EXHIBIT 4.2
GUARANTEE AND COLLATERAL AGREEMENT
made by
THE SCOTTS MIRACLE-GRO COMPANY,
EACH DOMESTIC SUBSIDIARY BORROWER
and certain of their Domestic Subsidiaries
in favor of
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
Dated as of July 21, 2005
TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS....................................................... 1
1.1. Definitions......................................................... 1
1.2. Other Definitional Provisions....................................... 4
SECTION 2. BORROWER GUARANTEE.................................................. 4
2.1. Borrower Guarantee.................................................. 4
2.2. No Subrogation...................................................... 5
2.3. Amendments, etc..................................................... 5
2.4. Guarantee Absolute and Unconditional................................ 6
2.5. Reinstatement....................................................... 6
2.6. Payments............................................................ 6
SECTION 3. DOMESTIC SUBSIDIARY GUARANTEE....................................... 7
3.1. Domestic Subsidiary Guarantee....................................... 7
3.2. Right of Contribution............................................... 7
3.3. No Subrogation...................................................... 7
3.4. Amendments, etc. with respect to the Borrower Obligations and the
Borrower's Guarantor Obligations.................................... 8
3.5. Guarantees Absolute and Unconditional............................... 8
3.6. Reinstatement....................................................... 9
3.7. Payments............................................................ 9
SECTION 4. GRANT OF SECURITY INTEREST.......................................... 9
SECTION 5. REPRESENTATIONS AND WARRANTIES...................................... 10
5.1. Title; No Other Liens............................................... 10
5.2. Perfected First Priority Liens...................................... 10
5.3. Jurisdiction of Organization........................................ 10
5.4. Domestic Subsidiaries............................................... 10
5.5. Pledged Stock....................................................... 10
SECTION 6. COVENANTS........................................................... 10
6.1. Delivery of Certificated Securities................................. 11
6.2. Payment of Obligations.............................................. 11
6.3. Maintenance of Perfected Security Interest; Further Documentation... 11
6.4. Notices............................................................. 11
6.5. Pledged Stock....................................................... 11
SECTION 7. REMEDIAL PROVISIONS................................................. 12
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7.1. Pledged Stock....................................................... 12
7.2. Proceeds to be Turned Over To Administrative Agent.................. 13
7.3. Application of Proceeds............................................. 13
7.4. Code and Other Remedies............................................. 14
7.5. Registration Rights................................................. 14
7.6. Deficiency.......................................................... 15
SECTION 8. THE ADMINISTRATIVE AGENT............................................ 15
8.1. Administrative Agent's Appointment as Attorney-in-Fact, etc......... 15
8.2. Duty of Administrative Agent........................................ 16
8.3. Authority of Administrative Agent................................... 17
SECTION 9. MISCELLANEOUS....................................................... 17
9.1. Amendments in Writing............................................... 17
9.2. Notices............................................................. 17
9.3. No Waiver by Course of Conduct; Cumulative Remedies................. 17
9.4. Enforcement Expenses; Indemnification............................... 17
9.5. Successors and Assigns.............................................. 18
9.6. Set-Off............................................................. 18
9.7. Counterparts........................................................ 18
9.8. Severability........................................................ 18
9.9. Section Headings.................................................... 19
9.10. Integration......................................................... 19
9.11. GOVERNING LAW....................................................... 19
9.12. Submission To Jurisdiction; Waivers................................. 19
9.13. Acknowledgments..................................................... 19
9.14. Additional Grantors................................................. 20
9.15. Releases; Reinstatement............................................. 20
9.16. Conflict of Laws.................................................... 21
9.17. WAIVER OF JURY TRIAL................................................ 21
SCHEDULES
Schedule 1 Notice Addresses of Guarantors
Schedule 2 Description of Pledged Stock
Schedule 3 Jurisdiction of Incorporation
Schedule 4 Domestic Subsidiaries
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THIS GUARANTEE AND COLLATERAL AGREEMENT, dated as of July 21, 2005,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of JPMORGAN
CHASE BANK, N.A., as Administrative Agent (in such capacity, the "Administrative
Agent") for the banks and other financial institutions (the "Lenders") from time
to time parties to the Revolving Credit Agreement, dated as of July 21, 2005 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among The Scotts Miracle-Gro Company, an Ohio corporation (the
"Borrower"), the Subsidiary Borrowers (as defined in the Credit Agreement) from
time to time parties to the Credit Agreement, Bank of America, N.A. and CITICORP
NORTH AMERICA, Inc., as Syndication Agents, Bank of Tokyo-Mitsubishi Trust
Company, BNP Paribas, COBANK, ACB, HARRIS BANK, N.A., RABOBANK INTERNATIONAL and
SUNTRUST BANK, as Documentation Agents, and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower and the Subsidiary
Borrowers upon the terms and subject to the conditions set forth therein;
WHEREAS, the Borrower and each Subsidiary Borrower is a member of an
affiliated group of companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower and each Subsidiary
Borrower to make valuable transfers to one or more of the other Grantors in
connection with the operation of their respective businesses;
WHEREAS, the Borrower, each Subsidiary Borrower and the other
Grantors are engaged in related businesses, and each Grantor will derive
substantial direct and indirect benefit from the making of the extensions of
credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower and any
Subsidiary Borrower under the Credit Agreement that the Grantors shall have
executed and delivered this Agreement to the Administrative Agent for the
ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
and each Subsidiary Borrower thereunder, each Grantor hereby agrees with the
Administrative Agent, for the ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1. Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement and the term Certificated Security is used herein as
defined in the New York UCC.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
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"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) to the
Administrative Agent or any Lender (or, in the case of any Lender Hedge
Agreement, any Affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Credit
Agreement, this Agreement, the other Loan Documents, any Letter of Credit,
any Lender Hedge Agreement or any other document made, delivered or given
in connection with any of the foregoing, in each case whether on account
of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by the Borrower pursuant to the terms of any
of the foregoing agreements).
"Borrower's Guarantor Obligations": without duplicating any Borrower
Obligations, all obligations and liabilities of the Borrower which may
arise under or in connection with this Agreement (including, without
limitation, Section 2) or any other Loan Document to which the Borrower is
a party, whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of this Agreement or any other Loan
Document).
"Collateral": the collective reference to any right, title or
interest now owned or at any time hereafter acquired by such Grantor, or
in which such Grantor now has or at any time in the future may acquire any
right, title or interest, in (i) the Pledged Stock, all documents and
instruments issued or delivered in respect of any Pledged Stock, the
rights and interest of the holder or registered owner of any Pledged Stock
in and under the Pledged Stock, such documents and instruments, any and
all other documents and instruments that from time to time secure such
Pledged Stock and any and all collateral from time to time subject to any
such documents or instruments and (ii) all Proceeds of any Collateral.
"Collateral Reinstatement Ratings Level": the condition deemed to
occur at any time after any Collateral Release Date upon the occurrence of
a ratings downgrade of the Borrower's senior unsecured non-credit enhanced
long-term indebtedness by either S&P or Moody's to a level below (a)
either BB+ by S&P or Ba1 by Moody's (so long as the Borrower would not
then meet the Collateral Release Ratings Level) or (b) either BBB- by S&P
or Baa3 by Moody's (so long as the Borrower would not then meet the
Collateral Release Ratings Level). If either S&P or Moody's shall cease to
be in the business of rating corporate debt obligations, the Borrower, the
Administrative Agent and the Required Lenders shall negotiate in good
faith to amend this definition to reflect the unavailability of ratings
from such rating agency.
"Collateral Release Ratings Level": the condition deemed to occur at
any time after the Closing Date at which the Borrower's senior unsecured
non-credit enhanced long-term indebtedness is rated (i) at least BB+ (with
a stable outlook) by S&P and at least Ba1 (with a stable outlook) by
Moody's or (ii) at least BBB- (with a stable outlook) by S&P or at least
Baa3 (with a stable outlook) by Moody's. If either S&P or Moody's shall
cease to be in the business of rating corporate debt obligations, the
Borrower, the Administrative Agent and the Required
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Lenders shall negotiate in good faith to amend this definition to reflect
the unavailability of ratings from such rating agency.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
jurisdiction outside the United States of America, except for any such
Subsidiary which is a "check-the-box" entity under Regulation section
301.7701-3 of the Code.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
Foreign Subsidiary.
"Guarantor Obligations": with respect to any Guarantor, without
duplicating any Subsidiary Borrower Obligations, all obligations and
liabilities of such Guarantor which may arise under or in connection with
this Agreement (including, without limitation, Section 3) or any other
Loan Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to
the Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than
the Borrower. For the avoidance of doubt, notwithstanding any other
provision of this Agreement, the parties hereto expressly agree that no
Foreign Subsidiary shall be a Guarantor.
"Issuers": the collective reference to each issuer of any Pledged
Stock.
"Lender Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements entered into by the Borrower with any
Lender (or any Affiliate of any Lender) providing for protection against
fluctuations in interest rates, currency exchange rates or commodity
prices or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations and the Borrower's Guarantor Obligations, (ii) in the case of
each Guarantor which is also a Domestic Subsidiary Borrower, its
Subsidiary Borrower Obligations, and (iii) in the case of each Guarantor
(whether or not a Domestic Subsidiary Borrower), its Guarantor
Obligations.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Subsidiary of
the Borrower (to the extent required to be pledged under Section 6.11 of
the Credit Agreement) that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect; provided that in no event shall
more than 65% of the total outstanding Foreign Subsidiary Voting Stock of
any Foreign Subsidiary be required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock,
collections thereon or distributions or payments with respect thereto.
"Securities Act": the Securities Act of 1933, as amended.
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"Subsidiary Borrower Obligations": with respect to each Subsidiary
Borrower, without duplicating any Guarantor Obligations, the collective
reference to the unpaid principal of and interest on the Loans and all
other obligations and liabilities of such Subsidiary Borrower (including,
without limitation, interest accruing at the then applicable rate provided
in the Credit Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in the Credit Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to such Subsidiary
Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Administrative Agent or any Lender
(or, in the case of any Lender Hedge Agreement, any Affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, this Agreement, the
other Loan Documents, any Letter of Credit, any Lender Hedge Agreement or
any other document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Administrative Agent or to the Lenders that are required to be paid by
such Subsidiary Borrower pursuant to the terms of any of the foregoing
agreements).
"Unsecured Period": any time from and after any Collateral Release
Date (if any) until the following Collateral Reinstatement Date (if any).
1.2. Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. BORROWER GUARANTEE
2.1. Borrower Guarantee. (a) The Borrower hereby, unconditionally
and irrevocably, guarantees to the Administrative Agent, for the ratable benefit
of the Lenders and their respective successors, indorsees, transferees and
assigns, the prompt and complete payment and performance by each Subsidiary
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of its Subsidiary Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of the Borrower hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by the Borrower under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Subsidiary Borrower Obligations and the
obligations of the Borrower under the guarantee contained in this Section 2
shall have been satisfied by payment in full, no Letter of Credit shall be
outstanding and the Revolving Credit Commitments and Loans shall be terminated,
notwithstanding that
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from time to time during the term of the Credit Agreement each Subsidiary
Borrower may be free from any Subsidiary Borrower Obligations.
(d) No payment made by any Subsidiary Borrower, any of the other
Guarantors, any other guarantor or any other Person or received or collected by
the Administrative Agent or any Lender from any Subsidiary Borrower, any of the
other Guarantors, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any time
or from time to time in reduction of or in payment of the Subsidiary Borrower
Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of the Borrower hereunder which shall, notwithstanding any such
payment (other than any payment made by the Borrower in respect of the
Subsidiary Borrower Obligations or any payment received or collected from the
Borrower in respect of the Subsidiary Borrower Obligations), remain liable for
the Subsidiary Borrower Obligations up to the maximum liability of the Borrower
hereunder until the Subsidiary Borrower Obligations are paid in full, no Letter
of Credit shall be outstanding and the Revolving Credit Commitments are
terminated.
2.2. No Subrogation. Notwithstanding any payment or payments made by
the Borrower hereunder, or any set-off or application of funds of the Borrower
by the Administrative Agent or any Lender, the Borrower shall not be entitled to
be subrogated to any of the rights of the Administrative Agent or any Lender
against the Subsidiary Borrowers or against any collateral security or guarantee
or right of offset held by the Administrative Agent or any Lender for the
payment of the Subsidiary Borrower Obligations, nor shall the Borrower seek or
be entitled to seek any contribution or reimbursement from the Subsidiary
Borrowers in respect of payments made by the Borrower hereunder, until all
amounts owing to the Administrative Agent and the Lenders by the Subsidiary
Borrowers on account of the Subsidiary Borrower Obligations are paid in full and
the Revolving Credit Commitments and Loans are terminated. If any amount shall
be paid to the Borrower on account of such subrogation rights at any time when
all of the Subsidiary Borrower Obligations shall not have been paid in full,
such amount shall be held by the Borrower in trust for the Administrative Agent
and the Lenders, segregated from other funds of the Borrower, and shall,
forthwith upon receipt by the Borrower, be turned over to the Administrative
Agent in the exact form received by the Borrower (duly indorsed by the Borrower
to the Administrative Agent, if required), to be applied against the Subsidiary
Borrower Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine.
2.3. Amendments, etc. with respect to the Subsidiary Borrower
Obligations. The Borrower shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Borrower and without notice to or
further assent by the Borrower, any demand for payment of any of the Subsidiary
Borrower Obligations made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender and any of the Subsidiary
Borrower Obligations continued, and the Subsidiary Borrower Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any Lender, and the Credit Agreement and the other Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Required Lenders or all Lenders, as the case may
be) may deem advisable from time to time, and any collateral security, guarantee
or right of offset at any time held by the Administrative Agent or any Lender
for the payment of the Subsidiary Borrower Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Subsidiary Borrower Obligations or for the
guarantee contained in this Section 2 or any property subject thereto.
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2.4. Guarantee Absolute and Unconditional. The Borrower waives any
and all notice of the creation, renewal, extension or accrual of any of the
Subsidiary Borrower Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
2 or acceptance of the guarantee contained in this Section 2; the Subsidiary
Borrower Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and the Subsidiary Borrowers, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. The Borrower waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or the applicable Subsidiary Borrower with respect to the
Subsidiary Borrower Obligations. The Borrower understands and agrees that the
guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Credit Agreement or any other Loan Document,
any of the Subsidiary Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by any
Subsidiary Borrower or any other Person against the Administrative Agent or any
Lender, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or any Subsidiary Borrower) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Subsidiary Borrowers for the Subsidiary Borrower Obligations, or of the Borrower
under the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against the Borrower, the Administrative Agent or any Lender
may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Subsidiary Borrowers
or any other Person or against any collateral security or guarantee for the
Subsidiary Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from the
Borrower, any Subsidiary Borrower, or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any Subsidiary Borrower or any other Person or
any such collateral security, guarantee or right of offset, shall not relieve
the Borrower of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Administrative Agent or any Lender against the Borrower.
For the purposes hereof, "demand" shall include the commencement and continuance
of any legal proceedings.
2.5. Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Subsidiary Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower, any Subsidiary Borrower or any other Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower, any Subsidiary
Borrower or any other Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
2.6. Payments. The Borrower hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars or the applicable Optional Currency at the office of the
Administrative Agent located at 270 Park Avenue, New York, New York 10017 or at
such other place and time specified by the Administrative Agent.
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SECTION 3. DOMESTIC SUBSIDIARY GUARANTEE
3.1. Domestic Subsidiary Guarantee. (a) Each of the Guarantors
hereby, jointly and severally, unconditionally and irrevocably, guarantees to
the Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations and the
Borrower's Guarantor Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 3.2).
(c) Each Guarantor agrees that the Borrower Obligations and the
Borrower's Guarantor Obligations either solely or collectively, may at any time
and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 3 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
(d) The guarantees contained in this Section 3 shall remain in full
force and effect until all the Borrower Obligations and the Borrower's Guarantor
Obligations and the obligations of each Guarantor under the guarantees contained
in this Section 3 shall have been satisfied by payment in full, no Letter of
Credit shall be outstanding and the Revolving Credit Commitments and Loans shall
be terminated, notwithstanding that from time to time during the term of the
Credit Agreement, the Borrower may be free from any Borrower Obligations and any
Borrower's Guarantor Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations or the Borrower's
Guarantor Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the
Borrower Obligations or the Borrower's Guarantor Obligations or any payment
received or collected from such Guarantor in respect of the Borrower Obligations
or the Borrower's Guarantor Obligations) remain liable for the Borrower
Obligations and the Borrower's Guarantor Obligations up to the maximum liability
of such Guarantor hereunder until the Borrower Obligations and the Borrower's
Guarantor Obligations are paid in full, no Letter of Credit shall be outstanding
and the Revolving Credit Commitments and Loans are terminated.
3.2. Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 3.3. The provisions of
this Section 3.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders for the full
amount guaranteed by such Guarantor hereunder.
3.3. No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any
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Lender, no Guarantor shall be entitled to be subrogated to any of the rights of
the Administrative Agent or any Lender against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by the
Administrative Agent or any Lender for the payment of the Borrower Obligations
or the Borrower's Guarantor Obligations nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations and the Borrower's Guarantor Obligations are
paid in full, no Letter of Credit shall be outstanding and the Revolving Credit
Commitments and Loans are terminated. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Borrower Obligations and the Borrower's Guarantor Obligations shall not have
been paid in full, such amount shall be held by such Guarantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations and the Borrower's Guarantor
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
3.4. Amendments, etc. with respect to the Borrower Obligations and
the Borrower's Guarantor Obligations. Each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand
for payment of any of the Borrower Obligations or the Borrower's Guarantor
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations and
the Borrower's Guarantor Obligations continued, and the Borrower Obligations and
the Borrower's Guarantor Obligations or the liability of any other Person upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations or the Borrower's Guarantor Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Administrative Agent nor any Lender
shall have any obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the Borrower Obligations or the Borrower's
Guarantor Obligations or for the guarantee contained in this Section 3 or any
property subject thereto.
3.5. Guarantees Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations or Borrower's Guarantor Obligations and notice of or proof
of reliance by the Administrative Agent or any Lender upon any of the guarantees
contained in this Section 3 or acceptance of the guarantees contained in this
Section 3; the Borrower Obligations and the Borrower's Guarantor Obligations and
any of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 3; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 3.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Borrower Obligations and the Borrower's Guarantor
Obligations. Each Guarantor understands and agrees that the guarantees contained
in this Section 3 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
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Credit Agreement or any other Loan Document, any of the Borrower Obligations or
the Borrower's Guarantor Obligations or any other collateral security therefor
or guarantee or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, or (c) any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or such Guarantor) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations or the Borrower's
Guarantor Obligations, or of such Guarantor under the guarantee contained in
this Section 3, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Administrative Agent or any Lender may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against the Borrower, any other Guarantor or any other
Person or against any collateral security or guarantee for the Borrower
Obligations or the Borrower's Guarantor Obligations or any right of offset with
respect thereto, and any failure by the Administrative Agent or any Lender to
make any such demand, to pursue such other rights or remedies or to collect any
payments from the Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent or any Lender against
any Guarantor. For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
3.6. Reinstatement. The guarantees contained in this Section 3 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations or the
Borrower's Guarantor Obligations, is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Borrower or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
3.7. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars or the applicable Optional Currency at the office of the
Administrative Agent located at 270 Park Avenue, New York, New York 10017 or at
such other place and time specified by the Administrative Agent.
SECTION 4. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Lenders, a security interest in all the Collateral, as collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of such Grantor's Obligations.
Notwithstanding the limitation on the inclusion of Foreign Subsidiary Voting
Stock in the definition of Pledged Stock, the remaining 35% of the outstanding
Foreign Subsidiary Voting Stock of any Foreign Subsidiary Borrower (other than
any Foreign Subsidiary Borrower organized or incorporated under the laws of
Australia) shall be pledged and subject to a grant of a security interest
therein subject to this section 4; provided that such pledge and grant shall
only secure the obligations of such Foreign Subsidiary Borrower in its capacity
as a borrower under the Credit Agreement.
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SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrower and each Subsidiary Borrower thereunder, each Grantor
hereby represents and warrants to the Administrative Agent and each Lender that
other than during any Unsecured Period:
5.1. Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others.
5.2. Perfected First Priority Liens. The security interests granted
pursuant to this Agreement will constitute valid perfected security interests in
all of the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Lenders, as collateral security for such Grantor's Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor,
to the extent that perfection or enforceability against third parties is
obtainable by completion of the filings and other actions set forth on Schedule
3 or any similar filings or other actions in other jurisdictions in the United
States of America and are prior to all other Liens on the Collateral which have
priority over the Liens on the Collateral by operation of law and other Liens on
the Collateral permitted by the Credit Agreement.
5.3. Jurisdiction of Organization. On the date hereof, such
Grantor's jurisdiction of organization and identification number from the
jurisdiction of organization (if any) are set forth on Schedule 3. Such Grantor
has furnished to the Administrative Agent a certified charter, certificate of
incorporation or other organizational document and good standing certificate as
of a date which is recent to the date hereof.
5.4. Domestic Subsidiaries.On the date hereof, Schedule 4 sets forth
a true and complete list of the Domestic Subsidiaries.
5.5. Pledged Stock. (a) The shares of the Pledged Stock pledged by
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign
Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Stock pledged by it hereunder, free of any
and all Liens or options in favor of, or claims of, any other Person, except the
security interest created by this Agreement and except as permitted under
subsection 7.1 of the Credit Agreement.
SECTION 6. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Revolving Credit Commitments and Loans shall have
terminated, other than during any Unsecured Period,
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6.1. Delivery of Certificated Securities . If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Certificated Security, such Certificated Security shall be immediately
delivered to the Administrative Agent, duly indorsed (including by delivery of
related stock powers) in a manner satisfactory to the Administrative Agent, to
be held as Collateral pursuant to this Agreement.
6.2. Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind against or with respect to the Collateral, except that no
such charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
6.3. Maintenance of Perfected Security Interest; Further
Documentation. Such Grantor shall maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 5.2 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
6.4. Notices. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any
of its remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver, and have recorded,
such further instruments and documents and take such further actions as
the Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, (i)
filing any financing or continuation statements under the Uniform
Commercial Code (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby and (ii) in the case of
Pledged Stock and any other relevant Collateral, taking any actions
necessary to enable the Administrative Agent to obtain "control" (within
the meaning of the applicable Uniform Commercial Code) with respect
thereto.
6.5. Pledged Stock. (a) If such Grantor shall become entitled to
receive or shall receive any stock certificate (including, without limitation,
any certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights in respect of
the Capital Stock of any Issuer which is a direct or indirect Domestic
Subsidiary of such Grantor and which is Pledged Stock, whether in addition to,
in substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly
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indorsed (including by delivery of related stock or bond powers) by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor to be held by
the Administrative Agent, subject to the terms hereof, as additional collateral
security for such Grantor's Obligations. Any sums paid upon or in respect of the
Collateral upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the applicable Grantor's Obligations, and in case any distribution
of capital shall be made on or in respect of the Collateral or any property
shall be distributed upon or with respect to the Collateral pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for such Obligations except to the extent
permitted under Subsection 6.2. If any sums of money or property so paid or
distributed in respect of the Collateral shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Lenders,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.
(b) Without the prior written consent of the Administrative Agent or
unless permitted by the Credit Agreement, such Grantor will not (i) vote to
enable, or take any other action to permit, any Issuer to issue any stock or
other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Collateral (except pursuant to a transaction permitted by the Credit
Agreement), (iii) create, incur or permit to exist any Lien or option in favor
of, or any claim of any Person with respect to, any of the Collateral, or any
interest therein, except for the security interests created by this Agreement or
(iv) enter into any agreement or undertaking restricting the right or ability of
such Grantor or the Administrative Agent to sell, assign or transfer any of the
Collateral.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Stock issued by it and will comply with such terms insofar as such terms
are applicable to it, (ii) it will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 6.3(a) with
respect to the Pledged Stock issued by it and (iii) the terms of Sections 7.1(c)
and 7.5 shall apply to it, mutatis mutandis, with respect to all actions that
may be required of it pursuant to Section 7.1(c) or 7.5 with respect to the
Pledged Stock issued by it.
SECTION 7. REMEDIAL PROVISIONS
7.1. Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 7.1(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock, in each case
paid in the normal course of business of the relevant Issuer and consistent with
past practice, to the extent permitted in the Credit Agreement, to pay and
declare dividends to the extent permitted by the Credit Agreement and to
exercise all voting and corporate rights with respect to the Pledged Stock;
provided, however, that no vote shall be cast or corporate right exercised or
other action taken which, in the Administrative Agent's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result in any
violation of any provision of the Credit Agreement, this Agreement or any other
Loan Document.
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(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give written notice of its intent to exercise such
rights to the relevant Grantor or Grantors, (i) the Administrative Agent shall
have the right to receive any and all cash dividends, payments or other Proceeds
paid in respect of the Pledged Stock and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Pledged Stock shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Pledged Stock at any meeting of shareholders of the relevant Issuer or
Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Pledged Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Stock upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of any Issuer, or upon the
exercise by any Grantor or the Administrative Agent of any right, privilege or
option pertaining to such Pledged Stock, and in connection therewith, the right
to deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Stock pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Stock directly to the Administrative Agent.
7.2. Proceeds to be Turned Over To Administrative Agent. If an Event
of Default shall occur and be continuing, all Proceeds received by any Grantor
consisting of cash, checks and other near-cash items shall be held by such
Grantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Grantor, and shall, forthwith upon receipt by such Grantor,
be turned over to the Administrative Agent in the exact form received by such
Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Administrative
Agent and the Lenders) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 7.5.
7.3. Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Administrative Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Obligations
in the following order:
First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the
14
Lenders according to the amounts of the Obligations then due and owing and
remaining unpaid to the Lenders;
Third, to the Administrative Agent, for application by it towards
prepayment of the Obligations, pro rata among the Lenders according to the
amounts of the Obligations then held by the Lenders; and
Fourth, any balance remaining after the Obligations shall have been
paid in full, no Letters of Credit shall be outstanding and the Revolving
Credit Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
7.4. Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 7.4, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
New York UCC, need the Administrative Agent account for the surplus, if any, to
any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
7.5. Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 7.4, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and
15
deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts to cause
the registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account,
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 7.5 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 7.5 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 7.5 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the Credit Agreement.
7.6. Deficiency. Grantor shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay its Obligations and the fees and disbursements of any attorneys employed
by the Administrative Agent or any Lender to collect such deficiency.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1. Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby
16
gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(ii) execute, in connection with any sale provided for in Section
7.4 or 7.5, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(iii) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (1) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (2)
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any
Collateral; (3) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (4) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, give
such discharges or releases as the Administrative Agent may deem
appropriate; and (5) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and do, at the Administrative Agent's
option and such Grantor's expense, at any time, or from time to time, all
acts and things which the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and
the Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 8.1(a) to the contrary
notwithstanding, the Administrative Agent agrees that it will not exercise any
rights under the power of attorney provided for in this Section 8.1(a) unless an
Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 8.1, together with interest
thereon at a rate per annum equal to the highest rate per annum at which
interest would then be payable on any category of past due ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
8.2. Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under
17
Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the
same manner as the Administrative Agent deals with similar property for its own
account. Neither the Administrative Agent, any Lender nor any of their
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Administrative Agent or any
Lender to exercise any such powers. The Administrative Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
8.3. Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 9. MISCELLANEOUS
9.1. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with subsection 10.1 of the Credit Agreement.
9.2. Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
9.3. No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
9.4. Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay or reimburse each Lender and the Administrative Agent for all its
costs and expenses incurred in collecting
18
against such Guarantor under the guarantees contained in Section 2 or 3, as
applicable, or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents to which such Guarantor is a party, including,
without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrower would be required to do so pursuant to subsection 10.5 of
the Credit Agreement.
(d) The agreements in this Section 9.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
9.5. Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
9.6. Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time while an
Event of Default shall have occurred and be continuing, without notice to such
Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Grantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Grantor to the Administrative Agent or such
Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Grantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this Section 9.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Administrative Agent or such Lender may have.
9.7. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
9.8. Severability. 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
19
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
9.9. Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
9.10. Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.
9.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12. Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Grantor at its
address referred to in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
9.13. Acknowledgments. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a party;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Loan
20
Documents, and the relationship between the Grantors, on the one hand, and the
Administrative Agent and Lenders, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Grantors and the Lenders.
9.14. Additional Grantors. Each Domestic Subsidiary Borrower that is
required to become a party to this Agreement pursuant to subsection 10.1(b) of
the Credit Agreement shall become a Grantor for all purposes of this Agreement
upon execution and delivery by such Domestic Subsidiary Borrower of an
Assumption Agreement in the form of Annex 1 hereto.
9.15. Releases; Reinstatement.
(a) At such time as the Loans, the Reimbursement Obligations and the
other Obligations shall have been paid in full, the Revolving Credit Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
(c) At such time as the Borrower has achieved the Collateral Release
Ratings Level, the Borrower shall have the right by written notice to the
Administrative Agent to require that the Collateral be released from any
security interest created hereby. On any such date (the "Collateral Release
Date"), all rights to the Collateral shall transfer and revert to the Borrower
and the Guarantors. On any such Collateral Release Date, the Grantors shall be
authorized and the Administrative Agent hereby authorizes each Grantor, to
prepare and record UCC termination statements with respect to any financing
statements record by the Administrative Agent hereunder. At the request and sole
expense of the Borrower following the Collateral Release Date, the
Administrative Agent shall deliver to the Company any Collateral (including
certificates representing the Pledged Stock) held by the Administrative Agent
hereunder, and execute and deliver to the Borrower such documents as the
Borrower shall reasonably request to evidence such termination.
21
(d) Notwithstanding clause (c) of this Section 9.15, at any time
during an Unsecured Period that a ratings downgrade by either S&P or Moody's
causes the Collateral Reinstatement Ratings Level to be achieved (any such date,
the "Collateral Reinstatement Date"), the Collateral shall be reinstated in full
within sixty days of such Collateral Reinstatement Date, along with any
necessary modifications to the Schedules hereto.
9.16. Conflict of Laws. Notwithstanding anything to the contrary
herein, in the event that any provision of any pledge, charge or foreign
equivalent executed by any Foreign Subsidiary and governed by the laws of the
applicable foreign jurisdiction is inconsistent with any corresponding provision
in this Agreement, the provision in such pledge, charge or foreign equivalent
shall govern.
9.17. WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of page intentionally left blank]
22
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
JPMORGAN CHASE BANK, N.A.
By: /s/ Randolph Cates
-----------------------------------------
Name: Randolph Cates
Title: Vice President
THE SCOTTS MIRACLE-GRO COMPANY
By: /s/ Christopher L. Nagel
-----------------------------------------
Name: Christopher L. Nagel
Title: Executive Vice President and CFO
THE SCOTTS COMPANY LLC
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
MIRACLE-GRO LAWN PRODUCTS, INC.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
OMS INVESTMENTS, INC.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
HYPONEX CORPORATION
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS PRODUCTS CO.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS PROFESSIONAL PRODUCTS CO.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS-SIERRA HORTICULTURAL PRODUCTS COMPANY
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS SIERRA CROP PROTECTION COMPANY
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS-SIERRA INVESTMENTS, INC.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
EG SYSTEMS, INC.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SWISS FARM PRODUCTS, INC.
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS MANUFACTURING COMPANY
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SCOTTS TEMECULA OPERATIONS, LLC
By: /s/ Paul DeSantis
-----------------------------------------
Name: Paul DeSantis
Title: Vice President and Treasurer
SMITH & HAWKEN, LTD.
By: /s/ Christopher L. Nagel
-----------------------------------------
Name: Christopher L. Nagel
Title: Executive Vice President and CFO
SANFORD SCIENTIFIC, INC.
By: /s/ Christopher L. Nagel
-----------------------------------------
Name: Christopher L. Nagel
Title: Executive Vice President and CFO
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Guarantee and Collateral Agreement dated as of July 21, 2005 (the "Agreement"),
made by the Grantors parties thereto for the benefit of JPMorgan Chase Bank,
N.A., as Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
SECTION 1. The undersigned will be bound by the terms of the
Agreement and will comply with such terms insofar as such terms are
applicable to the undersigned.
SECTION 2. The undersigned will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in
Section 6.5(a) of the Agreement.
SECTION 3. The terms of Sections 7.1(c) and 7.5 of the Agreement
shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Section 7.1(c) or 7.5 of the Agreement.
[NAME OF ISSUER]
By:____________________________________
Name:
Title:
Address for Notices:
_______________________________________
_______________________________________
_______________________________________
Fax:___________________________________
Annex 1 to
Guarantee and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 20__, made by
______________________________, a ______________ corporation (the "Additional
Grantor"), in favor of JPMorgan Chase Bank, N.A., as administrative agent (in
such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, The Scotts Miracle-Gro Company, an Ohio corporation (the
"Borrower"), the Subsidiary Borrowers, the Lenders, the Administrative Agent,
the Documentation Agent and the Syndication Agent have entered into a Revolving
Credit Agreement, dated as of July 21, 2005 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered into
the Guarantee and Collateral Agreement, dated as of July 21, 2005 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee and
Collateral Agreement") in favor of the Administrative Agent for the benefit of
the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section 9.14
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in the Schedules to the
Guarantee and Collateral Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and warranties contained in Section 5
of the Guarantee and Collateral Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
[Remainder of page intentionally left blank]
2
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:___________________________
Name:
Title:
Annex 1-A to
Assumption Agreement
Supplement to Schedule 1
Supplement to Schedule 2
Supplement to Schedule 3
Supplement to Schedule 4
SCHEDULE 1
NOTICE ADDRESSES OF GUARANTORS
1. The Scotts Miracle-Gro Company
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
2. The Scotts Company LLC
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
3. Miracle-Gro Lawn Products, Inc.
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
4. OMS Investments, Inc.
10250 Constellation Blvd.
Suite 2800
Los Angeles, CA 90067-6228
Attn: Nicole McClelland
5. Hyponex Corporation
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
6. Scotts Products Co.
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
7. Scotts Professional Products Co.
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
8. Scotts-Sierra Horticultural Products Company
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
9. Scotts-Sierra Crop Protection Company
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
10. Scotts-Sierra Investments, Inc.
Delaware Corporate Management
1105 N. Market Street
Wilmington, Delaware 19899
Attn: Susan T. Dubb
11. EG Systems, Inc.
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
12. Swiss Farms Products, Inc.
3773 Howard Hughes Parkway, Suite 300 North
Las Vegas, Nevada 89109
Attn: David M. Aronowitz
13. Scotts Manufacturing Company
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
14. Scotts Temecula Operations, LLC
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
15. Smith & Hawken, Ltd.
4 Hamilton Landing, Suite 100
Novato, CA 94949
Attn: Barry Gilbert
16. Sanford Scientific, Inc.
14111 Scottslawn Road
Marysville, Ohio 43041
Attn: David M. Aronowitz
SCHEDULE 2
DESCRIPTION OF INVESTMENT PROPERTY
ISSUER CLASS OF STOCK STOCK CERTIFICATE NO. NO. OF SHARES
------ -------------- --------------------- -------------
1. SCOTTS MANUFACTURING common shares, $.01 par value 2 1,000
COMPANY
2. MIRACLE-GRO LAWN voting common stock, without par V13 1,000
PRODUCTS, INC. value
non-voting common stock, without NV11 999.8
par value
3. OMS INVESTMENTS, INC. common stock, 3 100
$.01 par value
4. HYPONEX CORPORATION common stock, 3 100
$.01 par value
5. SCOTTS PRODUCTS CO. common shares, without par value 3 100
6. SCOTTS PROFESSIONAL common shares, without par value 3 100
PRODUCTS CO.
7. SCOTTS-SIERRA Class A voting common shares, Class A Cert. No. 6 100
HORTICULTURAL PRODUCTS $.001 par value
COMPANY
Class A voting common shares, Class A Cert. No. 6 1
$.001 par value
Class B non-voting common shares, Class B Cert. No. 3 1
$.001 par value
8. SCOTTS-SIERRA CROP common shares, without par value 1 100
PROTECTION COMPANY
ISSUER CLASS OF STOCK STOCK CERTIFICATE NO. NO. OF SHARES
------ -------------- --------------------- -------------
9. SCOTTS-SIERRA Class A common stock, without par 3A 100
INVESTMENTS, INC. value
Class A common stock, without par 4A 1
value
Class B common stock, without par 2B 1
value
10. SWISS FARMS PRODUCTS, common stock, without par value 2 100
INC.
11. SMITH & HAWKEN, LTD. Common stock 18 11,652,708
12. EG SYSTEMS, INC. Common stock 29 36,480,458
13. SANFORD SCIENTIFIC, INC. Common stock 8 99
14. THE SCOTTS COMPANY LLC limited liability company interest n/a n/a
(not certificated)
15. SCOTTS TEMECULA limited liability company interest n/a n/a
OPERATIONS, LLC (not certificated)
SCHEDULE 3
JURISDICTION OF ORGANIZATION AND IDENTIFICATION NUMBERS
COMPANY STATE ID #
The Scotts Miracle-Gro Company Ohio 1501530
The Scotts Company LLC Ohio 1503259
Scotts Manufacturing Company Delaware 1369282
Scotts-Sierra Horticultural Products Company California 515533
OMS Investments, Inc. Delaware 2435730
Scotts-Sierra Investments, Inc. Delaware 2512334
ACTIONS WITH RESPECT TO PLEDGED STOCK
Delivery of Pledged Stock to JPMorgan Chase Bank, N.A., as Administrative
Agent, indorsed in blank by an effective indorsement or accompanied by undated
stock powers with respect thereto, duly indorsed in blank by an effective
indorsement.
SCHEDULE 4
SUBSIDIARIES
SMGM LLC, an Ohio limited liability company
SMG Brands, Inc., a Delaware limited liability company
The Scotts Company LLC, an Ohio limited liability company
EG Systems, Inc., dba Scotts LawnService, an Indiana corporation
(1)Custom Lawn Care Service, Inc., a Pennsylvania corporation
Hyponex Corporation, a Delaware corporation
OMS Investments, Inc., a Delaware corporation
Scotts Temecula Operations, LLC, a Delaware corporation
Sanford Scientific, Inc., a New York corporation
Scotts Global Services, Inc., a Nevada corporation
Scotts Manufacturing Company, a Delaware corporation
Miracle-Gro Lawn Products, Inc., a New York corporation
Scotts Products Co., an Ohio corporation
Scotts Professional Products Co., an Ohio corporation
Scotts-Sierra Horticultural Products Company, a California corporation
Scotts-Sierra Crop Protection Company, a California corporation
Scotts-Sierra Investments, Inc., a Delaware corporation
Smith & Hawken, Ltd., a Delaware corporation
Swiss Farms Products, Inc., a Delaware corporation
- --------
(1) This company is inactive and is in the process of being dissolved.