PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this
``Agreement'') is dated as of October [9], 1996 and
entered into by and between FRUEHAUF TRAILER CORPORATION,
a Delaware corporation, as debtor and debtor-in-possession
(``FTC''), EACH OF THE SUBSIDIARIES OF FTC LISTED ON THE
SIGNATURE PAGES HERETO (the ``Subsidiaries''), as debtor
and debtor-in-possession (FTC and such Subsidiaries, shall
be individually referred to herein as a ``Grantor'' or
``Borrower'' and jointly and severally as ``Grantors'' or
``Borrowers''), and XXXXXXXX, L.L.C., a Delaware limited
liability company (``Secured Party'' or ``Lender'') .
R E C I T A L S
WHEREAS, Borrowers and Lender have entered into that
certain Debtor-In-Possession Credit Agreement, dated as of
October [9], 1996 (said Credit Agreement, as it may
hereafter be amended, restated, supplemented or otherwise
modified from time to time, being the ``Credit
Agreement''; the terms defined therein and not otherwise
defined herein being used herein as therein defined),
pursuant to which the Lender has made certain commitments,
subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to
Borrowers;
WHEREAS, each of the Borrowers is jointly and
severally liable for the performance of the Obligations
and desires to secure all of its Obligations under the
Credit Agreement and the other Loan Documents to which it
is a party;
WHEREAS, it is a condition precedent to the initial
extensions of credit by the Lender under the Credit
Agreement that Grantors shall have granted the security
interests and undertaken the obligations contemplated by
this Agreement; and
WHEREAS, each Grantor will receive value and obtain
benefits in exchange for delivering this Agreement
securing their Obligations arising from time to time under
the Credit Agreement, the receipt of which value and
benefits are hereby acknowledged, and each Grantor,
accordingly, desires to enter into this Agreement in order
to satisfy the condition precedent described in the
foregoing paragraph.
NOW, THEREFORE, in consideration of the premises and
in order to induce the Lender to enter into the Credit
Agreement and extend credit thereunder and for other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Grantors hereby agree with
Secured Party as follows:
2
Section 1. Grant of Security
As collateral security for the prompt payment or
performance in full when due of the Secured Obligations
(as hereinafter defined) as more fully set forth in
Section 2 below, each Grantor hereby pledges and assigns
to Secured Party, and hereby grants to Secured Party a
security interest in, all of such Grantor's right, title
and interest in and to the following (including, without
limitation, all right, title and interest in, to and under
all property of the estate of such Grantor, as such term
is defined in Section 541 of the Bankruptcy Code), in
each case whether now or hereafter existing or in which
such Grantor now has or hereafter acquires an interest and
wherever the same may be located (the ``Collateral''):
(a) all equipment in all of its forms
including, but not limited to, all machinery, furnishings,
tools, supplies, motor vehicles and other equipment of any
kind and nature, together with all parts thereof
(including spare parts) and accessions thereto (any and
all such equipment, parts and accessions being the
``Equipment'');
(b) all inventory in all of its forms,
including, but not limited to, (i) all goods and
merchandise held by such Grantor for sale or lease or to
be furnished under contracts of service or so leased or
furnished, (ii) all raw materials, work in process,
finished goods, and materials used or consumed in the
manufacture, packing, shipping, advertising, selling,
leasing, furnishing or production of such inventory or
otherwise used or consumed in such Grantor's business,
(iii) all such goods in which such Grantor has a joint or
other interest or right of any kind, and (iv) all such
goods which are returned to or repossessed by such Grantor
and all accessions thereto and products thereof (all such
inventory, accessions and products being the "Inventory'')
and all non-negotiable and negotiable documents of title
(including, without limitation, warehouse receipts, dock
receipts and bills of lading) issued by any Person
covering any Inventory (any such negotiable document of
title being a ``Negotiable Document of Title'');
(c) all accounts, accounts receivables, rights
to payment and other receivables of any kind or nature
(including without limitation all of the foregoing arising
in connection with the sale or lease of Inventory) and all
contract rights, chattel paper, documents, instruments,
notes, general intangibles related to the foregoing,
whether or not earned by performance (collectively, the
``Accounts'') and all rights in, to and under all security
agreements, leases and other contracts securing or
otherwise relating to any of the Accounts (the ``Related
Contracts'');
(d) the agreements and contracts to which such
Grantor is a party, including without limitation those
listed in Schedule I annexed hereto, as each such
agreement may be amended, supplemented or otherwise
modified from time to time (said agreements, as so
amended, supplemented or otherwise modified, being
referred to herein individually as an ``Assigned
Agreement'' and collectively as the ``Assigned
agreements''), including without limitation (i) all rights
of such Grantor to receive moneys due or to become due
under or pursuant to the Assigned Agreements, (ii) all
rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to
the Assigned Agreements, (iii) all claims of such Grantor
for damages arising out of any breach of or default under
the Assigned Agreements, and (iv) all rights of such
Grantor to terminate, amend, supplement, modify or
exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder;
3
(e) all of the Grantors' right, title and
interest in or other claim or demand both in law or
equity, in any real property or estate including without
limitation (i) all fee simple interests in real property,
(ii) all easements, rights-of-way and all right, title
and interest of the Grantors to sidewalks, alleys, strips
and gores of land adjacent to or used in connection with
any real property, (iii) all leasehold estates, and all
right, title and interest of the Grantors in and to any
and all leases, subleases, licenses, concessions,
franchises or similar agreements affecting or relating to
any real property or any portion thereof, and all right,
title and interest of the Grantors thereunder, including
all cash, security deposits, rentals, and deposits or
payments of similar nature,including without limitation
the list of real property in Schedule II hereto (the
``Real Property'');
(f) all right, title and interest, whether as
owner, lessee or otherwise, in and to any and all
buildings, constructions and improvements now or hereafter
erected, including fixtures, attachments, appliances,
equipment, machinery, and those other articles which are
attached to said buildings, constructions and
improvements, all of which shall be deemed and construed
to be part of the realty (the ``Improvements and
Fixtures'');
(g) all right, title and interest of the
Grantor in, to and under all plans, specifications, maps,
surveys, studies, reports, permits, licenses,
architectural, engineering and construction contracts,
books of account and other documents, of whatever kind or
character, relating to use, construction upon, occupancy,
leasing, sale or operation of the Real Property or the
Improvements and Fixtures (the ``Intangible Real Property
Collateral,'' and together with the Real Property and the
Improvements and Fixtures, the ``Real Property
Collateral'');
(h) all cash, money and currency;
(i) all demand, time, savings, passbook or like
accounts or deposits with any bank, savings and loan
association, credit union or like organization, including,
without limitation, the Collection Accounts and the
Disbursement Accounts (the ``Deposit Accounts'') and all
post office boxes, mail stops or like mechanisms for the
receipt of Accounts (collectively, the ``Lockboxes'')
together with (i) all funds held therein and all notes,
certificates, certificates of deposit, or other
instruments representing or evidencing any such funds, the
Deposit Accounts or the Lockboxes or issued in
substitution therefor or in addition thereto, (ii) all
investments from time to time credited thereto and all
certificates and instruments, if any representing or
evidencing such investments and (iii) all interest,
dividends, cash, instruments or other property from time
to time received, receivable or otherwise distributed in
respect of or in exchange for any such Collateral (the
Collateral in this clause (i) is referred to as the
``Deposit Account Collateral'');
4
(j) to the extent not included in any other
paragraph of this Section 1, all cash equivalents,
securities, certificates of deposit and other investments
and all certificates and instruments, if any, from time to
time representing or evidencing such investments and all
interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise
distributed in respect thereof or in exchange therefor;
(k) Each of the various published and
unpublished works of authorship, including, without
limitation, the designs used by the Grantors in their
business (collectively, the ``Copyrights''), all right,
title and interest in and to the Copyrights and works
protectable by copyright, which are presently, or in the
future may be, owned, created, authored (as a work for
hire), acquired or used (whether pursuant to a license or
otherwise) by such Grantor, in whole or in part, and all
common law and other rights in and to the Copyrights
throughout the world, including all copyright licenses
(the ``Copyright Rights'') and all copyright registrations
and applications for copyright registration which have
heretofore or may hereafter be issued thereon or applied
for with the United States Copyright Office and throughout
the world (the ``Copyright Registrations''), and all
renewals and extensions thereof, throughout the world,
including all proceeds thereof (such as, by way of example
and not by limitation, license royalties and proceeds of
infringement suits), and all goodwill associated with the
foregoing, including, without limitation: (i) all of
Grantors' right, title and interest, to the extent that it
has the same, in and to all Copyrights or rights or
interests in Copyrights registered or recorded in the
United States Copyright Office, including, without
limitation, the Copyright Registrations listed on Schedule
III annexed hereto, as the same may be amended pursuant
hereto from time to time; (ii) all of Grantors' right,
title and interest, to the extent that it has the same, in
and to all renewals and extensions of any such Copyrights
that may be secured under the law now or hereafter in
force and effect; and (iii) all of Grantors' right, title
and interest, to the extent that it has the same, to make
and exploit all derivative works based on or adopted from
all works covered by the Copyrights referred to herein; it
being understood and agreed that the Collateral assigned
hereby shall include, without limitation, rights and
interests pursuant to licensing or other contracts in
favor of Grantors pertaining to Copyrights and works
protectable by copyright presently or in the future
owned or used by third-parties, but in the case of
third-parties which are not Affiliates of the Grantors
only to the extent permitted by such licensing or other
contracts and, if not so permitted, only with the consent
of such third-parties;
5
(l) each of the various intangible assets,
including trademarks, service marks, designs, logos,
indicia, trade names, corporate names, company names,
business names, fictitious business names, trade styles
and/or other source or business identifiers and
applications pertaining thereto (the ``Trademarks'') and
rights and interests in Trademarks which are presently, or
in the future may be, owned, held (whether pursuant to a
license or otherwise) or used by Grantors, in whole or in
part (including, without limitation, the Trademarks
specifically identified in Schedule IV annexed hereto, as
the same may be amended pursuant hereto from time to
time), and including all common law and other rights in
and to the Trademarks in the United States and worldwide
(the ``Trademark Rights'') and all federal, state and
foreign registrations thereof (the ``Trademark
Registrations'') heretofore or hereafter granted or
applied for, and all rights (but not obligations)
corresponding thereto in the United States and any foreign
country, and all goodwill associated with any of the
foregoing; it being understood that the rights and
interests included herein shall include, without
limitation, all rights and interests pursuant to licensing
or other contracts in favor of such Grantor pertaining to
the Trademarks, Trademark Registrations or Trademark
Rights presently or in the future owned or used by third
parties but, in the case of third parties which are not
Affiliates of Grantors, only to the extent permitted by
such licensing or other contracts and, if not so
permitted, only with the consent of such third parties;
(m) all patents and the patent applications
(the ``Patents'') and rights and interests in Patents
which are presently, or in the future, may be, owned, held
(whether pursuant to a license or otherwise) or used by
Grantors, in whole or in part, (including without
limitation the Patents listed on Schedule V annexed
hereto, as the same may be amended pursuant hereto from
time to time), and including all common law and other
rights in and to the Patents in the United States and
worldwide (the ``Patent Rights'') and all federal, state
and foreign registrations thereof (the ``Patent
Registrations'') heretofore or hereafter granted or
applied for, and all rights (but not obligations)
corresponding thereto in the United States and any foreign
country, and all goodwill associated with any of the
foregoing; it being understood that the rights and
interests included herein shall include, without
limitation, all rights and interests pursuant to
licensing or other contracts in favor of such Grantor
pertaining to the Patents, Patent Rights and Patent
Registrations presently or in the future owned or used by
third parties but, in the case of third parties which are
not Affiliates of Grantors, only to the extent permitted
by such licensing or other contracts and, if not so
permitted, only with the consent of such third parties;
(n) to the extent not included in any other
paragraph of this Section 1, all other general
intangibles (including, without limitation, tax refunds,
rights to payment or performance, causes of action and
judgments taken on any rights or claims included in the
Collateral and contract rights) and all goodwill;
6
(o) all shares of capital stock (``Stock'') or
other equity interests, including, without limitation,
partnership interests, limited liability company interests
and any securities convertible into, and warrants, options
and other rights to acquire, Stock, partnership interests
or limited liability company interests (``Other Equity
Interests''), together with certificates and instruments
representing all of such shares of Stock or Other Equity
Interests, including without limitation all shares of
Stock and Other Equity Interests owned by such Grantor on
the date hereof as set forth on Schedule VI annexed hereto
as the same may be amended pursuant hereto from time to
time (the ``Pledged Shares''), and any interest of such
Grantor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares and, all
dividends, cash, options, warrants, rights, instruments
and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of, or in
exchange for, any and all of the Pledged Shares;
(p) all indebtedness from time to time owed to
such Grantor by any Affiliate of such Grantor or any other
Person whether or not represented by any note or
instrument, including without limitation the indebtedness
owned by such Grantor on the date hereof set forth on
Schedule VII annexed hereto as the same may be amended
pursuant hereto from time to time (the ``Pledged Debt''),
and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any
or all of such indebtedness, and all collateral pledged to
secure such indebtedness and all notes, security
agreements and other documents and instruments relating
to, or evidencing, such collateral (the Pledged Shares,
the Pledged Debt and the other Collateral described in
paragraphs (o) and (p) of this Section 1, collectively the
``Pledged Collateral'');
(q) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and
related data processing software that at any time evidence
or contain information relating to any of the Collateral
or are otherwise necessary or helpful in the collection
thereof or realization thereupon; and
(s) to the extent not covered by any other
paragraph of this Section 1, all other property and assets
of such Grantor real, personal and mixed;
(t) all proceeds, products, rents and profits
of or from any and all of the foregoing Collateral and, to
the extent not otherwise included, all payments under
insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable
by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral. For purposes of this
Agreement, the term ``proceeds'' includes whatever is
receivable or received when Collateral or proceeds are
sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary.
7
In addition to, and not by way of limitation of, the
pledge of and grant of security interest in any Collateral
set forth above, each Grantor hereby, effective upon the
occurrence of an Event of Default and written notice from
Secured Party, assigns, grants, sells, conveys, transfers
and sets over to Secured Party for its benefit and all of
such Grantor's rights, title and interest in and to the
Copyrights, Copyright Rights, Copyright Registrations,
Trademarks, Trademark Rights, Trademark Registrations,
Patents, Patent Rights and Patent Registrations and all
associated goodwill.
Section 2. Security for Obligations
This Agreement secures, and the Collateral is
collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise
(including, to the extent applicable, the payment of
amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy
Code, of all Obligations of every nature of each Grantor
now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan
Documents to which such Grantor is a party and all
extensions or renewals thereof, whether for principal,
interest (including without limitation, to the extent
applicable, interest that, but for the filing of a
petition in bankruptcy with respect to any Grantor, would
accrue on such obligations and whether or not allowed,
fees, expenses, indemnities or otherwise, whether
voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from
time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of
such Obligations that are paid, to the extent all or any
part of such payment is avoided or recovered directly or
indirectly from Secured Party as a preference, fraudulent
transfer or otherwise (all such Obligations being the
``Underlying Debt''), and all Obligations of every nature
of each Grantor now or hereafter existing under this
Agreement (all such Obligations of Grantors, together with
the Underlying Debt, being the ``Secured Obligations'').
Section 3. Each Grantor Remains Liable
Anything contained herein to the contrary
notwithstanding, (a) each Grantor shall remain liable
under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform
all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the
exercise by Secured Party of any of its rights hereunder
shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in
the Collateral, and (c) Secured Party shall not have any
obligation or liability under any contracts and agreements
included in the Collateral by reason of this Agreement,
nor shall Secured Party be obligated to perform any of the
obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment
assigned hereunder.
8
Section 4. The Deposit Accounts; Cash Management System
(a) All Deposit Accounts of the Grantors (including
without limitation the Collection Accounts and the
Restricted Disbursement Accounts) are subject to the sole
dominion and control of Secured Party (subject only to the
rights of Grantors to make withdrawals from the Restricted
Disbursement Accounts in accordance with subsection 6.10
of the Credit Agreement).
(b) Each Grantor hereby agrees to instruct all
obligors with respect to Accounts to make all payments
with respect to Accounts to a Collection Account included
in the Cash Management System.
(c) Each Grantor hereby acknowledges, and hereby
agrees and covenants to comply with, the provisions of the
Credit Agreement specifically applicable to it and the
Cash Management System including, without limitation,
subsection 6.10 of the Credit Agreement.
Section 5. Representations and Warranties
Each Grantor represents and warrants as follows:
(a) Credit Agreement Representations. Each of
the representations and warranties set forth in Section 5
of the Credit Agreement are true, correct and complete
to the extent specifically applicable to such Grantor and
the Collateral of such Grantor therein and each such
representation and warranty is hereby incorporated herein
by this reference.
(b) Ownership of Collateral. Except for the
security interest created by this Agreement and the other
Loan Documents in favor of Secured Party and other Liens
permitted by the terms of the Credit Agreement, such
Grantor owns the Collateral held by it free and clear of
any Lien. Except as may have been filed in favor of
Secured Party relating to this Agreement and the other
Loan Documents, and other Liens and financing statement
filings or other recordings permitted by the terms of the
Credit Agreement, no effective financing statement,
mortgage or other instrument similar in effect covering
all or any part of such Grantor's Collateral is on file in
any filing or recording office other than financing
statements for which executed termination statements have
been delivered to the Secured Party;
9
(c) Location of Equipment and Inventory. All
of the Equipment and Inventory is, as of the date hereof,
located at the places specified in Schedule 5.1 to the
Credit Agreement.
(d) Office Locations; Fictitious Names. As of
the Closing Date, the principal place of business, the
chief executive office and the office where such Grantor
keeps its records regarding the Accounts and all originals
of all chattel paper that evidence Accounts is, and has
been for the six month period preceding the date hereof,
located as set forth in Schedule 5.1 to the Credit
Agreement. At all times after the Closing Date, the chief
place of business, chief executive office and the office
where such Grantor keeps its records regarding the
Accounts and all originals of chattel paper that evidence
payment rights are located as set forth in Schedule 5.1 to
the Credit Agreement or are locations identified on a
notice delivered to Secured Party pursuant to Section 7(c)
of this Agreement. Such Grantor has not in the past done,
and does not now do, business under any other name
(including any trade-name or fictitious business name)
except as set forth in Schedule 5.1 to the Credit
Agreement.
(e) Delivery of Certain Collateral. All
Pledged Shares, Pledged Debt, chattel paper and all notes
and other instruments (excluding checks) comprising any
and all items of Collateral have been delivered to Secured
Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Governmental Authorizations. No
authorization, approval or other action by, and no notice
to or filing with, any governmental authority or
regulatory body (except for the Court which has been
obtained) is required for either (i) the grant by such
Grantor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by
such Grantor or (ii) the perfection of or the exercise by
Secured Party of its rights and remedies hereunder (except
as may have been taken by or at the direction of such
Grantor).
(g) Perfection. The security interests in the
Collateral granted to the Secured Party hereunder
constitute valid and perfected first priority security
interests in the Collateral.
(h) Description of Copyrights. A true and
complete list of all Copyrights, Copyright Rights,
Copyright Registrations and applications for Copyright
Registrations owned, held (whether pursuant to a license
or otherwise) or used by Grantors, in whole or in part, in
conducting its business is set forth in Schedule III
attached hereto. Grantors have full right, title and
interest in such Copyrights, Copyright Rights and
Copyright Registrations except as otherwise expressly set
forth on Schedule III and no third parties have any
interests in, or rights to use such Copyrights, Copyrights
Rights or Copyright Registrations except pursuant to the
license agreements set forth on Part A of Schedule VIII
annexed hereto.
10
(i) Validity and Enforceability of Copyrights.
Each of the Copyrights, Copyright Registrations and
Copyright Rights are valid, subsisting and enforceable and
Grantors are not aware of any pending or threatened claim
by any third party that any of the Copyrights, Copyright
Registrations or Copyright Rights are invalid or
unenforceable or that the use of any of the Copyrights,
Copyright Registrations or Copyright Rights violates the
rights of any third person or any basis for any such
claim.
(j) Description of Trademarks. A true and
complete list of all Trademarks, Trademark Registrations
and Trademark Rights and applications for Trademark
Registrations owned, held (whether pursuant to a license
or otherwise) or used by Grantors, in whole or in part, as
of the date of this Agreement is set forth in Schedule
IV annexed hereto. Grantors have full right, title and
interest in such Trademarks, Trademark Rights and
Trademark Registrations except as otherwise expressly set
forth on Schedule IV and no third parties have any
interests in, or rights to use such Trademarks, Trademark
Rights or Trademark Registrations except pursuant to the
license agreements set forth on Part B of Schedule VIII
annexed hereto.
(k) Validity and Enforceability of Trademarks.
Each of the Trademarks, Trademark Registrations and
Trademark Rights is valid, subsisting and enforceable and
the Grantors are not aware of any pending or threatened
claim by any third party that any of the Trademarks,
Trademark Registrations or Trademark Rights is invalid or
unenforceable or that the use of any of the Trademarks,
Trademark Registrations or Trademark Rights violates the
rights of any third person or of any basis for any such
claim.
(l) Description of Patents. A true and
complete list of all Patents, Patent Registrations and
Patent Rights and applications for Patent Registrations
owned, held (whether pursuant to a license or otherwise)
or used by Grantors, in whole or in part, as of the date
of this Agreement is set forth in Schedule V annexed
hereto. Grantors have full right, title and interest in
such Patents, Patent Registrations and Patent Rights
except as otherwise expressly set forth on Schedule V and
no third parties have any interest in or rights to use
such Patents, Patent Registrations or Patent Rights except
pursuant to the license agreements set forth on Part C of
Schedule VIII annexed hereto.
(m) Validity and Enforceability of Patents.
Each of the Patents, Patent Registrations and Patent
Rights is valid, subsisting and enforceable and the
Grantors are not aware of any pending or threatened claim
by any third party that any of the Patents, Patent
Registrations or Patent Rights is invalid or unenforceable
or that the use of any of the Patents, Patent
Registrations or Patent Rights violates the rights of any
third person or of any basis for any such claim.
11
(n) Due Authorization etc. of the Pledged
Collateral. All of the Pledged Shares have been duly
authorized and validly issued and are fully paid and
non-assessable. All of the Pledged Debt has been duly
authorized, authenticated or issued, and delivered and is
the legal, valid and binding obligation of the issuers
thereof and is not in default.
(o) Description of Pledged Collateral. The
Pledged Shares constitute all of the issued and
outstanding shares of capital stock or other equity
interests of each issuer thereof except as otherwise
expressly noted in Schedule VI and there are no
outstanding warrants, options or other rights to purchase,
or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or
that requires the issuance or sale of, any Pledged Shares.
The Pledged Debt listed on Schedule VII constitutes all of
the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers
thereof owing to any Grantor.
(p) Real Property Collateral. Grantors do not
own, lease or otherwise hold any interest in Real Property
Collateral other than that described on Schedule II
annexed hereto.
(q) Other Information. All information
heretofore, herein or hereafter supplied to Secured Party
by or on behalf of such Grantor with respect to the
Collateral is accurate and complete in all material
respects.
Section 6. Further Assurances
(a) Each Grantor agrees that from time to time, at
the expense of such Grantor, such Grantor will promptly
execute and deliver all further instruments and documents,
and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to
perfect and protect any security interest granted or
purported to be granted hereby or by the Interim Order or
Final Order or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the
foregoing, such Grantor will: (i) upon the request of
Secured Party, xxxx conspicuously each item of chattel
paper included in the Accounts, and each of its records
pertaining to the Collateral, with a legend, in form and
substance reasonably satisfactory to Secured Party,
indicating that such Collateral is subject to the security
interest granted hereby, (ii) at the request of Secured
Party, deliver and pledge to Secured Party hereunder all
promissory notes and other instruments (including at any
time during the occurrence and continuance of any Event of
Default or Potential Event of Default, checks) and all
original counterparts of chattel paper constituting
Collateral, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in
form and substance satisfactory to Secured Party, (iii)
execute and file such financing or continuation
statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable,
or as Secured Party may request, (iv) upon the request of
Secured Party execute and record mortgages and fixture
filings in form and substance satisfactory to Secured
Party covering the Real Property Collateral, (v) at any
reasonable time during business hours and upon the terms
set forth in the Credit Agreement, upon request by Secured
Party, exhibit the Collateral to and allow inspection of
the Collateral by Secured Party, or persons designated by
Secured Party, and (vi) at Secured Party's reasonable
request, appear in and defend any action or proceeding
that may affect Secured Party's security interest in all
or any part of the Collateral.
12
(b) Each Grantor hereby authorizes Secured Party to
file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the
Collateral without the signature of such Grantor. Such
Grantor agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement
signed by such Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any
and all jurisdictions.
(c) Such Grantor will furnish to Secured Party from
time to time statements and schedules further identifying
and describing the Collateral and such other reports in
connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
(d) The Grantors shall promptly notify Secured Party
in writing of any rights to any new Copyrights, Copyright
Rights, Trademarks, Trademark Rights, Patents or Patent
Rights acquired by Grantors after the date hereof and of
any Copyright Registrations, Trademark Registrations or
Patent Registrations issued or applications for Copyright
Registrations, Trademark Registrations or Patent
Registrations made after the date hereof.
(e) Grantors hereby authorize Secured Party to
modify this Agreement without obtaining Grantors' approval
of or signature to such modification by amending Schedules
III, IV and V annexed hereto, as the case may be, to
include reference to any right, title or interest
in any Copyright, Copyright Registration, Copyright Right,
Trademark, Trademark Registration, Trademark Right,
Patent, Patent Registration, or Patent Right now existing
or hereafter acquired or developed by Grantor after the
execution hereof, provided that the failure to make any
such amendment or modification with respect to any
existing or new Copyright, Copyright Registration,
Copyright Right, Trademark, Trademark Registration,
Trademark Right, Patent, Patent Registration or Patent
Right shall not impair the security interest of Secured
Party therein or otherwise adversely affect the rights and
remedies of Secured Party hereunder with respect thereto.
Section 7. Certain Covenants of the Grantors
Each Grantor shall:
13
(a) not use or permit any Collateral to be used
in violation of any provision of this Agreement or any
other Loan Document or any applicable statute, regulation
or ordinance or any policy of insurance covering the
Collateral;
(b) notify Secured Party in writing of any
change in such Grantor's name, identity or corporate
structure at least 30 days prior to such change;
(c) not change such Grantor's principal place
of business, chief executive office, the office where such
Grantor keeps its records regarding the Accounts and all
originals of all chattel paper that evidence Accounts,
locations of Equipment or Inventory (or new locations
therefor), unless Grantor provides Secured Party notice in
writing at least 30 days in advance of such change and has
taken all action that may be necessary or desirable, or
that Secured Party may request, in order to perfect and
protect any security interest granted or purported to be
granted hereby or by the Interim Order or the Final Order
or to enable Secured Party to exercise and enforce its
rights and remedies hereunder, with respect to Collateral
affected by such change; and
(d) except as otherwise permitted by the Credit
Agreement, pay promptly when due all property and other
taxes, assessments and governmental charges or levies
imposed upon, and all claims (including claims for labor,
materials and supplies) against, the Collateral.
Section 8. Special Covenants with Respect to Inventory
Each Grantor shall:
(a) keep correct and accurate records of the
Inventory consistent with customary industry standards and
practices for businesses of a comparable size, itemizing
and describing the kind, type and quantity of Inventory
and such Grantor's cost therefor;
(b) upon the occurrence and during the
continuance of an Event of Default and at the request of
the Secured Party, instruct all agents and processors for
any Inventory to hold all such Inventory for the account
of Secured Party and subject to the instructions of
Secured Party; and
(c) promptly upon the issuance and delivery to
such Grantor of any Negotiable Document of Title, deliver
such Negotiable Document of Title to Secured Party.
14
Section 9. Special Covenants with Respect to Insurance
(a) Each Grantor shall, at its own expense, maintain
insurance with respect to the Real Property Collateral,
Equipment and Inventory in such amounts, against such
risks, in such form and with such insurers as required by
the Credit Agreement. Grantor shall, if so requested by
Secured Party, deliver to Secured Party original or
duplicate policies of such insurance and, as often as
Secured Party may reasonably request, a report of a
reputable insurance broker with respect to such insurance.
Further, such Grantor shall, at the request of Secured
Party, duly execute and deliver instruments of assignment
of such insurance policies in a form satisfactory to the
Secured Party and cause the respective insurers to
acknowledge notice of such assignment.
(b) All proceeds of insurance maintained by Grantors
shall be paid directly to the Collection Accounts. So
long as no Event of Default has occurred and is
continuing, in case of any loss involving damage to any
Real Property Collateral, Equipment or Inventory, the
applicable Grantor shall make or cause to be made the
necessary repairs to or replacements of such Real Property
Collateral, Equipment or Inventory and any payments by
Grantors in connection therewith shall constitute
Permitted Payments to the extent set forth in an Approved
Budget.
Section 10. Special Covenants with Respect to Accounts
and Related Contracts
(a) Each Grantor shall maintain (i) complete records
of each Account, including records of all payments
received, credits granted and merchandise returned, and
(ii) all documentation relating thereto, in accordance
with its customary practices and procedures for retention
of such information consistent with practices in effect on
the date hereof and shall permit representatives of
Secured Party at any time upon notice during normal
business hours to inspect and make abstracts from such
records and chattel paper, and such Grantor agrees for
purposes of enabling Secured Party to exercise its rights
and remedies hereunder to render to Secured Party, at such
Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard
thereto. Promptly upon the request of Secured Party, such
Grantor shall deliver to Secured Party complete and
correct copies of specific Related Contracts as identified
by Secured Party.
(b) Subject to subsection 6.10 of the Credit
Agreement and except as otherwise provided in this
subsection (b), each Grantor shall continue to collect, at
its own expense, all amounts due or to become due to such
Grantor under the Accounts and Related Contracts. In
connection with such collections, such Grantor may take
(and, upon the occurrence and during the continuance of an
Event of Default, at Secured Party's direction, shall
take) such action as such Grantor or Secured Party may
deem necessary or advisable to enforce collection of
amounts due or to become due under the Accounts; provided,
however, that Secured Party shall have the right at any
time, upon the occurrence and during the continuation of
an Event of Default, and upon written notice to such
Grantor of its intention to do so, to notify the
account debtors or obligors under any Accounts of the
assignment of such Accounts to Secured Party and to direct
such account debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder
directly to Secured Party, to notify each Person
15
maintaining a lockbox or similar arrangement to which
account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing
collections on checks and other payment items from time to
time sent to or deposited in such lockbox or other
arrangement directly to Secured Party and, upon such
notification and at the expense of such Grantor, to
enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the
same manner and to the same extent as such Grantor
might have done. Without limiting the duties or
obligations of any Grantor under Section 4 hereof and
subsection 6.10 of the Credit Agreement (or any trusts
created thereunder), after receipt by such Grantor of the
notice from Secured Party referred to in the proviso to
the preceding sentence, (i) all amounts and proceeds
(including checks and other instruments) received by such
Grantor in respect of the Accounts and the Related
Contracts shall be received in trust and held for the
benefit of Secured Party hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith
paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held
as Collateral and applied as provided by Section 20, and
(ii) such Grantor shall not adjust, settle or compromise
the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
Section 11. [Reserved]
Section 12. Covenants as to Pledged Collateral
(a) Each Grantor shall deliver to Secured Party all
notes, certificates or instruments representing or
evidencing the Pledged Collateral, and such notes,
certificates or instruments shall be in suitable form for
transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to Secured Party.
Secured Party shall have the right, at any time upon the
occurrence and during the continuance of an Event of
Default and without notice to such Grantor, to transfer to
or to register in the name of Secured Party or any of its
nominees any or all of the Pledged Collateral. In
addition, Secured Party shall have the right at any time
to exchange notes, certificates or instruments
representing or evidencing Pledged Collateral for notes,
certificates or instruments of smaller or larger
denominations.
(b) Upon obtaining any additional shares of Stock or
Other Equity Securities or certificates, instruments or
notes required to be pledged hereunder, promptly (and in
any event within five Business Days) deliver to Secured
Party a Pledge Amendment, duly executed by Grantor in
substantially the form of Schedule IX annexed hereto (a
``Pledge Amendment''), in respect of the additional
Pledged Shares or Pledged Debt to be pledged pursuant to
this Agreement. Each Grantor hereby authorizes Secured
Party to attach each Pledge Amendment to this Agreement
and agrees that all Pledged Shares or Pledged Debt listed
on any Pledge Amendment delivered to Secured Party shall
for all purposes hereunder be considered Collateral;
provided that the failure of a Grantor to execute a Pledge
Amendment with respect to any additional Pledged Shares or
Pledged Debt pledged pursuant to this Agreement shall not
impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of
Lender hereunder with respect thereto.
16
Section 13. Voting Rights; Dividends; etc.
(a) So long as no Event of Default shall have
occurred and be continuing: (i) each Grantor shall be
entitled to exercise any and all voting rights pertaining
to the Pledged Collateral of such Grantor or any part
thereof for any purpose not inconsistent with the terms
of this Agreement, the Credit Agreement or any other Loan
Document and (ii) Secured Party shall execute and deliver
(or cause to be executed and delivered) to Grantor all
such proxies and other instruments as such Grantor may
reasonably request for the purpose of enabling such
Grantor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to clause (i)
above.
(b) In addition to the rights of Secured Party under
this Agreement and the other Loan Documents, upon the
occurrence and during the continuance of an Event of
Default, at the election of Secured Party: (i) all rights
of any Grantor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise
pursuant to subsection 13(a)(i) shall cease, and all such
rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to exercise such
voting and other consensual rights and (ii) Grantor shall
execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies and other
instruments as Secured Party may reasonably request for
the purpose of enabling Secured Party to exercise the
voting and other consensual rights which it is entitled
to exercise pursuant to clause (i) above. Without
limiting the effect of the immediately preceding clause
(ii), each Grantor hereby grants to Secured Party an
irrevocable proxy to vote the Pledged Collateral and to
exercise all other rights, powers, privileges and remedies
to which a holder of the Pledged Collateral would be
entitled (including, without limitation, giving or
withholding written consents of shareholders, calling
special meetings of shareholders and voting at such
meetings), which proxy shall be effective, automatically
and without the necessity of any action (including any
transfer of any Pledged Collateral on the record books of
the issuer thereof) by any other Person (including the
issuer of the Pledged Collateral or any officer or agent
thereof), upon the occurrence of an Event of Default and
which proxy shall only terminate upon the payment in full
of the Secured Obligations and the termination of the
Commitments.
17
Section 14. License of Patents, Trademarks, Copyrights,
etc.
Without limiting any security interest or assignment
thereof pursuant to Section 1, each Grantor hereby
assigns, transfers and conveys to Secured Party, effective
upon the occurrence of any Event of Default, the
nonexclusive right and license to use all trademarks,
tradenames, copyrights, patents or technical processes
owned or used by Grantors that relate to the Collateral,
together with any goodwill associated therewith, all to
the extent necessary to enable Secured Party to use,
possess and realize on the Collateral and to enable any
successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the
benefit of all successors, assigns and transferees of
Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is
granted free of charge, without requirement that any
monetary payment whatsoever be made to Grantors.
Section 15. Transfers and Other Liens
Except in accordance with the Credit Agreement, no
Grantor shall (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of any of the Collateral
or (ii) except for the security interest created by this
Agreement or the other Loan Documents in favor of Secured
Party and other Liens permitted by the Credit Agreement,
create or suffer to exist any Lien upon or with respect to
any of the Collateral.
Section 16. Secured Party Appointed Attorney-In-Fact
Each Grantor hereby irrevocably appoints Secured
Party as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in
the name of such Grantor, Secured Party or otherwise, from
time to time in Secured Party's discretion to take
any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to
be maintained by such Grantor or paid to Secured Party
pursuant to Section 9;
(b) upon and during the continuance of an Event
of Default, to ask for, demand, collect, xxx for, recover,
compound, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of
the Collateral;
(c) to receive, endorse and collect any drafts
or other instruments, documents and chattel paper in
connection with clauses (a) and (b) above;
18
(d) to file any claims or take any action or
institute any proceedings that Secured Party may deem
necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Secured
Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other
than Liens permitted under the Credit Agreement) levied or
placed upon or threatened against the Collateral, the
legality or validity thereof and the amounts necessary to
discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured
Party to become Secured Obligations of such Grantor to
Secured Party, due and payable immediately without demand;
(f) to sign and endorse any invoices, freight
or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and
other documents relating to the Collateral;
(g) upon the occurrence and during the
continuation of an Event of Default, generally to sell,
transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and
completely as though Secured Party were the absolute owner
thereof for all purposes, and to do, at Secured Party's
option and such Grantor's expense, at any time or from
time to time, all acts and things that Secured Party deems
necessary to protect, preserve or realize upon the
Collateral and Secured Party's security interest therein
in order to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do; and
(h) to take any and all action permitted by
subsection 6.10 of the Credit Agreement, which subsection
is hereby incorporated herein by this reference.
Section 17. Secured Party May Perform
If such Grantor fails to perform any agreement
contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of
Secured Party incurred in connection therewith shall be
payable by such Grantors and be part of the Secured
Obligations.
Section 18. Standard of Care
(a) The powers conferred on Secured Party hereunder
are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such
powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Collateral or
as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to
any Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation
of Collateral in its possession if such Collateral is
accorded treatment substantially equal to that which
Secured Party accords its own property.
19
(b) Secured Party shall not be liable to any Grantor
(i) for any loss or damage sustained by it, or (ii) for
any loss, damage, depreciation or other diminution in the
value of any of the Collateral that may occur as a result
of, in connection with or that is in any way related to
(1) any exercise by Secured Party of any right or remedy
under this Agreement or (2) any other act of or failure to
act by Secured Party, except to the extent that the same
shall be determined by a final judgment of a court of
competent jurisdiction that is final and not subject to
review on appeal, to be the result of acts or omissions on
the part of Secured Party - constituting gross negligence
or willful misconduct.
(c) NO CLAIM MAY BE MADE BY ANY GRANTOR AGAINST
SECURED PARTY OR ITS AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES OR ATTORNEYS FOR ANY SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL
CONDUCT (WHETHER THE CLAIM THEREFOR IS BASED ON CONTRACT,
TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING
OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND GRANTOR HEREBY WAIVES, RELEASES
AND AGREES NOT TO XXX UPON ANY SUCH CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN
OR SUSPECTED TO EXIST IN ITS FAVOR.
Section 19. Remedies
(a) Notwithstanding anything herein to the contrary,
Secured Party shall give Grantors, Xxxxxx & Xxxxx (counsel
to certain holders of Senior Notes), the trustee under the
Existing Indenture and counsel to any official creditors'
committee in respect of the Chapter 11 Cases, five
Business Days' prior written notice (which notice shall be
delivered by facsimile or overnight courier) of the
intention to exercise its rights and remedies with respect
to the Collateral and file a copy of such notice with the
clerk of the Court all in accordance with the Borrowing
Orders. Secured Party shall not have any obligation of
any kind to make a motion or application to the Bankruptcy
Court to exercise its rights and remedies set forth or
referred to in this Agreement or in the other Loan
Documents. The enumeration of the rights and
remedies set forth in this section is not intended to be
exhaustive and the exercise of any right or remedy shall
not preclude the exercise of any other rights or remedies,
all of which shall be cumulative and not alternative.
20
(b) If any Event of Default shall have occurred and
be continuing, Secured Party may (i) instruct any
Depository Institution at which a Deposit Account of any
Grantor is maintained or which holds Deposit Account
Collateral to (x) sell any of the Deposit Account
Collateral, (y) transfer any or all of the Deposit Account
Collateral constituting cash to a Collection Account or
transfer any or all of the Deposit Account Collateral to
another account established in Secured Party's name
(whether at Secured Party or otherwise), or (z) register
title to any Deposit Account Collateral in the name of
Secured Party or one of its nominees or agents, without
reference to any interest of any Grantor and/or (ii)
exercise any and all rights of set-off available to Lender
under the Credit Agreement, any other Loan Document or
otherwise.
(c) If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of
the Collateral, in addition to all other rights and
remedies provided for herein, in the Credit Agreement, in
any other agreement between any Grantor and Secured
Party or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction
(the ``Code'') (whether or not the Code applies to the
affected Collateral), and also may (i) require any
Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of Secured Party forthwith,
assemble all or part of the Collateral as directed by
Secured Party and make it available to Secured Party at a
place to be designated by Secured Party that is reasonably
convenient to both parties, (ii) enter onto the property
where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to
the disposition of the Collateral, store, process, repair
or recondition the Collateral, lease or license use of any
Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party
deems appropriate, (iv) take possession of any Grantor's
premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of such
Grantor's equipment for the purpose of completing any work
in process, taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation, and
(v) without notice except as specified in clause (a) above
and below in this clause (c) sell, lease, or otherwise
dispose, of the Collateral or any part thereof in one or
more parcels at public or private sale, or other
disposition, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and
upon such other terms as Secured Party may deem
commercially reasonable. Secured Party or
may be the purchaser of any or all of the Collateral at
any such sale and Secured Party shall be entitled, for the
purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral
sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such
sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on
the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by applicable law) all
rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Each
Grantor agrees that, to the extent notice of sale shall be
required by law, at least five days' notice to such
Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall
not be obligated to make any sale of Collateral regardless
of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time
and place to which it was so adjourned. Each Grantor
hereby waives any claims against Secured Party arising by
reason of the fact that the price at which any Collateral
may have been sold at such a private sale was less than
the price which might have been obtained at a public sale,
even if Secured Party accepts the first offer received
and does not offer such Collateral to more than one
offeree. If the proceeds of any sale or other disposition
of the Collateral are insufficient to pay all the Secured
Obligations, such Grantor shall be liable for the
deficiency and the reasonable fees of any attorneys
employed by Secured Party to collect such deficiency.
21
(d) Each Grantor recognizes that, by reason of
certain prohibitions contained in the Securities Act of
1933, as from time to time amended (the ``Securities
Act''), and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or
any part of the Pledged Shares conducted without prior
registration or qualification of such Pledged Shares under
the Securities Act and/or such state securities laws, to
limit purchasers to those who will agree, among other
things, to acquire the Pledged Shares for their own
account, for investment and not with a view to the
distribution or resale thereof. Grantor acknowledges that
any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale
without such restrictions (including, without limitation,
a public offering made pursuant to a registration
statement under the Securities Act) and, notwithstanding
such circumstances, each Grantor agrees that any such
private sale shall be deemed to have been made in a
commercially reasonable manner and that Secured Party
shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Shares for the
period of time necessary to permit the issuer thereof to
register it for a form of public sale requiring
registration under the Securities Act or under applicable
state securities laws, even if such issuer would, or
should, agree to so register it.
(e) If Secured Party determines to exercise its
right to sell any or all of the Pledged Shares, upon
written request, each Grantor shall and shall cause each
issuer of any Pledged Shares to be sold hereunder from
time to time to furnish to Secured Party all such
information as Secured Party may request in order to
determine the number of shares and other instruments
included in the Pledged Shares which may be sold by
Secured Party in exempt transactions under the Securities
Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time
to time in effect.
(f) Secured Party may, by one or more motions, which
Borrowers agree not to oppose, cause any part or all of
the assets and properties of the Borrowers to be sold at
one or more sales pursuant to Section 363 of the
Bankruptcy Code, or Secured Party may request that
Borrowers file and prosecute such motion or motions and
Borrowers agree to do so.
22
Section 20. Application of Proceeds
Except as expressly provided elsewhere in this
Agreement or the Credit Agreement, all proceeds received
by Secured Party in respect of any sale of, (subject to
Section 6.10 of the Credit Agreement) collection from, or
other realization upon all or any part of the Collateral
may, in the discretion of Secured Party, be held by
Secured Party as Collateral for, and/or then, or at any
other time thereafter, applied in full or in part by
Secured Party against, the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses
of such sale, collection or other realization, including
reasonable compensation to Secured Party and its agents
and counsel, and all other reasonable expenses,
liabilities and advances made or incurred by Secured Party
in connection therewith, and all fees, expenses,
indemnities and other amounts to which Secured Party is
entitled hereunder and all advances made by Secured Party
hereunder for the account of any Grantor, and to the
payment of all costs and expenses paid or incurred by
Secured Party in connection with the exercise of
any right or remedy hereunder, all in accordance with
Section 21;
SECOND: To the payment of all other Secured
Obligations in accordance with the terms of the Credit
Agreement in such order as Secured Party may elect; and
THIRD: To the payment to or upon the order of
any Grantor, or to whosoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such
proceeds.
Section 21. Indemnity and Expenses
(a) Each Grantor jointly and severally agrees to
indemnify Secured Party from and against any and all
claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without
limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely
from Secured Party's (or its officer's, employee's or
agent's) gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) Each Grantor jointly and severally agrees to pay
to Secured Party upon demand the amount of any and all
reasonable costs and expenses, including the reasonable
fees and expenses of its counsel and of any experts and
agents, that Secured Party may incur in connection with
(i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of
the rights of Secured Party hereunder, or (iv) the failure
by any Grantor to perform or observe any of the provisions
hereof.
23
(c) The obligations of Grantors under this Section
21 shall survive the termination of this Agreement and the
discharge of Grantors' other obligations under the Loan
Documents.
Section 22. Continuing Security Interest
This Agreement shall create a continuing security
interest in the Collateral and shall (a) remain in full
force and effect until the payment in full of the Secured
Obligations and the cancellation or termination of the
Commitments, (b) be binding upon each Grantor, its
successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees
and assigns. Upon the payment in full of all Secured
Obligations in respect of the Loan Documents and the
cancellation or termination of the Commitments, the
security interest granted hereby shall terminate and all
rights to the Collateral owned by a Grantor shall revert
to such Grantor. Upon any such termination Secured Party
will, at Grantors' expense, execute and deliver to
Grantors such documents as Grantors shall reasonably
request to evidence such termination and the release of
the Secured Party's security interest in such Collateral.
Section 23. Amendments; etc.
No amendment or waiver of any provision of this
Agreement, or consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in
the case of an amendment, each Grantor, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was
given.
Section 24. Notices
Any notice or other communication herein required or
permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by United
States mail or courier service and shall be deemed to have
been given when delivered in person or by courier service,
upon confirmation of receipt of telecopy or telex, or four
Business Days after depositing it in the United States
mail, registered or certified, with postage prepaid and
properly addressed; provided that notices to Secured Party
shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set
forth in the Credit Agreement or as to any party, such
other address as shall be designated by such party in a
written notice delivered to the other parties in
accordance with this Agreement.
24
Section 25. Failure or Indulgence not Waiver; Remedies
Cumulative
No failure or delay on the part of Secured Party in
the exercise of any power, right or privilege hereunder
shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any
such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
Section 26. Pledge, Grant and Obligations Several
The pledge and grant of the Collateral of, and the
obligations hereunder of, each Grantor are independent and
several, and may be enforced against such Grantor
separately, whether or not enforcement of any right or
remedy hereunder has been sought against any other
Grantor.
Section 27. Marshalling; Payments Set Aside
Secured Party shall not be under any obligation to
marshal any assets in favor of any Grantor or any other
party or against or in payment of any or all of the
Secured Obligations. To the extent that any Grantor makes
a payment or payments to Secured Party or Secured
Party enforces its security interests or exercises its
rights of setoff, and such payment or payments or the
proceeds of such enforcement or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to
a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common
law or equitable cause, then to the extent of such
recovery, the Obligation or part thereof originally
intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
Section 28. Waiver of Hearing
Each Grantor expressly waives, to the maximum extent
permitted by law, any constitutional or other right to a
judicial hearing prior to the time Secured Party takes
possession or disposes of the Collateral as provided in
Section 19 hereof.
Section 29. Severability
In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations,
or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
25
Section 30. Headings
Section and subsection headings in this Agreement are
included herein for convenience of reference only and
shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect.
Section 31. Governing Law; Terms
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE GENERAL OBLIGATION LAWS
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT FEDERAL LAW OR
THE UNIFORM COMMERCIAL CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or
in the Credit Agreement, terms used in Article 9 of the
Uniform Commercial Code in the State of New York are used
herein as therein defined.
Section 32. Counterparts
This Agreement may be executed in one or more
counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that
all signature pages are physically attached to the same
document.
Section 33. Reassignment.
If (a) an Event of Default shall have occurred and,
by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of
Default shall have occurred and be continuing, (c) an
assignment to Secured Party of any rights, title
and interests in and to any of the Copyrights, Copyright
Rights, Copyright Registrations, Trademarks, Trademark
Rights, Trademark Registrations, Patents, Patent Rights or
Patent Registrations shall have been previously made and
shall have become absolute and effective pursuant to the
26
last paragraph of Section 1, and (d) the Secured
Obligations shall not have been Accelerated, upon the
written request of Grantors and the written consent of
Secured Party, Secured Party shall promptly execute and
deliver to Grantors such assignments as may be necessary
to reassign to Grantors any such rights, title and
interests as may have been assigned to Secured Party as
aforesaid, subject to any disposition thereof that may
have been made by Secured Party pursuant hereto; provided
that, after giving effect to such reassignment, Secured
Party's security interest and conditional assignment
granted pursuant to Section 1, as well as all other rights
and remedies of Secured Party granted hereunder, shall
continue to be in full force and effect.
Section 34. Conflicting Provisions
Notwithstanding anything to the contrary contained in
this Agreement (i) to the extent that the provisions of
this Agreement are in direct conflict with the express
provisions of the Credit Agreement, the Credit Agreement
shall control and (ii) to the extent that any provisions
of this Agreement relating to Real Property Collateral are
in direct conflict with the provisions of any Mortgage
entered into pursuant to the Credit Agreement for the
benefit of Secured Party, the express provisions of such
Mortgage shall control.
[Remainder of page intentionally left blank]
S-1
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the
date first written above.
GRANTORS:
FRUEHAUF TRAILER CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasurer
FGR, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasurer
FRUEHAUF CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasurer
S-2
MARYLAND SHIPBUILDING & DRYDOCK
COMPANY
By: /s/ Xxxx X. Xxxxxx
---------------------
Name: Xxxx X. Xxxxxx
Title: President
THE XXXXXX CO.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasurer
FRUEHAUF INTERNATIONAL LIMITED
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasure
DEUTSCHE-FRUEHAUF HOLDING
CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasurer
JACKSONVILLE SHIPYARDS, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------
Name: Xxxx X. Xxxxxx
Title: President
X.X. HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President - Treasurer
S-3
E.L. DEVICES, INC.
By: /s/ Xxxx X. Xxxxxx
---------------------
Name: Xxxx X. Xxxxxx
Title: President
SECURED PARTY:
XXXXXXXXX, L.L.C.
By:/s/ Xxxxx Xxxxxxx-Xxxxxx
-------------------------
Name: Xxxxx Xxxxxxx-Xxxxxx
Title: Attorney-In-Fact
