SECURITY AND PLEDGE AGREEMENT
(ACME Subsidiary Holdings III, LLC)
THIS SECURITY AND PLEDGE AGREEMENT made as of December 2, 1997, by and
between ACME SUBSIDIARY HOLDINGS III, LLC, a Delaware limited liability company
(the "Debtor"); and CANADIAN IMPERIAL BANK OF COMMERCE, as agent (in such
capacity, together with its successors and assigns in such capacity, the
"Agent") for the benefit of CIBC Inc. and the other financial institutions who
are or who become Lenders under, and as defined in, the Credit Agreement
referred to below and any Affiliates of such Lenders with whom the Debtor shall
maintain any Rate Hedging Obligations (collectively, the "Secured Parties").
RECITALS
A. Acme Television, LLC, a Delaware limited liability company (the
"Borrower"), the Lenders and the Agent are parties to that certain First Amended
and Restated Credit Agreement of even date herewith (as the same may be amended,
restated, renewed, replaced, supplemented or otherwise modified from time to
time, the "Credit Agreement"), pursuant to which the Lenders have extended, and
are extending, credit to the Borrower. In addition, the Borrower, from time to
time, may be obligated to one or more of the Lenders or any Affiliates of such
Lenders in respect of Rate Hedging Obligations. Capitalized terms used herein
without definition have the meanings assigned to them in the Credit Agreement.
B. It is a condition to such Secured Parties' willingness (1) to enter into
the Credit Agreement and provide to the Borrower the financing contemplated
thereby and (2) to extend credit to the Borrower that would constitute Rate
Hedging Obligations that the Debtor shall have (i) Guaranty all existing
obligations of the Borrower to the Agent and the Secured Parties pursuant to its
Guaranty of even date herewith from the Debtor and certain Affiliates of the
Debtor in favor of the Agent and the Secured Parties (the "Guaranty"), and (ii)
granted to the Secured Parties and the Agent the liens and security interests
contemplated hereby.
C. The security interests granted hereunder are expressly subject to the
applicable rules, regulations and policies of the Federal Communications
Commission ("FCC") as further set forth at Section 17 hereof.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
parties hereby agree as follows:
Section 1. The Security Interests.
(a) In order to secure: (i) the performance of all obligations of the
Borrower under the Credit Agreement; (ii) the due and punctual payment in full
(and not merely the collectibility) of the Note, including without limitation
all principal thereof and all interest payable thereon, at the
interest rates provided therein and in the Credit Agreement and regardless of
the extent allowed as a claim in any proceeding in respect of the bankruptcy,
reorganization or insolvency of the Borrower, the Debtor or any of their
respective Affiliates (a "Reorganization"), in each case when due and payable,
according to the terms of the Note and the Credit Agreement, whether at stated
maturity, by reason of acceleration or otherwise; (iii) the due and punctual
payment in full (and not merely the collectibility) of all other sums and
charges which may at any time be due and payable in accordance with, or under
the terms of, the Note or the Credit Agreement, whether at stated maturity, by
reason of acceleration or otherwise; (iv) the due and punctual payment in full
(and not merely the collectibility) of the Guaranty; (v) the due and punctual
payment in full of all such Rate Hedging Obligations as may be due from time to
time; (vi) the due and punctual payment in full (and not merely the
collectibility), performance and observance of all of the other indebtedness,
liabilities, obligations, terms, covenants and conditions contained in the Loan
Documents, whether now or hereafter existing, on the part of the Borrower, the
Debtor or any of their respective Affiliates to be paid, performed or observed;
(vii) the accuracy of the representations and warranties made by the Borrower,
the Debtor and their respective Affiliates in the Loan Documents; and (viii) the
due and punctual payment and performance in full (and not merely the
collectibility) of any and all other future advances and other obligations,
indebtedness, obligations and liabilities of the Borrower, the Debtor and their
respective Affiliates to the Secured Parties and the Agent of every kind and
description, whether now existing or hereafter arising, whether direct, indirect
or contingent, whether secured or unsecured, and howsoever evidenced, incurred
or arising, including without limitation any future loans and advances made to
the Borrower or any Debtor by any of the Secured Parties prior to, during or
following any Reorganization (all of the foregoing are collectively hereinafter
called the "Obligations"), the Debtor hereby grants to the Agent and each of the
Secured Parties a continuing security interest in and a collateral assignment
and pledge of, the following described fixtures and personal property, in each
case to the extent, and only to the extent, it is lawful to grant a security
interest in and collaterally assign and pledge such property (hereinafter
collectively called the "Collateral"):
All fixtures and all tangible and intangible personal property of
the Debtor, whether now owned or hereafter acquired by the Debtor, or
in which the Debtor may now have or hereafter acquire an interest,
including without limitation, the following property: (A) all
properties and assets of every type used or useful in connection with
the ownership or operation of broadcast television stations and any
and all other communication businesses (collectively, "Communication
Businesses"); (B) all equipment (including, without limitation, all
machinery, motor vehicles, tools, furniture, studio equipment, towers,
transmitters, translators, antennas, satellite dishes, and all other
equipment relating to the operation of Communications Businesses),
inventory (including, without limitation, all merchandise, raw
materials, work in process, finished goods, and supplies) and goods,
whether now owned or hereafter acquired by the Debtor, or in which the
Debtor may now have or hereafter acquire an interest; (C) all
accounts, accounts receivable and other receivables (including,
without limitation, intercompany receivables, rights to receive
payments of money under contracts, chattel paper and rights to receive
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payments of money under leases) and general intangibles (including,
without limitation, (i) all limited liability company member interests
now or hereafter held by or issued to the Debtor, subject to the
limitation set forth below, (ii) all existing and future rights of the
Debtor to any refund of any tax assessed against or paid by the
Debtor, loss carryback tax refunds, insurance premium refunds,
unearned premiums, insurance proceeds, chooses in action, goodwill,
going concern value, trademarks, service marks, tradenames, patents,
blueprints, designs, product lines, and research and development, and
all of the Debtor's rights to receive payments of money as a tenant
under any and all leases, (iii) all of the Debtor's rights under all
present and future authorizations, permits and licenses heretofore or
hereafter granted or assigned to the Debtor by the Federal
Communications Commission (the "FCC") or any other public or
governmental agency or regulatory body for the operation and ownership
of broadcast television stations and or other Communications
Businesses (such authorizations, licenses and permits, together with
any extensions or renewals thereof, being referred to collectively as
the "Licenses") (excluding, however, any such Licenses to the extent,
and only to the extent, it is unlawful to grant a security interest in
such Licenses, but including, to the maximum extent permitted by law,
all rights incident or appurtenant to such Licenses, including,
without limitation, the right to receive all proceeds derived or
arising from or in connection with the sale, assignment or transfer of
such Licenses), whether now owned or hereafter acquired by the Debtor,
or in which the Debtor may now have or hereafter acquire an interest,
(iv) all of the Debtor's rights under all construction contracts,
satellite broadcasting distribution agreements and licenses, leases,
permits, authorizations and other agreements granting to such the
Debtor the right to construct, operate, and maintain television
stations, communications cable, wire or line, whether now existing or
hereafter arising (excluding, however, any Specified Contract, as
defined below); (v) all management agreements, programming agreements,
network affiliation agreements and all other agreements for the
provision of management, engineering or similar services, microwave or
earth station service agreements, and other similar agreements to
which the Debtor is a party (excluding, however, any Specified
Contract); and (vi) all other agreements relating to Communications
Businesses whether now owned or hereafter acquired by the Debtor, or
in which the Debtor may now have or hereafter acquire an interest
(excluding, however, any Specified Contract); and (vii) all right,
title and interest, if any, under any intercompany notes, obligations
or agreements, whether now owned or hereafter acquired by the Debtor,
or in which the Debtor may now have or hereafter acquire an interest;
(D) all investment property, securities and other equity interests now
or hereafter held by or issued to the Debtor, including, without
limitation, all shares of stock, warrants, options, notes, investment
contracts, partnership interests and member interests in limited
liability companies; (E) all instruments, documents of title, policies
and certificates of insurance, securities, bank deposits, deposit
accounts, checking accounts and
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cash now or hereafter owned by the Debtor, or in which the Debtor may
now have or hereafter acquire an interest; (F) all accessions,
additions or improvements to, all replacements, substitutions and
parts for, and all proceeds and products of, and all distributions and
dividends relating to, all of the foregoing, including, without
limitation, proceeds of insurance; and (G) all books, records and
documents relating to all of the foregoing.
The foregoing includes, without limitation, all of Debtor's right, title
and interest (whether now owned or hereafter arising) in and to ACME TELEVISION
HOLDINGS OF UTAH, L.L.C., and ACME TELEVISION OF UTAH, L.L.C., ACME TELEVISION
LICENSES OF UTAH, L.L.C., ACME TELEVISION HOLDINGS OF NEW MEXICO, L.L.C., ACME
TELEVISION LICENSES OF NEW MEXICO, L.L.C. and ACME TELEVISION OF NEW MEXICO,
L.L.C., including, without limitation, all right to receive any distributions or
payments due or to become due under such membership agreement and other
agreements and all general intangibles relating thereto and proceeds resulting
therefrom.
As used herein, the term "Specified Contract" shall mean any contract,
agreement or lease, to the extent that the grant of a security interest therein
would (i) result in a default thereunder giving rise to the right of any third
party thereto to terminate or materially adversely amend the same, or (ii)
result in the termination or expiration thereof, but shall not include any
account receivable relating thereto.
(b) Customer Receivables. All Collateral consisting of accounts, contract
rights, chattel paper and general intangibles of the Debtor arising from the
sale, delivery or provision of goods and/or services are sometimes hereinafter
collectively called the "Customer Receivables".
(c) Security Interests. The security interests granted pursuant to this
Section 1 (the "Security Interests") are granted as security only and shall not
subject the Agent or any of the Secured Parties to, or transfer or in any way
affect or modify, any obligation or liability of a the Debtor under any of the
Collateral or any transaction which gave rise thereto.
(d) Collateral Account.
(i) There is hereby established with the Agent an interest bearing
cash collateral account (the "Collateral Account") in the name and under
the control of the Agent into which there shall be deposited from time to
time the cash proceeds of any of the Collateral and any other cash proceeds
of insurance, condemnation award or other compensation in respect of any
casualty or disposition affecting any property of the Debtor (whether
received by the Agent or by the Debtor) required to be delivered to the
Agent pursuant to the Credit Agreement and into which the Debtor may from
time to time deposit any additional amounts that the Debtor wishes to
pledge to the Agent for the benefit of the Secured Parties as additional
collateral security hereunder. The balance from time to time in the
Collateral Account shall constitute part of the Collateral hereunder and
shall not constitute payment of the Obligations until applied in accordance
with the Credit Agreement.
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(ii) The balance from time to time in the Collateral Account shall be
subject to withdrawal only as provided in the Credit Agreement (including,
without limitation, Sections 1.06 and 6.02 thereof). Unless an Event of
Default shall have occurred and shall be continuing, the Agent shall remit
the collected balance outstanding to the credit of the Collateral Account
to or upon the order of the Debtor, as the Credit Agreement so provides
and, if applicable and to the extent consistent with the provisions of the
Credit Agreement, as the Debtor shall from time to time instruct. Upon the
occurrence and during the continuance of an Event of Default, the Agent may
(and, if instructed by the Secured Parties as specified in the Credit
Agreement, shall) in its (or their) discretion apply or cause to be applied
(subject to collection) the balance from time to time outstanding to the
credit of the Collateral Account to the payment of the Obligations in the
manner specified in Section 13.
Section 2. Delivery of Pledged Securities and Chattel Paper.
All securities now or hereafter owned or held by the Debtor, including
without limitation, all shares of stock, warrants, options, notes, investment
contracts, partnership interests in limited or general partnerships and member
interests in limited liability companies, shall be promptly delivered to the
Agent, by the Debtor pursuant hereto (which securities, together with all other
securities and shares of stock which may hereafter be delivered to the Agent
pursuant to the terms hereof, are hereinafter called the "Pledged Securities"),
shall be in suitable form for transfer by delivery, in the case of certificated
securities, or shall be accompanied by duly executed instruments of transfer or
assignments in blank, and accompanied in each case by any required transfer tax
stamps, all in form and substance satisfactory to the Agent. In the case of
uncertificated securities, the Debtor hereby gives written instructions to the
issuer thereof to register the pledge thereof hereunder in the books and records
maintained by such issuer and such issuer, by signing a Confirmation of Issuer
in form satisfactory to Agent, to confirm that it has so registered said pledge.
Exhibit A attached hereto and made a part hereof sets forth a complete
description of all securities owned or held by the Debtor on the date hereof.
The Agent and the Secured Parties may at any time or from time to time, at
their sole discretion, require the Debtor to cause any chattel paper included in
the Customer Receivables to be delivered to the Agent or any agent or
representative designated by it for the purpose of causing a legend referring to
the Security Interests to be placed on such chattel paper and upon any ledgers
or other records concerning the Customer Receivables.
Section 3. Filing; Further Assurances.
The Debtor will, at its expense, execute, deliver, file and record (in such
manner and form as the Agent may reasonably require), or permit the Agent to
file and record, any financing statements, any carbon, photographic or other
reproduction of a financing statement or this Security Agreement (which shall be
sufficient as a financing statement hereunder), any specific assignments or
other paper that may be reasonably necessary or desirable, or that the Agent may
reasonably request, in order to create, preserve, perfect or validate any
Security Interest or to
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enable the Agent to exercise and enforce its rights and the rights of the
Secured Parties hereunder with respect to any of the Collateral. The Debtor
hereby appoints the Agent, which appointment is irrevocable and coupled with an
interest, as the Debtor's attorney-in-fact solely as to this Section 3 to
execute and file in the name and on behalf of such Debtor such additional
financing statements as the Agent may reasonably request.
Section 4. Representations and Warranties of the Debtor.
The Debtor hereby represents and warrants to the Agent and the Secured
Parties that (a) the Debtor is, or to the extent that certain of the Collateral
is to be acquired after the date hereof, will be, the sole legal and beneficial
owner of the Collateral free from any lien, security interest, encumbrance or
restrictions on transfer except in each case as permitted hereunder or under the
Credit Agreement or under any other Loan Document; (b) except as specified in
and permitted by the Credit Agreement, no financing statement covering the
Collateral is on file in any public office, other than the financing statements
filed pursuant to this Security Agreement; (c) all additional information,
representations and warranties contained in Exhibit B hereto as to the Debtor
and made a part hereof are true, accurate and complete on the date hereof; (d)
there are no restrictions as to which consent has not been obtained upon the
voting rights of any of the Pledged Securities and the Debtor has the right to
vote, pledge, grant a security interest in and otherwise transfer the Pledged
Securities owned by it free of any encumbrances (other than applicable
restrictions imposed by any Federal, state or local authorities, specifically
including the FCC, or Federal or state securities laws or regulations); (e) the
Pledged Securities are duly and validly issued, fully paid and nonassessable;
and (f) the Pledged Securities are not represented by certificates or other
instruments and are not held in a brokerage or similar account.
Section 5. Covenants of the Debtor.
The Debtor hereby covenants and agrees with the Agent and the Secured
Parties that the Debtor (a) shall take such commercially reasonable action as
reasonably necessary to protect the Collateral against all claims and demands of
all persons at any time claiming any interest therein senior to that of the
Agent and the Secured Parties; (b) shall provide the Agent with prompt written
notice of (i) any change in the Debtor's principal office or the office where
any Debtor maintains its books and records pertaining to the Customer
Receivables, and (ii) the movement or location of any Collateral to or at any
address other than as set forth in said Exhibit B with respect to the Debtor;
(c) shall promptly pay any and all taxes, assessments and governmental charges
upon the Collateral prior to the date penalties are attached thereto, except to
the extent permitted under the Credit Agreement; (d) shall immediately notify
the Agent of any event causing a substantial loss or diminution in the value of
all or any material part of the Collateral and the amount or an estimate of the
amount of such loss or diminution, except as otherwise permitted by the Credit
Agreement; (e) shall have and maintain insurance at all times in accordance with
the provisions of the Credit Agreement; (f) except in accordance with the Credit
Agreement, shall not sell or offer to sell or otherwise assign, transfer or
dispose of the Collateral or any interest therein, without the written consent
of the Agent; (g) shall keep the Collateral free from any adverse lien, security
interest or encumbrance other than liens, security interests or
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encumbrances contemplated hereby and permitted under the Credit Agreement; (h)
shall keep the Collateral in good order and repair, reasonable wear and tear
excepted, and shall not waste, destroy or dispose of the Collateral or any part
thereof, except as otherwise permitted by the Credit Agreement; and (i) shall
not use the Collateral in violation of any statute or ordinance, the violation
of which could have a Material Adverse Effect.
Section 6. Records Relating to Collateral.
The Debtor will keep its records concerning the Collateral, including the
Customer Receivables and all chattel paper included in the Customer Receivables,
at its office or one or more of the other locations designated in Exhibit B or
at such other place or places of business of which the Agent shall have been
notified in writing upon no less than twenty (20) days in advance. The Debtor
will hold and preserve such records and chattel paper and will permit
representatives of the Agent and the Secured Parties at any time during normal
business hours to examine and inspect the Collateral and to make abstracts from
such records and chattel paper in accordance with the terms of the Credit
Agreement, and will furnish to the Agent and the Secured Parties such
information and reports regarding the Collateral as the Agent and the Secured
Parties may from time to time reasonably request; provided, however, that no
notice shall be required of the Agent if an Event of Default has occurred and is
continuing.
Section 7. Record Ownership of Pledged Securities.
Upon the occurrence of an Event of Default (as defined in Section 11) and
subject to the requirements of applicable law, specifically including the rules,
regulations and policies of the FCC, the Agent may cause, upon written
notification to the Debtor, any or all of the Pledged Securities to be
transferred of record into the Agent's name; provided, however, that in the
event such Event of Default is cured within the time period provided in the
Credit Agreement, then Agent shall cause such Pledged Securities to be
transferred of record into the Debtor's name. The Debtor shall promptly give to
the Agent copies of any notices or other communications received by the Debtor
with respect to Pledged Securities registered in its name.
Section 8. Right to Receive Distributions on Pledged Securities.
(a) Unless and until an Event of Default has occurred and is continuing,
and the Agent shall have notified the Debtor in writing of its election to
exercise the Agent's rights under subsection (b) below, the Debtor shall be
entitled, from time to time, to receive for its own use any and all dividends,
interest and other payments and distributions made upon or with respect to the
Pledged Securities (subject to any restrictions thereon set forth in the Credit
Agreement or any other Loan Document referred to therein), except:
(i) stock dividends or distributions,
(ii) dividends payable in securities, member interests or other
property (except cash dividends or distributions),
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(iii) dividends or distributions on dissolution or on partial or total
liquidation or in connection with a reduction of capital, capital
surplus or paid-in surplus, and
(iv) other securities issued with respect to or in lieu of the Pledged
Securities (whether upon conversion of any convertible securities
included therein or through stock split, spin-off, split-off,
reclassification, merger, consolidation, sale of assets,
combination of shares or otherwise).
All of the foregoing, together with all new, substituted or additional shares of
capital stock, warrants, options, notes or other rights, or other securities
issued in addition to or in respect of all or any of the Pledged Securities
shall be delivered to the Agent hereunder as required by Section 2 hereof, to be
held as Collateral pursuant to the terms hereof in the same manner as the
Pledged Securities delivered to the Agent on the date hereof. The Debtor shall
have the right to receive and retain all dividends, distributions, principal,
interest and other payments made upon or with respect to the Pledged Securities,
except those which the Agent is specifically authorized to receive as provided
above, and the Agent at the Secured Parties' direction shall take all such
action as may be necessary or appropriate to give effect to such right. From
time to time upon receiving a written request from the Debtor accompanied by a
certificate signed by the Debtor stating that no Event of Default has occurred
and is continuing, the Agent shall deliver to the Debtor suitable assignments
and orders for the payment to the Debtor or upon its order of all dividends,
distributions, principal, interest and other payments to which the Debtor is
entitled as aforesaid, upon or with respect to any Pledged Securities which are
registered or standing in the name of the Agent. Nothing in this Section 8 shall
be deemed to permit any issuance of debt or equity securities, exercise of
rights, distributions, payments or other actions not otherwise expressly
permitted by the Credit Agreement.
(b) Notwithstanding any provision herein to the contrary, if any Event of
Default shall have occurred and be continuing, upon the giving of written notice
referred to in subsection (a) above, then and whether or not any holder of the
Obligations exercises any available option to declare such Obligations due and
payable or seeks or pursues any other relief or remedy available to such holder
under this Agreement or any instrument or agreement evidencing or securing any
Obligations, all dividends, distributions or interest or principal payments, as
the case may be, on the Pledged Securities shall be paid directly to the Agent
on behalf of the Secured Parties, and retained by it as part of the Pledged
Securities, subject to the terms of this Security and Pledge Agreement, and, if
the Agent shall so request in writing, the Debtor agrees to execute and deliver
to the Agent appropriate additional distributions and other orders and documents
to that end.
Section 9. Right to Vote Pledged Securities.
(a) Unless and until an Event of Default has occurred and is continuing and
the Agent shall have notified the Debtor in writing of its election to exercise
the Agent's rights under subsection (b) below, the Debtor shall have the right,
from time to time, to vote and to give consents, ratifications and waivers with
respect to the Pledged Securities and to exercise
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conversion rights with respect to any convertible securities included therein
(provided, however, that no vote shall be cast, and no consent shall be given or
shareholder action taken, which would have the effect of impairing the position
or interest of the Agent and the Secured Parties with respect to the Pledged
Securities or cause an Event of Default or which would authorize or effect any
action then prohibited by the Credit Agreement or any other Loan Document
referred to therein). The Agent shall, upon receiving a written request from any
Debtor accompanied by a certificate signed by its principal financial officer
stating that no Event of Default has occurred and is continuing, deliver to the
Debtor or as specified in such request such proxies, powers of attorney,
consents, ratifications and waivers in respect of any Pledged Securities which
are registered in the Agent's name, and make such arrangements with respect to
the conversion of convertible securities as shall be specified in the Debtor's
request and be in form and substance satisfactory to the Agent.
(b) Notwithstanding any provision herein to the contrary, except as set
forth in Section 17 hereof, if any Event of Default shall have occurred and be
continuing, upon written notice to the Debtor of such election, then and whether
or not any holder of the Obligations exercises any available option to declare
such Obligations due and payable or seeks or pursues any other relief or remedy
available to such holder under this Security and Pledge Agreement or any
instrument or agreement evidencing or securing any Obligations, the Agent, or
its nominee, shall forthwith, without further act on the part of any person,
have the sole and exclusive right (to the extent permitted by law specifically
including the rules, regulations and policies of the FCC) to exercise all voting
and other powers of ownership pertaining to the Pledged Securities and shall
exercise such powers in such manner as the Agent, at the Secured Parties'
direction, shall determine to be necessary, appropriate or advisable. The Debtor
hereby agrees to execute and deliver to the Agent such additional powers,
authorizations, proxies, dividends and such other documents as the Agent may
reasonably request to secure to the Agent the rights, powers and authorities
intended to be conferred upon the Agent by this subsection (b).
Section 10. General Authority.
To the extent permitted under FCC rules, regulations and policies, and
other Federal, state or local authorities, including, without limitation,
Federal and state securities laws, the Debtor hereby appoints the Agent as the
Debtor's lawful attorney, with full power of substitution, in the name of the
Debtor, for the sole use and benefit of the Agent on behalf of the Secured
Parties, but at the Debtor's expense, to exercise, all or any of the following
powers with respect to all or any of the Collateral during the existence and
continuance of any Event of Default:
(i) to demand, xxx for, collect, receive and give acquittance for any
and all monies due or to become due;
(ii) to receive, take, endorse, assign and deliver all checks, notes,
drafts, documents and other negotiable and non-negotiable
instruments and chattel paper taken or received by the Agent;
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(iii) to settle, compromise, initiate, prosecute or defend any action
or proceeding with respect thereto;
(iv) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof or the related goods securing
the Customer Receivables, as fully and effectually as if the
Agent on behalf of the Secured Parties was the absolute owner
thereof;
(v) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
(vi) to discharge any taxes, liens, security interests or other
encumbrances at any time placed thereon; and
(vii) to the extent permitted by law, including without limitation the
rules, regulations and policies of the FCC, state and local
rules, regulations and policies and Federal and state securities
laws, to execute any document or form, in the name of the Debtor,
which may be necessary or desirable in connection with any sale
of the Pledged Securities by the Agent, including without
limitation Form 144 (or any successor form) promulgated by the
Securities and Exchange Commission; provided that the Agent shall
give the Debtor not less than twenty (20) days' prior written
notice of the time and place of any sale or other intended
disposition of any of the Collateral. Such appointment as
attorney is irrevocable and coupled with an interest.
Section 11. Events of Default.
The Debtor shall be in default under this Security and Pledge Agreement
upon the occurrence of any "Event of Default" under and as defined in the Credit
Agreement (hereinafter referred to as an "Event of Default").
Section 12. Remedies Upon Event of Default.
(a) If an Event of Default shall occur and be continuing, the Agent, on
behalf of the Secured Parties, may exercise all the rights and remedies of a
secured party under the Uniform Commercial Code. Without limitation of the
foregoing, unless the Obligations shall have been paid in full in cash (or other
property acceptable to the Secured Parties, in their sole discretion), the
Agent, at the Secured Parties' direction, may, in the Secured Parties' sole
discretion, without further demand, advertisement or notice, except as expressly
provided for in subsection (i) of this Section, apply the cash, if any, then
held by it as Collateral hereunder, for the purposes and in the manner provided
in Section 13 hereof, and if there shall be no such cash or the cash so applied
shall be insufficient to make payment in full of all payments provided in
Section 13 hereof,
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(i) Subject to the provisions of Section 17 hereof and any other
applicable laws, including, without limitation, Federal and state
securities laws, sell the Collateral, or any part or component
thereof, in one or more sales, at a public or private sale,
conducted by any officer or agent of the Agent, at a place of
business of the Agent or elsewhere, for cash, upon credit or
future delivery, and at such price or prices as the Agent shall,
in a commercially reasonable manner, determine, and, to the
extent permitted by law, the Agent or any Secured Party may be
the purchaser of any or all of the Collateral so sold. Upon any
such sale, the Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser (including the Agent or any Secured Party) at any such
sale shall hold the Collateral so sold, absolutely free from any
claim or right of whatsoever kind, including, without limitation,
any equity or right of redemption of any Debtor which the Debtor,
to the extent it may lawfully do so, hereby specifically waives.
The Agent shall give the Debtor at least twenty (20) days'
written notice of any such public or private sale. The Agent
shall not be obligated to make any sale pursuant to any such
notice. The Agent may, without notice or publication, adjourn any
public or private sale from time to time by announcement at the
time and place fixed for such sale, or any adjournment thereof,
and any such sale may be made at any time or place to which the
same may be so adjourned without further notice or publication.
In case of any sale of all or any part of the Collateral for
credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the
purchaser thereof, but the Agent shall not incur any liability in
case of the failure of such purchaser to pay for the Collateral
so sold, and in case of any such failure, such Collateral may
again be sold under and pursuant to the provisions hereof; or
(ii) Proceed by a suit or suits at law or in equity to foreclose upon
this Security and Pledge Agreement and, subject to the provisions
of Section 17 hereof and applicable laws, including, without
limitation, Federal and state securities laws, sell the
Collateral, or any portion or component thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
(b) If at any time when the Agent, at the Secured Parties' direction, shall
determine to exercise its right to sell all or any part of the Pledged
Securities pursuant to subsection (a)(i) of this Section, such Pledged
Securities or the part thereof to be sold shall not, for any reason whatsoever,
be effectively registered under the Securities Act of 1933, as from time to time
in effect (the "Securities Act") or the securities laws of any state, the Agent,
at the Secured Parties'
11
direction, in their sole and absolute discretion, is hereby expressly authorized
to sell such Pledged Securities or such part thereof by private sale in such
manner and under such circumstances as the Agent and the Secured Parties may
deem commercially reasonable in order that such sale may legally be effected
without such registration. The Agent and the Secured Parties shall sell all or
any part of the Pledged Securities at a price which they deem commercially
reasonable under the circumstances.
(c) The Agent as attorney-in-fact pursuant to Section 10 hereof may, in
the name and stead of the Debtor, make and execute all conveyances, assignments
and transfers of any Collateral sold in accordance with this Agreement. The
Debtor shall, if so reasonably requested by the Agent, ratify and confirm any
sale or sales by executing and delivering to the Agent, or to such purchaser or
purchasers, all such instruments as may, in the reasonable judgment of the
Agent, be advisable for such purpose.
(d) The receipt by the Agent of the purchase money paid at any such
sale made by it shall be a sufficient discharge therefor to any purchaser (other
than the Agent) of the Collateral, or any portion thereof, sold as aforesaid;
and no such purchaser (or his or its representatives or assigns) (other than the
Agent), after paying such purchase money and receiving such receipt, shall be
bound to see to the application of such purchase money or any part thereof or in
any manner whatsoever be answerable for any loss, misapplication or
nonapplication of any such purchase money, or any part thereof, or be bound to
inquire as to the authorization, necessity, expediency or regularity of any such
sale.
Section 13. Application of Collateral and Proceeds.
The proceeds of any sale of, or other realization upon, all or any part
of the Collateral shall be applied in the following order of priority: (a)
first, to pay the expenses of such sale or other realization, including
reasonable attorneys' fees, and all expenses, liabilities and advances
reasonably incurred or made by the Agent or any of the Secured Parties in
connection therewith, and any other unreimbursed expenses for which the Agent or
any of the Secured Parties are to be reimbursed pursuant to Section 14; (b)
second, to the payment of the Obligations in such order of priority as the
Secured Parties, in their sole discretion, shall determine; and (c) finally, to
pay to the Debtor, or its successors and assigns, or as a court of competent
jurisdiction may direct, any surplus then remaining from such proceeds.
Section 14. Expenses; Agent's Lien.
The Debtor will forthwith upon demand pay to the Agent: (a) the amount
the Agent or any of the Secured Parties have paid (i) in respect of taxes
arising by reason of the Security Interests (including, without limitation, any
applicable transfer, intangible, recordation and personal property taxes but
excluding taxes in respect of the Agent's and the Secured Parties' income and
profits) or (ii) in order to free any of the Collateral from any lien thereon,
except as permitted under the Credit Agreement, and (b) the amount of any and
all reasonable costs and expenses (including, without limitation, the reasonable
fees and disbursements of its counsel and of any agents not regularly in its
employ) which the Agent or any of the Secured Parties may
12
incur in connection with (i) the preparation and interpretation of this Security
and Pledge Agreement and any amendments hereto or modifications hereof, (ii) the
collection, sale or other disposition of any of the Collateral, (iii) the
exercise by the Agent or any of the Secured Parties of any of the powers
conferred upon any of them hereunder, (iv) any Event of Default on any the
Debtor's part hereunder or (v) any Reorganization.
Section 15. Survival of Obligations; Termination of Security Interests;
Release of Collateral.
This Agreement and the warranties, representations, agreements and
covenants contained herein and in any certificates or instruments delivered
pursuant hereto shall survive the making of the Loans (as defined in the Credit
Agreement) and the execution and delivery of the Notes, regardless of any
investigation made by the Agent or the Secured Parties or any person on behalf
of the Agent or the Secured Parties, and shall continue for so long as any of
the Obligations shall remain outstanding or any of the Secured Parties shall
have any obligation to advance funds to the Borrower under the Loan Documents.
Upon the repayment and performance in full of all the Obligations and the
expiration or termination of any obligations of any of the Secured Parties to
advance funds to the Borrower under the Loan Documents, the Security Interests
shall terminate and all rights to the Collateral shall revert to the Debtor
except that the Security Interest shall be reinstated with respect to any
payment made or received by the Secured Parties in respect of the Obligations
that is subsequently voided as a fraudulent conveyance, preference or otherwise.
Upon such termination of the Security Interests or release of Collateral, the
Agent will, at the Debtor's expense to the extent permitted by law, promptly
execute and deliver to the Debtor such documents as reasonably necessary or as
the Debtor shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
Section 16. Notices.
All notices, requests, demands and other communications provided for
hereunder shall be in writing in the manner set forth in the Credit Agreement.
Section 17. FCC and Municipal Approvals.
The Agent's and the Secured Parties' rights hereunder are subject to all
applicable rules and regulations of the FCC and all municipal ordinances and
state law by which any License is created or granted. Notwithstanding anything
to the contrary contained herein, neither the Agent nor any of the Secured
Parties will take any action pursuant to this Agreement which would constitute
or result in any assignment of any FCC license or any transfer of control of the
Debtor or any FCC license, whether de jure or de facto, if such assignment of
license or transfer of control would require under then existing law (including
the written rules and regulations promulgated by the FCC), the prior approval of
the FCC, without first obtaining such approval. the Debtor agrees to take any
action, at the Debtor's sole cost and expense, which the Agent may reasonably
request in order to obtain and enjoy the full rights and benefits granted to the
Agent and the Secured Parties by this Agreement and each other agreement,
instrument and document delivered to the Agent and the Secured Parties in
connection herewith or in any document
13
evidencing or securing the Collateral, including specifically, at the Debtor's
own cost and expense, the use of its best efforts to assist in obtaining
approval of the FCC or any state or municipality or other governmental authority
for any action or transaction contemplated by, and consistent with the terms of,
this Agreement which is then required by law, and specifically, without
limitation, upon request after an Event of Default, to prepare, sign and file
(or cause to be filed) with the FCC or any state or municipality or other
governmental authority the assignor's or transferor's portion of any application
or applications for consent to (a) the assignment of any FCC Licenses or
transfer of control thereof, (b) any sale or sales of property constituting the
Collateral by any of the Secured Parties or the Agent on their behalf, or (c)
any assumption by any of the Secured Parties or the Agent on their behalf of
voting rights or management rights in property constituting the Collateral
effected in accordance with the terms of this Agreement. Furthermore,
notwithstanding anything to the contrary contained in this Agreement, the Agent
and the Secured Parties agree that (aa) voting rights in the Pledged Securities
shall remain with the Debtor even upon an Event of Default unless all required
prior approvals of the FCC to the transfer of such voting rights shall have been
obtained, (bb) upon an Event of Default, and only if so permitted by this
Agreement, the Agent or the Secured Parties may dispose of the Pledged
Securities, but only by private or public sale or other means acceptable to the
FCC, and (cc) prior to the exercise of stockholder or other equityholder rights
by a purchaser at such sale, all necessary FCC consents with respect to such
sale shall be timely obtained.
Section 18. Right of Set-Off.
In furtherance and not in limitation of any provisions herein contained,
the Debtor hereby agrees that any and all deposits or other sums at any time
claimed by or due from the Agent or any of the Secured Parties to the Debtor
shall at all times constitute security for the Obligations and, upon the
occurrence of an Event of Default, the Agent and each of the Secured Parties may
exercise any right of set-off against such deposits or other sums as may accrue
or exist under applicable law, whether or not the Obligations are otherwise
fully secured, with prompt notice thereof.
Section 19. Miscellaneous.
(a) No failure on the part of the Agent or the Secured Parties to exercise,
and no delay in exercising, and no course of dealing with respect to, any right,
power or remedy under this Security and Pledge Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise by the Agent or any of
the Secured Parties of any right, power or remedy under this Security and Pledge
Agreement preclude any other right, power or remedy. The remedies in this
Security and Pledge Agreement are cumulative and are not exclusive of any other
remedies provided by law. Neither this Security and Pledge Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
(b) THIS SECURITY AND PLEDGE AGREEMENT SHALL BE DEEMED EXECUTED AS A SEALED
INSTRUMENT AND SHALL BE CONSTRUED IN
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ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(c) This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
Agreement.
Section 20. Payment of Expenses.
In the event this Agreement shall be enforced by suit or otherwise, the
Debtor will reimburse the Agent and the holder or holders of the Obligations,
upon demand, for all reasonable expenses incurred in connection therewith,
including, without limitation, reasonable attorneys' fees (including without
limitation all such costs, charges and expenses incurred by the Agent or any of
the Secured Parties in connection with any Reorganization).
Section 21. Severability.
If any provision hereof is invalid or unenforceable in any jurisdiction,
the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Agent.
Section 22. Inconsistencies.
Any inconsistencies between the provisions of this Agreement and the Credit
Agreement shall be governed by reference to the provisions of the Credit
Agreement.
Section 23. Consent to Jurisdiction.
THE DEBTOR, TO THE EXTENT THAT IT MAY LAWFULLY DO SO, HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AS WELL AS TO THE
JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR
THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF ITS
OBLIGATIONS ARISING HEREUNDER OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
HEREBY, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE,
INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH
COURTS. IN ADDITION, TO THE EXTENT THAT IT MAY LAWFULLY DO SO, THE DEBTOR
CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL SERVICE OR U.S. CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE DEBTOR AT THE
ADDRESS PROVIDED HEREIN. TO THE EXTENT THE DEBTOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH
15
RESPECT TO ITSELF OR ITS PROPERTY, THE DEBTOR HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
Section 24. Waiver of Jury Trial.
THE DEBTOR HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY
ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OTHER AGREEMENTS
EXECUTED IN CONNECTION HEREWITH.
Section 25. Agency.
The parties hereto, and any person not a party hereto for whose benefit the
Agent holds the Collateral hereunder, acknowledge that the Agent has been
requested to act as agent for the Secured Parties hereunder pursuant to the
terms of the Credit Agreement, and that the Agent, to the extent it may so act
hereunder, shall exercise all of the rights and remedies hereunder on behalf of,
and as agent for the benefit of, the Secured Parties and each of them. Without
limiting the generality of the foregoing, the Agent is authorized to execute and
deliver, from time to time, on behalf of the Secured Parties, any and all
amendments and modifications to this Agreement and any and all waivers to any
conditions herein or any Event of Default hereunder.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
by their duly authorized representatives all as of the day and year first above
written.
DEBTOR:
ACME SUBSIDIARY HOLDINGS III, LLC
By:/s/Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx, President
AGENT:
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
By:/s/Xxxxxxx Xxxxx
---------------------------------
Xxxxxxx Xxxxx, Executive Director,
CIBC Xxxxxxxxxxx Corp., as agent
EXHIBIT A
SECURITIES
1 Membership Unit in each of:
ACME Television of Utah, L.L.C.
ACME Television Licenses of Utah, L.L.C.
ACME Television of New Mexico, L.L.C.
ACME Television of Licenses of New Mexico, L.L.C.
EXHIBIT B
ACME SUBSIDIARY HOLDINGS III, LLC
ADDITIONAL REPRESENTATIONS AND WARRANTIES
1. The exact name of the Debtor is ACME SUBSIDIARY HOLDINGS III, LLC
2. The Debtor does not do business under any other name.
3. The Debtor is not required to qualify to transact business in any
jurisdiction other than Delaware.
4. The Debtor's chief executive office and principal office is:
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxx, XX 00000
5. All of the Debtor's personal property or fixtures are located at the
following addresses: 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxx, XX 00000
