EXHIBIT 10.62
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
dated as of February 11, 2002
among
AMERICAN COIN MERCHANDISING, INC.
and
THE OTHER PARTIES HERETO,
as Grantors,
and
MADISON CAPITAL FUNDING LLC,
as Agent
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
Guarantee and Collateral Agreement, dated as of February 11, 2002 (as
amended, supplemented, restated or otherwise modified from time to time, this
"Agreement"), made by each signatory hereto (together with any other Person that
becomes a party hereto as provided herein, "Grantors"), in favor of Madison
Capital Funding LLC, as Agent for all Lenders party to the Credit Agreement (as
hereafter defined).
Lenders have severally agreed to extend credit to Borrower pursuant to
the Credit Agreement. Borrower is affiliated with each other Grantor. The
proceeds of credit extended under the Credit Agreement will be used in part to
enable Borrower to make valuable transfers to Grantors in connection with the
operation of their respective businesses. Borrower and the other Grantors are
engaged in interrelated businesses, and each Grantor will derive substantial
direct and indirect benefit from extensions of credit under the Credit
Agreement. It is a condition precedent to each Lender's obligation to extend
credit under the Credit Agreement that Grantors shall have executed and
delivered this Agreement to Agent for the ratable benefit of all Lenders.
In consideration of the premises and to induce Agent and Lenders to
enter into the Credit Agreement and to induce Lenders to extend credit
thereunder, each Grantor hereby agrees with Agent, for the ratable benefit of
Lenders, as follows:
1. Definitions.
1.1. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms are used herein as defined in the UCC:
Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit
Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Goods,
Instruments, Inventory, Letter-of-Credit Rights, Proceeds and Supporting
Obligations.
1.2. When used herein the following terms shall have the following
meanings:
Agreement has the meaning set forth in the preamble hereto.
Borrower Obligations means all Obligations of the Borrower.
Collateral means (a) all of the personal property now owned or at any
time hereafter acquired by any Grantor or in which any Grantor now has or at any
time in the future may acquire any right, title or interest, including all of
each Grantor's Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment,
Fixtures, General Intangibles, Goods, Instruments, Intellectual Property,
Inventory, Investment Property, Letter-of-Credit Rights and Supporting
Obligations, (b) all books and records pertaining to any of the foregoing, (c)
all Proceeds and products of any of the foregoing and (d) all collateral
security and guarantees given by any Person with respect to any of the
foregoing. Where the context requires, terms relating to the Collateral or any
part thereof, when used in relation to a Grantor, shall refer to such Grantor's
Collateral or the relevant part thereof. Notwithstanding the foregoing, the term
"Collateral" shall not include (and the grant, assignment and transfer of a
security interest as provided herein shall not extend to) (i) "intent-to use"
trademarks at all times prior to the first use thereof, whether by the actual
use thereof in commerce, the recording of a statement of use with the United
States Patent and Trademark Office or otherwise or (ii) any General Intangibles
or Intellectual Property which in accordance with applicable licenses or other
agreements applicable thereto terminate or become terminable or under which a
breach or default occurs if a security interest is granted therein (a
"Terminable Intangible"); provided however, that the Collateral shall include
any and all Accounts,
Chattel Paper, payment intangibles and Instruments arising under any and all
such Terminable Intangibles.
Copyrights means all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, including those
listed on Schedule 5, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office, and the right to obtain
all renewals of any of the foregoing.
Copyright Licenses means all written agreements naming any Grantor as
licensor or licensee, including those listed on Schedule 5, granting any right
under any Copyright, including the grant of rights to manufacture, distribute,
exploit and sell materials derived from any Copyright.
Credit Agreement means the Credit Agreement of even date herewith among
the Borrower, the Lenders, the Agent, and The Royal Bank of Scotland plc, New
York Branch, as amended, supplemented, restated or otherwise modified from time
to time.
Fixtures means all of the following, whether now owned or hereafter
acquired by a Grantor: plant fixtures; business fixtures; other fixtures (as
defined on the UCC) and storage facilities, wherever located; and all additions
and accessories thereto and replacements therefor.
General Intangibles means all "general intangibles" as such term is
defined in Section 9-102 of the UCC and, in any event, including with respect to
any Grantor, all contracts, agreements, instruments and indentures in any form,
and portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same from time to time may be
amended, supplemented or otherwise modified, including, without limitation, (a)
all rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (b) all rights of such Grantor to damages
arising thereunder and (c) all rights of such Grantor to perform and to exercise
all remedies thereunder.
Guarantor Obligations means, collectively, with respect to each
Guarantor, all of such Guarantor's Obligations.
Guarantors means the collective reference to each Grantor other than
the Borrower.
Intellectual Property means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses, and all rights to xxx at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
Intercompany Note means any promissory note evidencing loans made by
any Grantor to any other Grantor.
Investment Property means the collective reference to (a) all
"investment property" as such term is defined in Section 9-102 of the UCC (other
than the equity interest of any foreign Subsidiary excluded from the definition
of Pledged Equity) and (b) whether or not constituting "investment property" as
so defined, all Pledged Notes and all Pledged Equity.
Issuers means the collective reference to each issuer of any Investment
Property.
Patents means (a) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including any of the foregoing
referred to in Schedule 5, (b) all applications for letters patent of the United
States or any other country and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing referred to in
Schedule 5, and (c) all rights to obtain any reissues or extensions of the
foregoing.
Patent Licenses means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent, including any of the
foregoing referred to in Schedule 5.
Pledged Equity means the equity interests listed on Schedule 1,
together with any other equity interests, certificates, options or rights of any
nature whatsoever in respect of the equity interests of any Person that may be
issued or granted to, or held by, any Grantor while this Agreement is in effect;
provided that in no event shall (a) more than 65% of the total outstanding
equity interests of any foreign Subsidiary, or (b) any of the equity interests
in any Unrestricted Subsidiary, be required to be pledged hereunder.
Pledged Notes means all promissory notes listed on Schedule 1, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than (a) promissory notes issued
in connection with extensions of trade credit by any Grantor in the ordinary
course of business and (b) any individual promissory note which is less than
$250,000 in principal amount, up to an aggregate of $250,000 for all such
promissory notes excluded under this clause (b)).
Receivable means any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including
any Accounts).
Secured Obligations means, collectively, the Borrower Obligations and
Guarantor Obligations.
Securities Act means the Securities Act of 1933, as amended.
Trademarks means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including any of the foregoing referred to in Schedule
5, and (b) the right to obtain all renewals thereof.
Trademark Licenses means, collectively, each agreement, whether written
or oral, providing for the grant by or to any Grantor of any right to use any
Trademark, including any of the foregoing referred to in Schedule 5.
UCC means the Uniform Commercial Code as in effect on the date hereof
and from time to time in the State of Illinois, provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interests in any Collateral or the availability
of any remedy hereunder is governed by the Uniform Commercial Code as in effect
on or after the date hereof in any other jurisdiction, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy.
2. Guarantee.
2.1. Guarantee.
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, as a primary obligor and not only a surety,
guarantees to the Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Secured Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section 2
or affecting the rights and remedies of the Agent or any Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in
full force and effect until all of the Secured Obligations shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated.
(e) No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the Agent or
any Lender from the Borrower, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Secured Obligations shall be deemed to modify, reduce, release
or otherwise affect the liability of any Guarantor hereunder which shall,
notwithstanding any such payment (other than any payment made by such Guarantor
in respect of the Secured Obligations or any payment received or collected from
such Guarantor in respect of the Secured Obligations), remain liable for the
Secured Obligations up to the maximum liability of such Guarantor hereunder
until the Secured Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated.
2.2. Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Agent and the Lenders, and each Guarantor shall remain
liable to the Agent and the Lenders 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 Agent
or any Lender, no Guarantor shall be entitled to be subrogated to any of the
rights of the Agent or any Lender against the Borrower or any other Guarantor or
any collateral security or guarantee or right of offset held by the Agent or any
Lender for the payment of the Secured Obligations, nor shall any Guarantor seek
or be entitled to seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by such Guarantor hereunder,
until all of the Secured Obligations are paid in full (other than unasserted
contingent and indemnity obligations that by their terms survive the termination
of the Commitments), no Letter of
Credit shall be outstanding and the Commitments are terminated. If any amount
shall be paid to any Guarantor on account of such subrogation rights at any time
when all of the Secured Obligations shall not have been paid in full, such
amount shall be held by such Guarantor in trust for the Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Agent in the exact form received by
such Guarantor (duly indorsed by such Guarantor to the Agent, if required), to
be applied against the Secured Obligations, whether matured or unmatured, in
such order as the Agent may determine.
2.4. Amendments, etc. with respect to the Secured Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Secured
Obligations made by the Agent or any Lender may be rescinded by the Agent or
such Lender and any of the Secured Obligations continued, and the Secured
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 Agent or any Lender, and the Credit Agreement and the other Loan Documents
and any other documents executed and delivered in connection therewith may, in
accordance with the terms thereof, be amended, modified, supplemented or
terminated, in whole or in part, as the Agent (or the Required Lenders or all
Lenders, as the case may be) and the other necessary parties thereto may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Agent or any Lender for the payment of the
Secured Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Agent nor any Lender shall have any obligation to protect, secure,
perfect or insure any Lien at any time held by it as security for the Secured
Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.
2.5. Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Secured Obligations and notice of or proof of reliance by the Agent or any
Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Secured Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this Section 2, and all dealings between the Borrower and any of the
Guarantors, on the one hand, and the Agent and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with respect to the
Secured Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Secured 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 Agent or any Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment, performance or release pursuant to the terms of this
Agreement or the Credit Agreement) which may at any time be available to or be
asserted by the Borrower or any other Person against the Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Secured
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
Agent or any Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Secured Obligations or any right of offset with
respect thereto, and any failure by the Agent or any Lender to make any such
demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Agent or any Lender 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 Secured Obligations is rescinded or
must otherwise be restored or returned by the Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7. Payments. Each Guarantor hereby guarantees that payments hereunder
will be paid to the Agent without set-off or counterclaim in Dollars at the
office of the Agent specified in the Credit Agreement.
3. Grant of Security Interest.
Each Grantor hereby assigns and transfers to the Agent, and hereby
grants to the Agent, for its benefit and the ratable benefit of the Lenders and
(to the extent provided herein) their Affiliates, a security interest in all of
its Collateral, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Secured Obligations.
4. Representations and Warranties.
To induce the Agent and the Lenders to enter into the Credit Agreement
and to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor jointly and severally hereby represents and
warrants to the Agent and each Lender that:
4.1. Title; No Other Liens. Except for the security interest granted to
the Agent for its benefit and the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, the Grantors own each item of the Collateral free and clear of
any and all Liens or claims of others. No effective financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any public office, except such as have been filed in favor of the
Agent, for its benefit and the ratable benefit of the Lenders, pursuant to this
Agreement, filings evidencing Liens permitted by the Credit Agreement and
filings for which termination statements or authorizations to terminate have
been delivered to the Agent.
4.2. Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other documents
referred to on Schedule 2, have been authorized by the Grantors, with respect to
Collateral on which a Lien may be perfected by filing pursuant to the UCC, will
constitute valid perfected security interests in all of such Collateral in favor
of the Agent, for its benefit and the ratable benefit of the Lenders, as
collateral security for each Grantor's Obligations, enforceable in accordance
with the terms hereof against all creditors of each Grantor and any Persons
purporting to purchase any Collateral from each Grantor and (b) are prior to all
other Liens on such Collateral in existence on the date hereof except for Liens
expressly permitted by the Credit Agreement. The filings and other actions
specified on Schedule 2 constitute all of the filings and other actions
necessary to perfect all security interests granted hereunder, with respect to
which a Lien may be perfected by filing pursuant to the UCC.
4.3. Grantor Information. On the date hereof, Schedule 3 sets forth (a)
each Grantor's type and jurisdiction of organization, (b) the location of each
Grantor's chief executive office, (c) each Grantor's exact legal name as it
appears on its organizational documents, (d) each Grantor's federal employer
identification number and (e) each Grantor's state identification number, if
applicable.
4.4. Collateral Locations. On the date hereof, Schedule 4 sets forth
(a) each place of business of each Grantor (including its chief executive
office), (b) all locations where all Inventory and the Equipment owned by each
Grantor is kept, except with respect to Inventory and Equipment with a fair
market value of less than $100,000 (in the aggregate for all Grantors) which may
be located at other locations and (c) whether each such Collateral location and
place of business (including each Grantor's chief executive office) is owned or
leased (and if leased, specifies the complete name and notice address of each
lessor). No Collateral is located outside the United States or in the possession
of any lessor, bailee, warehouseman or consignee, except as indicated on
Schedule 4.
4.5. Certain Property. None of the Collateral constitutes, or is the
Proceeds of, (a) Farm Products or (b) vessels, aircraft or any other property
subject to any certificate of title or other registration statute of the United
States, any State or other jurisdiction, except for personal vehicles owned by
the Grantors and used by employees of the Grantors in the ordinary course of
business with an aggregate fair market value of less than $200,000 (in the
aggregate for all Grantors).
4.6. Investment Property.
(a) The shares of Pledged Equity pledged by each Grantor
hereunder constitute all the issued and outstanding equity interests of each
Issuer owned by such Grantor or, in the case of any foreign Subsidiary, 65% of
all issued and outstanding equity interests of such foreign Subsidiary.
(b) All of the Pledged Equity has been duly and validly issued
and is fully paid and nonassessable.
(c) To the knowledge of Grantors, each of the Pledged Notes
constitutes the legal, valid and binding obligation of the obligor with respect
thereto, enforceable in accordance with its terms (subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing).
(d) Schedule 1 lists all Investment Property owned by each
Grantor. Each Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement and, in the case of Investment
Property which does not constitute Pledged Equity or Pledged Notes, for Liens
expressly permitted by the Credit Agreement.
4.7. Receivables.
(a) No material amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Agent.
(b) No obligor on any Receivable is a governmental authority.
(c) The amounts represented by such Grantor to the Lenders
from time to time as owing to such Grantor in respect of the Receivables (to the
extent such representations are required by any of the Loan Documents) will at
all such times be accurate in all material respects.
4.8. Intellectual Property.
(a) Schedule 5 lists all Intellectual Property owned by such
Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property
owned by any Guarantor is valid, subsisting, unexpired and enforceable, has not
been abandoned and, to such Grantor's knowledge, does not infringe the
intellectual property rights of any other Person.
(c) Except as set forth in Schedule 5, none of the material
Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
governmental authority which would limit, cancel or question the validity of, or
any Grantor's rights in, any Intellectual Property owned by any Grantor, and
which would reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge
of such Grantor, threatened, on the date hereof seeking to limit, cancel or
question the validity of any Intellectual Property or any Grantor's ownership
interest therein, and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect.
4.9. Holdings. Holdings has not engaged in any activities other than
acting as a holding company and transactions incidental thereto and holds no
assets other than all of the issued and outstanding capital stock of Borrower.
5. Covenants.
Each Grantor covenants and agrees with the Agent and the Lenders that,
from and after the date of this Agreement until the Secured Obligations (other
than unasserted contingent and indemnity obligations that by their terms survive
the termination of the Commitments) shall have been paid in full, no Letter of
Credit shall be outstanding and the Commitments are terminated:
5.1. Delivery of Instruments, Certificated Securities and Chattel
Paper. If any amount payable under or in connection with any of the Collateral
in excess of $100,000 (in the aggregate for all Grantors) shall be or become
evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Agent, duly indorsed in a manner satisfactory to the Agent, to
be held as Collateral pursuant to this Agreement and in the case of Electronic
Chattel Paper, the applicable Grantor shall cause Agent to have control thereof
within the meaning set forth in Section 9-105 of the UCC. In the event that an
Event of Default shall have occurred and be continuing, upon the request of the
Agent, any Instrument, Certificated Security or Chattel Paper not theretofore
delivered to the Agent and at such time being held by any Grantor shall be
immediately delivered to the Agent, duly indorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Agreement, and the
applicable Grantor shall cause Agent to have control of all Electronic Chattel
Paper within the meaning of Section 9-105 of the UCC.
5.2. Maintenance of Perfected Security Interest; Further
Documentation.
(a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall use commercially reasonable efforts to defend
such security interest against the claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Agent and the Lenders
from time to time statements and schedules further identifying and describing
the assets and property of such Grantor and such other reports in connection
therewith as the Agent may reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted, including (i)
filing any financing or continuation statements under the UCC (or other similar
laws) in effect in any jurisdiction with respect to the security interests
created hereby and (ii) in the case of Investment Property, Deposit Accounts,
Electronic Chattel Paper and Letter-of-Credit Rights and any other relevant
Collateral, taking any actions necessary to enable the Agent to obtain "control"
(within the meaning of the UCC with respect to the applicable item of
Collateral) with respect thereto, in each case pursuant to documents in form and
substance reasonably satisfactory to the Agent.
5.3. Changes in Locations, Name, etc. Such Grantor shall not, except
upon 30 days' prior written notice to the Agent and delivery to the Agent of (a)
all additional executed financing statements and other documents reasonably
requested by the Agent as to the validity, perfection and priority of the
security interests provided for herein and (b) if applicable, a written
supplement to Schedule 4 showing any additional location at which Inventory or
Equipment shall be kept:
(i) except as permitted pursuant to the Credit Agreement and
except for Inventory for sale and contained within Borrower's crane
vending machines, permit any of the Inventory or Equipment to be kept
at a location other than those listed on Schedule 4; provided, that up
to $100,000 (in the aggregate for all Grantors) in fair market value of
any such Inventory and Equipment may be kept at other locations;
(ii) change its form or jurisdiction of organization or the
location of its chief executive office from that specified on Schedule
3 or in any subsequent notice delivered pursuant to this Section 5.3;
or
(iii) change its name, identity or corporate structure.
5.4. Notices. Such Grantor will advise the Agent and the Lenders
promptly, in reasonable detail, of:
(a) any Lien (other than Liens created hereby or expressly
permitted under the Credit Agreement) on any of the Collateral; and
(b) the occurrence of any other event which could reasonably
be expected to have a material adverse effect on the aggregate value of the
Collateral or on the Liens created hereby.
5.5. Investment Property.
(a) If such Grantor shall become entitled to receive or shall
receive any certificate, option or rights in respect of the equity interests of
any Issuer, whether in addition to, in substitution of, as a conversion of, or
in exchange for, any of the Pledged Equity, or otherwise in respect thereof,
such Grantor shall accept the same as the agent of the Agent and the Lenders,
hold the same in trust for the Agent and the Lenders and deliver the same
forthwith to the Agent in the exact form received, duly indorsed by such Grantor
to the Agent, if required, together with an undated instrument of transfer
covering such certificate duly executed in blank by such Grantor and with, if
the Agent so requests, signature guaranteed, to be held by the Agent, subject to
the terms hereof, as additional Collateral for the Secured Obligations. Upon the
occurrence and during the continuance of an Event of Default, (i) any sums paid
upon or in respect of the Investment Property upon the liquidation or
dissolution of any Issuer shall be paid over to the Agent to be held by it
hereunder as additional Collateral for the Secured Obligations, and (ii) in case
any distribution of capital shall be made on or in respect of the Investment
Property or any property shall be distributed upon or with respect to the
Investment Property 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 Lien in favor of the
Agent, be delivered to the Agent to be held by it hereunder as additional
Collateral for the Secured Obligations. Upon the occurrence and during the
continuance of an Event of Default, if any sums of money or property so paid or
distributed in respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Agent, hold such money or property in trust for the Lenders, segregated
from other funds of such Grantor, as additional Collateral for the Secured
Obligations. Agent agrees that it will release any Investment Property held by
Agent pursuant to this Agreement promptly upon receipt by Agent of proceeds
thereof in connection with the sale, transfer or other disposition of such
Investment Property in compliance with, and as permitted by, the Credit
Agreement.
(b) Without the prior written consent of the Agent, such
Grantor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any equity interests of any nature or to issue any other
securities or interests convertible into or granting the right to purchase or
exchange for any equity interests of any nature of any Issuer, (ii) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Investment Property or Proceeds thereof (except pursuant to a
transaction expressly permitted by the Credit Agreement); provided, that any
Grantor may take any action described in clauses (i) and (ii) above with respect
to Investment Property not constituting Pledged Stock or Pledged Notes, to the
extent such action is not prohibited by the Credit Agreement, (iii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Investment Property or Proceeds thereof, or
any interest therein, except for the security interests created by this
Agreement or Liens arising by operation of law or, with respect to Investment
Property not constituting Pledged Stock or Pledged Notes, as may be permitted by
the Credit Agreement, or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement relating
to the Investment Property issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Agent promptly in
writing of the occurrence of any of the events described in Section 5.5(a) with
respect to the Investment Property issued by it and (iii) the terms of Sections
6.3(c) and 6.7 shall apply to such Grantor with respect to all actions that may
be required of it pursuant to Section 6.3(c) or 6.7 regarding the Investment
Property issued by it.
5.6. Receivables.
(a) Other than in the ordinary course of business consistent
with its past practice and in amounts which are not material to Grantors (taken
as a whole), such Grantor will not (i) grant any extension of the time of
payment of any Receivable, (ii) compromise or settle any Receivable for less
than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any Receivable
in any manner that would reasonably be expected to materially adversely affect
the value thereof.
(b) Such Grantor will deliver the Agent 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 5% of the aggregate amount of
the then outstanding Receivables for all Grantors.
5.7. Intellectual Property.
(a) Such Grantor (either itself or through licensees) will (i)
continue to use each material Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, except where the failure to do so
would not reasonably be expected to have a Material Adverse Effect, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable law, (iv) not adopt or
use any xxxx which is confusingly similar or a colorable imitation of such
Trademark unless the Agent, for the ratable benefit of the Lenders, shall obtain
a perfected security interest in such xxxx pursuant to this Agreement, and (v)
not (and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become invalidated or
impaired in any way.
(b) Such Grantor (either itself or through licensees) will not
do any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
otherwise impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such Grantor (either itself or through licensees) will not
do any act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
(e) Such Grantor will notify the Agent and the Lenders
immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any court or tribunal in any country)
regarding, such Grantor's ownership of, or the validity of, any material
Intellectual Property or such Grantor's right to register the same or to own and
maintain the same.
(f) Whenever such Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any
other country or any political subdivision thereof, such Grantor shall report
such filing to the Agent concurrently with the next delivery of financial
statements of the Borrower pursuant to Section 6.1.1 or 6.1.2 of the Credit
Agreement, as applicable. Upon the request of the Agent, such Grantor shall
execute and deliver, and have recorded, any and all agreements, instruments,
documents, and papers as the Agent may request to evidence the Agent's and the
Lenders' security interest in any Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.
(g) Such Grantor will take all reasonable and necessary steps
to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of all material Intellectual
Property owned by it.
(h) In the event that any material Intellectual Property is
infringed upon or misappropriated or diluted by a third party, such Grantor
shall (i) take such actions as such Grantor shall reasonably deem appropriate
under the circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the Agent
after it learns thereof and, to the extent, in its reasonable judgment, such
Grantor determines it appropriate under the circumstances, xxx for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
(i) The parties hereto acknowledge that, as of the date
hereof, none of the Grantors has any material Intellectual Property.
5.8. Commercial Tort Claims.
If any Grantor shall at any time acquire any Commercial Tort Claim in
excess of $250,000, such Grantor shall promptly notify the Agent thereof in
writing, therein providing a reasonable description and summary thereof, and
upon delivery thereof to the Agent. Such Grantor shall be deemed to thereby
grant to the Agent (and such Grantor hereby grants to the Agent) a security
interest in such Commercial Tort Claim and all proceeds thereof.
5.9. Depositary and Other Deposit Accounts. Upon request by the Agent
from time to time, Grantors (other than Holdings) shall provide the Agent with a
listing of all Depository Accounts of such Grantor. Each Grantor (other than
Holdings) hereby authorizes the financial institutions at which such Grantor
maintains a deposit account to provide the Agent with such information with
respect to such deposit account as the Agent may from time to time reasonably
request, and each Grantor (other than Holdings) hereby consents to such
information being provided to the Agent. Each Grantor (other than Holdings)
will, upon the Agent's request, cause each financial institution at which such
Grantor maintains a Deposit Accounts or other depositary account to enter into a
bank agency or other similar agreement with the Agent and such Grantor, in form
and substance satisfactory to the Agent, in order to give the Agent "control"
(within the meaning set forth in Section 9-104 of the UCC) of such account.
5.10. Other Matters. Each of the Grantors shall cause to be delivered
to the Agent a Collateral Access Agreement with respect to (a) each bailee with
which such Grantor keeps Inventory or other assets as of the Closing Date and
designated by the Agent and (b) each landlord which leases real property (and
the accompanying facilities) to any of the Grantors as of the Closing Date and
designated by the Agent. If any Grantor shall cause to be delivered Inventory or
other property to any bailee as of or after the Closing Date (other than any
such bailees located in the Peoples Republic of China), such Grantor shall use
reasonable efforts to cause such bailee to sign a Collateral Access Agreement,
if so requested by the Agent, in the exercise of its reasonable credit judgment.
If any Grantor shall lease any real property or facilities as of or after the
Closing Date (other than any such locations located in the Peoples Republic of
China), such Grantor shall use reasonable efforts to cause the landlord in
respect of such leased property
or facilities to sign a Collateral Access Agreement, if so requested by the
Agent, in the exercise of its reasonable credit judgment.
5.11. Holdings Covenant. Holdings shall not, directly or indirectly,
(i) enter into any agreement (including any agreement for incurrence or
assumption of Debt, any purchase, sale, lease or exchange of any property or the
rendering of any service), between itself and any other Person, other than the
Loan Documents to which it is a party and the Related Agreements (collectively,
the "Holdings Documents"), (ii) engage in any business or conduct any activity
(including the making of any Investment or payment) or transfer any of its
assets, other than the making of the Investments in Borrower existing on the
date hereof, the performance of its obligations under the Holdings Documents in
accordance with the terms thereof and the performance of ministerial activities
and the payment of taxes and administrative fees or (iii) consolidate or merge
with or into any other Person. Holdings shall preserve, renew and keep in full
force and effect its existence. The provisions of this section shall not
preclude Holdings from engaging in any other activities reasonably incidental to
its Investment in Borrower.
5.12. Terminable Intangibles. Each Grantor's General Intangibles and
Intellectual Property constituting Terminable Intangibles are not, and will not
at any time be, material to the business or operations of such Grantor.
5.13. Credit Agreement to Govern. Notwithstanding anything to the
contrary contained in this Agreement, each Grantor may take any actions with
respect to the Collateral (including without limitation selling, transferring or
otherwise disposing of, or encumbering, the Collateral), to the extent such
actions are permitted by the terms of the Credit Agreement.
6. Remedial Provisions.
6.1. Certain Matters Relating to Receivables.
(a) At any time and from time to time after the occurrence and
during the continuance of an Event of Default, the Agent shall have the right to
make test verifications of the Receivables in any manner and through any medium
that it reasonably considers advisable, and each Grantor shall furnish all such
assistance and information the Agent may require in connection with such test
verifications. At any time and from time to time after the occurrence and during
the continuance of an Event of Default, upon the Agent's request and at the
expense of the relevant Grantor, such Grantor shall cause independent public
accountants or others satisfactory to the Agent to furnish to the Agent reports
showing reconciliations, agings and test verifications of, and trial balances
for, the Receivables.
(b) The Agent hereby authorizes each Grantor to collect such
Grantor's Receivables, and the Agent may curtail or terminate such authority at
any time after the occurrence and during the continuance of an Event of Default.
If required by the Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when collected
by any Grantor, (i) shall be forthwith (and, in any event, within 2 Business
Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Agent if required, in a collateral account maintained under
the sole dominion and control of the Agent, subject to withdrawal by the Agent
for the account of the Lenders only as provided in Section 6.5, and (ii) until
so turned over, shall be held by such Grantor in trust for the Agent and the
Lenders, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.
(c) At any time and from time to time after the occurrence and
during the continuance of an Event of Default, at the Agent's request, each
Grantor shall deliver to the Agent all
original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including all original orders,
invoices and shipping receipts.
6.2. Communications with Obligors; Grantors Remain Liable.
(a) The Agent in its own name or in the name of others may, at
any time after the occurrence and during the continuance of an Event of Default,
communicate with obligors under the Receivables to verify with them to the
Agent's satisfaction the existence, amount and terms of any Receivables. The
Agent agrees to provide subsequent notice to the applicable Grantor that Agent
has so communicated with such obligors.
(b) Upon the request of the Agent at any time after the
occurrence and during the continuance of an Event of Default, each Grantor shall
notify obligors on the Receivables that the Receivables have been assigned to
the Agent for the ratable benefit of the Lenders and that payments in respect
thereof shall be made directly to the Agent.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable in respect of each of the Receivables 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 Agent nor any Lender shall have any obligation or liability
under any Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Agent or any Lender of any
payment relating thereto, nor shall the Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(d) For the sole purpose of enabling Agent to exercise rights
and remedies under this Agreement, each Grantor hereby grants to Agent, for the
benefit of Agent and Lenders, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Grantor) to use,
license or sublicense any Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded
or stored and to all computer software and programs used for the compilation or
printout thereof.
6.3. Investment Property.
(a) Unless an Event of Default shall have occurred and be
continuing and the Agent shall have given notice to the relevant Grantor of the
Agent's intent to exercise its corresponding rights pursuant to Section 6.3(b),
each Grantor shall be permitted to receive all cash dividends and distributions
paid in respect of the Pledged Equity and all payments made in respect of the
Pledged Notes, to the extent permitted in the Credit Agreement, and to exercise
all voting and other rights with respect to the Investment Property; provided,
that no vote shall be cast or other right exercised or action taken which would
reasonably be expected to impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and
the Agent shall give notice of its intent to exercise such rights to the
relevant Grantor or Grantors, (i) the Agent shall have the right to receive any
and all cash dividends and distributions, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in such order as the Agent may
determine, and (ii) any or all of the Investment Property shall be registered in
the name of the Agent or its nominee, and the Agent or its nominee may
thereafter exercise (x) all voting and other rights pertaining to such
Investment Property at any meeting of holders of the equity interests of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner
thereof (including the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other structure
of any Issuer, or upon the exercise by any Grantor or the Agent of any right,
privilege or option pertaining to such Investment Property, and in connection
therewith, the right to deposit and deliver any and all of the Investment
Property with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Agent may determine),
all without liability except to account for property actually received by it,
but the Agent shall have no duty to any Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer
of any Investment Property pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying and (ii) during the existence of an Event of
Default, pay any dividends, distributions or other payments with respect to the
Investment Property directly to the Agent.
6.4. Proceeds to be Turned Over To Agent. In addition to the rights of
the Agent and the Lenders specified in Section 6.1 with respect to payments of
Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by any Grantor consisting of cash, checks and other cash equivalent
items shall be held by such Grantor in trust for the Agent and the Lenders,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Agent, if required). All Proceeds
received by the Agent hereunder shall be held by the Agent in a collateral
account maintained under its sole dominion and control. All Proceeds, while held
by the Agent in any collateral account (or by such Grantor in trust for the
Agent and the Lenders) established pursuant hereto, shall continue to be held as
collateral security for the Secured Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
6.5. Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Agent, or, if an Event of Default shall have occurred
and be continuing, at any time at the Agent's election, the Agent may apply all
or any part of Proceeds held in any collateral account established pursuant
hereto in payment of the Secured Obligations in such order as the Agent may
elect, and any part of such funds which the Agent elects not so to apply and
deems not required as collateral security for the Secured Obligations shall be
paid over from time to time by the Agent to the applicable Grantor or to
whomsoever may be lawfully entitled to receive the same. Any balance of such
Proceeds remaining after the Secured Obligations shall have been paid in full
(other than unasserted contingent and indemnity obligations that by their terms
survive the termination of the Commitments), no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
applicable Grantor or to whomsoever may be lawfully entitled to receive the
same.
6.6. Code and Other Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, 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 UCC or any
other applicable law. Without limiting the generality of the foregoing, the
Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice referred to below) to or upon any Grantor or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Agent or any Lender 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 with assumption of any credit risk. The
Agent may disclaim any warranties that might arise in connection with any such
lease, assignment, grant of option or other disposition of Collateral and have
no obligation to provide any warranties at such time. The Agent or any Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
any Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Agent's request, during the existence of an Event of
Default, to assemble the Collateral and make it available to the Agent at places
which the Agent shall reasonably select, whether at such Grantor's premises or
elsewhere. The Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Agent and the Lenders hereunder, including reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Secured Obligations, in such order as the Agent may elect, and only after such
application and after the payment by the Agent of any other amount required by
any provision of law, need the Agent account for the surplus, if any, to any
Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Agent or any Lender
arising out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.
6.7. Registration Rights.
(a) If the Agent shall determine to exercise its right to sell
any or all of the Pledged Equity pursuant to Section 6.6, and if in the opinion
of the Agent it is necessary or advisable to have the Pledged Equity, or that
portion thereof to be sold, registered under the provisions of the Securities
Act, the relevant Grantor will cause the Issuer thereof to (i) execute and
deliver, and 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 reasonable opinion of the
Agent, necessary or advisable to register the Pledged Equity, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use its
best efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Equity, 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 Agent, 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. Each
Grantor agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Agent shall
designate and to make available to its security holders, as soon as practicable,
an earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Equity, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Agent shall be under no obligation to delay a sale of any
of the Pledged Equity for the period of time necessary to permit the Issuer
thereof to register such securities or other interests for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Equity pursuant to this Section 6.7 valid and
binding and in compliance with applicable law. Each Grantor further agrees that
a breach of any of the covenants contained in this Section 6.7 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the Lenders
have no adequate remedy at law in respect of such breach and, as a consequence,
that each and every covenant contained in this Section 6.7 shall be specifically
enforceable against such Grantor, and such Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Credit Agreement.
6.8. Waiver; Deficiency. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations in full and the fees and
disbursements of any attorneys employed by the Agent or any Lender to collect
such deficiency.
7. The Agent.
7.1. Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Receivable or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Agent for the purpose of
collecting any and all such moneys due under any Receivable or with
respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Agent may request to evidence the Agent's
security interest in such Intellectual Property and the goodwill and
general intangibles of such Grantor relating thereto or represented
thereby;
(iii) discharge Liens levied or placed on the Collateral, and
effect any repairs or insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the
costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Agent or as the Agent shall direct; (2)
ask or demand for, collect, and receive payment of and receipt for, any
and all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (3) sign and
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; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (5) defend any suit, action
or proceeding brought against such Grantor with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or
releases as the Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark, throughout the world for such term or terms, on
such conditions, and in such manner, as the Agent shall in its sole
discretion determine; and (8) generally sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Agent were the
absolute owner thereof for all purposes, and do, at the Agent's option
and such Grantor's expense, at any time, or from time to time, all acts
and things which the Agent deems necessary to protect, preserve or
realize upon the Collateral and the Agent's 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 Agent
agrees that it will not exercise any rights under the power of attorney provided
for in this Section 7.1(a) unless an Event of Default shall have occurred and be
continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) Each Grantor hereby ratifies all that such attorneys shall
lawfully do or cause to be done by virtue hereof and as permitted hereby. All
powers, authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until the security interests created hereby are
released.
7.2. Duty of Agent. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall
be to deal with it in the same manner as the Agent deals with similar property
for its own account. Neither the Agent or any Lender nor any of their respective
officers, directors, employees or agents shall be liable for any failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Agent and the Lenders hereunder are solely to protect
the Agent's and the Lenders' interests in the Collateral and shall not impose
any duty upon the Agent or any Lender to exercise any such powers. The Agent and
the Lenders 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.
7.3. Execution of Financing Statements. Each Grantor authorizes the
Agent to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature of
such Grantor in such form and in such offices as the Agent determines
appropriate to perfect the security interests of the Agent under this Agreement.
A photographic or other reproduction of this Agreement shall be sufficient as a
financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.
7.4. Authority of Agent. Each Grantor acknowledges that the rights and
responsibilities of the Agent under this Agreement with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Agent and the Grantors, the Agent shall be conclusively presumed to be acting as
agent for the Lenders 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.
8. Miscellaneous.
8.1. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2. Notices. All notices, requests and demands to or upon the Agent or
any Grantor hereunder shall be effected in the manner provided for in Section
10.2 of the Credit Agreement; provided that each such notice, request or demand
to or upon any Guarantor shall be addressed to such Guarantor at its notice
address set forth on Schedule 1.
8.3. Indemnification by Grantors. Each Grantor hereby agrees, on a
joint and several basis, to indemnify, exonerate and hold Agent, each Lender and
each of the officers, directors, employees, Affiliates and agents of Agent and
each Lender (each a "Lender Party") free and harmless from and against any and
all actions, causes of action, suits, losses, liabilities, damages and expenses,
including Legal Costs (collectively, the "Indemnified Liabilities"), incurred by
Lender Parties or any of them as a result of, or arising out of, or relating to
(a) any tender offer, merger, purchase of equity interests, purchase of assets
(including the Related Transactions) or other similar transaction financed or
proposed to be financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans, (b) the use, handling, release, emission,
discharge, transportation, storage, treatment or disposal of any hazardous
substance at any property owned or leased by any Grantor or any Subsidiary, (c)
any violation of any Environmental Laws with respect to conditions at any
property owned or leased by any Grantor or any Subsidiary or the operations
conducted thereon, (d) the investigation, cleanup or remediation of offsite
locations at which any Grantor or any Subsidiary or their respective
predecessors are alleged to have directly or indirectly disposed of hazardous
substances or (e) the execution, delivery, performance or enforcement of this
Agreement or any other Loan Document by any Lender Party, except to the extent
any such Indemnified Liabilities result from the applicable Lender Party's own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction. If and to the extent that the foregoing undertaking may be
unenforceable for any reason, each Grantor hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The agreements in this
Section 8.3 shall survive repayment of the Secured Obligations (and termination
of all commitments thereunder), any foreclosure under, or any modification,
release or discharge of, any or all of the Collateral Documents and termination
of this Agreement.
8.4. Enforcement Expenses.
(a) Each Grantor agrees, on a joint and several basis, to pay
or reimburse on demand each Lender and the Agent for all reasonable
out-of-pocket costs and expenses (including Legal Costs) incurred in collecting
against any Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement and the other Loan
Documents.
(b) Each Grantor agrees to pay, and to save the Agent and the
Lenders harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
(c) The agreements in this Section 8.4 shall survive repayment
of the Secured Obligations (and termination of all commitments thereunder), any
foreclosure under, or any modification, release or discharge of, any or all of
the Collateral Documents and termination of this Agreement.
8.5. Captions. Captions used in this Agreement are for convenience only
and shall not affect the construction of this Agreement.
8.6. Nature of Remedies. All Secured Obligations of each Grantor and
rights of Agent and Lenders expressed herein or in any other Loan Document shall
be in addition to and not in limitation of those provided by applicable law. No
failure to exercise and no delay in exercising, on the part of Agent or any
Lender, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
8.7. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
by telecopy of any executed signature page to this Agreement or any other Loan
Document shall constitute effective delivery of such signature page.
8.8. Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
8.9. Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof and any prior arrangements made with respect to the payment by any
Grantor of (or any indemnification for) any fees, costs or expenses payable to
or incurred (or to be incurred) by or on behalf of Agent or Lenders.
8.10. Successors; Assigns. This Agreement shall be binding upon
Grantors, Lenders and Agent and their respective successors and assigns, and
shall inure to the benefit of Grantors, Lenders and Agent and the successors and
assigns of Lenders and Agent. No other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents. No Grantor
may assign or transfer any of its rights or Obligations under this Agreement
without the prior written consent of Agent.
8.11. Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
8.12. Forum Selection; Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GRANTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH GRANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH
GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
8.13. Waiver of Jury Trial. EACH GRANTOR, AGENT AND EACH LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
8.14. Set-off. Each Grantor agrees that Agent and each Lender have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, each Grantor agrees that at any time any Event of Default exists, Agent
and each Lender may apply to the payment of any Secured Obligations, whether or
not then due, any and all balances, credits, deposits, accounts or moneys of
such Grantor then or thereafter with Agent or such Lender. Notwithstanding the
foregoing, no Lender shall exercise any such rights without the consent of
Agent. The Person exercising such rights shall notify Borrower thereof promptly
after such exercise.
8.15. Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents to which
it is a party;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
the Grantors, on the one hand, and the Agent and Lenders, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Grantors and the Lenders.
8.16. Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 6.8 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of a joinder agreement in the form of
Annex I hereto.
8.17. Releases.
(a) At such time as the Secured Obligations have been paid in
full (other than unasserted contingent and indemnity obligations that by their
terms survive the termination of the Commitments), the Commitments have been
terminated and no Letters of Credit shall be outstanding, the Collateral shall
be released from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such termination) of
the Agent and each Grantor hereunder shall terminate, all without delivery of
any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Agent shall promptly deliver to the
Grantors any Collateral held by the Agent hereunder, and promptly execute and
deliver to the Grantors such documents as the Grantors shall reasonably request
to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the equity interests or substantially all of the assets of such Subsidiary
Guarantor shall be sold, transferred or otherwise disposed of in a transaction
permitted by the Credit Agreement; provided that the Borrower shall have
delivered to the Agent, with reasonable notice prior to the date of the proposed
release, a written request for release identifying the relevant Subsidiary
Guarantor and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Borrower stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.
8.18. Revised Article 9. The parties to this Agreement acknowledge that
revisions to Article 9 of the Uniform Commercial Code ("Revised Article 9") has
become effective in various states on July 1, 2001 and that Revised Article 9
may be adopted and become effective in one or more other states at any time
thereafter. In anticipation of the effectiveness of Revised Article 9 and its
resulting application to the Loan Documents or any matters contemplated thereby,
the Agent and Grantors hereby agree as follows:
(a) In applying the law of any state at any time on and after
the date Revised Article 9 is enacted (A) the Collateral includes each of the
following categories as defined by Revised Article 9, and all property of each
Grantor included therein at any time owned or acquired: goods; inventory;
equipment; documents; instruments; documents of title; accounts; chattel paper;
deposit accounts; letter-of-credit rights; commercial tort claims; investment
property; general intangibles; leases; money; supporting obligations; and all
products and proceeds of the foregoing; in each case wherever located, and
whenever owned or acquired, and (B) the Agents' Lien in all such property
created under this Agreement on the closing date shall continue in full force
and effect on and under and pursuant to Revised Article 9.
(b) The Agent may, at any time and from time to time, file
financing statements, continuation statements, and amendments thereto that
describe the Collateral as "all assets" of each Grantor, or words of similar
effect, and which contain any other information required pursuant to Revised
Article 9 for the sufficiency of filing office acceptance of any financing
statement, continuation statement,
or amendment, and each Grantor agrees to furnish any such information to the
Agent promptly upon request. Any such financing statement, continuation
statement, or amendment may be signed by the Agent on behalf of any Grantor and
may be filed at any time in any jurisdiction whether or not Revised Article 9 is
then in effect in that jurisdiction.
(c) Each Grantor shall, at any time and from time and to time,
whether or not Revised Article 9 is in effect in any particular jurisdiction,
take such steps as the Agent may reasonably request for the Agent (A) to obtain
an acknowledgement, in form and substance reasonably satisfactory to the Agent,
of any bailee having possession of any of the Collateral, stating that the
bailee holds such Collateral for the Agent, (B) to obtain "control" of any
letter-of-credit rights, or electronic chattel paper (as such terms are defined
by Revised Article 9 with corresponding provisions thereof defining what
constitutes "control" for such items of Collateral), with any agreements
establishing control to be in form and substance reasonably satisfactory to the
Agent, and (C) otherwise to insure the continued perfection and priority of the
Agent's security interest in any of the Collateral and of the preservation of
its rights therein, whether in anticipation of or following the effectiveness of
Revised Article 9 in any jurisdiction.
(d) Nothing contained in this Section 8.18 shall be construed
to narrow the scope of the Agent's Liens or the perfection or priority thereof
or to impair or otherwise limit any of the rights, powers, privileges, or
remedies of the Agent or any Lender under the Loan Documents.
[signature page follows]
Each of the undersigned has caused this Guarantee and Collateral
Agreement to be duly executed and delivered as of the date first above written.
AMERICAN COIN MERCHANDISING, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Title: President
ACMI HOLDINGS, INC., formerly known as
CRANE MERGERCO HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-----------------------------------
Title: President
MADISON CAPITAL FUNDING LLC, as Agent
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Managing Director
