EXHIBIT 6
SECURITY AGREEMENT
SECURITY AGREEMENT, dated September 19, 1996, made by
Midland USA, Inc., a Delaware corporation (the "Grantor") and a
wholly-owned subsidiary of Intek Diversified Corporation, a Delaware
corporation ("Intek"), in favor of Securicor Communications Limited, a
company incorporated under the laws of England and Wales (the
"Lender").
W I T N E S S E T H :
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WHEREAS, pursuant to that certain Loan Agreement dated as of
September 19, 1996 between Borrower and Lender (as the same may from
time to time be amended, modified or supplemented, the "Loan
Agreement"), Lender has agreed to make Revolving Credit Advances as
defined in the Loan Agreement; and
WHEREAS, Lender is willing to make the Revolving Credit
Advances but only upon the condition, among others, that Grantor shall
have executed and delivered to Lender this Security Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Defined Terms. As used in this Agreement, terms defined
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in the Loan Agreement are used herein as therein defined, and the
following terms have the meanings specified below (such meanings being
equally applicable to both the singular and plural forms of the terms
defined):
"Account" means any "account," as such term is defined
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in Section 9-106 of the UCC, now owned or hereafter acquired by the
Grantor and, in any event, includes, without limitation, (i) all
accounts receivable, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or
Instruments) now owned or hereafter received or acquired by or
belonging or owing to the Grantor (including, without limitation,
under any trade name, style or division thereof) whether arising out
of goods sold or services rendered by the Grantor or from any other
transaction, whether or not the same involves the sale of goods or
services by the Grantor (including, without limitation, any such
obligation which might be characterized as an account or contract
right under the UCC), (ii) all of the Grantor's rights in, to and
under all purchase orders or receipts now owned or hereafter acquired
by it for goods or services, and all of the Grantor's rights to
any goods represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed
or repossessed goods), (iii) all moneys due or to become due to the
Grantor under all contracts for the sale of goods or the performance
of services or both by the Grantor (whether or not yet earned by
performance on the part of the Grantor or in connection with any other
transaction), now in existence or hereafter occurring, including,
without limitation, the right to receive the proceeds of said purchase
orders and contracts, and (iv) all collateral security and guarantees
of any kind given by any Person with respect to any of the foregoing.
"Account Debtor" means any "account debtor," as such
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term is defined in Section 9-105(1)(a) of the UCC.
"Blocked Account #1" means account # 010161070176 at
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Xxxxxxx'x First National Bank of Kansas City, 00 Xxxx 00xx Xxxxxx,
Xxxxxx Xxxx, XX 00000.
"Blocked Account #2" means account # 010161070184 at
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Xxxxxxx'x First National Bank of Kansas City, 00 Xxxx 00xx Xxxxxx,
Xxxxxx Xxxx, XX 00000.
"Blocked Accounts" means the blocked accounts
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maintained by the Grantor with the Blocked Account Bank, all monies,
instruments and other property deposited therein and all certificates
and instruments, if any, representing or evidencing such Blocked
Accounts.
"Blocked Account Bank" means a financial institution
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selected or approved by the Lender and with respect to which the
Grantor has delivered to the Lender an executed Blocked Account
Letter.
"Blocked Account Letter" means a letter, substantially
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in the form of Annex I hereto (with such changes as may be agreed to
by the Lender), executed by the Grantor and the Lender and
acknowledged and agreed to by a Blocked Account Bank.
"Cash Collateral Account" has the meaning specified in
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Section 5(s).
"Chattel Paper" means any "chattel paper," as such term
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is defined in Section 9-105(1)(b) of the UCC, now owned or hereafter
acquired by the Grantor.
"Collateral" has the meaning assigned to it in Section
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2 of this Agreement.
"Contracts" means all contracts, undertakings or other
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agreements (other than Chattel Paper, Documents or Instruments) in or
under which the Grantor may now or hereafter have any right, title or
interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of
performance thereof.
"Copyrights" means copyrights, registrations and appli
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cations therefor, and any and all (i) renewals and extensions thereof,
(ii) income, royalties, damages and payments now and hereafter due or
payable or both with respect thereto, including, without limitation,
damages and payments for past or future infringements or
misappropriations thereof, (iii) rights to xxx for past, present and
future infringements or misappropriations thereof, and (iv) all other
rights corresponding thereto throughout the world.
"Documents" means any "document," as such term is
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defined in Section 9-105(1)(f) of the UCC, now owned or hereafter
acquired by the Grantor.
"Equipment" means any "equipment," as such term is
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defined in Section 9-109(2) of the UCC, now owned or hereafter
acquired by the Grantor and, in any event, includes, without
limitation, all machinery, equipment, furnishings, fixtures, vehicles,
computers and other electronic data-processing and office equipment
now owned or hereafter acquired by the Grantor and any and all addi-
tions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"General Intangibles" means any "general intangibles,"
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as such term is defined in Section 9-106 of the UCC, now owned or
hereafter acquired by the Grantor and, in any event, includes, without
limitation, all customer lists, Trademarks, Patents, rights in
Intellectual Property Collateral, Licenses, permits, Copyrights, Trade
Secrets, proprietary or confidential information, inventions (whether
patented or patentable or not) and technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill,
expertise, experience, processes, models, drawings, materials and
records, goodwill, rights of indemnification and all right, title and
interest which the Grantor may now or hereafter have in or under any
Contract, now owned or hereafter acquired by the Grantor.
"Governmental Authority" means any nation or
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government, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Instrument" means any "instrument," as such term is
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defined in Section 9-105(1)(i) of the UCC, now owned or hereafter
acquired by the Grantor, other than instruments that constitute, or
are a part of a group of writings that constitute, Chattel Paper.
"Intellectual Property Collateral" means:
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(a) All Trademarks of the Grantor, including, without
limitation, the Trademarks listed on Schedule III hereto;
(b) all Copyrights of the Grantor, including, without
limitation, the Copyrights listed on Schedule IV hereto;
(c) all Licenses of the Grantor, including, without
limitation, the Licenses listed on Schedule V hereto;
(d) all Patents of the Grantor, including, without
limitation, the Patents listed on Schedule VI hereto;
(e) all Trade Secrets of the Grantor; and
(f) the entire goodwill of the Grantor's business
connected with the use of and symbolized by the Trademarks.
"Inventory" means any "inventory," as such term is
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defined in Section 9-109(4) of the UCC, now owned or hereafter
acquired by the Grantor, and wherever located, and, in any event,
includes, without limitation, all inventory, merchandise, goods and
other personal property now owned or hereafter acquired by the Grantor
which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used
or consumed in the Grantor's business, or the processing, packaging,
delivery or shipping of the same, and all finished goods.
"Lender" has the meaning assigned to in the recitals
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and in any event refers to Securicor Communications Limited in its
capacity as Lender.
"Licenses" means license agreements in which the
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Grantor grants or receives a grant of any interest in Copyrights,
Trademarks, Patents and Trade Secrets (all as defined herein) and
other intellectual property and any and all (i) renewals, extensions,
supplements, amendments and continuations thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable to
the Grantor with respect thereto, including, without limitation,
damages and payments for past, present and future violations or
infringements or misappropriations thereof, and (iii) rights to xxx
for past, present and future violations or infringements or
misappropriations thereof.
"Obligor" has the meaning assigned to it in Section
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5(s)(iii) of this Agreement.
"Patents" means patents and patent applications along
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with any and all (i) inventions and improvements described and claimed
therein, (ii) reissues, divisions, continuations, renewals, extensions
and continuations-in-part thereof, (iii) income, royalties, damages
and payments now and hereafter due and/or payable to the Grantor with
respect thereto, including, without limitation, damages and payments
for past or future infringements or misappropriations thereof, (iv)
rights to xxx for past, present and future infringements or
misappropriations thereof, and (v) all other rights corresponding
thereto throughout the world.
"Permitted Liens" means Liens permitted by Section 7.8
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of the Loan Agreement existing as of the date hereof or to be created
hereafter.
"Proceeds" means "proceeds," as such term is defined in
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Section 9-306(1) of the UCC, and, in any event, shall include, without
limitation, (i) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Grantor from time to time with
respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to the Grantor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of Govern-
mental Authority), and (iii) any and all other amounts from time to
time paid or payable under or in connection with any of the
Collateral.
"Secured Obligations" means (i) all of the unpaid
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principal amount of, and accrued interest on, the Note, (ii) the
Extension Fee, and all other fees owing by the Grantor under the Loan
Agreement to the Lender and (iii) all other Indebtedness,
liabilities and obligations of the Grantor to the Lender, whether now
existing or hereafter incurred, and whether created under, arising out
of or in connection with the Loan Agreement, this Security Agreement,
any of the other Loan Documents or otherwise.
"Trade Secrets" means trade secrets, along with any and
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all (i) income, royalties, damages and payments now and hereafter due
and/or payable to the Grantor with respect thereto, including, without
limitation, damages and payments for past, present and future
infringements or misappropriations thereof, (ii) rights to xxx for
past, present and future infringements or misappropriations thereof,
and (iii) all other rights corresponding thereto throughout the world.
"Trademarks" means trademarks including service marks
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and trade names, whether registered or at common law, registrations
and applications therefor, and the entire product lines and goodwill
of Grantor's business connected therewith and symbolized thereby,
together with any and all (i) renewals thereof, (ii) income,
royalties, damages and payments now and hereafter due or payable or
both with respect thereto, including, without limitation, damages and
payments for past, present and future infringements or
misappropriations thereof, (iii) rights to xxx for past, present and
future infringements or misappropriations thereof, and (iv) all other
rights corresponding thereto throughout the world.
"UCC" means the Uniform Commercial Code as the same
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may, from time to time, be in effect in the State of New York;
provided, however, in the event that, by reason of mandatory
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provisions of law, any or all of the attachment, perfection or
priority of the Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
2. Grant of Security Interest.
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(a) As collateral security for the full and prompt payment
when due (whether at stated maturity, by acceleration or otherwise)
of, and the performance of, all the Secured Obligations and to induce
the Lender to make the Revolving Credit Advances available pursuant to
the Loan Agreement, the Grantor hereby assigns, conveys, mortgages,
pledges, hypothecates and transfers to the Lender, and hereby grants
to the Lender, a
security interest in, all of the Grantor's right, title and interest
in, to and under the following (all of which being hereinafter
collectively called the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts and any and all claims of the
Grantor for damages arising out of or for breach of or a default under
any Contract and the right of the Grantor to perform or to compel
performance under any Contract and to exercise all remedies
thereunder;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all present and future Blocked Accounts and all
funds, certificates and instruments, if any, from time to time held in
or representing or evidencing such Blocked Accounts provided, however,
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the foregoing grant with respect to Blocked Account #1 shall not be
effective until the 30th day following the date hereof;
(x) all other goods and personal property of the
Grantor whether tangible or intangible or whether now owned or
hereafter acquired by the Grantor and wherever located; and
(xi) to the extent not otherwise included, all Proceeds
of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of the
foregoing.
(b) In addition, as collateral security for the prompt and
complete payment when due of the Secured Obligations, the Lender is
hereby granted a lien and security interest in all property of the
Grantor held by the Lender including, without limitation, all property
of every description, now or hereafter in the possession or custody of
or in transit to the Lender for any purpose, including safekeeping,
collection or pledge, for the
account of the Grantor, or as to which the Grantor may have any right
or power.
3. Rights of the Lender; Limitations on Lender's
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Obligations.
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(a) It is expressly agreed by the Grantor that, anything
herein to the contrary notwithstanding, the Grantor shall remain
liable under each of the Contracts and Licenses to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder and the Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to the
terms and provisions of each such Contract and License. The Lender
shall not have any obligation or liability under any Contract or
License by reason of or arising out of this Agreement or the granting
of a security interest in any contract to the Lender or by reason of
the receipt by the Lender of any payment relating to any Contract or
License pursuant hereto, nor shall the Lender be required or obligated
in any manner to perform or fulfill any of the obligations of the
Grantor under or pursuant to any Contract or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of
any payment received by it or the sufficiency of any performance by
any party under any Contract or License, or to present or file any
claim, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) The Lender authorizes the Grantor to collect its
Accounts, Chattel Paper and Instruments, provided that such collection
is performed in a prudent and businesslike manner, and the Lender may,
upon the occurrence and during the continuance of any Event of Default
and without notice, limit or terminate said authority at any time. If
required by the Lender at any time during the continuance of any Event
of Default, any Proceeds, when first collected by the Grantor,
received in payment of any such Account or in payment for any of its
Inventory or on account of any of its Contracts, shall be promptly
deposited by the Grantor in precisely the form received (with all
necessary indorsements) in a special bank account maintained by the
Lender and subject to withdrawal only by the Lender, as hereinafter
provided, and until so turned over shall be deemed to be held in trust
by the Grantor for and as the Lender's property and shall not be
commingled with the Grantor's other funds or properties. Such
Proceeds, when deposited, shall continue to be collateral security for
all of the Secured Obligations and shall not constitute payment thereof
until applied as hereinafter provided.
The Lender shall apply all or a part of the funds on deposit in said
special account to the principal of or interest on or both in respect
of any of the Secured Obligations in accordance with the provisions of
Section 8(d) hereof and any part of such funds which the Lender elects
not so to apply and deem not required as collateral security for the
Secured Obligations shall be paid over from time to time by the Lender
to the Grantor. If an Event of Default has occurred and is
continuing, at the request of the Lender the Grantor shall deliver to
the Lender all original and other documents evidencing, and relating
to, the sale and delivery of such Inventory or the performance of
labor or service which created such Accounts, including, without limi-
tation, all original orders, invoices and shipping receipts; and,
prior to the occurrence of an Event of Default the Grantor shall
deliver photocopies thereof to the Lender at its request.
(c) The Lender may at any time, upon the occurrence and
during the continuance of any Default or Event of Default, after first
notifying the Grantor of its intention to do so, notify Account
Debtors of the Grantor, parties to Contracts of the Grantor, obligors
of Instruments of the Grantor and obligors in respect of Chattel Paper
of the Grantor that the Accounts and the right, title and interest of
the Grantor in and under such Contracts, such Instruments and such
Chattel Paper have been assigned to the Lender and that payments shall
be made directly to the Lender. Upon the request of the Lender, the
Grantor will so notify such Account Debtors, parties to such
Contracts, obligors of such Instruments and obligors in respect of
such Chattel Paper. Upon the occurrence and during the continuance of
an Event of Default, the Lender may in its own name or in the name of
others communicate with such Account Debtors, parties to such
Contracts, obligors of such Instruments and obligors in respect of
such Chattel Paper to verify with such Persons to the Lender's satis-
faction the existence, amount and terms of any such Accounts,
Contracts, Instruments or Chattel Paper.
(d) Upon reasonable prior notice to the Grantor (unless a
Default or Event of Default has occurred and is continuing, in which
case no notice is necessary), the Lender shall have the right to make
test verifications of the Accounts and physical verifications of the
Inventory in any manner and through any medium that it considers
advisable, and the Grantor agrees to furnish all such assistance and
information as the Lender may require in connection therewith. The
Grantor, at its own cost and expense, will cause certified independent
public accountants satisfactory to the Lender to prepare and deliver
to the Lender, at any time and from time to time promptly upon the
Lender's request, the following reports: (i) a reconciliation of all
its
Accounts, (ii) an aging of all its Accounts, (iii) trial balances, and
(iv) a test verification of such Accounts as the Lender may request.
The Grantor at its expense will cause certified independent public
accountants satisfactory to the Lender to prepare and deliver to the
Lender the results of the annual physical verification of its
Inventory made or observed by such accountants.
(e) Notwithstanding anything to the contrary contained
herein, unless an Event of Default has occurred and is continuing, the
Grantor may continue to exploit, license, franchise, use, enjoy and
protect (whether in the United States of America or any foreign
jurisdiction) the Intellectual Property Collateral in the ordinary
course of business and the Lender shall from time to time execute and
deliver, upon written request of Grantor and at Grantor's sole cost
and expense, any and all instruments, certificates or other documents,
in the form so requested, necessary or appropriate in the judgment of
Grantor to enable Grantor to do so.
(f) In order to more fully protect the Intellectual
Property Collateral in respect of which security interests have been
granted to the Lender by the Grantor hereunder, the Grantor shall
hereafter transfer to the Lender such additional rights, privileges,
marks and licenses as Lender or Grantor may in its discretion
determine to be necessary and appropriate to the continuing
exploitation, licensing, use, enjoyment and protection (whether in the
United States of America or any foreign jurisdiction) of the
Intellectual Property Collateral.
(g) The Grantor shall have the duty to preserve and
maintain all rights in the Intellectual Property Collateral in respect
of which a failure to be able to continue to use the same would have a
Material Adverse Effect in a manner substantially consistent with its
present practices. The Grantor shall take all action reasonably
requested by the Lender to register, record and/or perfect the
Lender's rights hereunder. Such duties shall include, but not be
limited to, the following:
(i) The Grantor shall take appropriate action at its
expense to halt the infringement of any of the Intellectual Property
Collateral if such infringement would have a Material Adverse Effect
on the value of the Intellectual Property Collateral or the Grantor's
ability to use the Intellectual Property Collateral;
(ii) The Grantor shall not amend, modify, terminate or
waive any provisions of any other contract to which
the Grantor is a party in any manner which might have a Material
Adverse Effect upon the Intellectual Property Collateral.
4. Representations and Warranties. The Grantor hereby
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represents and warrants to the Secured Parties as follows:
(a) The Grantor is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware.
(b) The execution, delivery and performance by the Grantor
of this Agreement are within the Grantor's corporate powers, have been
duly authorized by all necessary corporate action, do not contravene
the Grantor's certificate of incorporation or by-laws, any requirement
of law or any order or decree of any court, or any contractual
obligation of the Grantor, and do not result in or require the
creation of any Lien (other than pursuant to the Loan Agreement) upon
or with respect to any of its properties.
(c) No consent, authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority is
required for the due execution, delivery and performance by the
Grantor of this Agreement.
(d) This Agreement has been duly executed and delivered by
the Grantor and is the legal, valid and binding obligation of the
Grantor, enforceable against the Grantor in accordance with its terms
except that enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the
court before which any proceedings may be brought.
(e) There are no pending or threatened actions,
investigations or proceeding affecting the Grantor before any court,
Governmental Authority or arbitrator other than those that in the
aggregate, if adversely determined, would have no Material Adverse
Effect.
(f) The Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest
hereunder, having good title thereto, free and clear of any and all
Liens, except for the security interest granted pursuant to this
Agreement and other Permitted Liens. No material amounts payable
under or in connection with any of its Accounts or
Contracts are evidenced by Instruments which have not been delivered
to the Lender.
(g) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral is on file or of record in
any public office, except such as may have been filed by the Grantor
in favor of the Lender pursuant to this Agreement or such as relate to
other Permitted Liens.
(h) Appropriate financing statements having been filed in
the jurisdictions listed on Schedule I hereto, this Agreement is
effective to create a valid and continuing first priority Lien on the
Collateral, prior to all other Liens except Permitted Liens. All
action necessary or desirable to protect and perfect such security
interest in each item of the Collateral has been duly taken.
(i) The Grantor's principal place of business and the place
where its records concerning the Collateral are kept and the location
of its Inventory and Equipment are set forth on Schedule II hereto.
(j) The amount represented by the Grantor to the Lender
from time to time as owing by each Account Debtor or by all Account
Debtors in respect of the Accounts of the Grantor will at such time be
the correct amount actually and unconditionally owing by such Account
Debtors thereunder.
(k) With respect to the Intellectual Property Collateral:
(i) The Trademarks and the Copyrights, Licenses,
Patents and Trade Secrets are subsisting and have not been adjudged
invalid or unenforceable, in whole or in part;
(ii) The Grantor has the full right, power and
authority to grant all of the right, title and interest herein
granted;
(iii) The Grantor has not previously assigned,
transferred, conveyed or otherwise encumbered such right, title and
interest;
(iv) The Grantor is the sole and exclusive owner of the
Intellectual Property Collateral, all of which is free and clear of
any Liens, charges and encumbrances, and no other person
or entity has any claim with respect to the Intellectual Property
Collateral whatsoever;
(v) The Intellectual Property Collateral is sufficient
for the purpose of producing goods, performing services and otherwise
carrying on the business of the Grantor;
(vi) Schedules III, IV, V and VI attached hereto list
all Trademarks, Copyrights and Licenses and Patents related to the
Intellectual Property Collateral;
(vii) To the best of the Grantor's knowledge, the
Intellectual Property Collateral does not infringe any rights owned or
possessed by any third party except such infringements as could not
have a Material Adverse Effect;
(viii) There are no claims, judgments or settlements to
be paid by the Grantor or pending claims or litigation relating to the
Intellectual Property Collateral;
(ix) No effective security agreement, financing state-
ment, equivalent security or lien instrument or continuation statement
covering all or any part of the Intellectual Property Collateral is on
file or of record in any public office, except such as may have been
filed by the Grantor in favor of the Lender pursuant to this Agreement
or such as relate to other Permitted Liens; and
(x) All appropriate filings have been made with the
United States Patent and Trademark Office and the United States
Copyright Office and any appropriate filing offices located in foreign
countries, and this Agreement is effective to create a valid and
continuing first priority lien on and first priority security interest
in the Intellectual Property Collateral in favor of the Lender. All
action necessary or desirable to protect and create such security
interest in each item of the Intellectual Property Collateral has been
duly taken.
(l) The Grantor has no trade names, fictitious names or
other names except its legal name, and does not operate in any
jurisdiction under, and, except as set forth on Schedule II hereto,
has not had or operated in any jurisdiction within the five-year
period preceding the date hereof under, any trade name, fictitious
name or other name other than its legal name.
5. Covenants and Blocked Accounts. The Grantor covenants
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and agrees with the Lender that from and after the date
of this Agreement and so long as the Loan Agreement is in effect or
any Secured Obligations are outstanding:
(a) Further Documentation; Pledge of Instruments. At any
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time and from time to time, upon the written request of the Lender,
and at the sole expense of the Grantor, the Grantor will promptly and
duly execute and deliver any and all such further instruments and
documents and take such further action as the Lender may reasonably
deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation,
using its best efforts to secure all consents and approvals necessary
or appropriate for the assignment to the Lender of any Contract held
by the Grantor or in which the Grantor has any rights not heretofore
assigned, the filing of any financing or continuation statements under
the UCC with respect to the Liens and security interests granted
hereby, transferring Collateral to the Lender's possession (if a
security interest in such Collateral can be perfected by possession)
and placing the interest of the Lender as lienholder on the certifi-
cate of title of any vehicle. The Grantor also hereby authorizes the
Lender to file any such financing or continuation statement without
the signature of the Grantor to the extent permitted by applicable
law. If any of the Collateral shall be or become evidenced by any
Instrument, the Grantor agrees to pledge such Instrument to the Lender
and shall duly endorse such Instrument in a manner satisfactory to the
Lender and deliver the same to the Lender.
(b) Maintenance of Records. The Grantor will keep and
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maintain at its own cost and expense satisfactory and complete records
of the Collateral, including, without limitation, a record of all
payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral. The Grantor
will xxxx its books and records pertaining to the Collateral to
evidence this Agreement and the Lien and security interests granted
hereby. All Chattel Paper will be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are sub-
ject to the security interest of Securicor Communications Limited, as
the Lender". If requested by the Lender, the security interest of the
Lender shall be noted on the certificate of title of each vehicle.
For the Lender's further security, the Grantor agrees that the Lender
shall have a special property interest in all of the Grantor's books
and records pertaining to the Collateral and, upon the occurrence and
during the continuance of any Event of Default, the Grantor shall
deliver and turn over any such books and records to the Lender or to
its representatives at any time on demand of the Lender. Prior to the
occurrence of an Event of
Default and upon reasonable notice from the Lender, the Grantor shall
permit any representative of the Lender to inspect such books and
records and will provide photocopies thereof to the Lender.
(c) Indemnification. In any suit, proceeding or action
---------------
brought by the Lender relating to any Account, Chattel Paper,
Contract, General Intangible or Instrument for any sum owing
thereunder, or to enforce any provision of any Account, Chattel Paper,
Contract, General Intangible or Instrument, the Grantor will save,
indemnify and keep the Lender harmless from and against all expense,
loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction of liability whatsoever of the
obligor thereunder, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement,
Indebtedness or liability at any time owing to, or in favor of, such
obligor or its successors from the Grantor, and all such obligations
of the Grantor shall be and remain enforceable against and only
against the Grantor and shall not be enforceable against the Lender.
(d) Compliance with Laws, Etc. The Grantor will comply, in
-------------------------
all material respects, with all acts, rules, regulations, orders,
decrees and directions of any Governmental Authority, applicable to
the Collateral or any part thereof or to the operation of the
Grantor's business; provided, however, that the Grantor may contest
-------- -------
any act, regulation, order, decree or direction in any reasonable
manner which shall not, in the sole opinion of the Lender, adversely
affect the Lender's rights hereunder or adversely affect the first
priority of its Lien on and security interest in the Collateral.
(e) Payment of Obligations. The Grantor will pay promptly
----------------------
when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of its income or profits
therefrom and all claims of any kind (including, without limitation,
claims for labor, materials and supplies), except that no such charge
need be paid if (i) such non-payment does not involve any danger of
the sale, forfeiture or loss of any of the Collateral or any interest
therein, and (ii) such charge is adequately reserved against in
accordance with and to the extent required by GAAP.
(f) Compliance with Terms of Accounts, Etc. In all
--------------------------------------
material respects, the Grantor will comply with and perform all
obligations, covenants, conditions and agreements with respect to any
Account, Chattel Paper, Contract, License and all other agreements to
which it is a party or by which it is bound.
(g) Limitation on Liens on Collateral. The Grantor will
---------------------------------
not create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any Lien
on the Collateral except Permitted Liens, and will defend the right,
title and interest of the Lender in and to any of the Grantor's rights
under the Chattel Paper, Contracts, Documents, General Intangibles and
Instruments and to the Equipment and Inventory and in and to the
Proceeds thereof against the claims and demands of all Persons
whomsoever.
(h) Limitations on Modifications of Accounts. Upon the
----------------------------------------
occurrence and during the continuance of any Default or Event of
Default, the Grantor will not, without the Lender's prior written
consent, grant any extension of the time of payment of any of the
Accounts, Chattel Paper or Instruments, or compromise, compound or
settle the same for less than the full amount thereof, or release,
wholly or partly, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon.
(i) Maintenance of Insurance. The Grantor will maintain,
------------------------
with financially sound and reputable companies, insurance policies (i)
insuring its Inventory and Equipment against loss by fire, explosion,
theft and such other casualties as are usually insured against by
companies engaged in the same or similar businesses and (ii) insuring
the Grantor and the Lender against liability for personal injury and
property damage relating to such Inventory and Equipment, such
policies to be in such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged
in the same or a similar business, naming the Lender as an additional
insured with a lender loss payable clause in favor of the Lender. All
insurance with respect to the Inventory and Equipment shall (i)
contain a clause which provides that the Lender's interest under the
policy will not be invalidated by any act or omission of, or any
breach of warranty by, the insured, or by any change in the title,
ownership or possession of the insured property, or by the use of the
property for purposes more hazardous than is permitted in the policy,
and (ii) provide that no cancellation, reduction in amount or change
in coverage thereof shall be effective until at least ten days after
receipt by the Lender of written notice thereof.
(j) Limitations on Disposition. The Grantor will not sell,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so, except as permitted by the Loan
Agreement.
(k) Further Identification of Collateral. The Grantor
------------------------------------
will, if so requested by the Lender, furnish to the Lender, as often
as the Lender reasonably requests, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Lender may reasonably request,
all in reasonable detail.
(l) Notices. The Grantor will advise the Lender promptly,
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in reasonable detail, (i) of any material Lien or claim made or
asserted against any of the Collateral, (ii) of any material change in
the composition of the Collateral, and (iii) of the occurrence of any
other event which would have a Material Adverse Effect on the
aggregate value of the Collateral or in the security interests created
hereunder.
(m) Right of Inspection. Upon reasonable notice to the
-------------------
Grantor (unless a Default or an Event of Default has occurred and is
continuing, in which case no notice is necessary), the Lender shall at
all times have full and free access during normal business hours to
all the books and records and correspondence of the Grantor, and the
Lender or its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and the Grantor agrees to
render to the Lender, at the Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard
thereto. Upon reasonable notice to the Grantor (unless a Default or
an Event of Default has occurred and is continuing, in which case no
notice is necessary), the Lender and its representatives shall also
have the right to enter into and upon any premises where any of the
Equipment or Inventory is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein.
(n) Maintenance of Equipment. The Grantor will keep and
------------------------
maintain the Equipment in good operating condition sufficient for the
continuation of the business conducted by the Grantor on a basis
consistent with past practices, and the Grantor will provide all
maintenance and service and all repairs necessary for such purpose.
(o) Continuous Perfection. The Grantor will not change its
---------------------
name, identity or corporate structure in any manner which might make
any financing or continuation statement filed in connection herewith
seriously misleading within the meaning of Section 9-402(7) of the UCC
(or any other then applicable provision of the UCC) unless the Grantor
shall have given the Lender at least 30 days' prior written notice
thereof and shall have taken all action (or made arrangements to take
such action
substantially simultaneously with such change if it is impossible to
take such action in advance) necessary or reasonably requested by the
Lender to amend such financing statement or continuation statement so
that it is not seriously misleading. The Grantor will not change its
principal place of business or remove its records or change the
location of its Inventory and Equipment, each as set forth on Schedule
II hereto, unless it gives the Lender at least 30 days' prior written
notice thereof and has taken such action as is necessary to cause the
security interest of the Lender in the Collateral to continue to be
perfected.
(p) Taxes. The Grantor will pay promptly when due all
-----
taxes, assessments and governmental charges or levies imposed upon the
Intellectual Property Collateral or in respect of its income or
profits therefrom and all claims of any kind, except that no such
charge need be paid if (i) such non-payment does not involve any
danger of forfeiture or loss of any of the Intellectual Property
Collateral or any interest therein and (ii) such charge is adequately
reserved against in accordance with and to the extent required by
GAAP.
(q) Maintenance of Records. The Grantor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete records
of the Intellectual Property Collateral, including, without
limitation, a record of all payments received and all credits granted
with respect to the Intellectual Property Collateral and all other
dealings with the Intellectual Property Collateral. The Grantor will
xxxx its books and records pertaining to the Intellectual Property
Collateral to evidence this Agreement and the security interests
granted hereby. For the Lender's further security, the Grantor agrees
that the Lender shall have a special property interest in all of the
Grantor's books and records pertaining to the Intellectual Property
Collateral and, upon the occurrence and during the continuation of any
Event of Default, the Grantor shall deliver and turn over any such
books and records to the Lender or its representatives at any time on
demand of the Lender. Prior to the occurrence of an Event of Default
and upon reasonable notice from the Lender, the Grantor shall permit
any representative of the Lender to inspect such books and records as
set forth in Section 12.
(r) New Intellectual Property. In the event, prior to the
-------------------------
time the Secured Obligations have been indefeasibly paid in full, the
Grantor shall (i) obtain any rights to or interests in any new
inventions whether or not patentable, patents, patent applications or
any reissue, divisions, continuations, renewals, extensions, or
continuations-in-part of any patent or improvement of any patent,
trademarks, trade names, service marks, and
registrations or applications therefor, copyrights and registrations
or applications therefor, or licenses, or (ii) become entitled to the
benefit of any patent, copyright or trademark, or any registrations or
applications therefor, license, license renewal, trade secret or
copyright renewal, the provisions of this Agreement shall
automatically apply thereto and anything enumerated in clause (i) or
(ii) of this Section 5 shall constitute Intellectual Property
Collateral. The Grantor agrees, promptly following the written
request by the Lender, to amend this Agreement by amending any or all
of Schedules III, IV, V and VI, as applicable, to include any such
future trademarks, trademark registrations, trademark applications,
trade names, service marks, copyrights and licenses which would be
Intellectual Property Collateral, and to immediately prepare, execute
and record with all appropriate foreign country, Federal, state and/or
local offices and authorities a Security Agreement for any such new
Intellectual Property Collateral, in form and substance similar to
this Agreement, and to deliver to the Lender reasonable proof of such
recordation.
(s) The Blocked Accounts.
--------------------
(i) The Grantor hereby transfers to the Lender the
exclusive dominion and control of Blocked Account #2 effective the
date hereof and Blocked Account #1 effective on the 30th day following
the date hereof.
(ii) The Grantor agrees and covenants that all Proceeds
of Accounts shall be deposited into Blocked Account #1 in accordance
with the provisions of Section 3.5 of the Asset and Trademark
Agreement (and thereafter all or a portion of such proceeds shall be
transferred into Blocked Account #2 in accordance with the terms
thereof) and all other cash and Proceeds of all other Collateral shall
be deposited directly into Blocked Account #2.
(iii) The Grantor shall cause each Person obliged to
make payments to the Grantor for any reason (each such Person being an
"Obligor" of the Grantor) to make all payments, or to continue to make
all payments, as the case may be, with respect to all Collateral, to
Blocked Account #1 and, in any event the Borrower shall cause any
payments received by the Borrower or any other Person from any Obligor
to be deposited immediately upon receipt into such Blocked Account #1.
(iv) In the event the Grantor or any Blocked Account
Bank shall, after the date hereof, terminate the agreement with
respect to the maintenance of a Blocked Account
for any reason, or if the Lender shall demand such termination as a
result of the failure of the Blocked Account Bank to comply with any
of the terms of the Blocked Account Letter, or there shall occur and
be continuing an Event of Default or if the Lender determines in its
sole discretion that the financial condition of the Blocked Account
Bank has materially deteriorated, at the Lender's request, the Grantor
agrees to notify all of its Obligors that were making payments to such
terminated Blocked Account or Blocked Account Bank to make all future
payments to another Blocked Account Bank with respect to which the
Grantor has delivered to the Lender an executed Blocked Account
Letter, and which has not been terminated.
(v) The Grantor hereby agrees that it shall not make
or maintain any deposits in any account with, or maintain any
investment account with, any financial institution other than a
Blocked Account Bank.
(vi) So long as no Event of Default shall have occurred
and be continuing, the Grantor is hereby authorized by the Lender to
direct the disposition of such funds then on deposit with the Blocked
Account Bank (but in the case of Blocked Account #1, in and only in a
manner consistent with Section 3.5 of the Asset and Trademark
Agreement), which direction shall not be exercised by the Lender
unless and until an Event of Default shall have occurred and be
continuing. Lender agrees that in the event it gives directions with
respect to Blocked Account #1 pursuant hereto, it shall do so in and
only in a manner consistent with Section 3.5 of the Asset and
Trademark Agreement.
(vii) If any Event of Default shall have occurred and be
continuing, upon notification by the Lender to the Grantor and the
Blocked Account Bank the authorization of the Grantor under clause
(vi) above shall be revoked and all deposits contained therein (other
than any to which Grantor shall be obligated to turn over to Xxxxxxxx
or Midland pursuant to Section 3.5 of the Asset and Trademark
Agreement, which shall be so turned over) shall be transferred to an
account established by the Lender, in the name of the Lender and under
the sole dominion and control of the Lender (the "Cash Collateral
Account"), to be held by the Lender as Collateral for the Secured
Obligations or applied to the Secured Obligations in accordance with
this Agreement (all such deposits in any such Cash Collateral Account
shall constitute "Collateral" for all purposes of this Agreement).
6. The Lender's Appointment as Attorney-in-Fact.
--------------------------------------------
(a) The Grantor hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Grantor
and in the name of the Grantor or in its own name, from time to time
in the Lender's discretion, for the purpose of carrying out the terms
of this Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which the
Lender may deem necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing,
hereby gives the Lender the power and right, on behalf of the Grantor,
without notice to or assent by the Grantor to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to become due
under any Collateral and, in the name of the Grantor or in its own
name or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other Instruments for the
payment of moneys due under any Collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Lender for the purpose of
collecting any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any Collateral whenever payable;
(ii) to pay or discharge taxes, Liens, security
interests or other encumbrances levied or placed on or threatened
against the Collateral, to effect any repairs or any insurance called
for by the terms of this Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys due,
and to become due thereunder, directly to the Lender or as the Lender
shall direct; (B) to receive payment of and receipt for any and all
moneys, claims and other amounts due, and to become due at any time,
in respect of or arising out of any Collateral; (C) to sign and
indorse 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 constituting or relating to the Collateral; (D) to commence
and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral; (E) to
defend any suit, action or proceeding brought against the Grantor with
respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Lender may deem
appropriate; (G) to license or, to the extent permitted by an
applicable license, sublicense, whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis, any patent or
trademark, throughout the world for such term or terms, on such
conditions, and in such manner, as the Lender shall in its sole
discretion determine; and (H) 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 the Lender were the
absolute owner thereof for all purposes, and to do, at the Lender's
option and the Grantor's expense, at any time, or from time to time,
all acts and things which the Lender reasonably deems necessary
to protect, preserve or realize upon the Collateral and the Lender's
and the Banks' Lien therein, in order to effect the intent of this
Agreement, all as fully and effectively as the Grantor might do.
(b) The Lender agrees that, except upon the occurrence and
during the continuance of any Default or Event of Default, it will
forbear from exercising the power of attorney or any rights granted to
the Lender pursuant to this Section 6. The Grantor hereby ratifies,
to the extent permitted by law, all that any said attorney shall
lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 6, being coupled with an
interest, shall be irrevocable until the Secured Obligations are
indefeasibly paid in full.
(c) The powers conferred on the Lender hereunder are solely
to protect the Lender's interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result
of the exercise of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Grantor for
any act or failure to act, except for its own negligence or willful
misconduct.
(d) The Grantor also authorizes the Lender, at any time and
from time to time upon the occurrence and during the continuance of a
Default or Event of Default, (i) to communicate in its own name with
any party to any Contract with regard to the assignment of the right,
title and interest of the Grantor in and
under the Contracts hereunder and other matters relating thereto and
(ii) to execute, in connection with the sale provided for in Section 8
hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
7. Performance by the Lender of the Grantor's Obligations.
------------------------------------------------------
If the Grantor fails to perform or comply with any of its agreements
contained herein and the Lender, as provided for by the terms of this
Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable
expenses of the Lender incurred in connection with such performance or
compliance, together with interest thereon at the highest rate then in
effect in respect of the Revolving Credit Advances, shall be payable
by the Grantor to the Lender on demand and shall constitute Secured
Obligations secured hereby.
8. Remedies, Rights Upon an Event of Default.
-----------------------------------------
(a) If any Default or Event of Default shall occur and be
continuing, the Lender shall have the right to exercise in addition to
all other rights and remedies granted to it in this Agreement and in
any other instrument or agreement securing, evidencing or relating to
the Secured Obligations, all rights and remedies of a secured party
under the UCC. Without limiting the generality of the foregoing, the
Grantor expressly agrees that in any such event the Lender, without
demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or
private sale) to or upon the Grantor or any other Person (all and each
of which demands, advertisements and/or notices are hereby expressly
waived to the maximum extent permitted by the UCC and other applicable
law), may forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give an option or options to purchase, or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or
sales, at any exchange or broker's board or any of the Lender's
offices or elsewhere at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit
risk. The Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity of
redemption the Grantor hereby releases. The Grantor further agrees,
at the Lender's request to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably
select, whether at the Grantor's premises or
elsewhere. The Lender shall apply the net proceeds of any such
collection, recovery receipt, appropriation, realization or sale, as
provided in Section 8(d) hereof, the Grantor remaining liable for any
deficiency remaining unpaid after such application, and only after so
paying over such net proceeds and after the payment by the Lender of
any other amount required by any provision of law, including Section
9-504(1)(c) of the UCC, need the Lender account for the surplus, if
any, to the Grantor. To the maximum extent permitted by applicable
law, the Grantor waives all claims, damages, and demands against the
Lender arising out of the repossession, retention or sale of the
Collateral. The Grantor agrees that the Lender need not give more
than ten days' notice of the time and place of any public sale or of
the time after which a private sale may take place and that such
notice is reasonable notification of such matters. The Grantor shall
remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all amounts to
which the Lender is entitled, the Grantor also being liable for the
fees and expenses of any attorneys employed by the Lender to collect
such deficiency.
(b) The Grantor also agrees to pay all costs of the Lender,
including, without limitation, attorneys' fees, incurred in connection
with the enforcement of any of its rights and remedies hereunder.
(c) The Grantor hereby waives presentment, demand, protest
or any notice (to the maximum extent permitted by applicable law) of
any kind in connection with this Agreement or any Collateral.
(d) Without limitation of the foregoing, upon the
occurrence and during the continuation of a Default or an Event of
Default, the Lender may to the fullest extent permitted by applicable
law, without prior notice to the Grantor, and without advertisement,
hearing or process of law in any kind, (i) exercise any and all rights
as beneficial and legal owner of the Intellectual Property Collateral,
including, without limitation, any and all consensual rights and
powers with respect to the Intellectual Property Collateral, and (ii)
sell or assign or grant a license or franchise to use, or cause to be
sold or assigned or granted a license or franchise to use, any or all
of the Intellectual Property Collateral, in each case, free of all
rights and claims of the Grantor therein and thereto. Upon the occur-
rence and during the continuation of an Event of Default, the Lender
may (i) sell or assign the Intellectual Property Collateral, or any
part thereof, for cash upon credit as the Lender may deem appropriate
or (ii) grant licenses or franchises
or both to use the Intellectual Property Collateral on such terms and
conditions as the Lender shall determine. In connection therewith,
the Lender shall have the right to impose such limitations and
restrictions on the sale or assignment of the Intellectual Property
Collateral as the Lender may deem to be necessary or appropriate to
comply with any law, rule or regulation (Federal, state, local or that
of a foreign country) having applicability to any such sale and
requirements for any necessary governmental approvals.
(e) Notwithstanding any provisions of this Agreement to the
contrary, if, after giving effect to any sale, transfer, assignment or
other disposition of any or all of the Collateral pursuant hereto and
after the application of the proceeds hereunder to Secured
Obligations, any Secured Obligations remain unpaid or unsatisfied, the
Grantor shall remain liable for the unpaid and unsatisfied amount of
such Secured Obligations.
(f) Upon the declaration of an Event of Default, the
Grantor agrees that it will promptly (and in any event within three
Business Days) deliver to the Lender or its designee an assignment of
the Intellectual Property Collateral, duly executed by the Grantor, in
substantially the form of Annex II annexed hereto. The Grantor agrees
that the Lender may duly execute such an assignment as Grantor's true
and lawful attorney-in-fact pursuant to Section 6 hereof.
(g) Whenever an Event of Default shall have occurred and be
continuing, the Lender shall have the right, but shall in no way be
obligated, to bring suit in its own name to protect or enforce the
Trademarks, Copyrights, Licenses, Patents and Trade Secrets, and, if
the Lender shall commence any such suit, the Grantor shall, at the
request of the Lender, do any and all lawful acts and execute any and
all proper documents required by the Lender in aid of such protection
or enforcement.
(h) The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral shall be
distributed by the Lender in the following order of priorities:
first, to the Lender in an amount sufficient to pay in full
-----
the expenses of Lender in connection with such sale, disposition
or other realization, including all expenses, liabilities and
advances incurred or made by Lender in connection therewith,
including, without limitation, attorney's fees;
second, to the Lender in an amount equal to the then unpaid
------
principal of and accrued interest and prepayment premiums, if
any, on the Secured Obligations;
third, to the Lender in an amount equal to any other Secured
-----
Obligations which are then unpaid; and
finally, upon payment in full of all of the Secured
-------
Obligations, to pay to the Grantor or as a court of competent
jurisdiction may direct, any surplus then remaining from such
Proceeds.
9. Limitation on the Lender's Duty in Respect of Col
-------------------------------------------------
lateral. The Lender shall have no duty as to any Collateral in its
-------
possession or control or in the possession or control of any agent or
nominee of it or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto,
except that the Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Upon request of
the Grantor, the Lender shall account for any moneys received by it in
respect of any foreclosure on or disposition of the Collateral.
10. Reinstatement. This Agreement shall remain in full
-------------
force and effect and continue to be effective should any petition be
filed by or against the Grantor for liquidation or reorganization,
should the Grantor become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of the Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of
the Secured Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
11. Notices. All notices and other communications provided
-------
for hereunder shall be in writing (including telegraphic, telex,
telecopy, or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered by hand, if to the Grantor, addressed
to it at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000,
Attention: Xxxxxx Xxxxxxxxx,
Telecopy No: 000 000 0000 with copies to Manatt Xxxxxx & Xxxxxxxx LLP,
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxx Xxxxxx, Telecopy No: 000 000 0000 and Intek
Diversified Corporation, 000 Xxxx 000xx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxx, Telecopy No: 310 366 7712
and if to the Lender, addressed to it at the address of the Lender
specified in the Loan Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this
Section. All such notices and other communications shall, when
mailed, telegraphed, telexed, telecopied, cabled or delivered, be
effective seven days after being deposited in the mail (i) in the
United States in the case of notice being given by any Person located
in the United States or (ii) in the United Kingdom in the case of
notice being given by any Person located in the United Kingdom, or
when delivered to the telegraph company, confirmed by telex answer-
back, telecopied with confirmation or receipt, delivered to the cable
company, or delivered by hand to the addressee or its agent,
respectively.
12. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by the
Grantor therefrom shall in any event be effective unless the same
shall be in writing, approved and signed by the Lender and then any
such waiver or consent shall only be effective in the specific
instance and for the specific purpose for which given.
13. No Waiver; Remedies. (a) No failure on the part of
-------------------
the Lender to exercise, and no delay in exercising any right hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative, may be exercised singly or concurrently, and
are not exclusive of any remedies provided by law or any of the other
Loan Documents.
(b) Failure by the Lender at any time or times hereafter to
require strict performance by the Grantor or any other Person of any
of the provisions, warranties, terms or conditions contained in any of
the Loan Documents now or at any time or times hereafter executed by
the Grantor or any such other Person and delivered to the Lender shall
not waive, affect or diminish any right of any of the Lender at any
time or times hereafter to demand strict performance thereof, and such
right shall not be deemed to have been modified or waived by any
course of conduct or knowledge of the Lender, or any agent, officer or
employee of the Lender.
14. Successors and Assigns. This Agreement and all
----------------------
obligations of the Grantor hereunder shall be binding upon the
successors and assigns of the Grantor, and shall, together with the
rights and remedies of the Lender hereunder, inure to the benefit of
the Lender, and its successors and assigns.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
-------------
AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. WHEREVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION
SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY AND WITHOUT INVALIDATING THE REMAINING PROVISIONS OF THIS
AGREEMENT.
16. WAIVER OF JURY TRIAL. THE GRANTOR WAIVES ANY RIGHT IT
--------------------
MAY HAVE TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS OR REMEDIES HEREUNDER, UNDER THE LOAN AGREEMENT OR
UNDER ANY OF THE OTHER LOAN DOCUMENTS OR ANY OTHER DOCUMENT RELATING
TO ANY OF THE FOREGOING.
17. Further Indemnification. The Grantor agrees to pay,
-----------------------
and to save the Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise,
sales or other similar taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with
any of the transactions contemplated by this Agreement.
18. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of this Agreement.
IN WITNESS WHEREOF, The Grantor has caused this Agreement to
be executed and delivered by its duly authorized officer on the date
first above written.
MIDLAND USA, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------
Name: Xxxxx Xxxxxxx
Title: President
Accepted and acknowledged by:
SECURICOR COMMUNICATIONS LIMITED, as Lender
By: /s/ X.X. Xxxxxxxxx
------------------------
Name: X.X. Xxxxxxxxx
Title: Director
SCHEDULE I
FILINGS
-------
JURISDICTION FILING OFFICE
------------ -------------
California Secretary of State
County of Los Angeles
Missouri Secretary of State
County of Xxxxxxx
SCHEDULE II
LOCATION OF RECORDS AND CERTAIN COLLATERAL; FICTITIOUS NAMES
------------------------------------------------------------
Principal Place
of Business
-----------
Midland USA, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Location of Books
and Records, Inventory
and Equipment
-------------
Midland USA, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Fictitious Names
----------------
Borrower operates under the name Intek-Midland USA, Inc. in California
SCHEDULE III
TRADEMARKS
----------
Xxxx Registered Number Serial Number Date of
---- ----------------- ------------- -------
Registration
------------
"Midland" 927193 72-277,496 January 18, 1972
renewed December 13,
1991
"Midland" 895483 72-156,089 July 28, 1970
renewed December 18,
1990
SCHEDULE IV
COPYRIGHTS
----------
None
SCHEDULE V
LICENSES
--------
1) Midland USA - Midland International Corp. Trademark License
Agreement dated September 19, 1996.
2) Midland International Corp. - Midland Consumer Int'l. Exclusive
License Agreement dated June 30, 1995.
3) Midland International Corp. - LETT Electronics Private Label
Agreement dated March 1, 1995.
4) Midland International Corp. - American Digital Communications,
Inc. Asset Purchase Agreement dated December 29, 1995.
SCHEDULE VI
PATENTS
-------
US Patent Number 4,718,586 (Swivel Fastening Device)
ANNEX I
BLOCKED ACCOUNT LETTER
Xxxxxxx'x First National _______________, 19__
Bank of Kansas City
00 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Gentlemen:
We refer to the following account maintained with you by
Midland USA, Inc., a Delaware corporation (the "Company"), into which
certain monies, instruments and other property are deposited from time
to time (collectively, the "Blocked Account"): _______________. The
Company has granted to Securicor Communications Limited (a company
incorporated under the laws of England and Wales, the "Lender") under
the Loan Agreement, dated as of September 19, 1996, among the Company
and the Lender, a security interest in all assets and properties of
the Company, including, among other things, the Blocked Account, all
monies, instruments and other property deposited therein and all
certificates and instruments, if any, representing or evidencing the
Blocked Account. It is a condition to the continued maintenance of
the Blocked Account with you that you agree to this Letter Agreement.
By signing this Letter Agreement, you agree that from the
date hereof the Blocked Account shall be under the exclusive
dominion and control of the Lender, that you will act as its bailee
and that all monies, instruments or other property of the Company
received in connection therewith whether or not deposited in the
Blocked Account shall be held solely for the benefit of the Lender.
You agree to:
(a) follow your usual operating procedures for the handling
of any remittance received in the Blocked Account that is drawn in
foreign currency or that contains restrictive endorsements or
irregularities, such as a variance between the written and numerical
amounts, undated or postdated items, missing signature, incorrect
payee, etc;
[or such other date as may be provided in the Loan
Agreement]
(b) indorse and process all checks and other remittance
items not covered by paragraph (a) above on which the payee or
endorsee is the Company or, in your sole discretion, a reasonable
variation of the Company (an "Acceptable Payee"), and deposit such
checks and other remittance items in the Blocked Account; and
(c) maintain a record of all checks and other remittance
items received in the Blocked Account and, in addition to providing
the Company with photostats, vouchers, enclosures, etc. of checks and
other remittance items received on a daily basis, as well as a monthly
statement, furnish to the Lender at its request, free of any service
charge payable by the Lender, your regular bank statement with respect
to the Blocked Account, with the words "Securicor Communications
Limited, as Lender Re: Midland USA, Inc." included thereon so that
there is no confusion as to ownership of the Blocked Account and so
that the Lender is able to properly identify the Blocked Account.
The Company shall hold in trust for the Lender until
remitted to you for deposit in the Blocked Account any and all cash
and cash equivalents received under the above paragraph.
You hereby agree to follow the instructions of the Company
with respect to the disposition of any and all money deposited in the
Blocked Account as directed by the Company unless and until you have
received written instructions to the contrary from the Lender, in
which case you agree to follow such instructions from the Lender.
The Company hereby agrees to pay, indemnify and hold you
harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever (including, without
limitation, legal fees) with respect to the performance by you or any
of your directors, officers, agents or employees of this Letter
Agreement, except for your (or such director's, officer's, agent's or
employee's) gross negligence or willful misconduct.
In addition, the Company hereby indemnifies and holds you
harmless from and against all actions, proceedings, claims,
dismissals, losses, outlays, damages or expenses, including legal
fees, of every nature and character as may arise or be made against
you arising out of or in connection with its depositing checks payable
to or endorsed in favor of an Acceptable Payee if such Acceptable
Payee is incorrect, except for your gross negligence or willful
misconduct.
The Company hereby agrees to pay to you such fees and
charges with respect to the Blocked Account in accordance with your
standard charges or as shall from time to time be mutually agreed upon
by the Company and you. If such fees and expenses have not been paid
when due, you shall be entitled to charge the Blocked Account for any
such fees and expenses.
You undertake to perform only such duties as are expressly
set forth herein. Notwithstanding any other provision of this Letter
Agreement, it is agreed by the parties hereto that you shall not be
liable for any action taken by you or any of your directors, officers,
agents or employees in accordance with this Letter Agreement, except
for your (or such director's, officer's, agent's or employee's) gross
negligence or willful misconduct.
The Company acknowledges that the agreements made by it and
the authorizations granted by it herein are irrevocable unless
otherwise agreed to in writing by the Lender and that the
authorizations granted herein to you and the Lender are powers coupled
with an interest.
You waive and agree not to assert, claim or endeavor to
exercise, and by executing this Letter Agreement bar and estop
yourself from asserting, claiming or exercising, and you acknowledge
that you have not heretofore received a notice from any other party
asserting, claiming or exercising, any right of setoff, banker's lien
or other purported form of claim with respect to the Blocked Account
and funds from time to time therein. You shall have no rights in the
Blocked Account or the funds therein. To the extent you may ever have
any such rights, you hereby expressly subordinate all such rights to
all rights of the Lender.
This Letter Agreement shall be effective as of the day first
above written. To the extent inconsistent with this Letter Agreement,
this Letter Agreement shall supersede any other agreement relating to
the matters referred to herein, including any other account agreement
between the Company and you relating to the collection of receivables.
This Letter Agreement constitutes the entire agreement with respect to
the Blocked Account and is binding upon the parties hereto and their
respective successors and assigns and shall inure to their benefit.
Neither this Letter Agreement nor any provision hereof may be changed,
amended, modified or waived orally, but only by an instrument in
writing signed by the parties hereto. Any provision of this Letter
Agreement which may prove unenforceable under any law or regulation
shall not affect the validity of any other provision hereof.
You may terminate this Letter Agreement only upon thirty
days' prior written notice to that effect to the Company and the
Lender, by cancelling the Blocked Account maintained with you and
transferring all funds, if any, in such Blocked Account as directed by
the Lender. After any such termination, you shall nonetheless remain
obligated promptly to transfer to an account
designated by the Lender anything from time to time received in the
Blocked Account from obligors of the Company.
All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by
telegraph, telecopy, telex or nationally recognized courier service),
and shall be deemed to have been duly given or made when delivered by
hand, or seven days after being deposited (i) in the United States
mail in the case of notice being given by a party located in the
United States or (ii) in the United Kingdom in the case of a party
located in the United Kingdom, in each case with postage prepaid, or,
in the case of telegraphic notice, when delivered to the telegraph
company, or, in the case of telex notice, when sent, answer back
received, or, in the case of telecopy notice, when sent, or, in the
case of an internationally recognized courier service, one business
day after delivery to such courier service, addressed as follows, or
to such other address as may be hereafter notified by the respective
parties hereto:
Midland USA, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx
Xxxxxxxx 00000
XXX
Attention: Xxxxxx Xxxxxxxxx
Telecopy Number: 000 000 0000
With copies to:
Intek Diversified Corporation
000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopy Number: 310 366 7712
Manatt, Xxxxxx & Xxxxxxxx LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx
Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy Number: 000 000 0000
Securicor Communications Limited
00 Xxxxxxxxxx Xxxx
Xxxxxx
Xxxxxx XX0 0XX
Xxxxxxx
Attention: Xx Xxxxx
Telecopy No. (0000) 000-0000
With copies to:
Weil, Gotshal & Xxxxxx
00 Xxxxxxxxxxx
Xxxxxx, XX0X 0XX
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy No. 0171 426 0990
Blocked
Account Bank:
Xxxxxxx'x First National
Bank of Kansas City
00 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telecopy No: 000 000-0000
You are hereby notified, pursuant to New York Uniform
Commercial Code Section 9-302 (1)(g), that the Company has granted a
security interest in favor of the Lender in the Blocked Account
identified above.
This Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
This Letter Agreement may be executed in any number of
counterparts which together shall constitute one
and the same instrument.
Very truly yours,
MIDLAND USA, INC.
By:
--------------------------------
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:
--------------------------------
Name:
Title:
Acknowledged and agreed to as of
the date first above written.
XXXXXXX'X FIRST NATIONAL
BANK OF KANSAS CITY
By:
-------------------------------
Name:
Title:
ANNEX II
ASSIGNMENT OF INTELLECTUAL PROPERTY COLLATERAL
----------------------------------------------
AGREEMENT made this ___ day of ____________, 19__, by
and between Midland USA, Inc., a Delaware corporation (the "Assignor")
and Securicor Communications Limited, a company incorporated under the
laws of England and Wales (the "Lender").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Assignor and the Lender are parties to the Loan
Agreement dated as of September 19, 1996 (said Agreement, as it
hereafter may be amended or otherwise modified from time to time,
being referred to as the "Loan Agreement") and the Security Agreement
dated as of September 19, 1996 (the "Security Agreement") which
provides that upon the occurrence of certain events specified therein
Assignor and the Lender shall execute this Assignment; and
WHEREAS, the aforementioned events have occurred;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
(i) Incorporation. This Assignment is made pursuant to and
-------------
subject to the terms of the Loan Agreement and the Security Agreement,
each of which is deemed incorporated herein by this reference and
shall constitute part of this Assignment as if fully set forth herein.
(ii) Assignment. Assignor hereby conveys, sells, assigns,
----------
transfers and sets over to the Lender all of Assignor's right, title
interest in and to the Intellectual Property Collateral (as defined in
the Security Agreement).
(iii) Notices. All notices hereunder to the parties hereto
-------
shall be made in the manner and to the addresses specified in the
Security Agreement.
(iv) Further Instruments. The parties agree to promptly
-------------------
execute and deliver all further instruments necessary or desirable to
carry out the purposes of this Agreement.
(v) Schedules. The terms and conditions of the Schedules
---------
referred to herein are incorporated herein by this reference and shall
constitute part of this Assignment as if fully set forth herein.
(vi) Headings. The headings in this Assignment are for
--------
purposes of reference only and shall not in any way limit or otherwise
affect the meaning or interpretation of any of the terms hereof.
IN WITNESS WHEREOF, the parties have executed this
Assignment as of the date first written above.
MIDLAND USA, INC.
By:________________________
Name:
Title:
SECURICOR COMMUNICATIONS LIMITED
By:________________________
Name:
Title:
STATE OF )
ss.:
COUNTY OF )
On this ___ day of ___________, 19__, before me came
__________________________, to me known to be an officer of Midland
USA, Inc., the company described in and which executed the above
instrument, and duly acknowledged that he executed the same.
____________________________
NOTARY PUBLIC
STATE OF )
ss.:
COUNTY OF )
On this ___ day of ___________, 19__, before me came Midland
USA, Inc., to me known to be an officer of Securicor Communications
Limited, the company described in and which executed the above
instrument, and duly acknowledged that he executed the same.
____________________________
NOTARY PUBLIC
NYFS09...:\73\73273\0003\1224\AGR0306U.550
