FORM OF GENERAL SECURITY AGREEMENT
This General Security Agreement ("Agreement") dated September 29, 1999 is
by , a Delaware corporation ("Guarantor") in favor of
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Congress Financial Corporation (Central), an Illinois corporation ("Lender").
W I T N E S S E T H
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WHEREAS, Lender has entered or is about to enter into certain financing
arrangements with The Musicland Group, a Delaware corporation ("Borrower")
pursuant to which Lender may make loans and provide other financial
accommodations to Borrower; and
WHEREAS, Borrower owns all of the issued and outstanding capital stock of
Guarantor, and Guarantor will benefit from the making of loans and other
financial accommodations to Borrower;
WHEREAS, Guarantor has executed and delivered or is about to execute and
deliver to Lender a guarantee in favor of Lender pursuant to which Guarantor
absolutely and unconditionally guarantees to Lender the payment and performance
of all now existing and hereafter arising obligations, liabilities and
indebtedness of Borrower to Lender; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires. All references to Guarantor, Borrower and Lender pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof",
"herein", "hereunder", "this Agreement" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced. The word "including" when used in this Agreement shall mean
"including, without limitation". An Event of Default shall exist or continue or
be continuing until such Event of Default is waived in accordance with Section
7.3 or is cured in a manner satisfactory to Lender, if such Event of Default is
capable of being cured as determined by Lender. Any accounting term used herein
unless otherwise defined in this Agreement shall have the meanings customarily
given to such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1. "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.2. "Company" shall have the meaning set forth in Section 1.7 of the
Loan Agreement.
1.3. "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Guarantor and any
governmental authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking
Water Act of 1974, (ii) applicable state counterparts to such laws, and (iii)
any common law or equitable doctrine that may impose liability or obligations
for injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.4. "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.5. "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.6. "Event of Default" shall have the meaning set forth in Section 6.1
hereof.
1.7. "Financing Agreements" shall mean, collectively, the Loan
Agreement, this Agreement and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower, Guarantor or any Obligor in connection
with the Loan Agreement, as the same
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now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
1.8. "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied.
1.9. "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.10. "Information Certificate" shall mean the Information Certificate of
Guarantor constituting Exhibit A hereto containing material information with
respect to Guarantor, its business and assets provided by or on behalf of
Guarantor to Lender in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.
1.11. "Inventory" shall mean all of Guarantor's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, at the Specified Locations but
does not include inventory that is no longer located at a Specified Location.
1.12. "Loan Agreement" shall mean the Loan and Security Agreement, dated
September 29, 1999, by and between Borrower and Lender, as the same now exists
and may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced; all capitalized terms used herein but not defined herein
shall have the meaning ascribed thereto in the Loan Agreement.
1.13. "Obligations" shall mean any and all obligations, liabilities and
indebtedness of every kind, nature and description owing by Guarantor to Lender
and/or its affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under that certain Guarantee of even date herewith
executed by Guarantor in favor of Lender, this Agreement or any other Financing
Agreement, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of the Loan Agreement or after
the commencement of any case with respect to Borrower or Guarantor under the
United States
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Bankruptcy Code or any similar statute (including the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case, whether or not such amounts are allowed or allowable in whole or in part
in such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and however acquired by Lender.
1.14. "Obligor" shall mean any other guarantor, endorser, acceptor,
surety or other person liable on or with respect to the Obligations or who is
the owner of any property which is security for the Obligations, other than
Borrower.
1.15. "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.16. "Records" shall mean all of Guarantor's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral, together with
the tapes, disks, diskettes and other data and software storage media and
devices, file cabinets or containers in or on which the foregoing are stored
(including any rights of Guarantor with respect to the foregoing maintained with
or by any other person).
1.17. "Specified Locations" shall mean the locations of Inventory of
Guarantor listed on Schedule 1.36 to the Loan Agreement as such Schedule may be
updated from time to time by agreement of Guarantor and Lender.
1.18. "Trigger Event" shall have the meaning set forth in Section 1.37 of
the Loan Agreement.
SECTION 2. GRANT OF SECURITY INTEREST
To secure payment and performance o all Obligations, Guarantor hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
2.1. all present and future rights of Guarantor to payment for goods
sold or leased or for services rendered which are not evidenced by instruments
or chattel paper, and whether or not earned by performance;
2.2. all present and future monies, securities, credit balances,
deposits, deposit accounts and other property of Guarantor now or hereafter held
or received by or in
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transit to Lender or its affiliates or at any other depository or other
institution from or for the account of Guarantor whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all present and
future liens, security interests, rights, remedies, title and interest in, to
and in respect of other Collateral, including (a) rights and remedies under or
relating to insurance related to the Collateral, (b) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (c) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Collateral, including returned, repossessed and reclaimed goods;
2.3. Inventory (excluding Inventory consigned to Guarantor);
2.4. those Records which relate specifically to the Collateral described
in the other provisions of this Section 2;
2.5. all insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the Inventory (excluding
consigned Inventory); and
2.6. all products and proceeds of the foregoing.
Notwithstanding the foregoing, Lender's security interest in the
Collateral described in Sections 2.1 and 2.2 shall (i) only attach and be
effective at such times as a Trigger Event is then continuing and (ii) be
limited to only those accounts and proceeds related thereto, arising from the
sale of Inventory (excluding consigned Inventory)from the Specified Locations to
unrelated third parties. Further, notwithstanding the foregoing, Inventory
which is no longer located at a Specified Location shall cease to constitute
Collateral nor shall the proceeds of such Inventory which is no longer located
at a Specified Location constitute Collateral.
SECTION 3. COLLATERAL COVENANTS
3.1. Inventory Covenants. With respect to the Inventory: (a) Guarantor
shall, at all times maintain inventory records reasonably satisfactory to
Lender, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, Guarantor's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Guarantor shall, conduct a
physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the form
and with such specificity as may be reasonably satisfactory to Lender concerning
such physical count; (c) Guarantor shall not remove any Inventory from the
Specified Locations of Guarantor, without the prior written consent of Lender,
except for sales of Inventory in the ordinary course of Guarantor's business
and except to move Inventory to or from the distribution center to any location,
to vendors for return in the ordinary course of business or directly from one
store to another store; (d) upon Lender's request, at any time that a Trigger
Event has occurred and is continuing, Guarantor shall, at its expense, at any
time or times as Lender may request, deliver or cause to be delivered to Lender
written reports or appraisals as to the Inventory of Guarantor in form,
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scope and methodology acceptable to Lender and by an appraiser acceptable to
lender, addressed to Lender or upon which Lender is expressly permitted to rely;
(E) Guarantor shall, produce, use, store and maintain the Inventory, with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with applicable laws (including the requirements of
the Federal Fair Labor Standards Act of 1938, as amended and all rules,
regulations and orders related thereto); (f) Guarantor assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) Guarantor shall, keep the
Inventory in good and marketable condition; and (i) Guarantor shall not,
without prior written notice to Lender, acquire or accept any Inventory on
consignment or approval unless such Inventory is readily identifiable.
3.2. Power of Attorney. Guarantor hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Guarantor's true and
lawful attorney-in-fact, and authorizes Lender, in Guarantor's or Lender's name,
to:(a) at any time an Event of Default or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing do all acts and things which are necessary, in Lender's
determination, to fulfill Guarantor's obligations under this Agreement and the
other Financing Agreements, (b) at any time that a Trigger Event has occurred
and is continuing to (i) take control in any manner of any item of payment or
proceeds thereof, (ii) have access to any lockbox or postal box into which
Guarantor's mail is deposited, (iii) endorse Guarantor's name upon any items of
payment proceeds of Collateral and deposit the same in the Lender's account for
application to the Obligations, and (c) at any time, execute in Guarantor's name
and file any UCC financing statements or amendments thereto. Guarantor hereby
releases Lender and its officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, except as a result of Lender's own
gross negligence or wilful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
3.3. Lender's Right to Cure. Lender may, after reasonable notice to
Guarantor, at its option, (a) cure any default by Guarantor under any agreement
with a third party or pay or bond on appeal any judgment entered against
Guarantor, (b) discharge taxes, liens, security interests or other encumbrances
at any time levied on or existing with respect to the Collateral and (c) pay any
amount, incur any expense or perform any act which, in Lender's judgment, is
necessary or appropriate to preserve, protect, insure or maintain the Collateral
and the rights of Lender with respect thereto. Lender may add any amounts so
expended to the Obligations and charge Guarantor's account therefor, such
amounts to be repayable by Guarantor on demand. Lender shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of Guarantor. Any payment
made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.
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3.4. Access to Premises. Once a year or, at any time a Trigger Event
has occurred and is continuing, at such times as Lender may request, in any
case, at the cost and expense of Guarantor (provided, that one audit each year
shall be deemed to be paid for by the servicing fee set forth in Section 3.3 of
the Loan Agreement), (a) Lender or its designee shall have complete access to
all of Guarantor's premises where collateral is located during normal business
hours and after notice to Guarantor, or at any time and without notice to
Guarantor if an Event of Default exists or has occurred and is continuing, for
the purposes of inspecting, verifying and auditing the Collateral and all of
Guarantor's books and records, including the Records, and (b) Guarantor shall
promptly furnish to Lender access to, and the ability to obtain copies of such
books and records or extracts therefrom as Lender may reasonably request, and
(c) use during normal business hours such of Guarantor's personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and if an
Event of Default exists or has occurred and is continuing for the realization of
Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES
Guarantor hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement):
4.1. Corporate Existence, Power and Authority; Subsidiaries. Guarantor
is a corporation duly organized and in good standing under the laws of its state
of incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Guarantor's financial condition,
results of operation or business or the rights of Lender in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the
other Financing Agreements and the transactions contemplated hereunder and
thereunder are all within Guarantor's corporate powers, have been duly
authorized and are not in contravention of law or the terms of Guarantor's
certificate of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which Guarantor is a party or by
which Guarantor or its property are bound. This Agreement and the other
Financing Agreements constitute legal, valid and binding obligations of
Guarantor enforceable in accordance with their respective terms. Guarantor does
not have any subsidiaries except as set forth on the Information Certificate.
4.2. Financial Statements; No Material Adverse Change. All financial
statements relating to Guarantor which have been or may hereafter be delivered
by Guarantor to Lender have been prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of Guarantor as at
the dates and for the periods set forth therein. Except as disclosed in any
interim financial statements furnished by Guarantor to Lender prior to the date
hereof, there has been no material adverse change in the assets, liabilities,
properties and condition, financial or otherwise, of Guarantor, since the date
of the
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most recent audited financial statements furnished by Guarantor to Lender prior
to the date hereof.
4.3. Chief Executive Office; Collateral Locations. The chief executive
office of Guarantor and Guarantor's Records are located only at the addresses
set forth in the Information Certificate and its only other places of business
and the only other locations of Collateral, if any, are the addresses set forth
in the Information Certificate, subject to the right of Guarantor to establish
new locations in accordance with Section 5.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Guarantor and
sets forth the owners and/or operators thereof.
4.4. Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 4.4
hereto and the other liens permitted under Section 5.8 hereof. Guarantor has
good and marketable title to all of its properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Lender and such others as are specifically listed
on Schedule 4.4 hereto or permitted under Section 5.8 hereof.
4.5. Tax Returns. Guarantor has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Guarantor has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Guarantor
and with respect to which adequate reserves have been set aside on its books.
Adequate provision has been made for the payment of all accrued and unpaid
Federal, State, county, local, foreign and other taxes whether or not yet due
and payable and whether or not disputed.
4.6. Litigation. Except as set forth on the Information Certificate,
there is no present investigation by any governmental agency pending, or to the
best of Guarantor's knowledge threatened, against or affecting Guarantor, its
assets or business and there is no action, suit, proceeding or claim by any
Person pending, or to the best of Guarantor's knowledge threatened, against
Guarantor or its assets or goodwill, or against or affecting any transactions
contemplated by this Agreement, which if adversely determined against Guarantor
would result in any material adverse change in the assets, business or prospects
of Guarantor or which would impair the ability of Guarantor to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Lender to enforce the Obligations or realize upon any
Collateral.
4.7. Compliance with Other Agreements and Applicable Laws. Guarantor is
not in default under, or in violation of any of the terms of, any agreement,
contract,
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instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound, except for such defaults or violations which would
not reasonably be expected to have a material adverse effect on the business,
assets, results of operations or financial condition of Guarantor and Guarantor
is in compliance with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State or local
governmental authority except for such noncompliance which would not reasonably
be expected to have a material adverse effect on the business, assets, results
of operations or financial condition of Guarantor.
4.8. Environmental Compliance.
(a) Except as set forth on Schedule 4.8 hereto and except for events
which have been resolved with the appropriate governmental authorities and with
respect to which no liabilities remain unsatisfied, Guarantor has not generated,
used, stored, treated, transported, manufactured, handled, produced or disposed
of any Hazardous Materials, on or off its premises (whether or not owned by it)
in any manner which at any time violates any applicable Environmental Law or any
license, permit, certificate, approval or similar authorization thereunder and
the operations of Guarantor complies in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder.
(b) Except as set forth on Schedule 4.8 hereto and except for
investigations, proceedings, complaints, orders, directives, claims, citations
or notices which have been resolved with the appropriate governmental
authorities and with respect to which no liabilities remain unsatisfied, there
has been no investigation, proceeding, complaint, order, directive, claim,
citation or notice by any governmental authority or any other person nor is any
pending or to the best of Guarantor's knowledge threatened, with respect to any
non-compliance with or violation of the requirements of any Environmental Law by
Guarantor or the release, spill or discharge, threatened or actual, of any
Hazardous Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials or any
other environmental, health or safety matter, which affects Guarantor or its
business, operations or assets or any properties at which Guarantor has
transported, stored or disposed of any Hazardous Materials.
(c) Guarantor has no unsatisfied material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.
(d) Guarantor has all licenses, permits, certificates, approvals or
similar authorizations required to be obtained or filed in connection with the
operations of Guarantor under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are valid and in full
force and effect.
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4.9. Employee Benefits.
(a) Guarantor has not engaged in any transaction in connection with
which Guarantor or any of its ERISA Affiliates could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, including any accumulated funding deficiency described
in Section 4.9(c) hereof and any deficiency with respect to vested accrued
benefits described in Section 4.9(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has been or
is expected by Guarantor to be incurred with respect to any employee benefit
plan of Guarantor or any of its ERISA Affiliates. There has been no reportable
event (within the meaning of Section 4043(b) of ERISA) or any other event or
condition with respect to any employee pension benefit plan of Guarantor or any
of its ERISA Affiliates which presents a risk of termination of any such plan by
the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which Guarantor or any of
its ERISA Affiliates is required under Section 302 of ERISA and Section 412 of
the Code to have paid under the terms of each employee benefit plan as
contributions to such plan as of the last day of the most recent fiscal year of
such plan ended prior to the date hereof, and no accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any employee benefit plan, including any penalty
or tax described in Section 4.9(a) hereof and any deficiency with respect to
vested accrued benefits described in Section 4.9(d) hereof.
(d) The current value of all vested accrued benefits under all employee
benefit plans maintained by Guarantor that are subject to Title IV of ERISA does
not exceed the current value of the assets of such plans allocable to such
vested accrued benefits, including any penalty or tax described in Section
4.9(a) hereof and any accumulated funding deficiency described in Section 4.9(c)
hereof. The terms "current value" and "accrued benefit" have the meanings
specified in ERISA.
(e) Neither Guarantor nor any of its ERISA Affiliates is or has ever
been obligated to contribute to any "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
4.10. Bank Accounts. All of the deposit accounts or other accounts with
respect to the Specified Locations in the name of or used by Guarantor
maintained at any bank or other financial institution are set forth on Schedule
4.10 hereto, subject to the right of Guarantor and such Companies to establish
new accounts with at least ten (10) days' prior written notice to Lender.
4.11. Accuracy and Completeness of Information. All information furnished
by or on behalf of Guarantor in writing to Lender in connection with this
Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including all information on the Information
Certificate is true and correct in all material respects on the
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date as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a material adverse affect on the business, assets or prospects of
Guarantor, which has not been fully and accurately disclosed to Lender in
writing.
4.12. Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation under the Loan Agreement and shall be conclusively
presumed to have been relied on by Lender regardless of any investigation made
or information possessed by Lender. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Guarantor shall now or hereafter give, or cause to be given, to
Lender.
SECTION 5. AFFIRMATIVE AND NEGATIVE COVENANTS
5.1. Maintenance of Existence. Guarantor shall at all times preserve,
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Guarantor shall give Lender prior written notice of any proposed
change in its corporate name at least thirty (30) days prior to such change
becoming effective, which notice shall set forth the new name and Guarantor
shall deliver to Lender a copy of the amendment to the Certificate of
Incorporation of Guarantor providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation of Guarantor as soon as
it is available.
5.2. New Collateral Locations. Guarantor may open any new location
within the continental United States provided Guarantor (a) gives Lender thirty
(30) days prior written notice of the intended opening of any such new location
which is to be a Specified Location or any existing location which is being
newly designated as a Specified Location and (b) executes and delivers, or
causes to be executed and delivered, to Lender such agreements, documents, and
instruments as Lender may deem reasonably necessary or desirable to protect its
interests in the Collateral at a new Specified Location, including UCC financing
statements; provided, that the thirty (30) day notice period will be waived with
respect to the designation of a new Specified Location which is being pledged to
cure a Trigger Event within the required grace period.
5.3. Compliance with Laws, Regulations, Etc.
(a) Guarantor shall, at all times, comply in all material respects with
all laws, rules, regulations, licenses, permits, approvals and orders applicable
to it and duly observe all requirements of any Federal, State or local
governmental authority, including the
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Employee Retirement Security Act of 1974, as amended, the Occupational Safety
and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as
amended, and all statutes, rules, regulations, orders, permits and stipulations
relating to environmental pollution and employee health and safety, including
all of the Environmental Laws, except for such noncompliance which would not
have a material adverse effect on Borrower, its business or assets.
(b) Guarantor shall give both oral and written notice to Lender
immediately upon Guarantor's receipt of any notice of, or Guarantor's otherwise
obtaining knowledge of, (i) the occurrence of any event involving the release,
spill or discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Guarantor or (B) the release, spill or discharge,
threatened or actual, of any Hazardous Material or (C) the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or (D) any other environmental, health or
safety matter, which affects Guarantor or its business, operations or assets or
any properties at which Guarantor transported, stored or disposed of any
Hazardous Materials.
(c) Guarantor shall indemnify and hold harmless Lender, its directors,
officers, employees, agents, invitees, representatives, successors and assigns,
from and against any and all losses, claims, damages, liabilities, costs, and
expenses (including attorneys' fees and legal expenses) directly or indirectly
arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material, including the costs of any required or
necessary repair, cleanup or other remedial work with respect to any property of
Guarantor and the preparation and implementation of any closure, remedial or
other required plans. All representations, warranties, covenants and
indemnifications in this Section 5.3 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
5.4. Payment of Taxes and Claims. Guarantor shall duly pay and discharge
all taxes, assessments, contributions and governmental charges upon or against
it or its properties or assets, except for taxes, assessments, contributions and
governmental charges the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Guarantor and with
respect to which adequate reserves have been set aside on its books. Guarantor
shall be liable for any tax or penalties imposed on Lender as a result of the
financing arrangements provided for herein and Guarantor agrees to indemnify and
hold Lender harmless with respect to the foregoing, and to repay to Lender on
demand the amount thereof, and until paid by guarantor such amount shall be
added and deemed part of the loans, provided that, nothing contained herein
shall be construed to require Guarantor to pay any income or franchise taxes
attributable to the income of Lender from any amounts charged or paid hereunder
to Lender. The foregoing indemnity shall survive the payment of the Obligations,
the termination of this Agreement and the termination or non-renewal of the Loan
Agreement.
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5.5. Insurance. Guarantor shall, at all times, maintain with Zurich
Insurance Co. or other financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to Lender
as to form, amount and insurer. Guarantor shall furnish certificates, policies
or endorsements to Lender as Lender shall require as proof of such insurance,
and, if Guarantor fails to do so, Lender is authorized, but not required, to
obtain such insurance at the expense of Guarantor. All policies shall provide
for at least thirty (30) days prior written notice to Lender of any
cancellation or reduction of coverage and that Lender may act as attorney for
Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Guarantor shall cause Lender to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Guarantor shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Lender. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Lender as its interests
may appear and further specify that Lender shall be paid regardless of any act
or omission by Guarantor or any of its affiliates. At its option, Lender may
apply any insurance proceeds received by Lender at any time to the cost of
repairs or replacement of Collateral and/or to payment of the Obligations,
whether or not then due, in any order and in such manner as Lender may determine
or hold such proceeds as cash collateral for the Obligations, provided, that any
insurance proceeds received by Lender from a loss at a Specified Location other
than the main distribution center will be promptly delivered by Lender to
Guarantor so long as (i) no Event of Default is then continuing and (ii) no
Trigger Event is then continuing.
5.6. Financial Statements and Other Information.
(a) Guarantor shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Guarantor and its subsidiaries (if any) in
accordance with GAAP and Guarantor shall furnish or cause to be furnished to
Lender: (i) within thirty (30) days after the end of each fiscal month, monthly
unaudited consolidated and consolidating financial statements (including in each
case balance sheets, statements of income and loss, and statements of cash flow
(such statement of cash flow to be prepared on a consolidated basis only)), all
in reasonable detail, fairly presenting the financial position and the results
of the operations of Borrower and its subsidiaries as of the end of and through
such fiscal month and (ii) within ninety (90) days after the end of each fiscal
year, audited consolidated financial statements and unaudited consolidating
financial statements of Borrower and its subsidiaries (including in each case
balance sheets, statements of income and loss and statements of cash flow (such
statement of cash flow to be prepared on a consolidated basis only)), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrower and its
subsidiaries as of the end of and for such fiscal year, together with the
unqualified opinion of Xxxxxx Xxxxxxxx LLP or other
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independent certified public accountants, which accountants shall be an
independent accounting firm selected by Guarantor and reasonably acceptable to
Lender, that such financial statements have been prepared in accordance with
GAAP, and present fairly the results of operations and financial condition of
Guarantor and its subsidiaries as of the end of and for the fiscal year then
ended.
(b) Guarantor shall promptly notify Lender in writing of the details of
(i) any material loss, damage, investigation, action, suit, proceeding or claim
relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Guarantor's
business, properties, assets, goodwill or condition, financial or otherwise and
(ii) the occurrence of any Event of Default or event which, with the passage of
time or giving of notice or both, would constitute an Event of Default.
(c) Guarantor shall promptly after the sending or filing thereof furnish
or cause to be furnished to Lender access to, and the ability to obtain copies
of all reports which Guarantor sends to its stockholders generally and copies of
all reports and registration statements which Guarantor files with the
Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.
(d) Once each year, so long as no Event of Default has occurred,
Guarantor shall furnish or cause to be furnished to Lender such budgets,
forecasts, projections and other information respecting the Collateral and the
business of Guarantor which Guarantor prepares in the ordinary course of its
business, provided that during the continuance of an Event of Default, Guarantor
shall provide such information as and when Lender requests such information.
Lender is hereby authorized to deliver a copy of any financial statement or any
other information relating to the business of Guarantor to any court or other
government agency or, provided, that such party has executed a confidentiality
agreement acceptable to Guarantor and Lender in their reasonable determination,
to any participant or assignee or prospective participant or assignee. Guarantor
hereby irrevocably authorizes all accountants or auditors to deliver to Lender,
at Guarantor's expense, copies of reports of internal controls of Guarantor and
any reports or management letters prepared by such accountants or auditors on
behalf of Guarantor and to disclose to Lender such information as they may have
regarding the business of Guarantor. Any documents, schedules, invoices or other
papers delivered to Lender may be destroyed or otherwise disposed of by Lender
one (1) year after the same are delivered to Lender, except as otherwise
designated by Guarantor to Lender in writing.
(e) Guarantor shall give Lender prior written notice of any amendment to
documents evidencing indebtedness of Guarantor owing to any unrelated third
parties.
5.7. Sale of Assets, Consolidation, Merger, Dissolution, Etc. To the
extent prohibited pursuant to that certain Indenture dated as of April 6, 1998
among Musicland Stores Corporation, Borrower and Bank One, N.A. as Trustee with
respect to the 9-7/8% Senior Subordinated Notes due 2008, as in effect on the
date hereof as the same may be amended or otherwise modified from time to time,
Guarantor shall not, directly or indirectly,
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(a) merge into or with or consolidate with any other Person or permit any other
Person to merge into or with or consolidate with it, or (b) sell, assign, lease,
transfer, abandon or otherwise dispose of any stock or indebtedness to any other
Person or any of its assets to any other Person (except for (i) sales of
Inventory in the ordinary course of business). Notwithstanding the foregoing,
intercompany mergers and restructurings among the Companies shall be permitted
with prior written notice to Lender so long as such mergers or restructurings do
not adversely affect the Collateral or any collateral pledged to Lender by any
of the Companies or Lender's security interest therein.
5.8. Encumbrances. Guarantor shall not create, incur, assume or suffer
to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of the Collateral (including the
items described in sections sections 2.1 and 2.2 whether or not the security
interest has attached), except: (a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings diligently
pursued and available to Guarantor and with respect to which adequate reserves
have been set aside on its books; (c) non-consensual statutory liens (other
than liens securing the payment of taxes) arising in the ordinary course of
Guarantor's business to the extent: (i) such liens secure indebtedness which is
not overdue or (ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Guarantor, in each
case prior to the commencement of foreclosure or other similar proceedings and
with respect to which adequate reserves have been set aside on its books;
(d) zoning restrictions, easements, licenses, covenants and other restrictions
affecting the use of real property which do not interfere in any material
respect with the use of such real property or ordinary conduct of the business
of Guarantor as presently conducted thereon or materially impair the value of
the real property which may be subject thereto; (e) subordinated liens on the
Collateral in favor of vendors, provided such liens are subordinated to Lender
on terms and conditions and subject to agreements acceptable to Lender; and
(f) the security interests and liens set forth on Schedule 4.4 hereto.
5.9. Compliance with ERISA.
(a) Guarantor shall not with respect to any "employee benefit plans"
maintained by Guarantor or any of its ERISA Affiliates: (i) terminate any of
such employee benefit plans so as to incur any liability in excess of $5,000,000
to the Pension Benefit Guaranty Corporation established pursuant to ERISA,
(ii) allow or suffer to exist any prohibited transaction involving any of such
employee benefit plans or any trust created thereunder which would subject
Guarantor or such ERISA Affiliate to a tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA, (iii)
fail to pay to any such employee benefit plan any contribution which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
terms of such plan, (iv) allow or suffer to exist any accumulated funding
deficiency, whether or not waived, with respect to any such employee benefit
plan, (v) allow or suffer to exist any occurrence of a reportable event or
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any other event or condition which presents a material risk of termination by
the Pension Benefit Guaranty Corporation of any such employee benefit plan that
is a single employer plan, which termination could result in any liability to
the Pension Benefit Guaranty Corporation or (vi) incur any withdrawal liability
with respect to any multiemployer pension plan.
(b) As used in this Section 5.9, the terms "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
5.10. Costs and Expenses. Guarantor shall pay to Lender on demand all
commercially reasonable costs, expenses, filing fees and taxes paid or payable
in connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable);
(b) all insurance premiums paid by Lender pursuant to Section 5.5, appraisal
fees and search fees; (c) costs and expenses of preserving and protecting the
Collateral; (d) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of
Lender, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (e) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Lender during the
course of periodic field examinations of the Collateral and Guarantor's
operations, plus a per diem charge at the rate of $650.00 per person per day for
Lender's examiners in the field and in the office; and (f) the reasonable fees
and disbursements of counsel (including legal assistants) to Lender in
connection with any of the foregoing.
5.11. Further Assurances. At the request of Lender at any time and from
time to time, Guarantor shall, at its expense, duly execute and deliver, or
cause to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Where
permitted by law, Guarantor hereby authorizes Lender to execute and file one or
more UCC financing statements signed only by Lender.
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SECTION 6. EVENTS OF DEFAULT AND REMEDIES
6.1. Events of Default. The occurrence or existence of any Event of
Default under the Loan Agreement is referred to herein individually as an "Event
of Default", and collectively as "Events of Default".
6.2. Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Guarantor or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Guarantor of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against Guarantor or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h) of the Loan
Agreement, all Obligations shall automatically become immediately due and
payable), (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral or complete processing,
manufacturing and repair of all or any portion of the Collateral, (iii) require
Guarantor, at Guarantor's expense, to assemble and make available to Lender any
part or all of the Collateral at any place and time designated by Lender,
(iv) collect, foreclose, receive, appropriate, setoff and realize upon any and
all Collateral, (v) remove any or all of the Collateral from any premises on or
in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose, (vi) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
(including entering into contracts with respect thereto, public or private sales
at any exchange, broker's board, at any office of Lender or elsewhere) at such
prices or terms as Lender may deem reasonable, for cash, upon credit or for
future delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of Guarantor, which right or equity of
redemption is hereby expressly waived and released by Guarantor. If any of the
Collateral is sold or leased by Lender upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Lender. If
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notice of disposition of Collateral is required by law, five (5) days prior
notice by Lender to Guarantor designating the time and place of any public sale
or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
Guarantor waives any other notice. In the event Lender institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, Guarantor waives the posting of any bond which might otherwise be
required.
(c) Lender may apply the cash proceeds of Collateral actually received by
Lender from any sale, lease, foreclosure or other disposition of the Collateral
to payment of the Obligations, in whole or in part and in such order as Lender
may elect, whether or not then due. Guarantor shall remain liable to Lender for
the payment of any deficiency with interest at the highest rate provided for in
the Loan Agreement and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
SECTION 7. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
7.1.Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and the
other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of Illinois (without giving
effect to principles of conflicts of law).
(b) Guarantor irrevocably consents and submits to the non-exclusive
jurisdiction of the Circuit Court of Xxxx County, Illinois and the United States
District Court for the Northern District of Illinois, Eastern Division and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Agreement or any of the other
Financing Agreements or in any way connected or related or incidental to the
dealings of Guarantor and Lender in respect of this Agreement or the other
Financing Agreements or the transactions related hereto or thereto, in each case
whether now existing or hereafter arising, and whether in contract, tort, equity
or otherwise, and agrees that any dispute with respect to any such matters shall
be heard only in the courts described above (except that Lender shall have the
right to bring any action or proceeding against Guarantor or its property in the
courts of any other jurisdiction which Lender deems necessary or appropriate in
order to realize on the Collateral or to otherwise enforce its rights against
Guarantor or its property).
(c) Guarantor hereby waives personal service of any and all process upon
it and consents that all such service of process may be made by certified mail
(return receipt requested) directed to its address set forth on the signature
pages hereof and service so made shall be deemed to be completed five (5) days
after the same shall have been so deposited in the U.S. mails, or, at Lender's
option, by service upon Guarantor in any other manner
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provided under the rules of any such courts. Within thirty (30) days after such
service, Guarantor shall answer or otherwise plead in response to such process,
failing which Guarantor shall be deemed in default and judgment may be entered
by Lender against Guarantor for the amount of the claim and other relief
requested.
(d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF GUARANTOR AND LENDER IN RESPECT OF THIS AGREEMENT
OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT GUARANTOR OR LENDER MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF GUARANTOR AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(e) Lender shall not have any liability to Guarantor (whether in tort,
contract, equity or otherwise) for losses suffered by Guarantor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Lender that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct.
7.2. Waiver of Notices. Guarantor hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Guarantor which Lender may elect to give shall entitle Guarantor
to any other or further notice or demand in the same, similar or other
circumstances.
7.3. Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of
Guarantor. Lender shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion
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shall not be construed as a bar to or waiver of any such right, power and/or
remedy which Lender would otherwise have on any future occasion, whether similar
in kind or otherwise.
7.4. Waiver of Counterclaims. Guarantor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding brought by Lender with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
7.5. Indemnification. Guarantor shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel except to the extent such loss, claim, damage, liability, cost or
expense is caused by such party's own gross negligence or willful misconduct.
To the extent that the undertaking to indemnify, pay and hold harmless set
forth in this Section may be unenforceable because it violates any law or public
policy, Guarantor shall pay the maximum portion which it is permitted to pay
under applicable law to Lender in satisfaction of indemnified matters under this
Section. The foregoing indemnity shall survive the payment of the Obligations,
the termination of this Agreement and the termination or non-renewal of the Loan
Agreement.
SECTION 8. MISCELLANEOUS
8.1. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, attention Xxxxxx Xxxxxxxx and to Guarantor at its chief
executive office set forth below, or to such other address as either party may
designate by written notice to the other in accordance with this provision, and
(b) deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing.
8.2. Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
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8.3. Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon Guarantor
and its successors and assigns and inure to the benefit of and be enforceable by
Lender and its successors and assigns, except that Guarantor may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender.
8.4. Entire Agreement. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
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IN WITNESS WHEREOF, Guarantor has caused these presents to be
duly executed as of the day and year first above written.
GUARANTOR:
---------------------------------
/s/ Xxxxx X. Xxxxx By /s/ Xxxxx X. Xxxxxx
------------------------------------ ------------------------------
Vice President, General Counsel Its Vice Chairman and C.F.O.
and Secretary ------------------------------
[CORPORATE SEAL] ---------------------------
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
