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Account (or any agreement
giving rise thereto) to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
6.3. Pledged Stock.
(a) Subject to the terms of the Intercreditor Agreement,
unless an Event of Default shall have occurred and be continuing, and the
Co-Agents shall have given notice to the relevant Pledgor of the Co-Agents'
intent to exercise its corresponding rights pursuant to Section 6.3(b), each
Pledgor shall be permitted to receive all cash dividends paid in respect of the
Pledged Stock and all payments made in respect of the Pledged Notes, to the
extent permitted in the Note Purchase Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Stock; provided, however, that no
vote shall be cast or corporate right exercised or such other action taken
(other than in connection with a transaction expressly permitted by the Note
Purchase Agreement) which, in the Co-Agents' reasonable judgment, would
materially impair the Pledged Collateral or the related rights or remedies of
the Secured Parties or which would be inconsistent with or result in any
violation of any provision of the Note Purchase Agreement, this Agreement or any
other Note Document, subject to the terms of the Intercreditor Agreement.
(b) If an Event of Default shall have occurred and be
continuing and the Co-Agents shall have given notice of their intent to exercise
such rights to the relevant Pledgor or Pledgors, then, subject to the terms of
the Intercreditor Agreement, (i) the Co-Agents shall have
21
22
the right to receive any and all cash dividends, payments or other Proceeds paid
in respect of the Pledged Stock and make application thereof to the Secured
Obligations in such order as the Co-Agents may determine, and (ii) any or all of
the Pledged Stock shall be registered in the name of the Co-Agents or its
nominee, and the Co-Agents or its nominee may thereafter exercise (x) all
voting, corporate and other rights pertaining to such Pledged Stock at any
meeting of shareholders of the relevant Issuer or Issuers or otherwise and (y)
any and all rights of conversion, exchange, subscription and any other rights,
privileges or options pertaining to such Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the relevant Pledgor or the
Co-Agents of any right, privilege or option pertaining to such Pledged Stock,
and in connection therewith, the right to deposit and deliver any and all of the
Pledged Stock with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Co-Agents may reasonably
determine), all without liability (other than for its gross negligence or
willful misconduct) except to account for property actually received by it, but
the Co-Agents shall have no duty to any Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing, provided that the Co-Agents shall not exercise any voting or
other consensual rights pertaining to the Pledged Stock in any way that would
constitute an exercise of the remedies described in Section 7 hereof other than
in accordance with Section 7 hereof.
(c) Each Pledgor hereby authorizes and instructs each Issuer
or Maker of any Pledged Securities pledged by such Pledgor hereunder to, subject
to the terms of the Intercreditor Agreement (i) comply with any instruction
received by it from the Administrative Agent or the Co-Agents, as the case may
be, in writing that (x) states that an Event of Default has occurred and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Pledgor; and each Pledgor agrees that each Issuer
or Maker shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent or the Co-Agents, as
applicable.
6.4. Proceeds to be Turned Over To the Senior Agent or the Co-Agents.
In addition to the rights of the Co-Agents and the other Secured Parties
specified in Section 6.1 hereof with respect to payments of. Accounts, if an
Event of Default shall have occurred and be continuing, subject to the terms of
the Intercreditor Agreement, all Proceeds received by such Grantor consisting of
cash, checks and other Cash Equivalent items shall be held by such Grantor in
trust for the Co-Agents and the other Secured Parties, segregated from other
funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Administrative Agent or the Co-Agents, as applicable, in the
exact form received by such Grantor (duly indorsed by such Grantor thereto, if
required). Subject to the terms hereof the Co-Agents shall hold all Proceeds
received by the Co-Agents hereunder in the relevant Collateral Proceeds Account
maintained under their sole dominion and control. Subject to the terms of the
Intercreditor Agreement, all Proceeds while held by the Co-Agents in such
Collateral Proceeds Account (or by such Grantor in trust for the Co-Agents and
the other Secured Parties) shall continue to be held as security for all the
Secured Obligations and shall not constitute payment thereof until applied as
provided in Section 6.5.
22
23
6.5. Application of Proceeds. Subject to the terms of the Intercreditor
Agreement, it is agreed that if an Event of Default shall have occurred and be
continuing, any and all Proceeds of the relevant Grantor's Security Collateral
received by the Co-Agents (whether from the relevant Grantor or otherwise) shall
be held by the Co-Agents for the benefit of the Secured Parties as security for
the Secured Obligations of the relevant Grantor (whether matured or unmatured),
and/or then or at any time thereafter may, in the sole discretion of the
Co-Agents, be applied by the Co-Agents against the Secured Obligations of the
relevant Grantor then due and owing in the following order of priority:
FIRST, to the payment of all reasonable costs and expenses
incurred by the Co-Agents in connection with this Agreement, the Note Purchase
Agreement, any other Note Document or any of the Secured Obligations of the
relevant Grantor, including, without limitation, all court costs and the
reasonable fees and expenses of its agents and legal counsel, and any other
reasonable costs or expenses incurred in connection with the exercise by the
Co-Agents of any right or remedy under this Agreement, the Note Purchase
Agreement, or any other Note Document;
SECOND, to the ratable satisfaction of all other Secured
Obligations of the relevant Grantor; and
THIRD, to the relevant Grantor or its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same.
6.6. Code and Other Remedies. If an Event of Default shall have
occurred and be continuing, the Co-Agents, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the Code or any other applicable Law, subject in all cases to the
Intercreditor Agreement. Without limiting the generality of the foregoing, and
subject to the terms of the Intercreditor Agreement, to the extent permitted by
applicable Law, the Co-Agents, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Security Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give option or options to purchase, or otherwise dispose of
and deliver the Security Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Co-Agents or any other Secured
Party or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Co-Agents or any other Secured Party
shall, subject to the terms of the Intercreditor Agreement, have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Security
Collateral so sold, free of any right or equity of redemption in any Grantor,
which right or equity is hereby waived or released. Each Grantor further agrees,
at the Co-Agents' request, subject to the terms of the Intercreditor Agreement,
to assemble the Security Collateral and make it available to the Co-Agents at
places that the Co-Agents shall reasonably select, whether at such Grantor's
premises
23
24
or elsewhere. The Co-Agents shall apply the net proceeds of any action taken by
it pursuant to this Section 6.6, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Security Collateral or in any way relating to
the Security Collateral or the rights of the Co-Agents and the other Secured
Parties hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations of
the relevant Grantor, in the order of priority specified in Section 6.5 above,
and only after such application and after the payment by the Co-Agents of any
other amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Co-Agents account for the surplus, if
any, to any Grantor. To the extent permitted by applicable Law, each Grantor
waives all claims, damages and demands it may acquire against the Co-Agents or
any other Secured Party arising out of the exercise by them of any rights
hereunder, except to the extent arising as a result of the gross negligence or
willful misconduct of the Co-Agents or such other Secured Party. If any notice
of a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition.
6.7. Registration Rights.
(a) Subject to the terms of the Intercreditor Agreement, if
the Co-Agents shall determine to exercise its right to sell any or all of the
Pledged Stock pursuant to Section 6.6, and if in the reasonable opinion of the
Co-Agents it is necessary or reasonably advisable to have the Pledged Stock, or
that portion thereof to be sold, registered under the provisions of the
Securities Act, the relevant Pledgor will use its reasonable best efforts to
cause the Issuer thereof to (i) execute and deliver, and use its best efforts to
cause the directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Co-Agents, necessary or advisable to register such
Pledged Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (ii) use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of such Pledged Stock, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus which, in the reasonable opinion of the Co-Agents, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Such Pledgor agrees to cause such Issuer to
comply with the provisions of the securities or "Blue Sky" laws of any and all
jurisdictions which the Co-Agents shall reasonably designate and to make
available to its security holders, as soon as practicable, an earnings statement
(which need not be audited) which will satisfy the provisions of Section 11 (a)
of the Securities Act.
(b) Such Pledgor recognizes that the Co-Agents may be unable
to effect a public sale of any or all such Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Such
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
24
25
deemed to have been made in a commercially reasonable manner. The Co-Agents
shall de under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Such Pledgor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of such Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Such Pledgor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Co-Agents and the
Purchasers, that the Co-Agents and the Purchasers have no adequate remedy at law
in respect of such breach and, as a consequence, that each and every covenant
contained in this Section 6.7 shall be specifically enforceable against such
Pledgor, and to the extent permitted by applicable Law, such Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Note Purchase Agreement.
6.8. Waiver Deficiency. Each Grantor (other than the Company) waives
and agrees not to assert any rights or privileges that it may acquire under
Section 9-112 of the Code, to the extent permitted by applicable Law. Each
Grantor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Security Collateral are insufficient to pay its Secured
Obligations and the fees and disbursements of any attorneys employed by the
Co-Agents or any other Secured Party to collect such deficiency.
SECTION 7. THE CO-AGENTS
7.1. Co-Agents' Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints each
Co-Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of such Grantor and in the name of such Granting Parry or
in its own name, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be reasonably necessary or desirable to accomplish the
purposes of this Agreement to the extent permitted by applicable Law. Without
limiting the generality of the foregoing, at any time when an Event of Default
has occurred and is continuing (in each case to the extent permitted by
applicable Law), (x) each Pledgor hereby gives the Co-Agents the power and
right, on behalf of such Pledgor, without notice or assent by such Pledgor, to
execute, in connection with any, sale provided for in Section 6.6 or 6.7, any
endorsements, assessments or other instruments of conveyance or transfer with
respect to such Pledgor's Pledged Collateral, and (y) each Grantor hereby gives
the Co-Agents the power and right, on behalf of such Grantor, without notice to
or assent by such Grantor, to do any or all of the following (all of which
actions are subject to the terms of the Intercreditor Agreement, as applicable):
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other
25
26
instruments for the payment of moneys due under any Account of such
Grantor or with respect to any other Collateral of such Grantor and
file any claim or take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Co-Agents for the
purpose of collecting any and all such moneys due under any Account of
such Grantor or with respect to any other Collateral of such Grantor
whenever payable;
(ii) in the case of any Copyright, Patent or
Trademark constituting Collateral of such Grantor, execute and deliver
any and all agreements, instruments, documents and papers as the
Co-Agents may reasonably request to evidence the Secured Parties'
security interest in such Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral of such Grantor, effect
any repairs or any insurance called for by the terms of this Agreement
and pay all or any part of the premiums therefor and the costs thereof;
and
(iv) (A) direct any party liable for any payment
under any of the Collateral of such Grantor to make payment of any and
all moneys due or to become due thereunder directly to the Co-Agents or
as the Co-Agents shall direct; (B) ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out
of any Collateral of such Grantor, (C) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral of such
Grantor, (D) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect
the Collateral of such Grantor or any portion thereof and to enforce
any other right in respect of any Collateral of such Grantor, (E)
defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral of such Grantor, (F) settle, compromise, or
adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Co-Agents may
deem appropriate; (G) subject to any existing reserved rights or
licenses, assign any Copyright, Patent or Trademark constituting
Collateral of such Grantor (along with the goodwill of the business to
which any such Copyright, Patent or Trademark pertains), for such term
or terms, on such conditions, and in such manner, as the Co-Agents
shall in their sole discretion determine; and (H) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral of such Grantor as fully and completely
as though the Co-Agents were the absolute owner thereof for all
purposes, and do, at the Co-Agents' option and such Grantor's expense,
at any time, or from time to time, all acts and things which the
Co-Agents deems necessary to protect, preserve or realize upon the
Collateral of such Grantor and the Co-Agents' and the other Secured
Parties' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the Co-Agents
agree that they will not exercise any rights under the power of attorney
provided for in this Section 7.1 (a) unless
26
27
an Event of Default shall have occurred and be continuing and only subject to
the terms of the Intercreditor Agreement.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Co-Agents, at their option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The reasonable expenses of the Co-Agents incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable under then Notes, from the date of payment by the
Co-Agents to the date reimbursed by the relevant Grantor, shall be payable by
such Grantor to the Co-Agents on demand in accordance with the terms of the
Intercreditor Agreement, if applicable.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable as to the relevant Grantor until this Agreement is terminated as to
such Grantor, and the security interests in the Security Collateral of such
Grantor created hereby are released.
7.2. Duty of Co-Agents. Each Co-Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Security Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal with
it in the same manner as such Co-Agent deals with similar property for its own
account. Neither the Co-Agents, any other Secured Party nor any of their
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Security Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Security Collateral upon the request of any Grantor or any other Person
or to take any other action whatsoever with regard to the Security Collateral or
any part thereof. The powers conferred on the Co-Agents and the other Secured
Parties hereunder are solely to protect the Secured Parties' interests in the
Security Collateral and shall not impose any duty upon the Co-Agents or any
other Secured Party to exercise any such powers. The Co-Agents and the other
Secured Parties shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
7.3. Execution of Financing Statements. Pursuant to Section 9-402 of
the Code and any other applicable Law, each Grantor authorizes each Co-Agent to
file or record financing statements and other filing or recording documents or
instruments with respect to such Grantor's Security Collateral without the
signature of such Grantor in such form and in such offices as the Co-Agents
reasonably determines appropriate to perfect the security interests of the
Co-Agents under this Agreement. A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
27
28
7.4. Authority of Co-Agents. Each Grantor acknowledges that the rights
and responsibilities of each Co-Agent under this Agreement with respect to any
action taken by the Co-Agents or the exercise or non-exercise by such Co-Agent
of any option, voting right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Agreement or any amendment,
supplement or other modification of this Agreement shall, as between such
Co-Agent and the other Secured Parties, be governed by the Note Purchase
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between such Co-Agent and the Grantors such
Co-Agent shall be conclusively presumed to be acting as agent for the Secured
Parties with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
7.5. Right Of Inspection. Upon reasonable written advance notice to any
Grantor and at reasonable intervals, or at any time and from time to time if an
Event of Default shall have occurred and be continuing, each Co-Agent shall have
reasonable access during normal business hours to all the books, correspondence
and records of such Grantor, and each Co-Agent and its representatives may
examine the same, and to the extent reasonable take extracts therefrom and make
photocopies thereof, and such Grantor agrees to render to the Co-Agents, at such
Grantor's reasonable cost and expense, such clerical and other assistance as may
be reasonably requested with regard thereto. Each Co-Agent and its
representatives shall also have the right, upon reasonable advance written
notice to such Grantor, to enter during normal business hours into and upon any
premises owned, leased or operated by such Grantor where any of such Grantor's
Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
SECTION 8. MISCELLANEOUS
8.1. Amendments in Writing. Subject to Section 14.1 of the Note
Purchase Agreement, none of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a written
instrument executed by each affected Grantor and the Co-Agents, except that any
provision of this Agreement imposing obligations on any Grantor may be waived by
the Co-Agents in a written instrument executed by the Co-Agents that complies
with the requirements of Section 14.1 of the Note Purchase Agreement.
8.2. Notices. All notices, requests and demands to, or upon the
Co-Agents or any Grantor hereunder shall be effected in the manner provided for
in Article 15 of the Note Purchase Agreement; provided that any such notice,
request or demand to or upon any Guarantor shall be addressed to such Guarantor
at its notice address set forth on Schedule 1 hereto, unless and until such
Guarantor shall change such address by notice to the Co-Agents given in
accordance with Article 15 of the Note Purchase Agreement.
8.3. No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Co-Agents nor any other Secured Party shall by any act (except by a written
instrument pursuant to Section 8.1 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Co-Agents or any other Secured Party,
28
29
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Co-Agents or any other Secured Party
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that the Co-Agents or such other Secured Party would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
8.4. Enforcement Expenses: Indemnification.
(a) Each Guarantor agrees to pay or reimburse each Secured
Party and the Co-Agents for all their respective reasonable costs and expenses
incurred in collecting against such Guarantor under the guarantee contained in
Section 2 or otherwise enforcing or preserving any rights under this Agreement
against such Guarantor and the other Note Documents to which, such Guarantor is
a party, including, without limitation, the reasonable fees and disbursements of
one firm of counsel to the Secured Parties and the Co-Agents.
(b) Each Guarantor agrees to pay, and to save the Co-Agents
and the Secured Parties harmless from, (x) any and all liabilities with respect
to, or resulting from any delay in paying, any and all stamp, excise, sales or
other similar taxes which may be payable or determined to be payable with
respect to any of the Security Collateral or in connection with any of the
transactions contemplated by this Agreement and (y) any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement (collectively, the "INDEMNIFIED LIABILITIES"), in each case to the
extent the Company would be required to do so pursuant to Section 11.5 of the
Note Purchase Agreement, and in any event excluding any taxes or other
indemnified liabilities arising from gross negligence or willful misconduct of
the Co-Agents or any Secured Party.
(c) The agreements in this Section 8.4 shall survive repayment
of the Secured Obligations and all other amounts payable under the Note Purchase
Agreement and the other Note Documents.
8.5. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Grantors, the Co-Agents and the Secured
Parties and their respective successors and assigns; provided that no Grantor
may assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Co-Agents.
8.6. Set-Off. Each Guarantor hereby irrevocably authorizes the
Co-Agents and each other Secured Party at any time and from time to time without
notice to such Guarantor, any other Guarantor or the Company, any such notice
being expressly waived by each Guarantor and by the Company, to the extent
permitted by applicable Law and the Intercreditor Agreement, upon the occurrence
and during the continuation of an Event of Default, to set-off and appropriate
and apply against any such amount any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or
29
30
unmatured, at any time held or owing by the Co-Agents or such other Secured
Party to or for the credit or the account of such Guarantor, or any part thereof
in such amounts as the Co-Agents or such other Secured Party may elect. The
Co-Agents and each other Secured Party shall notify such Guarantor promptly of
any such set-off and the application made by the Co-Agents or such other Secured
Party of the proceeds thereof; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Co-Agents and each other Secured Party under this Section 8.6 are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that the Co-Agents or such other Secured Party may have.
8.7. Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
8.8. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9. Section Headings. The Section headings used in this Agreement are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
8.10. Integration. This Agreement and the other Note Documents
represent the entire agreement of the Grantors, the Co-Agents and the other
Secured Parties with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Grantors, the
Co-Agents or any other Secured Party relative to subject matter hereof not
expressly set forth or referred to herein or in the other Note Documents.
8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12. Submission To Jurisdiction; Waivers. Each party hereto hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Note Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
30
31
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such party
at its address referred to in Section 8.2 or at such other address of which the
Co-Agents (in the case of any other party hereto) or the Company (in the case of
the Co-Agents) shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any punitive damages.
8.13. Acknowledgements. Each Guarantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Note Documents to which
it is a party;
(b) neither the Co-Agents nor any other Secured Party has any
fiduciary relationship with or duty to any Guarantor arising out of or in
connection with this Agreement or any of the other Note Documents, and the
relationship between the Guarantors, on the one hand, and the Co-Agents and the
other Secured Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor, and
(c) no joint venture is created hereby or by the other Note
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Secured Parties or among the Guarantors and the Secured Parties.
8.14. Intercreditor Agreement. The security interests and Liens granted
hereunder and the rights and remedies of the Co-Agents and the other Secured
Parties hereunder are subject to the terms of the Intercreditor Agreement. In
the event of any conflict between the terms and provisions of this Agreement and
the Intercreditor Agreement, the terms and provisions of the Intercreditor
Agreement shall govern and control.
8.15. Additional Grantors. Each new Domestic Subsidiary of the Company
that is required to become a party to this Agreement pursuant to Section 8.15 of
the Note Purchase Agreement shall become a Grantor for all purposes of this
Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Exhibit B hereto.
8.16. Releases.
(a) At such time as the Senior Secured Notes and the other
Secured Obligations then due and owing shall have been paid in full, all
Security Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Co-Agents and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and
all rights to the Security Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Co-Agents shall deliver to such Grantor any
31
32
Security Collateral held by the Co-Agents hereunder, and execute and deliver to
such Grantor such documents (including without limitation UCC termination
statements) as such Grantor shall reasonably request to evidence such
termination.
(b) In connection with the sale or other disposition of all of
the Capital Stock of any Guarantor or the sale or other disposition of Security
Collateral permitted under the Note Purchase Agreement and the release of such
Guarantor from its Guarantee or the release of the Security Collateral subject
to such sale or other disposition, the Company shall deliver to the Co-Agents, a
written request for release identifying such Guarantor or the relevant Security
Collateral and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Company stating that such transaction is in
compliance with the Note Purchase Agreement and the other Note Documents. In
connection with the foregoing, the Co-Agents shall execute and deliver to the
relevant Grantor (at the sole cost and expense of such Grantor) all releases or
other documents (including without limitation UCC termination statements)
necessary or reasonably desirable for the release of the Liens created hereby on
such Security Collateral as such Grantor may reasonably request.
8.17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of Page Intentionally Left Blank]
32
33
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
TELEX COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
Vice President and Chief Financial
Officer
TELEX COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
Title: Vice President and Chief
Financial Officer
TELEX INTERNATIONAL LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
Title: Director
Acknowledged and Agreed to as
of the date hereof by:
TCI INVESTMENTS LLC
By: Greenwich Street Capital Partners II, L.P.,
its sole member
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: Partner
GOLDENTREE HIGH YIELD
OPPORTUNITIES I, L.P.
By: /s/ Xxxxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Partner
33
34
EXHIBIT A
Intercreditor Agreement
A-1
35
EXHIBIT B
Form of Assumption Agreement
C-1
