SECURITY AGREEMENT
(Sub)
THIS SECURITY AGREEMENT (the "Agreement"), dated March 21, 2000 is
entered into by and between U.S. INTERACTIVE CORP. (DELAWARE), a Delaware
corporation (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION, as Agent (the
"Agent") for the Banks (as defined below);
WITNESSETH THAT:
WHEREAS, the Borrower is (or will be with respect to after-acquired
property) the legal and beneficial owner and the holder of the Collateral (as
defined in Section 1 hereof); and
WHEREAS, pursuant to that certain Credit Agreement (as it may hereafter
from time to time be restated, amended, modified or supplemented, the "Credit
Agreement") of even date herewith by and among the Agent, the Banks party
thereto (the "Banks") and the Borrower, the Agent and the Banks have agreed to
make certain loans to the Borrower; and
WHEREAS, the obligation of the Banks to make loans under the Credit
Agreement is subject to the condition, among others, that the Borrower secure
its obligations to the Banks under the Credit Agreement in the manner set forth
herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
1. Terms which are defined in the Credit Agreement and not otherwise
defined herein are used herein as defined therein. The following words and terms
shall have the following meanings, respectively, unless the context hereof
otherwise clearly requires:
(a) "Code" means the Uniform Commercial Code of each state as in
effect on the date hereof and as the same may subsequently be amended from time
to time, the substantive provisions of which are applicable to any of the
property of the Borrower in which the Agent for the benefit of the Banks is
granted a security interest pursuant to this Agreement.
(b) "Collateral" means all of the Borrower's right, title and
interest in, to and under the following described property of the Borrower (each
capitalized term used in this Section 1(b) shall have in this Agreement the
meaning given to it by Article 9 of the Code as in effect in Pennsylvania):
(i) all now existing and hereafter acquired and arising Accounts,
General Intangibles, Chattel Paper, Documents, Instruments, Investment Property,
Letters of Credit, Advices of Credit, Equipment, and Inventory, all Products of
and Accessions to the foregoing and all Proceeds of all of the foregoing
(including without limitation all insurance policies and proceeds thereof);
(ii) to the extent, if any, not included in clause (i) above,
each and every other item of personal property and fixtures, both those that are
now owned and those that hereafter arise or are acquired, regardless of whether
Article 9 of the Code is applicable to any extent to the creation, perfection or
enforcement of Liens thereon or therein.
Without limiting the foregoing, Collateral includes all business records and
information, including computer tapes and other storage media containing the
same and computer programs and software (including without limitation, source
code, object code and related manuals and documentation and all licenses to use
such software) for accessing and manipulating such information.
(c) "Debt" means, collectively, all now existing and hereafter
arising Indebtedness and Obligations of the Borrower to the Banks or any
Affiliate of any Bank under the Credit Agreement and other Loan Documents,
including without limitation, all Indebtedness and Obligations, whether of
principal, interest, fees, expenses or otherwise, of the Borrower to the Banks
or any Affiliate of any Bank now existing or hereafter incurred under the Credit
Agreement or the Notes), or any of the other Loan Documents referred to therein
as any of the same or any one or more of them may from time to time be amended,
restated, modified or supplemented, together with any and all extensions,
renewals, refinancings or refundings thereof in whole or in part.
(d) "Receivables" means all of the Collateral except Equipment and
Inventory.
2. As security for the due and punctual payment and performance of
the Debt in full, the Borrower hereby agrees that the Agent and the Banks and
any Affiliate of any Bank shall have, and the Borrower hereby grants to and
creates in favor of the Agent for the benefit of the Banks and any Affiliate of
any Bank, a first priority security interest under the Code in and to the
Collateral subject only to Permitted Liens. Without limiting the generality of
Section 4 below, the Borrower further agrees that with respect to each item of
Collateral as to which (i) the creation of a valid and enforceable security
interest is not governed exclusively by the Code or (ii) the perfection of a
valid and enforceable security interest therein under the Code cannot be
accomplished either by the Agent taking possession thereof or by the filing in
appropriate locations of appropriate Code financing statements executed by the
Borrower, the Borrower will at its expense execute and deliver to the Agent such
documents, agreements, notices, assignments and instruments and take such
further actions as may be reasonably requested by the Agent from time to time
for the purpose of creating a valid and perfected first priority Lien on such
item, subject only to Permitted Liens, enforceable against the Borrower and all
third parties to secure the Debt.
3. The Borrower represents and warrants to the Agent and the Banks
that (a) the Borrower has good and marketable title to the Collateral, and (b)
except for the security interest granted to and created in favor of the Agent
for the benefit of the Banks hereunder and Permitted Liens, all the Collateral
is free and clear of any Lien other than the Liens of record of Venture Leasing
against Borrower that will be removed in connection with this transaction.
4. The Borrower will faithfully preserve and protect the Agent's
security interest in the Collateral as a prior perfected security interest under
the Code, superior and prior to the rights of all third Persons, except for
Permitted Liens, and will do all such other acts and things and will, upon
request therefor by the Agent, execute, deliver, file and record all such other
documents and instruments, including, without limitation, financing statements,
security agreements, assignments and documents and powers of attorney with
respect to the Collateral, and pay all filing fees and taxes related thereto, as
the Agent in its reasonable discretion may deem necessary or advisable from time
to time in order to attach, continue, preserve, perfect and protect said
security interest; and the Borrower hereby irrevocably appoints the Agent, its
officers, employees and agents, or any of them, as attorneys-in-fact for the
Borrower to execute, deliver, file and record such items for the Borrower and in
the Borrower's name, place and stead if an Event of Default has occurred and is
continuing. This power of attorney, being coupled with an interest, shall be
irrevocable for the life of this Agreement.
5. The Borrower covenants and agrees that:
(a) it will defend the Agent's and the Banks' right, title and
security interest in and to the Collateral and the proceeds thereof against the
claims and demands of all Persons whomsoever, other than any Person claiming a
right in the Collateral pursuant to an agreement between such Person and the
Agent or a Bank;
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(b) it will not suffer or permit to exist on any Collateral any Lien
except for Permitted Liens;
(c) it will not take or omit to take any action, the taking or the
omission of which would result in a material alteration or impairment of the
Collateral or of the Agent's rights under this Agreement;
(d) it will not sell, assign or otherwise dispose of any portion of
the Collateral except as permitted in the Credit Agreement;
(e) except as permitted by the Credit Agreement, it will (i) obtain
and maintain sole and exclusive possession of the Collateral, (ii) keep the
Collateral and all records pertaining thereto at the locations specified on the
Security Interest Data Summary attached as Schedule A hereto, unless it shall
have given the Agent prior notice and taken any action reasonably requested by
the Agent to maintain its security interest therein, (iii) deliver to the Agent
upon the Agent's request therefor all Collateral consisting of Chattel Paper
immediately upon the Borrower's receipt of a request therefor, and (iv) keep
materially accurate and complete books and records concerning the Collateral and
such other books and records as the Agent may from time to time reasonably
require; and
(f) it will promptly furnish to the Agent such information and
documents relating to the Collateral as the Agent may reasonably request,
including, without limitation, all invoices, Documents, contracts, Chattel
Paper, Instruments and other writings pertaining to the Borrower's contracts or
the performance thereof, all of the foregoing to be certified upon request of
the Agent by an authorized officer of the Borrower.
6. The Borrower assumes full responsibility for taking any and all
necessary steps to preserve the Agent's and the Banks' rights with respect to
the Collateral against all Persons other than anyone asserting rights in respect
of a Permitted Lien. The Agent shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession if the Agent
takes such action for that purpose as the Borrower requests in writing, provided
that such requested action will not, in the judgment of the Agent, impair the
security interest in the Collateral created hereby or the Agent's and the Banks'
rights in, or the value of, the Collateral, and provided further that such
written request is received by the Agent in sufficient time to permit the Agent
to take the requested action.
7. (a) At any time and from time to time whether or not an Event of
Default then exists and without prior notice to or consent of the Borrower, the
Agent may at its option take such actions as the Agent deems appropriate (i) to
attach, perfect, continue, preserve and protect the Agent's and the Banks' prior
security interest in the Collateral, and/or (ii) to inspect, audit and verify
the Collateral, including reviewing all of the Borrower's books and records and
copying and making excerpts therefrom, provided that prior to an Event of
Default or a Potential Default, the same is done with advance notice during
normal business hours to the extent access to the Borrower's premises is
required, and if not paid in a timely fashion by Borrower, (iii) to add all
liabilities, obligations, costs and expenses reasonably incurred in connection
with the foregoing clauses (i) and (ii) to the Debt, to be paid by the Borrower
to the Agent for the benefit of the Banks upon demand;
(b) At any time and from time to time after an Event of Default
exists and is continuing and without prior notice to or consent of the Borrower,
the Agent may at its option take such action as the Agent in its reasonable
discretion deems appropriate (i) to maintain, repair, protect and insure the
Collateral, and/or (ii) to perform, keep, observe and render true and correct
any and all covenants, agreements, representations and warranties of the
Borrower hereunder, and (iii) to add all liabilities, obligations, costs and
expenses reasonably incurred in connection with the foregoing
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clauses (i) and (ii) to the Debt, to be paid by the Borrower to the Agent for
the benefit of the Banks upon demand.
8. After there exists any Event of Default under the Credit
Agreement:
(a) The Agent shall have and may exercise all the rights and
remedies available to and subject to all of the obligations of a secured party
under the Code in effect at the time, and such other rights and remedies as may
be provided by Law and as set forth below, including without limitation to take
over and collect all the Borrower's Receivables and all other Collateral, and to
this end the Borrower hereby appoints effective at such time, the Agent, its
officers, employees and agents, as its irrevocable, true and lawful
attorneys-in-fact with all necessary power and authority to (i) take possession
immediately, with or without notice, demand, or legal process, of any of or all
of the Collateral wherever found, and for such purposes, enter upon any premises
upon which the Collateral may be found and remove the Collateral therefrom, (ii)
require the Borrower to assemble the Collateral and deliver it to the Agent or
to any place designated by the Agent at the Borrower's expense, (iii) receive,
open and dispose of all mail addressed to the Borrower and notify postal
authorities to change the address for delivery thereof to such address as the
Agent may designate, (iv) demand payment of the Receivables, (v) enforce payment
of the Receivables by legal proceedings or otherwise, (vi) exercise all of the
Borrower's rights and remedies with respect to the collection of the
Receivables, (vii) settle, adjust, compromise, extend or renew the Receivables,
(viii) settle, adjust or compromise any legal proceedings brought to collect the
Receivables, (ix) to the extent permitted by applicable Law, sell or assign the
Receivables upon such terms, for such amounts and at such time or times as the
Agent deems advisable, (x) discharge and release the Receivables, (xi) take
control, in any manner, of any item of payment or proceeds from any account
debtor, (xii) prepare, file and sign the Borrower's name on any Proof of Claim
in Bankruptcy or similar document against any account debtor, (xiii) prepare,
file and sign the Borrower's name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables,
(xiv) do all acts and things necessary, in the Agent's reasonable and sole
discretion, to fulfill the Borrower's obligations under the Loan Documents, (xv)
endorse the name of the Borrower upon any check, Chattel Paper, Document,
Instrument, invoice, freight xxxx, xxxx of lading or similar document or
agreement relating to the Receivables or Inventory; (xvi) use the Borrower's
stationery and sign the Borrower's name to verifications of the Receivables and
notices thereof to account debtors; (xvii) access and use the information
recorded on or contained in any data processing equipment or computer hardware
or software relating to the Receivables, Inventory, or other Collateral or
proceeds thereof to which the Borrower has access, (xviii) demand, xxx for,
collect, compromise and give acquittances for any and all Collateral, (xix)
prosecute, defend or compromise any action, claim or proceeding with respect to
any of the Collateral, and (xx) take such other action as the Agent may deem
appropriate, including extending or modifying the terms of payment of the
Borrower's debtors. This power of attorney, being coupled with an interest,
shall be irrevocable for the life of this Agreement. To the extent permitted by
Law, the Borrower hereby waives all claims of damages due to or arising from or
connected with any of the rights or remedies exercised by the Agent pursuant to
this Agreement, except claims for physical damage to the Collateral arising from
gross negligence or willful misconduct by the Agent or its employees or agents.
(b) The Agent shall have the right to lease, sell or otherwise
dispose of all or any of the Collateral at public or private sale or sales for
cash, credit or any combination thereof, with such notice as may be required by
Law (it being agreed by the Borrower that, in the absence of any contrary
requirement of Law, fifteen (15) days' prior notice of a public or private sale
of Collateral shall be deemed reasonable notice), in lots or in bulk, for cash
or on credit, all as the Agent, in its reasonable and sole discretion, may deem
advisable. Such sales may be adjourned from time to time with or without notice.
The Agent shall have the right to conduct such sales on the Borrower's premises
or elsewhere and shall have the right to use the Borrower's premises without
charge for such sales for such time or times as the Agent may see fit. The Agent
may purchase all or any part of
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the Collateral at public or, if permitted by Law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Debt.
9. The security interest in the Borrower's Collateral granted to and
created in favor of the Agent by this Agreement shall be for the benefit of the
Agent and the Banks. Each of the rights, privileges, and remedies provided to
the Agent hereunder or otherwise by Law with respect to the Borrower's
Collateral shall be exercised by the Agent only for its own benefit and the
benefit of the Banks, and any of the Borrower's Collateral or proceeds thereof
held or realized upon at any time by the Agent shall be applied as set forth in
Section 8.2.5 of the Credit Agreement. The Borrower shall remain liable to the
Banks for and shall pay to the Agent for the benefit of the Banks any deficiency
which may remain after such sale or collection.
10. If the Agent repossesses or seeks to repossess any of the
Collateral pursuant to the terms hereof because of the occurrence of an Event of
Default, Borrower will cooperate with the Agent and grant the Agent reasonable
access to the Borrower's premises. In the event Borrower does not cooperate with
the Agent and does not grant the Agent reasonable access to the Borrower's
premises, then to the extent it is commercially reasonable for the Agent to
store any Collateral on any of the Borrower's premises, the Borrower hereby
agrees to lease to the Agent on a month-to-month tenancy for a period not to
exceed one hundred twenty (120) days at the Agent's election, at a rental of One
Dollar ($1.00) per month, the premises on which the Collateral is located,
provided it is located on premises owned or leased by the Borrower.
11. Upon indefeasible payment in full of the Debt and termination of
the Credit Agreement, this Agreement shall terminate and be of no further force
and effect, and the Agent shall thereupon promptly return to the Borrower such
of the Collateral and such other documents delivered by the Borrower hereunder
as may then be in the Agent's possession and Agent will terminate all financing
statements. Until such time, however, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
12. No failure or delay on the part of the Agent in exercising any
right, remedy, power or privilege hereunder shall operate as a waiver thereof or
of any other right, remedy, power or privilege of the Agent hereunder; nor shall
any single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. No waiver of a single Event of Default shall
be deemed a waiver of a subsequent Event of Default. All waivers under this
Agreement must be in writing. The rights and remedies of the Agent under this
Agreement are cumulative and in addition to any rights or remedies which it may
otherwise have, and the Agent may enforce any one or more remedies hereunder
successively or concurrently at its option.
13. All notices, statements, requests and demands given to or made
upon either party hereto in accordance with the provisions of this Agreement
shall be given or made as provided in Section 10.6 of the Credit Agreement.
14. The Borrower agrees that as of the date hereof, all information
contained on the Security Interest Data Schedule attached hereto as Schedule A
is accurate and complete and contains no omission or misrepresentation. The
Borrower shall promptly notify the Agent of any changes in the information set
forth thereon.
15. The Borrower acknowledges that the provisions hereof giving the
Agent rights of access to books, records and information concerning the
Collateral and the Borrower's operations and providing the Agent access to the
Borrower's premises are intended to afford the Agent with immediate access to
current information concerning the Borrower and its activities, including
without limitation, the value, nature and location of the Collateral so that the
Agent can, among other things, make an appropriate determination after the
occurrence of an Event of Default, whether and when to
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exercise its other remedies hereunder and at Law, including without limitation,
instituting a replevin action should the Borrower refuse to turn over any
Collateral to the Agent. The Borrower further acknowledges that should the
Borrower at any time fail to promptly provide such information and access to the
Agent, the Borrower acknowledges that the Agent would have no adequate remedy at
Law to promptly obtain the same. The Borrower agrees that the provisions hereof
may be specifically enforced by the Agent and waives any claim or defense in any
such action or proceeding that the Agent has an adequate remedy at Law.
16. This Agreement shall be binding upon and inure to the benefit of
the Agent, the Banks and their respective successors and assigns, and the
Borrower and its successors and assigns, except that the Borrower may not assign
or transfer the Borrower's obligations hereunder or any interest herein.
17. This Agreement shall be deemed to be a contract under the laws
of the Commonwealth of Pennsylvania and for all purposes shall be governed by
and construed in accordance with the laws of said Commonwealth excluding its
rules relating to conflicts of law.
18. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE 1 OF 1 TO SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement as of the day and
year first above set forth.
U.S. INTERACTIVE CORP. (DELAWARE)
By:_______________________________
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION, as
Agent
By:_______________________________
Name:
Title:
SCHEDULE A
TO
SECURITY AGREEMENT
SECURITY INTEREST DATA SUMMARY
1. The chief executive office of U.S. Interactive Corp. (Delaware)
(the "Debtor") is located at:
_________________
_________________
_________________
__________ County
2. The Debtor's true and full name is: U.S. Interactive Corp.
(Delaware). The Debtor uses no trade names or fictitious names.
3. All of the Debtor's personal property which has not been
delivered to the Agent pursuant to the terms of this Agreement or the Credit
Agreement is now, and will be at all future times, located at the Debtor's chief
executive office as described in Paragraph 1 above, except as specified below:
