ABL GUARANTEE AND COLLATERAL AGREEMENTGuarantee Agreement |
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SPECTRUM BRANDS, INC. | AQUARIA, INC | AQUARIUM SYSTEMS, INC | DB ONLINE, LLC | Goldman Sachs Credit Partners LP | PERFECTO MANUFACTURING, INC | ROV HOLDING, INC | ROVCAL, INC | SCHULTZ COMPANY | SOUTHERN CALIFORNIA FOAM, INC | SPECTRUM BRANDS, INC | SPECTRUM NEPTUNE US HOLDCO CORPORATION | Subsidiary Loan Parties | TETRA HOLDING (US), INC | UNITED INDUSTRIES CORPORATION | United Pet Group, Inc | WACHOVIA BANK, NATIONAL ASSOCIATION. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10.2
EXECUTION COPY
ABL GUARANTEE AND COLLATERAL AGREEMENT dated as of September 28,
2007, among SPECTRUM BRANDS, INC., a Wisconsin corporation (the
“ Borrower ”), the
SUBSIDIARIES of the Borrower identified herein and WACHOVIA BANK,
NATIONAL ASSOCIATION, as the Collateral Agent.
Reference is made to the Credit Agreement dated as of
September 28, 2007 (as amended, supplemented or otherwise
modified from time to time, the “ Credit
Agreement ”), among the Borrower, the other
Loan Parties party thereto, the Lenders party thereto, Wachovia
Bank, National Association, as the Administrative Agent, the
Collateral Agent and an LC Issuer, and Goldman Sachs Credit
Partners L.P., as the Syndication Agent. The Lenders and
the LC Issuers have agreed to extend credit to the Borrower subject
to the terms and conditions set forth in the Credit
Agreement. The obligations of the Lenders and the LC
Issuers to extend such credit are conditioned upon, among other
things, the execution and delivery of this
Agreement. The Subsidiary Loan Parties are, or are
Affiliates of, the Borrower, will derive substantial benefits from
the extension of credit to the Borrower pursuant to the Credit
Agreement and are willing to execute and deliver this Agreement in
order to induce the Lenders and the LC Issuers to extend such
credit. Accordingly, the parties hereto agree as
follows:
Definitions
SECTION 1.01 . Credit
Agreement . (a) Capitalized terms used in this
Agreement (including the preliminary statement hereto) and not
otherwise defined herein have the meanings specified in the Credit
Agreement. All terms defined in the New York UCC
(as defined herein) and not defined in this Agreement or in the
Credit Agreement have the meanings specified therein; the term
“instrument” shall have the meaning specified in
Article 9 of the New York UCC.
(b) The
rules of construction specified in Section 1.02 of the Credit
Agreement also apply to this Agreement.
“ ABL Collateral ” means any
and all of the following assets and property of any Loan Party,
whether real, personal or mixed: (a) all Accounts (other than
Accounts arising under contracts for the sale of Non-ABL
Collateral) and related Records; (b) all Chattel Paper;
(c) all Deposit Accounts and all cash, checks and other
negotiable instruments, funds and other evidences of payment held
therein (but not any identifiable Proceeds of Non-ABL Collateral);
(d) all Inventory; (e) solely to the extent evidencing,
governing, securing or otherwise related to the items referred to
in the preceding clauses (a), (b), (c) and (d), all Documents,
General Intangibles (other than Intellectual Property),
Instruments, Investment Property and Letter of Credit Rights;
(f) all books and
records related to the foregoing; and (g) all Proceeds,
including insurance Proceeds, of any and all of the foregoing and
all collateral, security and guarantees given by any Person with
respect to any of the foregoing. Notwithstanding clause
(g) of the immediately preceding sentence, “ABL
Collateral” shall not include any assets referred to in
clauses (a) through (j) and (l) of the definition of “Non-ABL
Collateral” that are not included in clause (e)
above. All capitalized terms used in this definition and
not defined elsewhere in this Agreement have the meanings assigned
to them in the New York UCC.
“ Account ” has the meaning
assigned to such term in Section 9-102 of the New York
UCC.
“ Account Debtor ” means any
Person who is or who may become obligated to any Loan Party under,
with respect to or on account of an Account.
“ Borrower ” has the meaning
assigned to such term in the preliminary statement to this
Agreement.
“ Copyright License ” means
any written agreement, now or hereafter in effect, granting any
right to any third party under any copyright now or hereafter owned
by any Loan Party or that such Loan Party otherwise has the right
to license, or granting any right to any Loan Party under any
copyright now or hereafter owned by any third party, and all rights
of such Loan Party under any such agreement.
“ Copyrights ” means all of
the following now owned or hereafter acquired by any Loan
Party: (a) all copyright rights in any work subject
to the copyright laws of the United States or any other
country, whether as author, assignee, transferee or otherwise, and
(b) all registrations and applications for registration of any
such copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and
pending applications for registration in the United States
Copyright Office.
“ Credit Agreement ” has the
meaning assigned to such term in the preliminary statement to this
Agreement.
“ Intellectual Property ”
means all intellectual and similar property of every kind and
nature now owned or hereafter acquired by any Loan Party, including
inventions, designs, Patents, Copyrights, Licenses, Trademarks,
trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other proprietary data or
information, rights in software and databases and rights in all
embodiments or fixations thereof and rights in related
documentation, registrations and franchises, and all additions,
improvements and accessions to any of the foregoing.
“ Inventory ” has the meaning
assigned to such term in Section 9-102 of the New York
UCC.
“ Lender Party ” means each
Lender, each Agent, each Arranger, each LC Issuer and each of their
respective Affiliates (including any Person that is a Lender, an
Agent or an LC Issuer (or that is such an Affiliate) as of the
Closing Date but
subsequently ceases to be a Lender, an Agent or an LC Issuer (or
such an Affiliate), as the case may be, if such Person is a
counterparty to any Swap Contract with any Loan Party or provides
any cash management services to any Loan Party).
“ License ” means any Patent
License, Trademark License, Copyright License or other license or
sublicense agreement to which any Loan Party is a
party.
“ Loan Parties ” means,
collectively, the Borrower and the Subsidiary Loan
Parties.
“ New York UCC ” means
the Uniform Commercial Code as from time to time in effect in the
State of New York.
“ Non-ABL Collateral ”
means any and all of the following assets and
property of any Loan Party, whether real, personal or mixed: (a)
all Investment Property; (b) all Documents; (c) all General
Intangibles; (d) all Intellectual Property; (e) all Equipment; (f)
all real property (including both fee and leasehold interests) and
fixtures; (g) all Instruments; (h) all insurance; (i) all Letter of
Credit Rights; (j) all Commercial Tort Claims; (k) all other assets
and property not constituting ABL Collateral; (l) all books and
records related to the foregoing; and (m) all Proceeds,
including insurance Proceeds, of any and all of the foregoing and
all collateral security and guarantees given by any Person with
respect to any of the foregoing. Notwithstanding the
foregoing, “Non-ABL Collateral” shall not include any
assets or property included in clause (e) of the definition of
“ABL Collateral” or any assets or property excluded
pursuant to the terms of the Term Collateral
Documents. All capitalized terms used in this definition
and not defined elsewhere in this Agreement have the meanings
assigned to them in the New York UCC.
“ Obligations ” means
(a) the due and punctual payment by the Borrower of
(i) the principal of and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set
for prepayment or otherwise, (ii) each payment required to be
made by the Borrower under any Loan Document in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of LC Disbursements, interest thereon (including
interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) and obligations to
provide cash collateral and (iii) all other monetary
obligations of the Borrower to any of the Secured Parties under the
Credit Agreement and each of the other Loan Documents, including
expense reimbursement obligations and indemnification obligations,
whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred, and any interest thereon
accruing, during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), (b) the due and
punctual payment of all the monetary obligations of each other Loan
Party under or pursuant to the Credit Agreement and each of the
other Loan Documents (including monetary obligations incurred, and
any
interest thereon accruing, during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), (c) the due
and punctual payment and performance of all monetary obligations of
each Loan Party under each Swap Contract with a counterparty that
is a Lender Party (whether such Swap Contract is in effect on the
Closing Date or entered into after the Closing Date), other than
any such Swap Contract with respect to which the Lender Party that
is the counterparty thereto shall have agreed in writing that such
Swap Contract shall be deemed not to be a “Swap
Contract” for purposes of this clause (c) (a copy of such
writing to be delivered to the Collateral Agent), and (d) the
due and punctual payment and performance of all monetary
obligations of each Loan Party to any Lender Party in respect of
cash management services (including treasury, depository,
overdraft, credit or debit card (including non-card e-payable
services), electronic funds transfer and other cash management
arrangements) (other than cash management services provided after
(i) the principal of each Loan and all LC Disbursements,
interest and fees payable under the Credit Agreement have been paid
in full, (ii) all Commitments under the Credit Agreement have
been reduced to zero and (iii) no LC Issuer shall have any
obligation to issue Letters of Credit under the Credit Agreement
and no Letter of Credit shall be outstanding (other than any Letter
of Credit the obligations under which have been cash collateralized
in full or supported in full by letters of credit of other banks
naming the applicable LC Issuer as the beneficiary, in each case,
in a manner satisfactory to the applicable LC
Issuer)).
“ Patent License ” means any
written agreement, now or hereafter in effect, granting to any
third party any right to make, use or sell any invention on which a
patent, now or hereafter owned by any Loan Party or that any Loan
Party otherwise has the right to license, is in existence, or
granting to any Loan Party any right to make, use or sell any
invention on which a patent, now or hereafter owned by any third
party, is in existence, and all rights of any Loan Party under any
such agreement.
“ Patents ” means all of the
following now owned or hereafter acquired by any Loan
Party: (a) all letters patent of the
United States or the equivalent thereof in any other country,
all registrations and recordings thereof, and all applications for
letters patent of the United States or the equivalent thereof
in any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark
Office or any similar offices in any other country and (b) all
reissues, continuations, divisions, continuations-in-part, renewals
or extensions thereof, and the inventions disclosed or claimed
therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
“ Perfection Certificate ”
means a certificate substantially in the form of Exhibit II,
completed and supplemented with the schedules and attachments
contemplated thereby, and duly executed by a Responsible Officer of
the Borrower.
“ Proceeds ” has the meaning
assigned to such term in Section 9-102 of the New York
UCC.
“ Secured Parties ” means
(a) the Lenders, (b) the Administrative Agent,
(c) the Collateral Agent, (d) the Syndication Agent,
(e) the Arrangers, (f) the LC Issuers, (g) the
Lender Parties to whom any of the Obligations are owed and
(h) the permitted successors and assigns of each of the
foregoing.
“ Security Interest ” has the
meaning assigned to such term in Section 3.01(a).
“ Subsidiary Loan Parties ”
means (a) the Subsidiaries identified on Schedule I and
(b) each other Subsidiary that becomes a party to this
Agreement as a Subsidiary Loan Party after the Closing
Date.
“ Term Collateral Documents ”
has the meaning assigned to such term in the ABL Intercreditor
Agreement.
“ Term Liens ” has the
meaning assigned to such term in the ABL Intercreditor
Agreement.
“ Trademark License ” means
any written agreement, now or hereafter in effect, granting to any
third party any right to use any trademark now or hereafter owned
by any Loan Party or that any Loan Party otherwise has the right to
license, or granting to any Loan Party any right to use any
trademark now or hereafter owned by any third party, and all rights
of any Loan Party under any such agreement.
“ Trademarks ” means all of
the following now owned or hereafter acquired by any Loan
Party: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, logos, other source or
business identifiers and other general intangibles of like nature,
now existing or hereafter adopted or acquired, all registrations
and recordings thereof, and all registration and recording
applications filed in connection therewith, including registrations
and registration applications in the United States Patent and
Trademark Office or any similar offices in any State of the
United States or any other country or any political
subdivision thereof, and all extensions or renewals thereof and
(b) all goodwill associated therewith or symbolized
thereby.
Guarantee
SECTION 2.01 .
Guarantee . Each Loan Party unconditionally
guarantees, jointly with the other Loan Parties and severally, as a
primary obligor and not merely as a surety, the due and punctual
payment of the Obligations. Each Loan Party further
agrees that the Obligations may be extended or renewed, in whole or
in part, or amended or modified, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal, or amendment or
modification, of any Obligation. Each Loan Party waives
presentment to, demand of payment from and protest to the Borrower
or any other Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for
nonpayment.
SECTION 2.02 . Guarantee of
Payment . Each Loan Party further agrees that its
guarantee hereunder constitutes a guarantee of payment when due and
not of collection, and waives any right to require that any resort
be had by the Collateral Agent or any other Secured Party to any
security held for the payment of the Obligations or to any balance
of any deposit account or credit on the books of the Collateral
Agent or any other Secured Party in favor of the Borrower or any
other Person.
SECTION 2.03 . No
Limitations . (a) Except for termination of a Loan
Party’s obligations hereunder as expressly provided in
Section 6.13, the obligations of each Loan Party hereunder
shall not be subject to any reduction, limitation, impairment or
termination for any reason, including any claim of waiver, release,
surrender, alteration or compromise of any Obligations, and shall
not be subject to any defense or set-off, counterclaim, recoupment
or termination whatsoever by reason of the invalidity, illegality
or unenforceability of the Obligations or
otherwise. Without limiting the generality of the
foregoing, the obligations of each Loan Party hereunder shall not
be discharged or impaired or otherwise affected by (i) the
failure of the Collateral Agent or any other Secured Party to
assert any claim or demand or to enforce any right or remedy under
the provisions of any Loan Document or otherwise; (ii) any
rescission, waiver, amendment or modification of, or any release
from any of the terms or provisions of, any Loan Document or any
other agreement, including with respect to any other Loan Party
under this Agreement; (iii) the release of, or any impairment
of or failure to perfect any Lien on or security interest in, any
security held by the Collateral Agent or any other Secured Party
for the Obligations or any of them; (iv) any default, failure
or delay, wilful or otherwise, in the performance of the
Obligations; or (v) any other act or omission that may or
might in any manner or to any extent vary the risk of any Loan
Party or otherwise operate as a discharge of any Loan Party as a
matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations). Each Loan Party
expressly authorizes the Secured Parties to take and hold security
in accordance with the terms of this Agreement and the other Loan
Documents for the payment and performance of the Obligations, to
exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and
direct the order and manner of any sale thereof in their sole
discretion or to release or substitute any one or more other Loan
Parties or obligors upon or in respect of the Obligations, all
without affecting the obligations of any Loan Party
hereunder.
(b) To the fullest extent permitted by applicable Law,
each Loan Party waives any defense based on or arising out of any
defense of the Borrower or any other Loan Party or the
unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the
Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The
Collateral Agent and the other Secured Parties may, at their
election, foreclose on any security held by one or more of them in
accordance with the terms of this Agreement and the other Loan
Documents by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise
or adjust any part of the Obligations, make any other accommodation
with the Borrower or any other Loan Party or exercise any other
right or remedy available to them against the Borrower or any other
Loan Party, without affecting or impairing in any way the liability
of any Loan Party hereunder
except to the extent the Obligations have been fully and
indefeasibly paid in full in cash. To the fullest extent
permitted by applicable Law, each Loan Party waives any defense
arising out of any such election even though such election
operates, pursuant to applicable Law, to impair or to extinguish
any right of reimbursement or subrogation or other right or remedy
of such Loan Party against the Borrower or any other Loan Party, as
the case may be, or any security.
SECTION 2.04 .
Reinstatement . Each Loan Party agrees that its
guarantee hereunder shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part
thereof, of any Obligation is rescinded or must otherwise be
restored by the Collateral Agent or any other Secured Party upon
the bankruptcy or reorganization of the Borrower, any other Loan
Party or otherwise.
SECTION 2.05 . Agreement to
Pay; Subrogation . In furtherance of the foregoing
and not in limitation of any other right that the Collateral Agent
or any other Secured Party has at law or in equity against any Loan
Party by virtue hereof, upon the failure of the Borrower or any
other Loan Party to pay any Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, each Loan Party hereby promises to and
will forthwith pay, or cause to be paid, to the Collateral Agent
for distribution to the applicable Secured Parties in cash the
amount of such unpaid Obligation. Upon payment by any
Loan Party of any sums to the Collateral Agent as provided above,
all rights of such Loan Party against the Borrower or any other
Loan Party arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subject to Article V.
SECTION 2.06.
Information . Each Loan Party assumes all
responsibility for being and keeping itself informed of the
Borrower’s and each other Loan Party’s financial
condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that such Loan Party assumes and incurs
hereunder, and agrees that neither the Collateral Agent nor any of
the other Secured Parties will have any duty to advise such Loan
Party of information known to it or any of them regarding such
circumstances or risks.
Security Interests in Personal Property
SECTION 3.01 . Security
Interest . (a) As security for the payment in full
of the Obligations, each Loan Party hereby pledges to the
Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a
security interest (the “ Security
Interest ”) in, all right, title or interest
in, to and under any and all of the ABL Collateral now owned or at
any time hereafter acquired by such Loan Party or in which such
Loan Party now has or at any time in the future may acquire any
right, title or interest.
(b) Each Loan Party hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to file in any
relevant jurisdiction any initial financing statements with respect
to the ABL Collateral or any part thereof and amendments
thereto and continuations thereof that contain the information
required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement
or amendment, including whether such Loan Party is an organization,
the type of organization and any organizational identification
number issued to such Loan Party. Each Loan Party agrees
to provide such information to the Collateral Agent promptly upon
request. Without limiting the foregoing, each Loan Party
hereby irrevocably authorizes the Collateral Agent at any time and
from time to time to file in any relevant jurisdiction financing
statements that describe the ABL Collateral as “all assets,
whether now owned or hereafter acquired” of such Loan Party,
or words of similar effect as being of an equal or lesser scope or
with greater detail. Each Loan Party also ratifies its
authorization for the Collateral Agent to file in any relevant
jurisdiction any initial financing statements or amendments thereto
if filed prior to the date hereof.
(c) The Security Interest is granted as security only
and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or
liability of any Loan Party with respect to or arising out of the
ABL Collateral (other than the duties expressly created
hereunder).
SECTION 3.02 .
Representations and Warranties . The Loan Parties
jointly and severally represent and warrant to the Collateral Agent
and the other Secured Parties that:
(a) Each Loan Party has good and valid rights in and
title to the ABL Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power
and authority to grant to the Collateral Agent, for the benefit of
the Secured Parties, the Security Interest in such
ABL Collateral pursuant hereto and to execute, deliver and
perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other Person
other than any consent or approval that has been obtained, except
to the extent that the failure to have such rights, title, power or
authority could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(b) The Perfection Certificate has been duly prepared,
completed and executed and the information set forth therein,
including the exact legal name and place of organization of each
Loan Party, is correct and complete as of the Closing
Date. The Uniform Commercial Code financing statements
prepared by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for
filing in each governmental, municipal or other office specified in
Schedules 2A and 2B to the Perfection Certificate (or specified by
notice from the Borrower to the Collateral Agent after the Closing
Date in the case of filings, recordings or registrations required
by Section 6.13 of the Credit Agreement), are all the filings,
recordings and registrations that are necessary to publish notice
of, perfect and protect the validity of and to establish a legal,
valid and perfected security interest in favor of the Collateral
Agent, for the benefit of the Secured Parties, in respect of all
ABL Collateral in which the Security Interest
may
be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under
applicable Law with respect to the filing of continuation
statements.
(c) The Security Interest constitutes (i) a legal
and valid security interest in all the ABL Collateral securing
the payment of the Obligations and (ii) subject to the filings
described in Section 3.02(b), a perfected security interest in
all ABL Collateral in which a security interest may be
perfected by filing, recording or registering a financing statement
or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable Law in such
jurisdictions. The Security Interest is and shall be
prior to any other Lien on any of the ABL Collateral, other
than Permitted Liens (but not Term Liens) that have priority as a
matter of law.
(d) The ABL Collateral is owned by the Loan Parties
free and clear of any Lien, except for Permitted
Liens. None of the Loan Parties has filed or consented
to the filing of (i) any financing statement or analogous
document under the Uniform Commercial Code or any other applicable
Law covering any ABL Collateral or (ii) any assignment in
which any Loan Party assigns any ABL Collateral or any
security agreement or similar instrument covering any
ABL Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document,
assignment, security agreement or similar instrument is still in
effect, except, in each case, for Permitted Liens.
SECTION 3.03 .
Covenants . (a) Each Loan Party agrees to
maintain, at its own cost and expense, such complete and accurate
records with respect to the ABL Collateral owned by it as is
consistent with its current practices and its reasonable business
judgment, and, at such time or times as the Collateral Agent may
reasonably request, promptly to prepare and deliver to the
Collateral Agent an updated schedule in form and detail reasonably
satisfactory to the Collateral Agent showing the identity, amount
and location of any and all ABL Collateral.
(b) Each Loan Party shall, at its own expense, take any
and all actions consistent with its current practices and its
reasonable business judgment to defend title to the
ABL Collateral against all Persons and to defend the Security
Interest of the Collateral Agent in the ABL Collateral and the
priority thereof against any Lien that is not a Permitted
Lien.
(c) Each Loan Party agrees, at its own expense, to
execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the
Collateral Agent may from time to time reasonably request to better
assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any
fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements or other documents in
connection herewith or
therewith. If any amount payable under or in connection
with any of the ABL Collateral shall be or become evidenced by
any promissory note or other instrument, such note or instrument
shall be promptly pledged and delivered to the Collateral Agent,
duly endorsed in a manner reasonably satisfactory to the Collateral
Agent.
(d) Upon the occurrence and during the continuance of an
Event of Default, the Collateral Agent and such Persons as the
Collateral Agent may reasonably designate shall have the right to
inspect the ABL Collateral, all records related thereto (and
to make extracts and copies from such records) and the premises
upon which any of the ABL Collateral is located, to discuss
the Loan Parties’ affairs with the officers of the Loan
Parties and their independent accountants and to verify under
reasonable procedures, in accordance with Section 6.11 of the
Credit Agreement, the validity, amount, quality, quantity, value,
condition and status of, or any other matter relating to, the ABL
Collateral. In the case of Accounts or other ABL
Collateral in the possession of any third Person, the Collateral
Agent and such Persons as the Collateral Agent may reasonably
designate shall have the right to verify, at any time, the
validity, amount, quality, quantity, value, condition and status
thereof by contacting Account Debtors or the third Person
possessing such ABL Collateral for the purpose of making such a
verification. The Loan Parties shall be required to pay
all reasonable out-of-pocket costs and expenses incurred by the
Collateral Agent or any other Person in connection with any
inspection or verification referred to in this
paragraph.
(e) At its option, the Collateral Agent may discharge
past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the
ABL Collateral and not permitted pursuant to Section 7.01
of the Credit Agreement, may obtain insurance and may pay for the
maintenance and preservation of the ABL Collateral to the
extent any Loan Party fails to do so as required by the Credit
Agreement or this Agreement, and each Loan Party jointly and
severally agrees to reimburse the Collateral Agent on demand for
any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided that
nothing in this paragraph shall be interpreted as excusing any Loan
Party from the performance of, or imposing any obligation on the
Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Loan Party with respect to
taxes, assessments, charges, fees, Liens, security interests,
insurance or other encumbrances and maintenance as set forth herein
or in the other Loan Documents.
(f) If at any time any Loan Party shall take a security
interest in any property with a value in excess of $1,000,000 in
the aggregate of an Account Debtor or any other Person to secure
payment and performance of an Account, such Loan Party shall
promptly assign such security interest to the Collateral Agent, for
the benefit of the Secured Parties. Such assignment need
not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and
transferees from the Account Debtor or other Person granting the
security interest.
(g) Each Loan Party shall remain liable to observe and
perform all the conditions and obligations to be observed and
performed by it under each contract, agreement or instrument
relating to the ABL Collateral, all in accordance with the
terms
and conditions thereof, and the Loan Parties
jointly and severally agree to indemnify and hold harmless the
Collateral Agent and the other Secured Parties from and
against any and all liability for such performance.
(h) If and to the extent requested by the Collateral
Agent, each Loan Party agrees that it shall notify each
warehouseman, agent, bailee or processor that possesses or controls
any Inventory of such Loan Party of the Security Interest and shall
use its commercially reasonable efforts to obtain from such
warehouseman, agent, bailee or processor an acknowledgement in
writing, in form and substance reasonably satisfactory to the
Collateral Agent, that such warehouseman, agent, bailee or
processor holds such Inventory for the benefit of the Collateral
Agent subject to the Security Interest and shall act upon the
instructions of the Collateral Agent without further consent from
any Loan Party, and that such warehouseman, agent, bailee or
processor further agrees to fully subordinate any Lien held by it
with respect to such Inventory, whether arising by operation of Law
or otherwise, to the Security Interest.
(i) None of the Loan Parties will, without the
Collateral Agent’s prior written consent, grant any extension
of the time of payment of any Accounts included in the
ABL Collateral, compromise, compound or settle the same for
less than the full amount thereof, release, wholly or partly, any
Person liable for the payment thereof or grant any credit, discount
or allowance whatsoever thereon, other than extensions,
compromises, settlements, releases, credits, discounts or
allowances granted or made in the ordinary course of business and
consistent with its current practices and in accordance with such
prudent and standard practice used in industries that are the same
as or similar to those in which such Loan Party is
engaged. Upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim,
offset, counterclaim or dispute with Account Debtors or grant any
credits, discounts or allowances.
(j) The Loan Parties, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss
or damage to the Inventory in accordance with the requirements set
forth in Section 6.08 of the Credit Agreement. Each
Loan Party shall use its commercially reasonable efforts to
cause any fire and extended coverage insurance policies
maintained by it with respect to any ABL Collateral to be
endorsed or otherwise amended to include a lenders’ loss
payable clause in favor of the Collateral Agent and to provide that
it shall not be canceled, modified or not renewed except upon not
less than 10 days’ prior written notice thereof by the
insurer to the Collateral Agent. Each Loan Party
irrevocably makes, constitutes and appoints the Collateral Agent
(and all officers, employees or agents designated by the Collateral
Agent) as such Loan Party’s true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an
Event of Default, of making, settling and adjusting claims in
respect of ABL Collateral under policies of
insuran
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