EXHIBIT 4.2
FORM OF
BORROWER SECURITY AGREEMENT
AGREEMENT dated as of July 19, 1994, made by FLEMING
COMPANIES, INC., an Oklahoma Corporation (with its successors, the
"Pledgor"), in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Collateral Agent.
R E C I T A L S :
A. Pursuant to the Credit Agreement, dated as of July
19, 1994 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by
and among the Pledgor, the Banks listed therein, the Agents listed
therein and Morgan Guaranty Trust Company of New York, as Managing
Agent for the Banks, the Banks have agreed (i) to make loans to the
Pledgor up to an aggregate principal amount of $2,200,000,000 and
(ii) to issue certain letters of credit for the account of the
Pledgor.
B. It is contemplated that the Pledgor may enter into
one or more agreements ("Interest Rate Protection Agreements") with
one or more of the Banks (as hereinafter defined) regarding the
interest rates with respect to loans under the Credit Agreement
(all obligations of the Pledgor now existing or hereafter arising
under such Interest Rate Protection Agreements, collectively, the
"Interest Rate Obligations").
C. It is contemplated that the Pledgor may have or enter
into one or more agreements ("Further Letter of Credit Agreements")
with one or more of the Banks to issue certain letters of credit
(in addition to those issuable pursuant to the Credit Agreement)
for the account of the Pledgor in an aggregate face amount of up to
$160,000,000.
D. It is a condition precedent to the obligations of the
Banks to make the loans under the Credit Agreement and a condition
precedent to any letters of credit being issued under the Credit
Agreement and may be a condition precedent to any Bank entering
into Interest Rate Protection Agreements or entering into or
maintaining Further Letter of Credit Agreements that the Pledgor
execute and deliver this Agreement.
E. In order to comply with certain negative pledge
clauses in other instruments and agreements by which it is bound,
the Pledgor must, with respect to certain of the Collateral (as
hereinafter defined), secure certain other obligations existing on
the date hereof equally and ratably with its obligations under the
Credit Agreement and the notes issued pursuant thereto.
F. This Agreement is given by the Pledgor in favor of
the Collateral Agent for its benefit and the benefit of the Secured
Parties, to the extent provided for herein, to secure the payment
and performance of all of the Secured Obligations (as hereinafter
defined).
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Pledgor and the
Collateral Agent hereby agree as follows:
Section 1. Pledge. As collateral security for the
payment and performance when due of all the Secured Obligations,
the Pledgor hereby pledges, assigns, transfers and grants to the
Collateral Agent for the benefit of the Secured Parties, a
continuing first priority security interest in and to all of the
right, title and interest of the Pledgor in, to and under the
following (collectively, the "Collateral"):
(a) each and every Receivable (as hereinafter defined)
now existing or hereafter arising from time to time;
(b) all Inventory (as hereinafter defined) now existing
or hereafter acquired from time to time;
(c) the Collateral Account (as hereinafter defined) and
all cash deposited therein or other property held therein from time
to time;
(d) all Documents (as hereinafter defined) relating to
any of the foregoing; and
(e) all Proceeds (as hereinafter defined) of any and all
of the foregoing;
provided that the Collateral shall not include Excepted Inventory
and Excepted Receivables and provided further that the Non-Bank
Secured Parties shall be entitled to the benefits of only the
Security Interests in the Intercompany Receivables Collateral.
Section 2. Secured Obligations. This Agreement secures,
and the Collateral is collateral security for, the payment and
performance in full when due, whether at stated maturity, by
acceleration or otherwise (including, without limitation, the
payment of interest and other amounts which would accrue and become
due but for the filing of a petition in bankruptcy or the operation
of the automatic stay under Section 361(a) of the Bankruptcy Code,
11 U.S.C. Section 362(a)), of (i) all obligations of the Pledgor
now existing or hereafter arising under or in respect of the Credit
Agreement, all Interest Rate Obligations of the Pledgor now
existing or hereafter arising under or in respect of any Interest
Rate Protection Agreement, all obligations of the Pledgor now
existing or hereafter arising under or in respect of any Further
Letter of Credit Agreement and all obligations of the Pledgor now
existing or hereafter arising with respect to the principal of and
premium, if any, and interest on the Existing Indenture Obligations
(including, without limitation, the Pledgor's obligations to pay
principal, interest and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other
payments related to or in respect of the obligations contained in
the Credit Agreement, the obligations contained in any Interest
Rate Protection Agreement and the obligations contained in any
Further Letter of Credit Agreement) and (ii) without duplication of
the amounts described in clause (i), all obligations of the Pledgor
now existing or hereafter arising under or in respect of this
Agreement (the obligations described in clauses (i) and (ii),
collectively, the "Secured Obligations").
No Interest Rate Protection Agreement or Further Letter
of Credit Agreement, or any amount payable in connection therewith,
shall constitute a Secured Obligation unless the Pledgor has
designated it as such (and any references herein to an Interest
Rate Protection Agreement or Further Letter of Credit Agreement
shall include only those that have been so designated) by
delivering to the Collateral Agent a certificate signed by a
Responsible Officer which shall identify the obligation so
designated and specify the name and address of the counter party
thereto and, in the case of any Further Letter of Credit Agreement,
certify that, after giving effect to such designation, the
aggregate undrawn face amount of all letters of credit that are
outstanding on such date (or that a Bank is obligated to issue
after such date) under all Further Letter of Credit Agreements plus
the aggregate amount of all reimbursement obligations (but not any
interest thereon) for amounts previously drawn and remaining unpaid
under letters of credit issued pursuant to all Further Letter of
Credit Agreements does not exceed $160,000,000.
Section 3. No Release. Nothing set forth in this
Agreement shall relieve the Pledgor from the performance of any
term, covenant, condition or agreement on the Pledgor's part to be
performed or observed under or in respect of any of the Collateral
or from any liability to any Person under or in respect of any of
the Collateral or shall impose any obligation on the Collateral
Agent or any Secured Party to perform or observe any such term,
covenant, condition or agreement on the Pledgor's part to be so
performed or observed or shall impose any liability on the
Collateral Agent or any Secured Party for any act or omission on
the part of the Pledgor relating thereto or for any breach of any
representation or warranty on the part of the Pledgor contained in
this Agreement, any Interest Rate Protection Agreement, any Further
Letter of Credit Agreement or any other Operative Agreement, or
under or in respect of the Collateral or made in connection
herewith or therewith. The obligations of the Pledgor contained in
this Section 3 shall survive the termination of this Agreement and
the discharge of the Pledgor's other obligations under this
Agreement, any Interest Rate Protection Agreement, any Further
Letter of Credit Agreement and under the other Operative
Agreements.
Section 4. Supplements by the Collateral Agent.
The Pledgor hereby authorizes the Collateral Agent, without
relieving the Pledgor of any obligations hereunder, to file
financing statements, continuation statements and other documents,
relative to all or any part thereof, without the signature of the
Pledgor where permitted by law, and the Pledgor shall make,
execute, endorse, acknowledge, file or refile or make available
(or, upon the occurrence of an Event of Default, deliver) to the
Collateral Agent from time to time such lists, descriptions and
designations of the Collateral, copies of warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory
assignments, supplements, additional security agreements (but in
this instance only where required by law), conveyances, financing
statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or
rights covered by the security interests hereby granted, which the
Collateral Agent reasonably deems appropriate or advisable,
wherever required or permitted by law, in order to perfect and
preserve the rights and interests granted to the Collateral Agent
hereunder or to carry into effect the purposes of this Agreement or
better to assure and confirm unto the Collateral Agent its
respective rights, powers and remedies hereunder. All of the
foregoing shall be at the sole cost and expense of the Pledgor.
Section 5. Representations, Warranties and Covenants.
The Pledgor represents, warrants and covenants as follows:
(a) Corporate Existence and Power. The Pledgor is a
corporation duly incorporated, validly existing and in good
standing under the laws of Oklahoma, and has all corporate powers
and all material governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted.
(b) Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the
Pledgor of this Agreement are within the Pledgor's corporate
powers, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute a default under, any provisions of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Pledgor or result in the creation or imposition of any Lien (other
than those contemplated by this Agreement) on any asset of the
Pledgor.
(c) Necessary Filings. Within 3 Business Days of the
date hereof, Pledgor shall cause the filing of all filings,
registrations and recordings necessary, appropriate or requested by
the Collateral Agent to create, preserve, protect and perfect the
security interest granted by the Pledgor to the Collateral Agent
hereby in respect of the Collateral. Upon the filing of all such
filings, registrations and recordings, the security interest
granted to the Collateral Agent for the benefit of the Secured
Parties pursuant to this Agreement in and to the Collateral shall
constitute and hereafter will constitute a perfected security
interest therein, superior and prior to the rights of all other
Persons therein and subject to no other Liens other than Permitted
Liens.
(d) No Liens. The Pledgor is as of the date hereof,
and, as to Collateral acquired by it from time to time after the
date hereof, the Pledgor will be, the owner of all Collateral free
from any Lien or other right, title or interest of any Person other
than Permitted Liens, and the Pledgor shall defend the Collateral
against all claims and demands, other than Permitted Liens, of all
Persons at any time claiming any interest therein adverse to the
Collateral Agent or any Secured Party.
(e) Other Financing Statements. There is no financing
statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any
interest of any kind in the Collateral other than financing
statements relating to Permitted Liens, and so long as any of the
Secured Obligations remain unpaid or the Commitments of the Banks
to make any Loan or to issue any Letter of Credit shall not have
expired, the Pledgor shall not execute, authorize or permit to be
filed in any public office any financing statement (or similar
statement or instrument of registration under the law of any
jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and
covering Permitted Liens.
(f) Chief Executive Office; Records. The chief
executive office of the Pledgor is located at 6301 Waterford
Boulevard, Oklahoma City, Oklahoma 73126. The Pledgor shall not
move its chief executive office, except to such new location as the
Pledgor may establish in accordance with the last sentence of this
Section 5(f). All tangible evidence of the Receivables
constituting Collateral of the Pledgor and the only original books
of account and records of the Pledgor relating to the Collateral
are, and will continue to be, kept at such chief executive office,
or at any such new location for such chief executive office as the
Pledgor may establish in accordance with the last sentence of this
Section 5(f), or at such other locations as are set forth on
Schedule 5(f) or Schedule A hereto, as such Schedules may be
amended from time to time. All Collateral of the Pledgor is, and
will continue to be, controlled and monitored (including, without
limitation, for general accounting purposes) from such chief
executive office location shown above, from such new location as
the Pledgor may establish in accordance with the last sentence of
this Section 5(f), or from such other locations as are set forth on
Schedule 5(f) or Schedule A hereto, as such Schedules may be
amended from time to time. The Pledgor shall not establish a new
location for its chief executive office nor shall it change its
name until (i) it shall have given the Collateral Agent not less
than 20 days' prior written notice of its intention so to do,
clearly describing such new location or name and providing such
other information in connection therewith as the Collateral Agent
may request, and (ii) with respect to such new location or name,
the Pledgor shall have taken all action satisfactory to the
Collateral Agent or the Required Banks to maintain the perfection
and priority of the security interest of the Collateral Agent for
the benefit of the Secured Parties in the Collateral intended to be
granted hereby.
(g) Location of Inventory. All Inventory (other than
Inventory constituting Excepted Inventory and Excepted Receivables)
held on the date hereof by the Pledgor is located at one of the
locations shown on Schedule A hereto, except for Inventory in
transit in the ordinary course of business to or from one or more
of such locations. All Inventory now held or subsequently acquired
shall be kept at one of the locations shown on Schedule A hereto,
except for Inventory in transit in the ordinary course of business
to or from one or more of such locations, or such new location as
the Pledgor may establish if (i) in the case of any location not
within a jurisdiction covered by financing statements filed
pursuant to this Agreement, it shall have given to the Collateral
Agent at least 10 days' prior written notice of its intention so to
do, clearly describing such new location and providing such other
information in connection therewith as the Collateral Agent may
request and, in the case of any other location, it gives the
Collateral Agent written notice of such location within 10 days
after such action, and (ii) with respect to such new location, the
Pledgor shall have taken all action satisfactory to the Collateral
Agent or the Required Banks to maintain the perfection and priority
of the security interest in the Collateral intended to be granted
hereby.
(h) Authorization, Enforceability. The Pledgor has the
requisite corporate power, authority and legal right to pledge and
grant a security interest in all the Collateral pursuant to this
Agreement, and this Agreement constitutes the legal, valid and
binding obligation of the Pledgor, enforceable against the Pledgor
in accordance with its terms.
(i) No Consents, etc. No consent of any party
(including, without limitation, stockholders or creditors of the
Pledgor or any account debtor under a Receivable) and no consent,
authorization, approval, or other action by, and no notice to or
filing with, any governmental authority or regulatory body or other
Person is required either (x) for the pledge by the Pledgor of the
Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Pledgor, or (y)
for the exercise by the Collateral Agent of the rights provided for
in this Agreement, or (z) for the exercise by the Collateral Agent
of the remedies in respect of the Collateral pursuant to this
Agreement.
(j) Collateral. All information set forth herein,
including the Schedules annexed hereto, and all information
contained in any documents, schedules and lists heretofore
delivered to any Secured Party in connection with this Agreement,
in each case, relating to the Collateral, is accurate and complete
in all respects.
(k) Initial Evidence of Collateral. Other than in
connection with the sale or lease of Computer Equipment or other
equipment, all of the Pledgor's rights to payment for goods sold or
services performed (other than for services provided in connection
with sales or leases of Computer Equipment) are and will be
initially evidenced by only accounts, provided that in connection
with the refurbishment or expansion of an existing store supplied
by the Pledgor or the initial stocking of a store not previously
supplied by the Pledgor, the Pledgor may sell a stock of inventory
in consideration for a retailer note or chattel paper.
Section 6. Special Provisions Concerning Receivables.
(a) Maintenance of Records. The Pledgor shall keep and
maintain at its own cost and expense satisfactory and complete
records of each Receivable, in a manner consistent with prudent
business practices, and the Pledgor shall make the same available
to the Collateral Agent for inspection, at the Pledgor's sole cost
and expense, during customary business hours upon demand. Upon the
occurrence and during the continuance of an Event of Default, the
Pledgor shall, at the Pledgor's sole cost and expense, deliver all
tangible evidence of Receivables, including, without limitation,
all documents evidencing Receivables and any books and records
relating thereto, to the Collateral Agent or to its representatives
(copies of which evidence and books and records may be retained by
the Pledgor) at any time upon the demand of the Required Banks.
Upon the cure or waiver of any Event of Default, the Collateral
Agent shall promptly return all evidence and books and records to
the Pledgor. Upon the occurrence and during the continuance of an
Event of Default, the Collateral Agent, with the consent of the
Required Banks, may transfer a full and complete copy of the
Pledgor's books, records, credit information, reports, memoranda
and all other writings relating to the Receivables to and for the
use by any Person that has acquired or is contemplating acquisition
of an interest in the Receivables or the Collateral Agent's
security interest therein without the consent of the Pledgor.
(b) Modification of Terms, etc. The Pledgor shall not
rescind or cancel any indebtedness evidenced by any Receivable
constituting part of the Collateral or modify any term thereof or
make any adjustment with respect thereto, or extend or renew any
such indebtedness or compromise or settle any dispute, claim, suit
or legal proceeding relating thereto other than in the ordinary
course of business consistent with past practice. The Pledgor
shall timely fulfill all obligations on its part to be fulfilled
under or in connection with the Receivables.
(c) Collection. The Pledgor shall take all actions to
cause to be collected from the account debtor of each of the
Receivables constituting part of the Collateral, as and when due
(including, without limitation, Receivables that are delinquent,
such Receivables to be collected in accordance with generally
accepted commercial collection procedures), any and all amounts
owing under or on account of such Receivable, and apply forthwith
upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable. Subject to the rights of
the Collateral Agent hereunder upon the occurrence of an Event of
Default, the Pledgor may, with respect to a Receivable constituting
part of the Collateral, allow in the ordinary course of business
(i) a refund or credit due as a result of returned or damaged or
defective merchandise and (ii) such extension of time to pay
amounts due in respect of such Receivables and such other
modifications of payment terms or settlements in respect of such
Receivables as shall be commercially reasonable in the
circumstances, all in accordance with the Pledgor's ordinary course
of business consistent with its collection practices as in effect
from time to time. The costs and expenses (including, without
limitation, attorney's fees) of collection, in any case, whether
incurred by the Pledgor, the Collateral Agent or any Secured Party,
shall be paid by the Pledgor.
(d) Instruments. If the Pledgor receives from any
Person any instrument or chattel paper in exchange or substitution
for or in payment or other satisfaction of any account constituting
part of the Collateral and, after giving effect thereto the
aggregate outstanding face amount of all such instruments and
chattel paper received from such Person and its Affiliates by the
Pledgor exceeds $125,000, the Pledgor shall deliver to the
Collateral Agent, within 10 days after receipt of the instrument or
chattel paper in question by the Pledgor, all such instruments and
chattel paper. Any instrument or chattel paper delivered to the
Collateral Agent pursuant to this Section 6(e) shall be
appropriately endorsed (if applicable) to the order of the
Collateral Agent, as agent for the Secured Parties, and shall be
held by the Collateral Agent as further security hereunder. If
there is a bank or trust company located in Oklahoma City,
satisfactory to the Collateral Agent in its reasonable discretion,
willing and able to serve, on terms satisfactory to the Collateral
Agent in its reasonable discretion, as a co-agent pursuant to
Section 30, the Collateral Agent shall, if so requested by or on
behalf of the Pledgor, appoint such a bank as co-agent for purposes
of holding such instruments and chattel paper in custody. The
Pledgor may, on at least three Domestic Business Days' notice to
the Collateral Agent or any such co-agent, as the case may be (or
such shorter period as may be agreed to by the Collateral Agent or
any such co-agent from time to time or in any particular instance),
obtain redelivery of any such instrument or chattel paper to it for
purposes of cancellation or surrender to the maker thereof either
in exchange for a substitute note or against payment thereof.
(e) Upon the occurrence and during the continuance of
an Event of Default, if the Collateral Agent, at the request of the
Required Banks, so directs, the Pledgor shall cause all payments on
account of the Receivables constituting part of the Collateral to
be held by the Collateral Agent as cash collateral in the
Collateral Account, upon acceleration or otherwise. Without notice
to or assent by the Pledgor, the Collateral Agent may apply any or
all amounts then or thereafter held as cash collateral in the
manner provided in Section 11. The costs and expenses (including,
without limitation, reasonable attorney's fees) of collection,
whether incurred by the Collateral Agent or any Secured Party,
shall be paid by the Pledgor.
Section 7. Provisions Concerning All Collateral.
(a) Protection of the Collateral Agent's Security. The
Pledgor shall not take any action that impairs the rights of the
Collateral Agent or any Secured Party in the Collateral. The
Pledgor shall at all times keep the Inventory insured at the
Pledgor's own expense, to the Collateral Agent's reasonable
satisfaction, against fire, theft and all other risks to which the
Collateral may be subject, in such amounts and with such
deductibles as would be maintained by operators of businesses
similar to the business of the Pledgor. Within 30 days of the date
hereof, each policy or certificate with respect to such insurance
shall be endorsed to the Collateral Agent's satisfaction for the
benefit of the Collateral Agent (including, without limitation, by
naming the Collateral Agent as an additional insured and as
provided in the next succeeding sentence) and such policy or
certificate shall be delivered to the Collateral Agent. Each such
policy shall state that (i) it cannot be canceled without 30 days
prior written notice to the Collateral Agent, (ii) no claim in
excess of $25,000,000 shall be settled with the insurance provider
without the prior consent of the Collateral Agent and (iii) the
Collateral Agent shall be a loss payee on any claim in excess of
$25,000,000. At least 10 days prior to the expiration of any such
policy of insurance, the Pledgor shall deliver to the Collateral
Agent either (i) an extension or renewal policy or an insurance
certificate evidencing renewal or extension of such policy, or (ii)
notice that such policy has not been extended or renewed. If such
policy has not been extended or renewed, the Pledgor agrees to
consult with the Collateral Agent, and to furnish any information
that the Collateral Agent may request, as to the status of
negotiations with such insurance provider. If the Pledgor shall
fail to insure such Collateral in accordance with prudent industry
practices or if the Pledgor shall fail to so endorse and deposit,
or to extend or renew prior to expiration, all such
insurancepolicies or certificates with respect thereto, the
Collateral Agent shall have the right (but shall be under no
obligation) to advance funds to procure or renew or extend such
insurance and the Pledgor agrees to reimburse the Collateral Agent
for all costs and expenses thereof, with interest on all such funds
from the date advanced until paid in full at 1% plus the rate that
would be applicable to Tranche A Base Rate Loans under the Credit
Agreement.
(b) Upon the occurrence and during the continuance of an
Event of Default, the Collateral Agent, as directed by the Required
Banks, shall have the option to apply any proceeds of insurance
received by it pursuant to this Agreement toward the payment of the
Secured Obligations in accordance with Section 11 hereof or to
continue to hold such proceeds in the Collateral Account as
additional collateral to secure the performance by the Pledgor of
the Secured Obligations. So long as no Event of Default shall have
occurred and be continuing, the Pledgor shall have the option (i)
to direct the Collateral Agent to apply any proceeds of insurance
received by it toward payment of the Secured Obligations in
accordance with Section 11 hereof or (ii) to elect, by delivery of
written notice to the Collateral Agent, to apply the proceeds of
such insurance to the repair or replacement of the item or items of
Collateral in respect of which such proceeds were received. In the
event that the Pledgor elects to apply such proceeds to the repair
or replacement of any item of Collateral pursuant to clause (ii) of
the preceding sentence, the Collateral Agent shall release such
proceeds from the Collateral Account as soon as practicable
following its receipt of the Pledgor's written notice of such
election. The Pledgor shall upon its receipt of such proceeds
promptly commence and diligently continue to perform such repair or
promptly effect such replacement.
(c) Payment of Taxes; Claims. The Pledgor shall pay
promptly when due all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the
Collateral. Notwithstanding the foregoing, the Pledgor may at its
own expense contest the amount or applicability of any of the
obligations described in the preceding sentence by appropriate
legal or administrative proceedings, prosecution of which operates
to prevent the collection thereof and the sale or forfeiture of the
Collateral or any part thereof to satisfy the same; provided,
however, that in connection with such contest, the Pledgor shall,
at the option and upon the request of the Collateral Agent (a) have
made provision for the payment of such contested amount on the
Pledgor's books if and to the extent required by generally accepted
accounting principles, and (b) upon the occurrence and continuance
of an Event of Default, have deposited with the Collateral Agent in
the Collateral Account a sum sufficient to pay and discharge such
obligation and the Collateral Agent's estimate of all interest and
penalties related thereto, if requested by the Required Banks.
(d) Financing Statements. The Pledgor shall sign and
deliver to the Collateral Agent such financing and continuation
statements, in form acceptable to the Collateral Agent, as may from
time to time be required to continue and maintain a valid,
enforceable, first priority security interest in the Collateral as
provided herein and the other rights, as against third parties
(other than Permitted Liens), provided hereby, all in accordance
with the Uniform Commercial Code as enacted in any and all relevant
jurisdictions or any other relevant law. The Pledgor shall pay any
applicable filing fees and other expenses related to the filing of
such financing and continuation statements. The Pledgor authorizes
the Collateral Agent to file any such financing or continuation
statements without the signature of the Pledgor where permitted by
law.
(e) Warehouse Receipts Non-Negotiable. If any warehouse
receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of the Inventory, the Pledgor shall not permit
such warehouse receipt or receipt in the nature thereof to be
negotiable.
Section 8. Transfers and Other Liens. Except in
connection with sales and other dispositions permitted by the
Credit Agreement, the Pledgor shall not (i) sell, convey, assign or
otherwise dispose of, or grant any option with respect to, any of
the Collateral other than sales and other dispositions of Inventory
in the ordinary course of business or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral other
than Permitted Liens and the Lien and security interest granted to
the Collateral Agent under this Agreement.
Section 9. Reasonable Care. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if such Collateral
is accorded treatment substantially equivalent to that which the
Collateral Agent, in its individual capacity, accords its own
property, it being understood that the Collateral Agent shall not
have responsibility for taking any necessary steps to preserve
rights against any Person with respect to any Collateral.
Section 10. Remedies Upon Default; Obtaining the
Collateral Upon Event of Default. (a) If an Event of Default
shall have occurred and be continuing, then and in every such case,
the Collateral Agent, upon being instructed to do so by the
Required Banks, may:
(i) Personally, or by agents or attorneys, immediately
take possession of the Collateral, or any part hereof, from the
Pledgor or any other Person who then has possession of any part
thereof with or without notice or process of law, and for that
purpose enter upon the Pledgor's premises where any of the
Collateral is located and remove such Collateral and use in
connection with such removal any and all services, supplies, aids
and other facilities of the Pledgor.
(ii) Instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Receivables) constituting the Collateral to make any payment
required by the terms of such instrument or agreement directly to
the Collateral Agent; provided, however, that in the event that any
such payments are made directly to the Pledgor, prior to receipt by
any such obligor of such instruction, the Pledgor shall segregate
all amounts received pursuant thereto in a separate account and pay
the same promptly to the Collateral Agent.
(iii) Sell, assign or otherwise liquidate, or direct the
Pledgor to sell, assign or otherwise liquidate, any or all
investments made in whole or in part with the Collateral or any
part thereof, and take possession of the proceeds of any such sale,
assignment or liquidation.
(iv) Take possession of the Collateral or any part
thereof, by directing the Pledgor in writing to deliver the same to
the Collateral Agent at any place or places designated by the
Collateral Agent, in which event the Pledgor shall at its own
expense: (a) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there be delivered
to the Collateral Agent; (b) store and keep any Collateral so
delivered to the Collateral Agent at such place or places pending
further action by the Collateral Agent; and (c) while the
Collateral shall be so stored and kept, provide such security and
maintenance services as shall be necessary to protect the same and
to preserve and maintain them in good condition. The Pledgor's
obligation to deliver the Collateral is of the essence of this
Agreement. Upon application to a court of equity having
jurisdiction, the Collateral Agent shall be entitled to a decree
requiring specific performance by the Pledgor of such obligation.
(b) Remedies; Disposition of the Collateral.
(i) Upon the occurrence and continuance of an Event
of Default, the Collateral Agent, upon being instructed to do so by
the Required Banks, may from time to time exercise in respect of
the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and
remedies of a secured party under the Uniform Commercial Code as
enacted in any and all relevant jurisdictions or under any other
relevant law at the time of an event of default, and the Collateral
Agent may also in its sole discretion, without notice except as
specified below, (i) withdraw all cash in the Collateral Account
and apply such cash and any other cash held by it as Collateral as
specified in Section 11 and (ii) if there is no such cash, or if
such cash is insufficient to pay all the Secured Obligations, sell
the Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange, broker's board or at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other
terms as the Collateral Agent may deem commercially reasonable.
The Collateral Agent or any other Secured Party or any of their
respective Affiliates may be the purchaser of any or all of the
Collateral at any such sale and shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at such sale, to use
and apply any of the Secured Obligations owed to such Person as a
credit on account of the purchase price of any Collateral payable
by such Person at such sale. Each purchaser at any such sale shall
acquire the property sold absolutely free from any claim or right
on the part of the Pledgor, and the Pledgor hereby waives, to the
fullest extent permitted by law, all rights of redemption, stay or
appraisal hereafter enacted. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given. Th Collateral Agent may adjourn any public
or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The
Pledgor hereby waives, to the fullest extent permitted by law, any
claims against the Collateral Agent arising by reason of the fact
that the price at which any Collateral may have been sold at such
a private sale was less than the price which might have been
obtained at a public sale, even if the Collateral Agent accepts the
first offer received and does not offer such Collateral to more
than one offeree.
(ii) The Pledgor agrees that, to the extent notice
of sale shall be required by law, 5 days' notice from the
Collateral Agent of the time and place of any public sale or of the
time after which a private sale or other intended disposition is to
take place shall be commercially reasonable notification of such
matters. No notification need be given to the Pledgor if it has
signed, after the occurrence of an Event of Default, a statement
renouncing or modifying any right to notification of sale or other
intended disposition.
(c) Waiver of Claims. Except as otherwise provided
herein, the Pledgor hereby waives, to the fullest extent permitted
by applicable law, notice or judicial hearing in connection with
the Collateral Agent's taking possession of any of the Collateral
or of the Collateral Agent's disposition of any of the Collateral,
including, without limitation, any and all prior notice and hearing
for any prejudgment remedy or remedies and any such right which the
Pledgor would otherwise have under law, and the Pledgor hereby
further waives, to the fullest extent permitted by applicable law:
(i) all damages occasioned by such taking of possession; (ii) all
other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and (iii) all rights of redemption,
appraisal, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law. Any sale of, or the
grant of options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest,
claim and demand, either at law or in equity, of the Pledgor
therein and thereto, and shall be a perpetual bar both at law and
in equity against the Pledgor and against any and all Persons
claiming or attempting to claim the Collateral so sold, optioned or
realized upon, or any part thereof, from, through or under the
Pledgor.
Section 11. Application of Proceeds. (a) The proceeds
received by the Collateral Agent in respect of any sale of,
collection from or other realization upon all or any part of the
Collateral pursuant to the exercise by the Collateral Agent of its
remedies as a secured creditor as provided in Section 10 hereof (or
held by it pursuant to Section 18 hereof) and any cash held in the
Collateral Account shall be applied, together with any other sums
then held by the Collateral Agent pursuant to this Agreement,
promptly by the Collateral Agent while an Event of Default has
occurred and is continuing, upon being instructed to do so by the
Required Banks, as follows:
First, to the payment of all costs and expenses, fees,
commissions and taxes of such sale, collection or other
realization, including, without limitation, reasonable compensation
to the Collateral Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by the
Collateral Agent in connection therewith, together with interest on
each such amount at 1% plus the rate that would be applicable to
Tranche A Base Rate Loans under the Credit Agreement from and after
the date such amount is due, owing or unpaid until paid in full;
Second,
(a) in the case of any Intercompany Receivables
Collateral, to pay the Secured Obligations ratably (or provide for
the payment thereof pursuant to subsection (b) of this Section),
until payment in full of all such Secured Obligations shall have
been made (or so provided for), provided that before making any
payment pursuant to this subclause (a) of clause Second ratably to
the holders of the Secured Obligations, the Collateral Agent shall
first apply solely to the Non-Bank Secured Obligations any amount
held by it pursuant to subclause (ii)(A) of Section 18(b) and
provided further that the principal amount outstanding to any Bank
under any Interest Rate Protection Agreement at the time any such
payments are to be distributed in accordance with this clause
Second shall be the amount of the Pledgor's obligations then due
and payable (including any early termination payments then due) to
such Bank under such Interest Rate Protection Agreement; and
(b) in the case of any Bank Collateral, to pay the
Secured Obligations (other than the Non-Bank Secured Obligations)
ratably (or provide for the payment thereof pursuant to subsection
(b) of this Section), until payment in full of all such Secured
Obligations shall have been made (or so provided for), provided
that the principal amount of the outstanding Interest Rate
Obligations of any Bank at the time any such payments are to be
distributed in accordance with this clause shall be the amount of
the Pledgor's obligations then due and payable (including any early
termination payments then due) to such Bank under the applicable
Interest Rate Protection Agreement(s); and
Third, to the Pledgor, or its successors or assigns, or
to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
(b) If at any time any monies collected or received by
the Collateral Agent would, but for the provisions of this
subsection (b), be payable pursuant to subsection (a) of this
Section in respect of any Contingent Secured Obligation, the
Collateral Agent shall not apply such monies to pay such Contingent
Secured Obligation but instead shall hold such monies in the
Collateral Account. The Collateral Agent shall so hold all such
monies until such time as the holder of such Contingent Secured
Obligation advises the Collateral Agent (with at least three
Business Days' prior notice to the Pledgor) that all or a specified
part of such Contingent Secured Obligation has become a
Non-Contingent Secured Obligation, whereupon the Collateral Agent
shall apply the amount so held to pay such Non-Contingent Secured
Obligation; provided that, if the other Secured Obligations
theretofore paid pursuant to subsection (a) were not paid in full,
the Collateral Agent shall apply the amount so held to pay the same
percentage of such Non-Contingent Secured Obligation as the
percentage of such other Secured Obligations theretofore paid
pursuant to subsection (a). If (i) the holder of such Contingent
Secured Obligation shall advise the Collateral Agent (with at least
three Business Days' prior notice to the Pledgor) that no portion
thereof remains in the category of a Contingent Secured Obligation
and (ii) any amount held pursuant to this subsection (b) in
respect of such Contingent Secured Obligation remains after payment
of all ratable amounts payable pursuant to the preceding sentence
with respect to any portions thereof that became Non-Contingent
Secured Obligations, such remaining amount shall be applied by the
Collateral Agent in the order of priorities set forth in subsection
(a) of this Section.
(c) In making the payments and allocations required by
this Section, the Collateral Agent may, (i) as to any Secured
Obligations arising under an Interest Rate Protection Agreement or
Further Letter of Credit Agreement, rely upon information from the
applicable counterparty identified by the Pledgor pursuant to
Section 2, and (2) as to any Existing Indenture Obligations, rely
upon information from the Trustee under the applicable Existing
Debt Indenture and shall have no liability to the Pledgor or any
other Secured Party for actions taken in reliance on such
information except in the case of its gross negligence or willful
misconduct. All distributions made by the Collateral Agent
pursuant to this Section shall be final (except in the event of
manifest error) and the Collateral Agent shall have no duty to
inquire as to the application by the Secured Parties of any amount
distributed to them.
Section 12. Expenses. The Pledgor will upon demand pay
to the Collateral Agent the amount of any and all expenses,
including the fees and expenses of its counsel and the fees and
expenses of any experts and agents which the Collateral Agent may
incur in connection with (i) the collection of the Secured
Obligations, (ii) the enforcement and administration of this
Agreement, (iii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral,
(iv) the exercise or enforcement of any of the rights of the
Collateral Agent or any Secured Party hereunder or (v) the failure
by the Pledgor to perform or observe any of the provisions hereof.
All amounts payable by the Pledgor under this Section 12 shall be
due upon demand (and if not timely paid shall bear interest at 1%
plus the rate that would be applicable to Tranche A Base Rate Loans
under the Credit Agreement) and shall be part of the Secured
Obligations. The Pledgor's obligations under this Section shall
survive the termination of this Agreement and the discharge of the
Pledgor's other obligations hereunder.
Section 13. No Waiver; Cumulative Remedies.
(a) No failure on the part of the Collateral Agent to
exercise, no course of dealing with respect to, and no delay on the
part of the Collateral Agent in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein
provided are cumulative and are not exclusive of any remedies
provided by law.
(b) In the event the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and
such proceeding shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Collateral
Agent, then and in every such case, the Pledgor, the Collateral
Agent and each holder of any of the Secured Obligations shall be
restored to their respective former positions and rights hereunder
with respect to the Collateral, and all rights, remedies and powers
of the Collateral Agent and the Secured Parties shall continue as
if no such proceeding had been instituted.
Section 14. The Collateral Agent. The Collateral Agent
has been appointed as collateral agent pursuant to the Credit
Agreement. The actions of the Collateral Agent hereunder are
subject to the provisions of the Credit Agreement (including in
particular Article VII thereof). The obligations of the Collateral
Agent hereunder are only those expressly set forth herein. In any
case in which the Collateral Agent is authorized to exercise any
power or discretion, the Collateral Agent may refuse from such
exercise unless directed in writing by the Required Banks to act in
the manner specified in such direction. The Collateral Agent shall
have the right hereunder to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or
refrain from taking action (including, without limitation, the
release or substitution of Collateral), in accordance with this
Agreement and the Credit Agreement. The Collateral Agent may
resign and a successor Collateral Agent may be appointed in the
manner provided in the Credit Agreement. Upon the acceptance of
any appointment as Collateral Agent by a successor Collateral
Agent, that successor Collateral Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent under this Agreement, and
the retiring Collateral Agent shall thereupon be discharged from
its duties and obligations under this Agreement. After any
retiring Collateral Agent's resignation, the provisions of this
Agreement shall inure to its benefit as to any actions taken or
omitted to be taken by it under this Agreement while it was the
Collateral Agent.
Section 15. Collateral Agent May Perform; Collateral
Agent Appointed Attorney-in-Fact. If the Pledgor shall fail to do
any act or thing that it has covenanted to do hereunder or if any
warranty on the part of the Pledgor contained herein shall be
breached, the Collateral Agent if required by the Required Banks
may (but shall not be obligated to) upon three Business Days notice
to the Pledgor specifying the action to be taken, do the same or
cause it to be done or remedy any such breach, and may expend funds
for such purpose. Any and all amounts so expended by the
Collateral Agent shall be paid by the Pledgor promptly upon demand
therefor, with interest at 1% plus the rate that would be
applicable to Tranche A Base Rate Loans under the Credit Agreement
during the period from and including the date on which such funds
were so expended to the date of repayment. The Pledgor's
obligations under this Section 15 shall survive the termination of
this Agreement and the discharge of the Pledgor's other obligations
under this Agreement, the Credit Agreement, any other Operative
Agreement, any Interest Rate Protection Agreement and any Further
Letter of Credit Agreement. The Pledgor hereby appoints the
Collateral Agent its attorney-in-fact, with full authority in the
place and stead of the Pledgor and in the name of the Pledgor, or
otherwise, from time to time in the Collateral Agent's discretion
to take any action and to execute any instrument consistent with
the terms of this Agreement and the other Operative Agreements
which the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement. The foregoing grant and
such appointment shall be irrevocable for the term of this
Agreement. The Pledgor hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof.
Section 16. Indemnity.
(a) Indemnity. The Pledgor agrees to indemnify, pay and
hold harmless the Collateral Agent and each of the Secured Parties
and the officers, directors, employees, agents and affiliates of
the Collateral Agent and each of the Secured Parties (collectively
called the "Indemnitees") from and against any and all other
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs (including, without limitation,
settlement costs), expenses or disbursements of any kind or nature
whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitees in connection with
any investigative, administrative or judicial proceeding commenced
or threatened, whether or not such Indemnitee shall be designated
a party thereto), which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out
of this Agreement, any other Operative Agreement, any Interest Rate
Protection Agreement or any Further Letter of Credit Agreement
(including, without limitation, any misrepresentation by the
Pledgor in this Agreement, any other Operative Agreement or any
Interest Rate Protection Agreement or any Further Letter of Credit
Agreement) (the "indemnified liabilities"); provided that the
Pledgor shall have no obligation to an Indemnitee hereunder, with
respect to indemnified liabilities, if such indemnified liability
arose from the gross negligence or willful misconduct of that
Indemnitee. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy,
the Pledgor shall contribute the maximum which it is permitted to
pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them.
(b) Survival. The obligations of the Pledgor contained
in this Section 16 shall survive the termination of this Agreement
and the discharge of the Pledgor's other obligations under this
Agreement, any Interest Rate Protection Agreement, any Further
Letter of Credit Agreement and the other Operative Agreements.
(c) Reimbursement. Any amounts paid by any Indemnitee
as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Collateral.
Section 17. Modification in Writing. Other than in
respect of any release of Collateral pursuant to Section 18 hereof,
no amendment, modification, supplement, termination or waiver of or
to any provision of this Agreement, nor consent to any departure by
the Pledgor therefrom, shall be effective unless in writing and
signed by the Collateral Agent and the Pledgor (with the requisite
consent, if any, of the Banks, the Required Banks or the Releasing
Banks required by Section 9.04 of the Credit Agreement); provided
that without the consent of the Banks to whom a majority of the
Interest Rate Obligations are owed, no such amendment,
modification, supplement, termination or waiver may (i) exclude the
Interest Rate Obligations from the definition of Secured
Obligations or (ii) change the provisions of clause Second of
Section 11 hereof; provided further that without the consent of the
Banks to whom a majority of the obligations under the Further
Letter of Credit Agreements are owed, no such amendment,
modification, supplement, termination or waiver may (i) exclude any
Further Letter of Credit Agreement from the definition of Secured
Obligations. or (ii) change the provisions of clause Second of
Section 11 hereof. Any amendment, modification or supplement of or
to any provision of this Agreement, any waiver of any provision of
this Agreement, and any consent to any departure by the Pledgor
from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is
specifically required by this Agreement or any other Operative
Agreement, no notice to or demand on the Pledgor in any case shall
entitle the Pledgor to any other or further notice or demand in
similar or other circumstances.
Section 18. Termination; Release. (a) When all the
Credit Agreement Secured Obligations have been paid in full and the
Commitments of the Banks to make any Loan or to issue any Letter of
Credit under the Credit Agreement have expired, or if earlier the
occurrence of the Rating Target Date, this Agreement shall
terminate, except as expressly set forth herein.
(b)(i) The Pledgor may from time to time prior to the
termination of this Agreement request the Collateral Agent to
release all or any of the Collateral, which request shall be
accompanied by a certificate of a Responsible Officer stating (A)
whether such release is requested in connection with an Asset Sale,
(B) whether a Default has occurred and is continuing, (C) if such
release is requested in connection with an Asset Sale, identifying
the cash, Temporary Cash Investments and instruments comprising the
Net Proceeds of such Asset Sale that, in the good faith
determination of such Responsible Officer, are allocable to the
Collateral requested to be released (the "Collateral Net Proceeds")
and, if any of such Collateral is Intercompany Receivables
Collateral, the portion of the Collateral Net Proceeds allocable to
such Intercompany Receivables Collateral (the "Intercompany
Collateral Net Proceeds") and (D) if such release is requested in
connection with an Asset Sale, the amount, if any, of the cash and
Temporary Cash Investments included in the Collateral Net Proceeds
that is required to be applied by the Pledgor to the prepayment of
the principal amount of the Loans pursuant to Section 2.09(b)(i) of
the Credit Agreement within 14 days after the consummation of such
Asset Sale and the date on which such prepayment is to be made. If
such request is not in connection with an Asset Sale, the
Collateral Agent shall release Collateral pursuant to such request
but only with, if such Collateral does not include any Intercompany
Receivables Collateral, the consent of the Releasing Banks and, if
such Collateral does include any Intercompany Receivables
Collateral, the consent of the Releasing Banks and the Non-Bank
Secured Parties.
(ii) If such request is in connection with an Asset Sale
and such certificate states that no Default has occurred and is
continuing, the Collateral Agent shall release Collateral pursuant
to such request without the consent of any Secured Party but only
against delivery to the Collateral Agent of (A) the Non-Bank
Percentage of each element (cash, Temporary Cash Investments and
instruments) of the Intercompany Collateral Net Proceeds (as set
forth in such certificate) and (B) all other Collateral Net
Proceeds.
(iii) If such request is in connection with an Asset Sale
and such certificate states that a Default has occurred and is
continuing, the Collateral Agent shall release Collateral pursuant
to such request without the consent of any Secured Party but only
against delivery to the Collateral Agent of all cash and other
property constituting the portion of the Net Proceeds of such Asset
Sale allocable to the Collateral to be released (as set forth in
such certificate).
(iv) All such cash shall be held in the Collateral
Account and any such other property shall be held by the Collateral
Agent as Proceeds, subject to the Lien hereof, and
(A) in all cases, even if any other subclause below
would otherwise apply, if an Event of Default shall occur and be
continuing, applied pursuant to Section 11 hereof;
(B) in the case of any cash or Temporary Cash
Investments included in Collateral Net Proceeds held pursuant to
subclause (ii)(B), applied for the account of the Pledgor (after
reducing any such Temporary Cash Investments to cash) to make
prepayments of the Loans pursuant to Section 2.09(b)(i) of the
Credit Agreement as set forth in the related certificate of a
Responsible Officer;
(C) in the case of any instrument included in Collateral
Net Proceeds held pursuant to subclause (ii)(B), all income thereon
or other payments in respect thereof shall be applied for the
account of the Pledgor to make prepayments of the Loans pursuant to
Section 2.09(b)(i) of the Credit Agreement as shall be specified
from time to time in a certificate of a Responsible Officer;
(D) in the case of any cash, Temporary Cash Investments
and instruments held pursuant to clause (iii),
(1) an amount equal to the Non-Bank
Percentage of each element of the Intercompany Collateral Net
Proceeds (determined as of the date the Collateral Agent received
such Proceeds) shall be retained by the Collateral Agent until the
termination of this Agreement (and then paid to the Pledgor or as
it shall direct), provided that if the Collateral Agent receives a
certificate of a Responsible Officer stating that the Non-Bank
Secured Obligations have been paid in full, any such cash and
Temporary Cash Investments shall be applied for the account of the
Pledgor to make prepayments of the Loans to the extent required by
Section 2.09(b)(i) of the Credit Agreement and the balance, if any,
paid to the Pledgor or as it shall direct and any instruments shall
be applied as set forth in the immediately preceding clause (C),
and
(2) as to the balance, if a Responsible Officer
shall subsequently certify that no Default has occurred and is
continuing, any such cash and Temporary Cash Investments shall be
applied for the account of the Pledgor to make prepayments of the
Loans to the extent required by Section 2.09(b)(i) of the Credit
Agreement and the balance, if any, paid to the Pledgor or as it
shall direct and any instruments shall be applied as set forth in
the immediately preceding clause (C), and
(E) in the case of any cash or other property held
pursuant to subclause (ii)(A), applied as set forth in subclause
(1) of the immediately preceding clause (D).
(c) Upon termination of this Agreement or any release of
Collateral in accordance with the provisions hereof, the Collateral
Agent shall, upon the request and at the sole cost and expense of
the Pledgor, forthwith assign, transfer and deliver to the Pledgor,
against receipt and without recourse to or warranty by the
Collateral Agent, such of the Collateral to be released (in the
case of a release) as may be in possession of the Collateral Agent
and as shall not have been sold or otherwise applied pursuant to
the terms hereof, and, with respect to any other Collateral, proper
instruments (including Uniform Commercial Code termination
statements on Form UCC-3) acknowledging the termination of this
Agreement or the release of such Collateral, as the case may be.
Section 19. Collateral Account.
(a) There is hereby established with the Collateral
Agent a cash collateral account (the "Collateral Account") in the
name and under the control of the Collateral Agent into which there
shall be deposited from time to time the cash proceeds of the
Collateral required to be delivered to the Collateral Agent
pursuant to any provision of this Agreement. Any income received
by the Collateral Agent with respect to the balance from time to
time standing to the credit of the Collateral Account, including
any interest or capital gains on Liquid Investments, shall remain,
or be deposited, in the Collateral Account. All right, title and
interest in and to the cash amounts on deposit from time to time in
the Collateral Account together with any Liquid Investments from
time to time made pursuant to subsection (c) of this Section shall
vest in the Collateral Agent, shall constitute part of the
Collateral hereunder and shall not constitute payment of the
Secured Obligations until applied thereto as hereinafter provided.
(b) Upon the occurrence and during the continuation of
an Event of Default, the Collateral Agent shall, if so instructed
by the Required Banks, apply or cause to be applied (subject to
collection) any or all of the balance from time to time standing to
the credit of the Collateral Account in the manner specified in
Section 11. Upon the cure of such Event of Default, all Liquid
Investments held by the Collateral Agent in the Collateral Account
shall be reduced to cash and all cash amounts held in the
Collateral Account shall be promptly returned to the Pledgor,
provided that any Liquid Investments or cash held in the Collateral
Account arising out of matters of the character described in
Section 6(d), 7(b) or 18 shall be applied as provided therein.
(c) Amounts on deposit in the Collateral Account shall
be invested and re-invested from time to time in such Liquid
Investments as the Pledgor shall determine, which Liquid
Investments shall be held in the name and be under the control of
the Collateral Agent, provided that, if an Event of Default has
occurred and is continuing, the Collateral Agent shall, if
instructed by the Required Banks, liquidate any such Liquid
Securities and apply or cause to be applied in the proceeds thereof
to the payment of the Secured Obligations in the manner specified
in Section 11.
Section 20. Definitions. Capitalized terms used and not
defined herein shall have the meanings assigned to them in the
Credit Agreement. Unless otherwise defined herein or in the Credit
Agreement, or unless the context otherwise requires, all terms used
herein which are defined in Article 9 of the New York Uniform
Commercial Code as in effect on the date hereof have the meanings
stated therein. The following terms shall have the following
meanings.
"Bank Collateral" means all Collateral other than
Intercompany Receivables Collateral.
"Bank Secured Obligations" means the Secured Obligations
other than the Non-Bank Secured Obligations, provided that at any
time of determination no amount of the Pledgor's obligations under
any Interest Rate Protection Agreement shall be included in Bank
Secured Obligations that are Non-Contingent Secured Obligations
unless such obligations are then due and payable.
"Contingent Secured Obligation" means at any time any
Secured Obligation (or portion thereof) that is at such time:
(i) an obligation to reimburse a Bank for drawings not
yet made under a letter of credit issued or to be issued by such
Bank or
(ii) an obligation to provide collateral to or for the
benefit of a Bank to secure reimbursement obligations arising from
drawings not yet made under a letter of credit issued or to be
issued by such Bank or to make any other payment to the Issuing
Bank that such Issuing Bank would not be entitled to retain if no
drawings were made under the relevant letter of credit after the
time of determination.
"Credit Agreement Secured Obligations" means the Secured
Obligations arising under the Credit Agreement.
"Documents" shall mean all documents and all books,
records, ledgers, printouts, computer recording media, data files,
tapes, file materials and other papers containing information
relating to (a) Receivables and any account debtors, beneficiaries
and subcontractors in respect thereof and (b) all other Collateral.
"Existing Debt Indentures" means (i) the Indenture dated
as of December 1, 1989, as supplemented to the date hereof, from
the Pledgor to Morgan Guaranty Trust Company of New York, as
Trustee, and (ii) the Indenture dated as of March 15, 1986, as
supplemented to the date hereof, from the Pledgor to Morgan
Guaranty Trust Company of New York, as Trustee.
"Existing Indenture Obligations" means the notes and
debentures of the Pledgor outstanding from time to time under the
Existing Debt Indentures, provided that the term Existing Indenture
Obligations shall not include any such securities that are not
issued and outstanding on July 19, 1994 unless such securities have
been issued in exchange or substitution (which do not include any
refinancing or refunding) for any securities constituting Existing
Indenture Obligations that were outstanding on July 19, 1994.
"Intercompany Receivable" means any Receivable the
obligor of which is a Domestic Subsidiary (as defined in the
Existing Debt Indentures).
"Intercompany Receivables Collateral" means the
Intercompany Receivables, any instruments, chattel paper or
Document relating to any Intercompany Receivables and any Proceeds
of any thereof.
"Inventory" shall mean all inventory and, in any event,
shall include, without limitation, wherever located, and whether
now existing or hereafter acquired, all raw materials, work in
process, returned goods, finished goods and consigned goods to the
extent of the consignee's interest therein, materials and supplies
of any kind or nature which are or might be used in connection with
the manufacture, printing, publication, packing, shipping,
advertising, selling or finishing of any such goods, and all other
products, goods, materials and supplies, provided, however, that
personal computers, electronic point-of-sale equipment and related
software and printers ("Computer Equipment") shall not constitute
Inventory.
"Liquid Investment" means (i) direct obligations of the
United States or any agency thereof, or obligations guaranteed by
the United Sates or any agency thereof, (ii) commercial paper rated
in the highest grade by a nationally recognized credit rating
agency or (iii) time deposits with, including certificates of
deposit issued by, any office located in the United States of any
bank or trust company (including a bank or trust company acting as
the Collateral Agent or a co-agent hereunder) which is organized
under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least
$1,000,000,000; provided in each case that (x) such Liquid
Investment matures within 90 days from the date of acquisition
thereof and (y) in order to provide the Collateral Agent, for the
benefit of the Secured Parties, with a perfected security interest
therein, such Liquid Investment is:
(1) evidenced by a certificate or instrument which is
negotiable, or if non-negotiable is issued in the name of the
Collateral Agent or its nominee, and which (together with any
appropriate instruments of transfer) is delivered to, and held by,
the Collateral Agent or an agent thereof (which shall not be the
Pledgor or any of its Affiliates) in the State of New York;
(2) issued by the U.S. Treasury in book-entry form and
subject to pledge under then applicable state law and Treasury
regulations and held by the Collateral Agent at a Federal Reserve
Bank; provided that the books of the Collateral Agent reflect that
such Treasury securities are held as Collateral under this
Agreement in compliance with then applicable Treasury regulations
regarding the perfection of security interests in Treasury
securities; or
(3) otherwise issued, evidenced, registered or recorded
in such manner as will provide the Collateral Agent, for the
benefit of the Secured Parties, with a perfected security interest
therein.
"Non-Bank Percentage" means, as of any time of
determination, the percentage obtained by dividing the then-
outstanding principal amount of the Non-Bank Secured Obligations by
the sum of the then - outstanding principal amount of (a) the
Non-Bank Secured Obligations and (b) any Bank Secured Obligations
that are Non-Contingent Secured Obligations.
"Non-Bank Secured Obligations" means the Secured
Obligations held by the Non-Bank Secured Parties.
"Non-Bank Secured Parties" means the holders from time to
time of the Secured Obligations consisting of the Existing
Indenture Obligations.
"Non-Contingent Secured Obligation" means at any time any
Secured Obligation (or portion thereof) that is not a Contingent
Secured Obligation at such time.
"Permitted Liens" means any Lien permitted by clauses
(a), (b), (c), (d), (e), (f), (g) and (o) of Section 5.10 of the
Credit Agreement.
"Proceeds" shall mean all proceeds and, in any event,
shall include, without limitation, any and all (i) proceeds of any
insurance (except payments made to a Person which is not a party to
this Agreement), indemnity, warranty or guaranty payable to the
Collateral Agent or to the Pledgor from time to time with respect
to any of the Collateral, (ii) payments (in any form whatsoever)
made or due and payable to the Pledgor from time to time in
connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting on behalf of a
governmental authority), (iii) instruments representing obligations
to pay amounts in respect of Inventory or Receivables, (iv)
products of the Collateral and (v) other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean:
(a) all of the Pledgor's rights to payment for goods sold
or services performed by the Pledgor or any other party, whether
now in existence or arising from time to time hereafter, evidenced
by or consisting of accounts, together with (i) all instruments or
chattel paper received in exchange or substitution for, or in
payment or other satisfaction of, any such account (but not
including any instrument or chattel paper arising out of a
transaction of the character described in the proviso to Section
5(k)), and (ii) all of the Pledgor's rights under any guarantees,
indemnities, letters of credit or other collateral securing the
payment of any such account, provided that any receivables related
to services provided in connection with the lease of Computer
Equipment shall not constitute Receivables hereunder; and
(b) any chattel paper or instrument or any right to
receive a payment of money which constitutes an account, contract
right or general intangible, but only in such instances where the
obligor is the Borrower or a Subsidiary, and all of the Pledgor's
rights under any guarantees, indemnities, letters of credit or
other collateral securing the payment of any thereof.
"Responsible Officer" means the Chairman of the Board,
the Vice Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the Chief Operating Officer, the President
or the Treasurer of the Pledgor.
"Secured Parties" means (i) the holders from time to time
of the Secured Obligations and (ii) the Collateral Agent, provided
that for purposes of any notice to or consent required from the
Non-Bank Secured Parties, the Trustee under each Existing Debt
Indenture at the time in question shall be treated as the Non-Bank
Secured Party with respect to the Existing Indenture Obligations
thereunder and all payments to be made to or for the benefit of any
holder of an Existing Indenture Obligation shall be made to the
Trustee in question and the Collateral Agent shall have no further
responsibilities or liability with respect thereto.
"Security Interests" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
Section 21. Notices. Unless otherwise provided herein
or in the Credit Agreement, any notice or other communication
herein required or permitted to be given shall be given in the
manner set forth in the Credit Agreement, if to the Pledgor,
addressed to it at the address set forth on the signature page
hereof, if to the Collateral Agent, addressed to it at the address
set forth on the signature page of this Agreement or as to any
party at such other address as shall be designated by such party in
a written notice to the other party complying as to delivery with
the terms of this Section 21; provided that notices to the
Collateral Agent shall not be effective until received by the
Collateral Agent.
Section 22. Continuing Security Interest; Assignment.
This Agreement shall create a continuing security interest in the
Collateral and shall (i) be binding upon the Pledgor, its
successors and assigns, and (ii) inure, together with the rights
and remedies of the Collateral Agent hereunder, to the benefit of
the Collateral Agent and the other Secured Parties and each of
their respective successors, transferees and assigns; no other
Persons (including, without limitation, any other creditor of the
Pledgor) shall have any interest herein or any right or benefit
with respect hereto. Without limiting the generality of the
foregoing clause (ii), any Bank may assign or otherwise transfer
any indebtedness held by it secured by this Agreement to any other
Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to such Bank, herein or
otherwise, subject however, with respect to any Bank, to the
provisions of the Credit Agreement and provided further than no
counterparty to an Interest Rate Protection Agreement or a Further
Letter of Credit Agreement shall be entitled to the benefits hereof
unless it is also a Bank.
Section 23. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL
BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PROPERTY ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
Section 24. CONSENT TO JURISDICTION AND SERVICE OF
PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE PLEDGOR WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT THE PLEDGOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS
AGAINST THE PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.
Section 25. Severability of Provisions. Any provision
of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 26. Execution in Counterparts. This Agreement
and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original, but all such
counterparts together shall constitute one and the same agreement.
Section 27. Headings. The Section headings used in this
Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 28. Obligations Absolute. All obligations of
the Pledgor hereunder shall be absolute and unconditional
irrespective of:
(i) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of
the Pledgor;
(ii) any lack of validity or enforceability of the
Credit Agreement, any Letter of Credit, any Interest Rate
Protection Agreement, any Further Letter of Credit Agreement or any
other Operative Agreement, or any other agreement or instrument
relating thereto;
(iii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Secured Obligations,
or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any Letter of Credit, any Interest Rate
Protection Agreement, any Further Letter of Credit Agreement or any
other Operative Agreement, or any other agreement or instrument
relating thereto;
(iv) any exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or
consent to any departure from any guarantee, for all or any of the
Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any
right, remedy, power or privilege under or in respect of this
Agreement, any Interest Rate Protection Agreement, any Further
Letter of Credit Agreement, or any other Operative Agreement except
as specifically set forth in a waiver granted pursuant to the
provisions of Section 17 hereof; or
(vi) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, the Pledgor.
Section 29. Future Advances. This Agreement shall
secure the payment of any amounts advanced from time to time
pursuant to the Credit Agreement or any Further Letter of Credit
Agreement.
Section 30. Appointment of Co-Agents. At any time or
times, in order to comply with any legal requirement in any
jurisdiction or in connection with Section 6(d), the Collateral
Agent may appoint another bank or trust company or one or more
other persons, either to act as co-agent or co-agents, jointly with
the Collateral Agent, or to act as separate agent or agents on
behalf of the Secured Parties with such power and authority as may
be necessary for the effectual operation of the provisions hereof
and may be specified in the instrument of appointment (which may,
in the discretion of the Collateral Agent, include provisions for
the protection of such co-agent or separate agent similar to the
provisions of or incorporated by reference in Section 14.
Notwithstanding any such appointment but only to the extent not
inconsistent with such legal requirements or, in the reasonable
judgment of the Collateral Agent, not unduly burdensome to it or
any such co-agent, the Pledgor shall, so long as no Event of
Default shall have occurred and be continuing, be entitled to deal
solely and directly with the Collateral Agent rather than any such
co-agent in connection with the Collateral Agent's rights and
obligations under this Agreement.
Section 31. The other provisions of this Agreement to
the contrary notwithstanding, the obligation of the Pledgor to file
financing statements in the State of Tennessee with respect to
Collateral shall be subject to the following. Financing statements
need be filed in the State of Tennessee by the Pledgor and all
other parties to a Security Document (collectively, the "Pledgors")
only with respect to Collateral having an aggregate value equal to
$108.25 million, to be allocated among all Pledgors on the basis of
the estimated value of Inventory located in Tennessee owned by each
of them as of a date reasonably proximate to the date hereof,
provided that this sentence shall not affect the determination at
any time of whether the Collateral Requirement has been met. In
connection with the foregoing, the Pledgor represents and warrants
to the Collateral Agent, for the benefit of the Banks, that the
aggregate value as of a date reasonably proximate to the date
hereof of all Inventory owned by the Pledgors located in the State
of Tennessee is approximately $90.2 million.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement
to be executed and delivered by its duly authorized officer as of
the date first above written.
FLEMING COMPANIES, INC., as
Pledgor
By /s/ John M. Thompson
Name: John M. Thompson
Title: Vice President
P. O. Box 26647
6301 Waterford Boulevard
Oklahoma City, Oklahoma 73126
Attn: Treasurer
Telecopier: (405) 840-7202
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By /s/ Michael C. Mauer
Name: Michael C. Mauer
Title: Vice President
Notice Address:
60 Wall Street
New York, New York 10260
Attention: Loan Department
Telecopier: (212) 648-5336
Telex: 177615