Exhibit 10.20
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as of
December 21, 1998 and entered into by and between DOMINO'S, INC., a Delaware
corporation ("Company"), BLUEFENCE, INC., a Michigan corporation ("Subsidiary
Borrower," and together with Company, each a "Pledgor" and, collectively,
"Pledgors") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral Agent
for and representative of (in such capacity herein called "Collateral Agent")
the financial institutions ("Lenders") from time to time party to the Credit
Agreement referred to below.
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of December 21,
1998 (said Credit Agreement, as it may hereafter be amended, supplemented or
otherwise modified from time to time, being the "Credit Agreement", the terms
defined therein and not otherwise defined herein being used herein as therein
defined) by and among Pledgors, TISM, INC., a Michigan corporation ("Holdings"),
Lenders, the financial institutions from time to time party thereto, J.P. MORGAN
SECURITIES INC., as arranger (in such capacity, "Arranger"), NBD BANK, as
syndication agent, and COMERICA BANK, as documentation agent, and Collateral
Agent, Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgors.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgors shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and issue Letters of Credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgors hereby agree with Collateral
Agent as follows:
SECTION 1. Certain Definitions. The following terms used in this Agreement
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shall have the following meanings:
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government or (b) issued
by any agency of the United States the obligations of which are backed by
the full faith and credit of the United States, in each case maturing
within thirty (30) days from such date; (ii) marketable direct obligations
issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof, in
each case maturing within thirty (30) days from such date and having, at
the time of acquisition thereof, the highest rating obtainable from either
Standard & Poor's Ratings Services, a division of McGraw-Hill, Inc. ("S&P")
or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper
maturing no more than thirty (30) days from the date of creation thereof
and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within thirty (30) days from such date issued by any Lender or by any
commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia that (a) is at least
"adequately capitalized'' (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; and (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and
(ii) above, (b) has net assets of not less than $500,000,000, and (c) has
the highest rating obtainable from either S&P or Moody's.
"Collateral" means (i) the Collateral Account and all amounts
from time to time on deposit therein, (ii) all Investments, including all
certificates and instruments from time to time representing or evidencing
such Investments and any account or accounts in which such Investments may
be held by, or in the name of, Collateral Agent for or on behalf of
Pledgors, (iii) all notes, certificates of deposit, checks and other
instruments and all deposits and uncertificated securities from time to
time hereafter transferred to or otherwise possessed by, or held in the
name of, Collateral Agent for or on behalf of Pledgors in substitution for
or in addition to any or all of the Collateral, (iv) all interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the Collateral, and (v) to the extent not covered by clauses (i)
through (iv) above, all proceeds of any or all of the foregoing Collateral.
"Collateral Account" means the restricted deposit account
established and maintained by Collateral Agent pursuant to Section 2(a).
"Investments" means those investments, if any, made by Collateral
Agent pursuant to Section 5.
"Secured Obligations" means all obligations and liabilities of
every nature of Pledgors now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents and
all extensions or renewals thereof, whether for principal, interest
(including interest that, but for the filing of a petition in bankruptcy
with respect to any Pledgor, would accrue on such obligations),
reimbursement of amounts drawn under Letters of Credit, fees, expenses,
indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or
not jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred, and all
or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Collateral Agent or any Lender as a preference, fraudulent
transfer or otherwise, and all obligations of every nature of Pledgors now
or hereafter existing under this Agreement.
SECTION 2. Establishment and Operation of Collateral Account.
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(a) Collateral Agent is hereby authorized to establish and maintain at
its custodian office at Bank if New York, 1 Wall Street, New York, New York
10286, as a blocked account in the name of Collateral Agent and under the sole
dominion and control of Collateral Agent, a restricted deposit account
designated as "MGT NY Special Loan Account # 190159."
(b) The Collateral Account shall be operated in accordance with the
terms of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgors but shall be held in the name of Collateral Agent
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgors shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. Deposits of Cash Collateral.
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(a) All deposits of funds in the Collateral Account shall be made by
wire transfer (or, if applicable, by intra-bank transfer from another account of
any Pledgor) of immediately available funds, in each case addressed as follows:
Name of Bank: Bank of New York
Account No.: GLA 111565
ABA No.: 021000018
FCC: MGT NY Special Loan Account # 190159
Reference: Domino's Pizza Collateral
Pledgors shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Collateral Agent by telefacsimile of the date, amount
and method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgors are required to pay
to Collateral Agent an amount (the "Aggregate Available Amount") equal to the
maximum amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgors shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a).
Upon any drawing under any outstanding Letter of Credit in respect of which
Pledgors have deposited in the Collateral Account any amounts described above,
Collateral Agent shall apply such amounts to reimburse the Issuing Lender for
the amount of such drawing. In the event the amount deposited in the Collateral
Account pursuant to this Section 3(b) exceeds the maximum amount available to be
drawn under all Letters of Credit, Collateral Agent shall apply such excess
amount then on deposit in the Collateral Account in accordance with subsection
2.4D of the Credit Agreement.
(c) So long as no Event of Default has occurred and is continuing, any
interest received in respect of Investments of any amounts deposited in the
Collateral Account pursuant to this Section shall be delivered by Collateral
Agent to Pledgors upon receipt of written request from Pledgors; provided,
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however, that Collateral Agent shall not deliver to any Pledgor any such
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interest received in respect of Investments of any amounts deposited in the
Collateral Account pursuant to Section 3(b) unless all outstanding Secured
Obligations have been indefeasibly paid in full or cash collateralized pursuant
to the terms of this Agreement.
SECTION 4. Pledge of Security for Secured Obligations.
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Pledgors hereby pledge and assign to Collateral Agent, and hereby
grant to Collateral Agent a security interest in, all of Pledgors' right, title
and interest in and to the Collateral as collateral security for the prompt
payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)), of all
Secured Obligations.
SECTION 5. Investment of Amounts in Collateral Account; Interest.
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Cash held by Collateral Agent in the Collateral Account shall not be
invested or reinvested except as provided in this Section 5.
(a) So long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, any funds on deposit in the Collateral Account
shall be invested by Collateral Agent in its own name, in accordance with and
upon receipt by Collateral Agent from time to time of written instructions from
Pledgors, in Cash Equivalents. Upon the occurrence and during the continuance
of an Event of Default or Potential Event of Default, Pledgors' right to
instruct Collateral Agent with respect to such investment or reinvestment shall
terminate without further notice to Pledgors.
(b) Collateral Agent is hereby authorized to sell, and shall sell, all
or any designated part of the securities constituting part of the Collateral (i)
so long as no Event of Default or Potential Event of Default shall have occurred
and be continuing, upon receipt of written instructions from any Pledgor or (ii)
in any event if such sale is necessary to permit Collateral Agent to perform its
duties hereunder. Collateral Agent shall have no responsibility for any loss
resulting from a fluctuation in interest rates or otherwise. Subject to the
provisions of Section 3(d), any interest received in respect of securities
constituting part of the Collateral and the net proceeds of the sale or payment
of any such securities shall be held in the Collateral Account by Collateral
Agent pending investment thereof pursuant to Section 5(a).
(c) The Collateral Account shall be subject to such applicable laws,
and such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
SECTION 6. Representations and Warranties. Each Pledgor represents and
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warrants as follows:
(a) Ownership of Collateral. Such Pledgor is (or at the time of
transfer thereof to Collateral Agent will be) the legal and beneficial
owner of the Collateral from time to time transferred by such Pledgor to
Collateral Agent , free and clear of any Lien except for the security
interest created by this Agreement and Permitted Encumbrances.
(b) Perfection. The pledge and assignment of the Collateral pursuant
to this Agreement creates a valid and perfected First Priority Lien in the
Collateral, securing the payment of the Secured Obligations.
(c) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of such Pledgor with
respect to the Collateral is accurate and complete in all respects.
SECTION 7. Further Assurances.
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Pledgors agree that from time to time, at the joint and several
expense of Pledgors, Pledgors will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Collateral Agent may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Pledgors will: (a) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Collateral Agent may request, in order to perfect
and preserve the security interests granted or purported to be granted hereby
and (b) at Collateral Agent's request, appear in and defend any action or
proceeding that may affect any Pledgor's beneficial title to or Collateral
Agent's security interest in all or any part of the Collateral.
SECTION 8. Transfers and other Liens.
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Each Pledgor agrees that it will not (a) sell, assign (by operation of
law or otherwise) or otherwise dispose of any of the Collateral or (b) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the security interest under this Agreement.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact.
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Each Pledgor hereby irrevocably appoints Collateral Agent as such
Pledgor's attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor, Collateral Agent or otherwise, from
time to time in Collateral Agent's discretion to take any action and to execute
any instrument that Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including to file one or more
financing or continuation statements, or amendments thereto, relative to all or
any part of the Collateral without the signature of such Pledgor.
SECTION 10. Collateral Agent Party May Perform.
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If any Pledgor fails to perform any agreement contained herein,
Collateral Agent may itself perform, or cause performance of, such agreement,
and the expenses of Collateral
Agent incurred in connection therewith shall be payable by Pledgors under
subsection 10.2 of the Credit Agreement.
SECTION 11. Standard of Care.
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The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Collateral Agent shall have no duty as to any
Collateral, it being understood that Collateral Agent shall have no
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not Collateral Agent has or is deemed to have knowledge
of such matters, (b) taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above to maintain possession of
the Collateral) to preserve rights against any parties with respect to any
Collateral, (c) taking any necessary steps to collect or realize upon the
Secured Obligations or any guarantee therefor, or any part thereof, or any of
the Collateral, (d) initiating any action to protect the Collateral against the
possibility of a decline in market value, (e) any loss resulting from
Investments made pursuant to Section 5, except for a loss resulting from
Collateral Agent's gross negligence, willful misconduct or bad faith in
complying with Section 5, or (f) determining (i) the correctness of any
statement or calculation made by Pledgors in any written instructions or (ii)
whether any deposit in the Collateral Account is proper. Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Collateral Agent accords its own property
consisting of negotiable securities.
SECTION 12. Remedies.
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Subject to the provisions of Section 3(b), Collateral Agent may
exercise in respect of the Collateral, in addition to all other rights and
remedies otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "Code") (whether or not the Code applies to the affected
Collateral).
SECTION 13. Continuing Security Interest; Transfer of Loans.
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This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon each Pledgor, its successors and assigns, and (c)
inure, together with the rights and remedies of Collateral Agent hereunder, to
the benefit of Collateral Agent and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Pledgor. Upon any such termination
Collateral Agent shall, at Pledgors' expense, execute and deliver to each
Pledgors such documents as such Pledgor shall reasonably request to evidence
such termination and such Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to Collateral
Agent, of such of the Collateral as shall not have been otherwise applied
pursuant to the terms hereof.
SECTION 14. Administrative Agent as Collateral Agent.
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(a) Collateral Agent has been appointed to act as Collateral Agent
hereunder by Lenders. Collateral Agent shall be obligated, and 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 any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement.
(b) Collateral Agent shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall
also constitute notice of resignation as Collateral Agent under this Agreement;
removal of Administrative Agent pursuant to subsection 9.5 of the Credit
Agreement shall also constitute removal as Collateral Agent under this
Agreement; and appointment of a successor Administrative Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under subsection 9.5 of the Credit Agreement
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Collateral Agent under this Agreement, and
the retiring or removed Collateral Agent under this Agreement shall promptly (i)
transfer to such successor Collateral Agent all sums held by Collateral Agent
hereunder (which shall be deposited in a new Collateral Account established and
maintained by such successor Collateral Agent), together with all records and
other documents necessary or appropriate in connection with the performance of
the duties of the successor Collateral Agent under this Agreement, and (ii)
execute and deliver to such successor Collateral Agent such amendments to
financing statements, and take such other actions, as may be necessary or
appropriate in connection with the assignment to such successor Collateral Agent
of the security interests created hereunder, whereupon such retiring or removed
Collateral Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Collateral Agent, 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 Collateral Agent hereunder.
SECTION 15. Amendments; Etc.
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No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by any Pledgor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
Collateral Agent and, in the case of any such amendment or modification, by
Pledgors. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
SECTION 16. Notices.
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Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served or sent by telefacsimile
or United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service or upon receipt if sent by
telefacsimile or by the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as provided in subsection 10.8 of the Credit Agreement.
SECTION 17. Failure or Indulgence Not Waiver; Remedies Cumulative.
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No failure or delay on the part of Collateral Agent in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 18. Severability.
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In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 19. Headings.
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Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 20. Governing Law; Terms.
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THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 21. Counterparts.
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This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, Pledgors and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
DOMINO'S, INC.,
as Pledgor
By: /s/ Harry Silverman
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Name: Harry Silverman
Title: Vice President
BLUEFENCE, INC.,
as Pledgor
By: /s/ Harry Silverman
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Name: Harry Silverman
Title: President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By: /s/ Colleen Galle
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Name: Colleen Galle
Title: Vice President