U.s. Guarantee And Collateral Agreement

EXHIBIT 10.2 U.S. GUARANTEE AND COLLATERAL AGREEMENT dated and effective as of November 4, 2003, among NALCO HOLDINGS LLC, NALCO COMPANY, each Domestic Subsidiary of Holdings identified herein, and CITICORP NORTH AMERICA, INC., as Collateral Agent TABLE OF CONTENTS Page ---- ARTICLE I. DefinitionsSECTION 1.01. Credit Agreement............................................................1SECTION 1.02. Other Defined Terms.........................................................2 ARTICLE II. GuaranteeSECTION 2.01. Guarantee...................................................................5SECTION 2.02. Guarantee of Payment........................................................5SECTION 2.03. No Limitations, Etc.........................................................5SECTION 2.04. Reinstatement...............................................................7SECTION 2.05. Agreement To Pay; Subrogation...............................................8SECTION 2.06. Information.................................................................8SECTION 2.07. Maximum Liability...........................................................8 ARTICLE III. Pledge of SecuritiesSECTION 3.01. Pledge......................................................................8SECTION 3.02. Delivery of the Pledged Collateral..........................................9SECTION 3.03. Representations, Warranties and Covenants..................................10SECTION 3.04. Certification of Limited Liability Company and Limited Partnership Interests....................................................11SECTION 3.05. Registration in Nominee Name; Denominations................................11SECTION 3.06. Voting Rights; Dividends and Interest, etc.................................12 -i- ARTICLE IV. Security Interests in Personal PropertySECTION 4.01. Security Interest..........................................................13SECTION 4.02. Representations and Warranties.............................................15SECTION 4.03. Covenants..................................................................17SECTION 4.04. Other Actions..............................................................19SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral.............20 ARTICLE V. RemediesSECTION 5.01. Remedies Upon Default......................................................22SECTION 5.02. Application of Proceeds....................................................24SECTION 5.03. Grant of License to Use Intellectual Property..............................24SECTION 5.04. Securities Act, etc........................................................25SECTION 5.05. Registration, etc..........................................................25 ARTICLE VI. Indemnity, Subrogation and SubordinationSECTION 6.01. Indemnity and Subrogation..................................................26SECTION 6.02. Contribution and Subrogation...............................................26SECTION 6.03. Subordination..............................................................26 ARTICLE VII. MiscellaneousSECTION 7.01. Notices....................................................................27SECTION 7.02. Security Interest Absolute.................................................27SECTION 7.03. [Reserved].................................................................27 -ii- SECTION 7.04. Binding Effect; Several Agreement..........................................27SECTION 7.05. Successors and Assigns.....................................................28SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification......................28SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact................................28SECTION 7.08. GOVERNING LAW..............................................................29SECTION 7.09. Waivers; Amendment.........................................................29SECTION 7.10. WAIVER OF JURY TRIAL.......................................................30SECTION 7.11. Severability...............................................................30SECTION 7.12. Counterparts...............................................................30SECTION 7.13. Headings...................................................................30SECTION 7.14. Jurisdiction; Consent to Service of Process................................30SECTION 7.15. Termination or Release.....................................................31SECTION 7.16. Additional Subsidiaries....................................................31SECTION 7.17. Right of Set-off...........................................................32Schedules- ---------Schedule I Subsidiary PartiesSchedule II Capital Stock; Debt SecuritiesSchedule III Intellectual PropertySchedule IV Limited Liability Company InterestsExhibits- --------Exhibit I Form of Supplement to the U.S. Guarantee and Collateral AgreementExhibit II Form of U.S. Perfection Certificate -iii- U.S. GUARANTEE AND COLLATERAL AGREEMENT dated and effective as of November4, 2003 (this "Agreement"), among NALCO HOLDINGS LLC, a Delaware limitedliability company ("Holdings"), NALCO COMPANY, a Delaware corporation (the "U.S.Borrower"), each Domestic Subsidiary of Holdings identified herein (each, a"Subsidiary Party") and CITICORP NORTH AMERICA, INC., as Collateral Agent (insuch capacity, the "Collateral Agent") for the Secured Parties (as definedbelow). Reference is made to the Credit Agreement dated as of November 4, 2003 (asamended, supplemented, waived or otherwise modified from time to time, the"Credit Agreement"), among NALCO HOLDINGS LLC, a Delaware limited liabilitycompany ("Holdings"), NALCO COMPANY, a Delaware corporation (the "U.S.Borrower"), the Foreign Subsidiary Borrowers from time to time party thereto(the "Foreign Subsidiary Borrowers" and collectively with the U.S. Borrower, the"Borrowers"), the LENDERS party thereto from time to time, CITIGROUP GLOBALMARKETS INC. ("CGMI") and BANC OF AMERICA SECURITIES LLC ("BAS"), as globalcoordinators (in such capacity, the "Global Coordinators"), CITICORP NORTHAMERICA, INC., as administrative agent (in such capacity, the "AdministrativeAgent") and as collateral agent (in such capacity, the "Collateral Agent") forthe Lenders, BANK OF AMERICA, N.A., as documentation agent (in such capacity,the "Documentation Agent"), DEUTSCHE BANK SECURITIES INC. ("DBSI"), J.P. MORGANSECURITIES INC. ("JPMSI"), GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP") and UBSSECURITIES LLC ("UBSS"), each as co-syndication agent (in such capacity, a"Co-Syndication Agent"), and CGMI, BAS, DBSI, JPMSI, GSCP and UBSS, as jointlead arrangers and joint book managers (in such capacity, the "Joint LeadArrangers"). The Lenders have agreed to extend credit to the Borrowers subject to theterms and conditions set forth in the Credit Agreement. The obligations of theLenders to extend such credit are conditioned upon, among other things, theexecution and delivery of this Agreement. In addition, the Borrowers and theGuarantors have agreed to take the actions set forth on Schedule 5.15 to theCredit Agreement after the Closing Date (as defined in the Credit Agreement).Holdings and the Subsidiary Parties are affiliates of the Borrowers, will derivesubstantial benefits from the extension of credit to the Borrowers pursuant tothe Credit Agreement and are willing to execute and deliver this Agreement inorder to induce the Lenders to extend such credit. Accordingly, the partieshereto agree as follows: ARTICLE I. Definitions SECTION 1.01. Credit Agreement. (a) Capitalized terms used in thisAgreement and not otherwise defined herein have the respective meanings assignedthereto in the Credit Agreement. All terms defined in the New York UCC (asdefined herein) and not defined in this Agreement have the meanings specifiedtherein. The term "instrument" shall have the meaning specified in Article 9 ofthe New York UCC. (b) The rules of construction specified in Section 1.02 of the CreditAgreement also apply to this Agreement. SECTION 1.02. Other Defined Terms. As used in this Agreement, the followingterms have the meanings specified below: "Account Debtor" means any person who is or who may become obligated to anyGuarantor under, with respect to or on account of an Account. "Article 9 Collateral" has the meaning assigned to such term in Section4.01. "Collateral" means Article 9 Collateral and Pledged Collateral. "Control Agreement" means a securities account control agreement orcommodity account control agreement, as applicable, in form and substancereasonably satisfactory to the Collateral Agent. "Copyright License" means any written agreement, now or hereafter ineffect, granting any right to any third party under any Copyright now orhereafter owned by any Guarantor or that any Guarantor otherwise has the rightto license, or granting any right to any Guarantor under any Copyright now orhereafter owned by any third party, and all rights of any Guarantor under anysuch agreement. "Copyrights" means all of the following now owned or hereafter acquired byany Guarantor: (a) all copyright rights in any work subject to the copyrightlaws of the United States or any other country, whether as author, assignee,transferee or otherwise; and (b) all registrations and applications forregistration of any such Copyright in the United States or any other country,including registrations, supplemental registrations and pending applications forregistration in the United States Copyright Office, including those listed onSchedule III. "Credit Agreement" has the meaning assigned to such term in the preliminarystatement of this Agreement. "Federal Securities Laws" has the meaning assigned to such term in Section5.04. "General Intangibles" means all "General Intangibles" as defined in the NewYork UCC, including all choses in action and causes of action and all otherintangible personal property of any Guarantor of every kind and nature (otherthan Accounts) now owned or hereafter acquired by any Guarantor, includingcorporate or other business records, indemnification claims, contract rights(including rights under leases, whether entered into as lessor or lessee, SwapAgreements and other agreements), Intellectual Property, goodwill,registrations, franchises, tax refund claims and any letter of credit,guarantee, claim, security interest or other security held by or granted to anyGuarantor to secure payment by an Account Debtor of any of the Accounts. "Guarantors" means Holdings, the U.S. Borrower, and the Subsidiary Parties. "Intellectual Property" means all intellectual and similar property ofevery kind and nature now owned or hereafter acquired by any Guarantor,including inventions, designs, Patents, Copyrights, Trademarks, Patent Licenses,Copyright Licenses, Trademark Licenses, -2- trade secrets, domain names, confidential or proprietary technical and businessinformation, know-how, show-how or other data or information and all relateddocumentation. "Loan Document Obligations" means (a) the due and punctual payment by eachBorrower of (i) the unpaid principal of and interest (including interestaccruing during the pendency of any bankruptcy, insolvency, receivership orother similar proceeding, regardless of whether allowed or allowable in suchproceeding) on the Loans made to such Borrower, when and as due, whether atmaturity, by acceleration, upon one or more dates set for prepayment orotherwise, (ii) each payment required to be made by such Borrower under theCredit Agreement in respect of any Letter of Credit, when and as due, includingpayments in respect of reimbursement of disbursements, interest thereon(including interest accruing during the pendency of any bankruptcy, insolvency,receivership or other similar proceeding, regardless of whether allowed orallowable in such proceeding) and obligations to provide cash collateral and(iii) all other monetary obligations of such Borrower to any of the SecuredParties under the Credit Agreement and each of the other Loan Documents,including obligations to pay fees, expense and reimbursement obligations andindemnification obligations, whether primary, secondary, direct, contingent,fixed or otherwise (including monetary obligations incurred during the pendencyof any bankruptcy, insolvency, receivership or other similar proceeding,regardless of whether allowed or allowable in such proceeding), (b) the due andpunctual performance of all other obligations of each Borrower under or pursuantto the Credit Agreement and each of the other Loan Documents and (c) the due andpunctual payment and performance of all the obligations of each other Loan Partyunder or pursuant to this Agreement and each of the other Loan Documents. "New York UCC" means the Uniform Commercial Code as from time to time ineffect in the State of New York. "Obligations" means (a) the Loan Document Obligations, (b) the due andpunctual payment and performance of all obligations of each Loan Party orForeign Subsidiary under each Swap Agreement that (i) is in effect on theClosing Date with a counterparty that is a Lender or an Affiliate of a Lender asof the Closing Date or (ii) is entered into after the Closing Date with anycounterparty that is a Lender or an Affiliate of a Lender at the time such SwapAgreement is entered into, (c) the due and punctual payment and performance ofall obligations of Foreign Subsidiaries under Indebtedness incurred pursuant tocommitted and uncommitted working capital facilities (to the extent suchIndebtedness is permitted under Section 6.01(a) of the Credit Agreement and isidentified as ordinary working capital Indebtedness on Schedule 6.01 of theCredit Agreement that will be secured by a Lien on the Collateral or isPermitted Refinancing Indebtedness of any such identified Indebtedness that isincurred for working capital purposes in the ordinary course of business onordinary business terms) that is with a counterparty that is a Lender or anAffiliate of a Lender as of the Closing Date and (d) the due and punctualpayment and performance of all obligations of U.S. Borrower and any of itssubsidiaries in respect of overdrafts and related liabilities owed to a Lenderor any of its Affiliates and arising from cash management services (includingtreasury, depository, overdraft, credit or debit card, electronic funds transferand other cash management arrangements). "Patent License" means any written agreement, now or hereafter in effect,granting to any third party any right to make, use or sell any invention coveredby a Patent, now -3- or hereafter owned by any Guarantor or that any Guarantor otherwise has theright to license or granting to any Guarantor any right to make, use or sell anyinvention covered by a Patent, now or hereafter owned by any third party. "Patents" means all of the following now owned or hereafter acquired by anyGuarantor: (a) all letters patent of the United States or the equivalent thereofin any other country, and all applications for letters patent of the UnitedStates or the equivalent thereof in any other country, including those listed onSchedule III, and (b) all reissues, continuations, divisions,continuations-in-part or extensions thereof, and the inventions disclosed orclaimed therein, including the right to make, use and/or sell the inventionsdisclosed or claimed therein. "Pledged Collateral" has the meaning assigned to such term in Section 3.01. "Pledged Debt Securities" has the meaning assigned to such term in Section3.01. "Pledged Securities" means any promissory notes, stock certificates orother certificated securities now or hereafter included in the PledgedCollateral, including all certificates, instruments or other documentsrepresenting or evidencing any Pledged Collateral. "Pledged Stock" has the meaning assigned to such term in Section 3.01. "Pledgor" shall mean each Guarantor. "Secured Parties" means (a) the Lenders (and any Affiliate of a Lender towhich any obligation referred to in clause (d) of the definition of the term"Obligations" is owed), (b) the Administrative Agent, (c) each Issuing Bank, (d)each counterparty to any Swap Agreement entered into with a Loan Party theobligations under which constitute Obligations, (e) each counterparty to anylocal working capital indebtedness of a Foreign Subsidiary the obligations underwhich constitute Obligations pursuant to clause (c) of the definition of suchterm, (f) the beneficiaries of each indemnification obligation undertaken by anyLoan Party under any Loan Document and (g) the successors and permitted assignsof each of the foregoing. "Security Interest" has the meaning assigned to such term in Section 4.01. "Sovereign Risk Event" shall mean any event referred to in Section2.03(a)(ix). "Subsidiary Party" has the meaning assigned to such term in the preliminarystatement of this Agreement. "Trademark License" means any written agreement, now or hereafter ineffect, granting to any third party any right to use any Trademark now orhereafter owned by any Guarantor or that any Guarantor otherwise has the rightto license, or granting to any Guarantor any right to use any Trademark now orhereafter owned by any third party. "Trademarks" means all of the following now owned or hereafter acquired byany Guarantor: (a) all trademarks, service marks, corporate names, companynames, business names, fictitious business names, trade styles, trade dress,logos, other source or business identifiers, designs and general intangibles oflike nature, now existing or hereafter adopted or acquired, all -4- registrations thereof (if any), and all registration and recording applicationsfiled in connection therewith, including registrations and registrationapplications in the United States Patent and Trademark Office or any similaroffices in any State of the United States or any other country or any politicalsubdivision thereof, and all renewals thereof, including those listed onSchedule III and (b) all goodwill associated therewith or symbolized thereby. "U.S. Perfection Certificate" means a certificate substantially in the formof Exhibit II, completed and supplemented with the schedules and attachmentscontemplated thereby, and duly executed by a Financial Officer of the U.S.Borrower and the chief legal officer of the U.S. Borrower. ARTICLE II. Guarantee SECTION 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointlywith the other Guarantors and severally, as a primary obligor and not merely asa surety, the due and punctual payment and performance of the Obligations. EachGuarantor further agrees that the Obligations may be extended or renewed, inwhole or in part, without notice to or further assent from it, and that it willremain bound upon its guarantee notwithstanding any extension or renewal of anyObligation. Each Guarantor waives presentment to, demand of payment from andprotest to any Borrower or any other Loan Party of any of the Obligations, andalso waives notice of acceptance of its guarantee and notice of protest fornonpayment. SECTION 2.02. Guarantee of Payment. Each Guarantor further agrees that itsguarantee hereunder constitutes a guarantee of payment when due and not ofcollection, and waives any right to require that any resort be had by theCollateral Agent or any other Secured Party to any security held for the paymentof the Obligations or to any balance of any deposit account or credit on thebooks of the Collateral Agent or any other Secured Party in favor of anyBorrower or any other person. SECTION 2.03. No Limitations, Etc. (a) Except for termination of aGuarantor's obligations hereunder as expressly provided for in Section 7.15, theobligations of each Guarantor hereunder shall not be subject to any reduction,limitation, impairment or termination for any reason, including any claim ofwaiver, release, surrender, alteration or compromise, and shall not be subjectto any defense or setoff, counterclaim, recoupment or termination whatsoever byreason of the invalidity, illegality or unenforceability of the Obligations orotherwise. Without limiting the generality of the foregoing, the obligations ofeach Guarantor hereunder shall not be discharged or impaired or otherwiseaffected by: (i) the failure of the Administrative Agent, the Collateral Agent or any other Secured Party to assert any claim or demand or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement; -5- (iii) the failure to perfect any security interest in, or the exchange, substitution, release or any impairment of, any security held by the Collateral Agent or any other Secured Party for the Obligations; (iv) any default, failure or delay, willful or otherwise, in the performance of the Obligations; (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations), (vi) any illegality, lack of validity or enforceability of any Obligation, (vii) any change in the corporate existence, structure or ownership of any Borrower, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Borrower or its assets or any resulting release or discharge of any Obligation, (viii) the existence of any claim, set-off or other rights that the Guarantor may have at any time against any Borrower, the Collateral Agent, or any other corporation or person, whether in connection herewith or any unrelated transactions, provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim, (ix) any law, regulation or order of any jurisdiction, or any other event, affecting any term of any Obligation or the Collateral Agent's rights with respect thereto, including, without limitation: (A) the application of any such law, regulation, decree or order, including any prior approval, which would prevent the exchange of a foreign currency for Dollars or the remittance of funds outside of such jurisdiction or the unavailability of Dollars in any legal exchange market in such jurisdiction in accordance with normal commercial practice; or (B) a declaration of banking moratorium or any suspension of payments by banks in such jurisdiction or the imposition by such jurisdiction or any governmental authority thereof of any moratorium on, the required rescheduling or restructuring of, or required approval of payments on, any indebtedness in such jurisdiction; or (C) any expropriation, confiscation, nationalization or requisition by such country or any governmental authority that directly or indirectly deprives any Borrower of any assets or their use, or of the ability to operate its business or a material part thereof; or -6- (D) any war (whether or not declared), insurrection, revolution, hostile act, civil strife or similar events occurring in such jurisdiction which has the same effect as the events described in clause (A), (B) or (C) above (in each of the cases contemplated in clauses (A) through (D) above, to the extent occurring or existing on or at any time after the date of this Guaranty), (x) and any other circumstance (including without limitation, any statute of limitations) or any existence of or reliance on any representation by the Collateral Agent that might otherwise constitute a defense to, or a legal or equitable discharge of, any Borrower or the Guarantor or any other guarantor or surety.Each Guarantor expressly authorizes the Secured Parties to take and holdsecurity for the payment and performance of the Obligations, to exchange, waiveor release any or all such security (with or without consideration), to enforceor apply such security and direct the order and manner of any sale thereof intheir sole discretion or to release or substitute any one or more otherguarantors or obligors upon or in respect of the Obligations, all withoutaffecting the obligations of any Guarantor hereunder.Without limiting the generality of the foregoing, with respect to anyObligations that, in accordance with the express terms of any agreement pursuantto which such Obligations were created, were denominated in Dollars or anycurrency other than the currency of the jurisdiction where a Borrower isprincipally located, the Guarantor guarantees that it shall pay the CollateralAgent strictly in accordance with the express terms of such agreement, includingin the amounts and in the currency expressly agreed to thereunder, irrespectiveof and without giving effect to any laws of the jurisdiction where a Borrower isprincipally located in effect from time to time, or any order, decree orregulation in the jurisdiction where a Borrower is principally located. (b) To the fullest extent permitted by applicable law, each Guarantorwaives any defense based on or arising out of any defense of any Borrower or anyother Loan Party or the unenforceability of the Obligations or any part thereoffrom any cause, or the cessation from any cause of the liability of any Borroweror any other Loan Party, other than the indefeasible payment in full in cash ofall the Obligations. The Collateral Agent and the other Secured Parties may, attheir election, foreclose on any security held by one or more of them by one ormore judicial or nonjudicial sales, accept an assignment of any such security inlieu of foreclosure, compromise or adjust any part of the Obligations, make anyother accommodation with any Borrower or any other Loan Party or exercise anyother right or remedy available to them against any Borrower or any other LoanParty, without affecting or impairing in any way the liability of any Guarantorhereunder except to the extent the Obligations have been fully and indefeasiblypaid in full in cash. To the fullest extent permitted by applicable law, eachGuarantor waives any defense arising out of any such election even though suchelection operates, pursuant to applicable law, to impair or to extinguish anyright of reimbursement or subrogation or other right or remedy of such Guarantoragainst any Borrower or any other Loan Party, as the case may be, or anysecurity. SECTION 2.04. Reinstatement. Each Guarantor agrees that its guaranteehereunder shall continue to be effective or be reinstated, as the case may be,if at any time -7- payment, or any part thereof, of any Obligation is rescinded or must otherwisebe restored by the Administrative Agent or any other Secured Party upon thebankruptcy or reorganization of any Borrower, any other Loan Party or otherwise. SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of theforegoing and not in limitation of any other right that the Collateral Agent orany other Secured Party has at law or in equity against any Guarantor by virtuehereof, upon the failure of any Borrower or any other Loan Party to pay anyObligation when and as the same shall become due, whether at maturity, byacceleration, after notice of prepayment or otherwise, each Guarantor herebypromises to and will forthwith pay, or cause to be paid, to the Collateral Agentfor distribution to the applicable Secured Parties in cash the amount of suchunpaid Obligation. Upon payment by any Guarantor of any sums to the CollateralAgent as provided above, all rights of such Guarantor against such Borrower, orother Loan Party or any other Guarantor arising as a result thereof by way ofright of subrogation, contribution, reimbursement, indemnity or otherwise shallin all ...