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Exhibit 4.8
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as of
July 1, 1997 among NATIONAL EQUIPMENT SERVICES, INC., a Delaware corporation
(the "Company"), the subsidiary borrowers listed on the signature pages
attached hereto and such other subsidiaries of the Company as may from time to
time become borrowers as provided under the Credit Agreement described below
(the "Subsidiary Borrowers") (hereinafter, the Company and the Subsidiary
Borrowers collectively referred to as the "Borrowers" or individually referred
to as a "Borrower") and FIRST UNION COMMERCIAL CORPORATION, in its capacity as
agent (in such capacity, the "Agent") for the financial institutions from time
to time party to the Credit Agreement referred to hereinbelow (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "Credit Agreement"), among the Borrowers, the Lenders and the Agent, the
Lenders have agreed to make Loans and issue Letters of Credit upon the terms
and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Borrowers shall
have executed and delivered this Security Agreement to the Agent for the
ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement,
and the following terms which are defined in the Uniform Commercial Code
in effect in the State of New York on the date hereof (the "UCC"), are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Farm Products, Fixtures, General Intangibles,
Instruments, Inventory and Proceeds. For purposes of this Security
Agreement, the term "Lender" shall include any affiliate of a Lender which
has entered into an Interest Rate Protection Agreement with a Borrower in
respect of the Obligations of the Borrowers under the Credit Agreement.
a. In addition, the following terms shall have the
following meanings:
"Contracts": (a) the Closing Date Acquisition Documents and the
Acquisition Documents, (b) all Equipment Leases and (c) all other
contracts and agreements to which a Borrower is a party, as each may be
amended, supplemented or otherwise modified from time to time, including,
without limitation, (i) all rights of a Borrower to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights
of a
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Borrower to damages arising out of or for breach or default in respect
thereof and (iii) all rights of a Borrower to exercise all remedies
thereunder.
"Copyright Licenses": any written agreement, naming any Borrower as
licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 1(b) hereto.
"Copyrights": (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations
and recordings thereof, and all applications in connection therewith,
including, without limitation, registrations, recordings and applications
in the United States Copyright office including, without limitation, any
thereof referred to in Schedule 1(b) hereto, and (b) all renewals thereof
including, without limitation, any thereof referred to in Schedule 1(b)
hereto.
"Equipment Leases": all leases of Equipment entered into by a
Borrower acting as lessor, as each may be amended, supplemented or
otherwise modified from time to time.
"Insurance Policies": all insurance policies insuring the Borrowers
and their assets and any life insurance policies securing the lives of
officers of the Borrowers which name one or more Borrowers as beneficiary
thereof.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to a Borrower of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 1(b) hereto, and (b) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 1(b)
hereto.
"Secured Obligations": (a) all of the Borrowers' obligations under
the Credit Agreement and the other Credit Documents (hereinafter, the
"Obligations"), (b) all expenses and charges, legal and otherwise,
reasonably incurred by the Agent in collecting or enforcing any
Obligations or in realizing on or protecting any security therefor,
including without limitation the security afforded hereunder and (c) all,
liabilities and obligations arising under Interest Rate Protection
Agreements between a Borrower and a Lender in respect of the Obligations.
"Trademark License": any agreement, written or oral, providing for
the grant by or to an Borrower of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 1(b)
hereto.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
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acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
Schedule 1(b) hereto, and (b) all renewals thereof.
"UCC": as defined in Section 1 hereof.
"Work": any work which is subject to copyright protection pursuant
to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, each Borrower hereby
grants to the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of such Borrower in and to the following, whether now owned or
existing or owned, acquired, or arising hereafter (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Deposit Accounts, including, without limitation, all Lockbox
Accounts, the FUCC Account and any replacement or successor accounts
relating thereto;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles, including, without limitation,
all rights under the Contracts;
(j) all Instruments;
(k) all Inventory;
(l) all Patents;
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(m) all Patent Licenses;
(n) all Trademarks;
(o) all Trademark Licenses;
(p) all Insurance Policies;
(q) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and related
data processing software (owned by such Borrower or in which it
has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or realization
thereupon;
(r) to the extent not otherwise included, all other
personal property of such Borrower; and
(s) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
The Borrowers and the Agent, on behalf of the Lenders, hereby acknowledge
and agree that the security interest created hereby in the Collateral (i)
constitutes continuing collateral security for all of the Secured Obligations,
whether now existing or hereafter arising and (ii) is not to be construed as an
assignment in the nature of a sale of any Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks or Trademark Licenses.
3. Representations and Warranties. Each Borrower hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Secured Obligations remain outstanding or any Credit Document is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each Borrower's chief
executive office and chief place of business is (and for the prior four
months have been) located at the locations set forth on Schedule 3(a)
hereto, and each Borrower keeps its books and records at such locations.
(b) Location of Collateral, Etc. The location of all Collateral
owned by each Borrower (excluding Rental Equipment currently under lease)
is as shown on Schedule 3(b)(i) hereto.
(c) Ownership. Each Borrower is the legal and beneficial owner of
its Collateral and has the right to pledge, sell, assign or transfer the
same. Each Borrower's legal name is as shown in this Security Agreement
and no Borrower has in the past four months changed its name, been party
to a merger, consolidation or other change in structure or used any trade
name, d/b/a or other fictitious business name, except as set forth in
Schedule 3(c) attached hereto.
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(d) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Agent, for the benefit of the
Lenders, in the Collateral of such Borrower and, when properly perfected
by filing, shall constitute a valid perfected security interest in such
Collateral, to the extent such security can be perfected by filing under
the UCC, free and clear of all Liens, except for Permitted Liens.
(e) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Borrowers and the papers and
documents relating thereto are genuine and in all material respects what
they purport to be, (ii) each Account arises out of (A) a bona fide sale
of goods sold and delivered by such Borrower (or is in the process of
being delivered) or (B) services theretofore actually rendered by such
Borrower to, the account debtor named therein and (iii) no Account of a
Borrower is evidenced by any Instrument or Chattel Paper unless such
Instrument or Chattel Paper has been theretofore endorsed over and
delivered to the Agent.
(g) Copyrights, Patents and Trademarks.
(i) Schedule 1(b) hereto includes all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses
owned by the Borrowers in their own names as of the date hereof.
(ii) To the best of each Borrower's knowledge, each Copyright,
Patent and Trademark of such Borrower is valid, subsisting,
unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 1(b) hereto, none of such
Copyrights, Patents and Trademarks is the subject of any licensing or
franchise agreement.
(iv) No holding, decision or judgment has been rendered by any
court, tribunal, agency or other governmental body or authority which
would limit, cancel or question the validity of any Copyright, Patent
or Trademark.
(v) No action or proceeding is pending seeking to limit, cancel
or question the validity of any Copyright, Patent or Trademark, or
which, if adversely determined, would have a material adverse effect
on the value of such Copyright, Patent or Trademark.
(vi) All applications pertaining to the Copyrights, Patents and
Trademarks of each Borrower have been duly and properly filed, and
all registrations or letters pertaining to such Copyrights, Patents
and Trademarks have been duly
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and properly filed and issued, and all of such Copyrights, Patents
and Trademarks are valid and enforceable.
(vii) No Borrower has made any assignment or agreement in
conflict with the security interest in the Copyrights, Patents or
Trademarks of such Borrower hereunder.
(h) Inventory. No Inventory is held by a Borrower pursuant to
consignment, sale or return, sale on approval or similar arrangement.
4. Covenants. Each Borrower (except for such covenants which specifically
pertain to the Company only) covenants that, so long as any of the Secured
Obligations remain outstanding or any Credit Document is in effect or any
Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Borrower shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of the Collateral
or any interest therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good order,
condition and repair and not use the Collateral in violation of the
provisions of this Security Agreement or any other agreement relating to
the Collateral or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance which violation (in the
case of any such agreement, statute, law, bylaw, rule, regulation or
ordinance) could be reasonably expected to materially and adversely effect
the value of such Collateral or its utility to such Borrower in the
conduct of such Borrower's business in the ordinary course.
(c) Instruments/Chattel Paper. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, promptly deliver such Instrument or Chattel
Paper to the Agent, duly endorsed in a manner satisfactory to the Agent,
to be held as Collateral pursuant to this Security Agreement; provided,
however, that with respect to instruments or chattel paper where the
obligor is not a Borrower or a Subsidiary of a Borrower, such instruments
or chattel paper shall not be required to be delivered to the Agent until
such time as the Agent shall have requested delivery of the same or until
an Event of Default shall have occurred.
(d) Change in Location. Not, without providing 30 days prior written
notice to the Agent and without filing such amendments to any previously
filed financing statements as the Agent may require, (a) change the
location of its chief executive office and chief place of business (as
well as its books and records) from the locations set forth on Schedule
3(a) hereto, (b) change the location of its Collateral from the locations
set forth for such Borrower on Schedule 3(b)(i) hereto, or (c) change its
name, be party to a merger, consolidation or other change in structure or
use any trade name, d/b/a or other fictitious business name other than as
permitted under the Credit Agreement.
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(e) Inspection. Upon reasonable notice, at such reasonable times and as
often as may be reasonably desired, allow the Agent, any Lender or their
respective representatives free access to and right of inspection of the
tangible Collateral.
(f) Perfection of Security Interest. Execute and deliver to the
Agent such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing
documents, as the Agent may reasonably request) and do all such other
things as the Agent may reasonably deem necessary or appropriate (i) to
assure to the Agent its security interests hereunder, including (A) such
financing statements (including renewal statements) or amendments thereof
or supplements thereto or other instruments as the Agent may from time to
time reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC, (B) with regard to
Copyrights, a Notice of Grant of Security Interest in Copyrights in the
form of Schedule 4(f)(i), (C) with regard to Patents, a Notice of Grant of
Security Interest in Patents for filing with the United States Patent and
Trademark Office in the form of Schedule 4(f)(ii) attached hereto and (D)
with regard to Trademarks, a Notice of Grant of Security Interest in
Trademarks for filing with the United States Patent and Trademark Office
in the form of Schedule 4(f)(iii) attached hereto, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and assure
the Agent of its rights and interests hereunder. To that end, each
Borrower agrees that the Agent may file one or more financing statements
disclosing the Agent's security interest in any or all of the Collateral
of such Borrower without, to the extent permitted by law, such Borrower's
signature thereon, and further each Borrower also hereby irrevocably
makes, constitutes and appoints the Agent, its nominee or any other person
whom the Agent may designate, as such Borrower's attorney in fact with
full power and for the limited purpose to sign in the name of such
Borrower any such financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Agent's reasonable discretion would be necessary,
appropriate or convenient in order to perfect and maintain perfection of
the security interests granted hereunder, such power, being coupled with
an interest, being and remaining irrevocable so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any
other Credit Document or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have terminated. Each
Borrower hereby agrees that a carbon, photographic or other reproduction
of this Security Agreement or any such financing statement is sufficient
for filing as a financing statement by the Agent without notice thereof to
such Borrower wherever the Agent may in its sole discretion desire to file
the same. In the event for any reason the law of any jurisdiction other
than North Carolina becomes or is applicable to the Collateral of any
Borrower or any part thereof, or to any of the Secured Obligations, such
Borrower agrees to execute and deliver all such instruments and to do all
such other things as the Agent in its sole discretion reasonably deems
necessary or appropriate to preserve, protect and enforce the security
interests of the Agent under the law of such other jurisdiction (and, if a
Borrower shall fail to do so promptly upon the request of the Agent, then
the Agent may execute any and all such requested documents on behalf of
such Borrower pursuant to the power of attorney granted hereinabove). If
any Collateral is in the possession or control of a Borrower's agents and
the Agent so requests, such Borrower agrees to
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notify such agents in writing of the Agent's security interest therein
and, upon the Agent's request, instruct them to hold all such Collateral
for the Lenders' account and subject to the Agent's further instructions.
Each Borrower agrees to xxxx its books and records to reflect the security
interest of the Agent in the Collateral.
(g) Covenants Relating to Accounts.
(i) Upon the occurrence of a Cash Management Event, comply with
all provisions of the Credit Agreement relating to the establishment
and maintenance of the Lockboxes.
(ii) Comply with all reporting requirements set forth in the
Credit Agreement with respect to Accounts.
(iii) Unless and until an Event of Default occurs and is
continuing, each Borrower may settle and adjust disputes and claims
with its customers and account debtors and grant discounts, credits
and allowances in the ordinary course of its business as presently
conducted and otherwise for amounts and on terms which such Borrower
in good faith considers advisable. Upon the occurrence of any Event
of Default and during the continuation thereof, if so instructed by
the Agent, such Borrower shall settle and adjust disputes and claims,
at no expense to the Agent, but no discount, credit or allowance
other than on normal trade terms in the ordinary course of business
shall be granted to any customer or account debtor without the
Agent's consent. The Agent may (but shall not be required to), at
all times upon the occurrence of any Event of Default and during the
continuance thereof, settle or adjust disputes and claims directly
with customers or account debtors for amounts and upon terms which
the Agent considers advisable.
(h) Covenants Relating to Inventory.
(i) Maintain, keep and preserve the Inventory in good, rentable
condition at its own cost and expense.
(ii) Comply with all reporting requirements set forth in the
Credit Agreement with respect to Inventory.
(iii) If any of the Inventory is at any time evidenced by a
document of title, (A) promptly cause each such document of title to
name on the face thereof the Agent, for the Lenders, as lienholder of
such title and (B) promptly upon request by the Agent, deliver such
document of title to the Agent.
(i) Covenants Relating to Copyrights.
(i) Employ each Copyright with such notice of copyright as may
be required by law to secure copyright protection.
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(ii) Not do any act or knowingly omit to do any act whereby any
Copyright may become invalidated and (A) not do any act, or knowingly
omit to do any act, whereby any Copyright may become injected into
the public domain; (B) notify the Agent immediately if it knows, or
has reason to know, that any Copyright may become injected into the
public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any court or tribunal in the United
States or any other country) regarding a Borrower's ownership of any
such Copyright or its validity; (C) take all necessary steps as it
shall deem appropriate under the circumstances, to maintain and
pursue each application (and to obtain the relevant registration) and
to maintain each registration of each Copyright owned by a Borrower
including, without limitation, filing of applications for renewal
where necessary; and (D) promptly notify the Agent of any material
infringement of any Copyright of a Borrower of which it becomes aware
and take such actions as it shall reasonably deem appropriate under
the circumstances to protect such Copyright, including, where
appropriate, the bringing of suit for infringement, seeking
injunctive relief and seeking to recover any and all damages for such
infringement.
(iii) Not make any assignment or agreement in conflict with the
security interest in the Copyrights of each Borrower hereunder,
except for licenses thereof which such Borrower has reasonably
determined to be advisable or advantageous and which comply with the
provisions of Section 9.16 of the Credit Agreement.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each Trademark on each and every
trademark class of goods applicable to its current line as reflected
in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past the quality of
products and services offered under such Trademark, (C) employ such
Trademark with the appropriate notice of registration, (D) not adopt
or use any xxxx which is confusingly similar or a colorable imitation
of such Trademark unless the Agent, for the ratable benefit of the
Lenders, shall obtain a perfected security interest in such xxxx
pursuant to this Security Agreement, and (E) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any Trademark may become invalidated.
(ii) Not do any act, or omit to do any act, whereby any Patent
may become abandoned or dedicated.
(iii) Notify the Agent and the Lenders immediately if it knows,
or has reason to know, that any application or registration relating
to any Patent or
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Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any
court or tribunal in any country) regarding a Borrower's ownership of
any Patent or Trademark or its right to register the same or to keep
and maintain the same.
(iv) Whenever a Borrower, either by itself or through an agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, a Borrower shall report
such filing to the Agent and the Lenders within five Business Days
after the last day of the fiscal quarter in which such filing occurs.
Upon request of the Agent, a Borrower shall execute and deliver any
and all agreements, instruments, documents and papers as the Agent
may request to evidence the Agent's and the Lenders' security
interest in any Patent or Trademark and the goodwill and general
intangibles of a Borrower relating thereto or represented thereby.
(v) Take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and
Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration) and to
maintain each registration of the Patents and Trademarks, including,
without limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(vi) Promptly notify the Agent and the Lenders after it learns
that any Patent or Trademark included in the Collateral is infringed,
misappropriated or diluted by a third party and promptly xxx for
infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other
actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in conflict with the
security interest in the Patents or Trademarks of each Borrower
hereunder, except for licenses thereof which such Borrower has
reasonably determined to be advisable or advantageous and which
comply with the provisions of Section 9.16 of the Credit Agreement.
(k) New Patents, Copyrights and Trademarks. Promptly provide the
Agent with (i) a listing of all applications, if any, for new Copyrights,
Patents or Trademarks (together with a listing of the issuance of
registrations or letters on present applications), which new applications
and issued registrations or letters shall be subject to the terms and
conditions hereunder, and (ii) (A) with respect to Copyrights, a duly
executed Notice of Security Interest in Copyrights, (B) with respect to
Patents, a duly executed Notice of Security Interest in Patents, (C) with
respect to Trademarks, a duly executed Notice of Security Interest in
Trademarks or (D) such other duly
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executed documents as the Agent may request in a form acceptable to
counsel for the Agent and suitable for recording to evidence the security
interest in the Copyright, Patent or Trademark which is the subject of
such new application.
(l) Insurance. Have and maintain at all times with respect to the
Collateral the same types and amounts of insurance as the Borrowers are
required to maintain pursuant to the Credit Agreement. All insurance
proceeds shall be subject to the Lien of the Agent hereunder; provided
that any such insurance proceeds may be retained by the Borrowers to the
extent permitted under the Credit Agreement.
(m) Equipment.
(i) At all times, maintain its Equipment in good working order
(ordinary wear and tear and damages from casualty and condemnation
excepted) and in compliance with all applicable safety standards.
(ii) If any of the Equipment is at any time evidenced by a
document of title, (A) promptly cause each such document of title to
name on the face thereof the Agent, for the Lenders, as lienholder of
such title and (B) promptly upon request by the Agent, deliver such
document of title to the Agent.
(n) Bank Accounts. At all times upon and during the occurrence of a
Cash Management Event, maintain the Lockbox Accounts, the FUCC Account and
any replacement or successor accounts relating thereto in accordance with
the terms of the Lockbox Agreements and the Credit Agreement, as
applicable, and cause all amounts received in the Lockboxes relating
thereto to be deposited into the applicable Lockbox Account or the FUCC
Account, as the case may be, and to be applied as set forth in the
applicable Lockbox Account Agreement, the Credit Agreement and this
Security Agreement, as applicable. All amounts on deposit in the Lockbox
Accounts, the FUCC Account and any replacement or successor accounts
relating thereto shall be subject to the Lien of the Agent hereunder.
5. Special Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of the
Borrowers shall remain liable under each of the Accounts to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Agent nor any Lender shall have
any obligation or liability under any Account (or any agreement giving
rise thereto) by reason of or arising out of this Security Agreement or
the receipt by the Agent or any Lender of any payment relating to such
Account pursuant hereto, nor shall the Agent or any Lender be obligated in
any manner to perform any of the obligations of a Borrower under or
pursuant to any Account (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance by
any party under any Account (or any agreement giving rise thereto), to
present
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or file any claim, to take any action to enforce any performance or to
collect 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) At any time after the occurrence and during the continuation of
an Event of Default, the Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and the
Borrowers shall furnish all such assistance and information as the Agent
may require in connection with such test verifications. At any time and
from time to time, upon the Agent's request and at the expense of the
Borrowers, the Borrowers shall cause independent public accountants or
others satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for,
the Accounts. The Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
6. Special Provisions Regarding Inventory.
(a) Unless and until an Event of Default occurs and is continuing and
the Agent instructs such Borrower otherwise, each Borrower may, without
further consent or approval of the Agent, use, consume, sell, lease and
exchange the Inventory in the ordinary course of its business as presently
conducted. In the case of a sale or exchange of Inventory permitted by
the Credit Agreement, the security interest created hereby in the
Inventory so sold or exchanged (but not in any proceeds arising from such
sale or exchange) shall cease immediately without any further action on
the part of the Agent.
(b) Upon the Lenders' making any Loan pursuant to the Credit
Agreement or the Issuing Bank issuing any Letter of Credit pursuant to the
Credit Agreement, each Borrower shall be deemed to have warranted that all
warranties of such Borrower set forth in this Security Agreement with
respect to its Inventory are true and correct in all material respects
with respect to such Inventory, including without limitation that such
Inventory is located at a location permitted by Section 3(b) or 4(d)
hereof.
7. Advances by Lenders. On failure of any Borrower to perform any of the
covenants and agreements contained herein, the Agent may, in its reasonable
discretion, but shall not be obligated to, perform the same and in so doing may
expend such sums as the Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums,
the payment of any taxes, a payment to obtain a release of a Lien or potential
Lien (other than a Permitted Lien), reasonable expenditures made in defending
against any adverse claim (other than in respect of a Permitted Lien) and all
other reasonable expenditures which the Agent or the Lenders may make for the
protection of the security hereof or which may be compelled to make by
operation of law. All such sums and amounts so expended shall be repayable by
the Borrowers on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 4.2 of the Credit Agreement. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of any Borrower,
and no such advance or expenditure therefor, shall
13
relieve the Borrowers of any breach under the terms of this Security Agreement
or the other Credit Documents. The Lenders may make any payment authorized
pursuant to this Section 7 in accordance with any xxxx, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax
lien, title or claim except to the extent such payment is being contested in
good faith by a Borrower in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
8. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an
"Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during continuation thereof, the Lenders shall have, in addition to the
rights and remedies provided herein, in the Credit Documents or by law
(including, but not limited to, the rights and remedies set forth in the
Uniform Commercial Code of the jurisdiction applicable to the affected
Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the
rights and remedies are asserted and regardless of whether the UCC applies
to the affected Collateral), and further, the Agent may, with or without
judicial process or the aid and assistance of others, (i) enter on any
premises on which any of the Collateral may be located and, without
resistance or interference by the Borrowers, take possession of the
Collateral and remove from any premises where same may be located any and
all documents, instruments, files and records (including the copying of
any computer records), and any receptacles or cabinets containing same,
relating to the Collateral, or the Agent may use (at the expense of the
Borrowers) such of the supplies or space of any Borrower at such
Borrower's place of business or otherwise, as may be necessary to properly
administer and control the Collateral or the handling of collections and
realizations thereon, (ii) dispose of any Collateral on any such
premises, (iii) maintain such possession on any Borrower's premises (each
Borrower hereby agreeing to lease warehouses and storage facilities to the
Agent or its designee if the Agent so requests), (iv) require the
Borrowers to assemble and make available to the Agent at the expense of
the Borrowers any Collateral at any place and time designated by the Agent
which is reasonably convenient to both parties, (v) remove any Collateral
from any such premises for the purpose of effecting sale or other
disposition thereof, and/or (vi) without demand and without advertisement,
notice, hearing or process of law, all of which each of the Borrowers
hereby waives to the fullest extent permitted by law, at any place and
time or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more parcels,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). If the Agent exercises its right to take
possession of the Collateral, each Borrower shall also at its expense
perform any and all other steps reasonably requested by the Agent to
preserve and protect the security interest
14
hereby granted in the Collateral, such as placing and maintaining signs
indicating the security interest of the Agent, appointing overseers for
the Collateral and maintaining inventory records. The Agent shall be
entitled to use all Proprietary Rights and computer software programs and
data bases used by any Borrower in connection with their respective
businesses or in connection with the Collateral. In addition to all other
sums due the Agent and the Lenders with respect to the Secured
Obligations, the Borrowers shall pay the Agent and each of the Lenders all
reasonable documented costs and expenses incurred by the Agent or any such
Lender, including, but not limited to, reasonable attorneys' fees and
court costs, in obtaining or liquidating the Collateral, in enforcing
payment of the Secured Obligations, or in the prosecution or defense of
any action or proceeding by or against the Agent or any Lender or the
Borrowers concerning any matter arising out of or connected with this
Security Agreement or the Collateral or the Secured Obligations, including
without limitation any of the foregoing arising in, arising under or
related to a case under the United States Bankruptcy Code. To the extent
the rights of notice cannot be legally waived hereunder, each Borrower
agrees that any requirement of reasonable notice shall be met if such
notice is personally served on or mailed, postage prepaid, to such
Borrower in accordance with the notice provisions of Section 14.5 of the
Credit Agreement at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Agent and the Lenders
shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. To the extent
permitted by law, any Lender may be a purchaser at any such sale. To the
extent permitted by law, each of the Borrowers hereby waives all of its
rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Agent and the Lenders may postpone or
cause the postponement of the sale of all or any portion of the Collateral
by announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed, or the Agent and the
Lenders may further postpone such sale by announcement made at such time
and place. After the occurrence and during the continuance of an Event of
Default, each Borrower agrees that all returned, reclaimed or repossessed
merchandise or goods shall be set aside by such Borrower, marked with the
Lenders' name and held by such Borrower for the Lenders' account as owner
and assignee.
(b) Remedies relating to Accounts. Upon the occurrence of an Event
of Default and during the continuation thereof, whether or not the Agent
has exercised any or all of its rights and remedies hereunder, the Agent
or its designee may notify any Borrower's customers and account debtors
that the Accounts of such Borrower have been assigned to the Agent or of
the Agent's security interest therein, and may (i) bring suit, in the name
of any Borrower or the Lenders, and generally shall have all other rights
respecting said Accounts, including without limitation the right to
accelerate or extend the time of payment, settle, compromise, release in
whole or in part any amounts owing on any Accounts and issue credits in
the name of any Borrower or the Lenders, (ii) in the Agent's discretion,
file any claim or take any other action or proceeding to protect and
realize upon the security interest of the Lenders in the Accounts and
(iii) sell, assign and deliver the Accounts and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or
private sale, which sale shall be conducted in a commercially reasonable
manner, for
cash, on credit or otherwise, at Agent's sole option and discretion, and
any Lender may bid or become a
15
purchaser at any such sale, free from any right of redemption, which right
is hereby expressly waived by each Borrower. Each Borrower acknowledges
and agrees that the Proceeds of its Accounts remitted to or on behalf of
the Agent in accordance with the provisions of this Section 9(b) shall be
solely for the Agent's own convenience and that such Borrower shall not
have any right, title or interest in such Accounts or in any such other
amounts except as expressly provided herein. The Agent may apply all or
any part of any Proceeds of Accounts or other Collateral received by it
from any source to the payment of the Secured Obligations (whether or not
then due and payable). The Agent shall have no obligation to apply or give
credit for any item included in proceeds of Accounts or other Collateral
until the applicable Lockbox Bank has received final payment therefor at
its offices in cash. However, if the Agent does permit credit to be given
for any item prior to a Lockbox Bank receiving final payment therefor and
such Lockbox Bank fails to receive such final payment or an item is
charged back to the Agent or any Lockbox Bank for any reason, the Agent
may at its election in either instance charge the amount of such item back
against any such Lockbox Accounts, together with interest thereon at a
rate per annum equal to the default rate specified in Section 4.2 of the
Credit Agreement. Each Borrower hereby indemnifies the Agent from and
against all liabilities, damages, losses, actions, claims, judgments,
costs, expenses, charges and reasonable attorneys' fees (except such as
result from the Agent's gross negligence or willful misconduct) suffered
or incurred by the Agent because of the maintenance of the foregoing
arrangements. The Agent shall have no liability or responsibility to any
Borrower for a Lockbox Bank accepting any check, draft or other order for
payment of money bearing the legend "payment in full" or words of similar
import or any other restrictive legend or endorsement whatsoever or be
responsible for determining the correctness of any remittance (it being
understood that this sentence shall in no way affect the liability or
responsibility of any such Lockbox Bank).
(c) Remedies relating to Inventory. Immediately upon the occurrence
of any Event of Default, the Agent may foreclose the security interests
created pursuant to the Credit Documents by any available judicial
procedure, or take possession of any or all of the Inventory without
judicial process and enter any premises where any Inventory may be located
for the purpose of taking possession of or removing the same. The Agent
shall have the right, without notice of advertisement, to sell, lease, or
otherwise dispose of all or any part of the Inventory whether in its then
condition or after further preparation or processing, in the name of any
Borrower or the Lenders, or in the name of such other party as the Agent
may designate, either at public or private sale or at any broker's board,
in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as the Agent in
its sole discretion may deem advisable, and the Agent or any other Lender
shall have the right to purchase at any such sale. If any Inventory shall
require rebuilding, repairing, maintenance or preparation, the Agent shall
have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting the Inventory in such salable form
as the Agent shall deem appropriate. Each Borrower agrees, at the request
of the Agent, to assemble the Inventory and to make it available to the
Agent at places which the Agent shall select, whether at the premises of
any Borrower or elsewhere, and to make available to the Agent the premises
and facilities of any Borrower for the
16
purpose of the Agent's taking possession of, removing or putting the
Inventory in salable form.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or the
Lenders to exercise any right, remedy or option under this Security
Agreement, any other Credit Document or as provided by law, or any delay
by the Agent or the Lenders in exercising the same, shall not operate as a
waiver of any such right, remedy or option. No waiver hereunder shall be
effective unless it is in writing, signed by the party against whom such
waiver is sought to be enforced and then only to the extent specifically
stated, which in the case of the Agent or the Lenders shall only be
granted as provided herein. To the extent permitted by law, neither the
Agent, the Lenders, nor any party acting as attorney for the Agent or the
Lenders, shall be liable hereunder for any acts or omissions or for any
error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder. The rights and remedies of
the Agent and the Lenders under this Security Agreement shall be
cumulative and not exclusive of any other right or remedy which the Agent
or the Lenders may have.
(e) Retention of Collateral. Upon the occurrence and during the
continuance of an Event of Default, the Agent may, after providing the
notices required by Section 9-505(2) of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction, to
the extent the Agent is in possession of any of the Collateral, retain the
Collateral in satisfaction of the Secured Obligations. Unless and until
the Agent shall have provided such notices, however, the Agent shall not
be deemed to have retained any Collateral in satisfaction of any Secured
Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Agent or the Lenders are legally entitled, the Borrowers shall be jointly
and severally liable for the deficiency, together with interest thereon at
the default rate specified in Section 4.2 of the Credit Agreement,
together with the costs of collection and the reasonable fees of any
attorneys employed by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Borrowers or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Borrower hereby designates and appoints the Agent,
on behalf of the Lenders, and each of its designees or agents, as
attorney-in-fact of such Borrower, irrevocably and with power of
substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event of Default:
(i) to demand, collect or settle, compromise, adjust, give
discharges and releases, all as the Agent may reasonably determine;
17
(ii) to commence and prosecute any actions at any court
for the purposes of collecting any Collateral and enforcing any
other right in respect thereof;
(iii) to defend, settle or compromise any action brought
and, in connection therewith, give such discharge or release as
the Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to a
Borrower and endorse checks, notes, drafts, acceptances, money
orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such
Borrower on behalf of and in the name of such Borrower, or
securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in respect
of, or otherwise deal with or exercise rights in respect of,
any Collateral or the goods or services which have given rise
thereto, as fully and completely as though the Agent were the
absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance policy
relating thereto;
(vii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine
necessary in order to perfect and maintain the security
interests and liens granted in this Security Agreement and in
order to fully consummate all of the transactions contemplated
therein;
(viii) institute any foreclosure proceedings that the
Agent may deem appropriate; and
(ix) do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient
in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding or any Letter of Credit shall remain outstanding and (ii)
until all of the Commitments shall have been terminated. The Agent shall
be under no duty to exercise or withhold the exercise of any of the
rights, powers, privileges and options expressly or implicitly granted to
the Agent in this Security Agreement, and shall not be liable for any
failure to do so or any delay in doing so. The Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity
18
or its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve and realize upon its
security interest in the Collateral.
(b) [reserved]
(c) Assignment by the Agent. Subject to Sections 13.9 and 14.6(c) of
the Credit Agreement, the Agent may from time to time assign the Secured
Obligations and any portion thereof and/or the Collateral and any portion
thereof, and the assignee shall be entitled to all of the rights and
remedies of the Agent under this Security Agreement in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by the
Agent hereunder, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the
Borrowers shall be responsible for preservation of all rights in the
Collateral, and the Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to the
Borrowers. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Agent accords its own property, which shall be no less than the treatment
employed by a reasonable and prudent agent in the industry, it being
understood that the Agent shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect to any
of the Collateral.
11. Application of Proceeds and Cash. Any amounts on deposit in the
Lockbox Accounts, the FUCC Account and any replacement or successor accounts
relating thereto, as applicable, shall be applied by the Agent in accordance
with the terms of the Credit Agreement and the Lockbox Agreement relating
thereto. Upon the occurrence of and during the continuance of an Event of
Default, the Proceeds and avails of the Collateral at any time received by the
Agent, directly or through the Lockboxes, shall, when received by the Agent in
cash or its equivalent, be applied as follows: first, to all reasonable costs
and expenses of the Agent (including without limitation, reasonable attorneys'
fees and expenses) incurred in connection with the implementation and/or
enforcement of this Security Agreement and/or any of the other Credit
Documents; second, to all costs and expenses of the Lenders (including without
limitation, reasonable attorneys' fees and expenses) incurred in connection
with the implementation and/or enforcement of this Security Agreement and/or
any of the other Credit Documents; third, to the principal amount of the
Secured Obligations; fourth, to such of the Secured Obligations consisting of
accrued but unpaid interest and fees; fifth, to all other amounts payable with
respect to the Secured Obligations; and sixth, to the payment of the surplus,
if any, to whoever may be lawfully entitled to receive such surplus. The
Borrowers shall remain liable to the Agent and the Lenders for any deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Security Agreement or relating to the
Collateral, or to protect the Collateral or exercise any rights or remedies
under this Security Agreement or with respect to the
19
Collateral, then the Borrowers agree to promptly pay upon demand any and all
such reasonable documented costs and expenses of the Agent or the Lenders, all
of which costs and expenses shall constitute Secured Obligations hereunder.
13. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any
other Credit Document or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have terminated (other
than any contingent indemnity obligations not yet due and payable). Upon
such payment and termination, this Security Agreement shall be
automatically terminated and, the Lenders shall, upon the request and at
the expense of the Borrowers, forthwith release all of its liens and
security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by the
Borrowers evidencing such termination. Notwithstanding the foregoing all
releases and indemnities provided hereunder shall survive termination of
this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation, any reasonable legal
fees and disbursements) incurred by the Agent or any Lender in defending
and enforcing such reinstatement shall be deemed to be included as a part
of the Secured Obligations.
14. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 14.10 of the Credit Agreement.
15. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Borrower, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the
Agent and the Lenders and their successors and permitted assigns; provided,
however, that none of the Borrowers may assign its rights or delegate its
duties hereunder without the prior written consent of the Agent. To the
fullest extent permitted by law, each Borrower hereby releases the Agent and
each Lender, and its successors and permitted assigns, from any liability for
any act or omission relating to this Security Agreement or the Collateral,
except for any liability arising from the gross negligence or willful
misconduct of the Agent, or such Lender, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 14.5 of the Credit
Agreement.
20
17. Counterparts. This Security Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
19. Governing Law; Submission to Jurisdiction; Venue; Arbitration. THIS
SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF THIS SECURITY AGREEMENT, THE CREDIT DOCUMENTS OR ANY OTHER
AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
21. Severability. If any provision of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Security Agreement and the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Borrowers
hereunder shall survive the execution and delivery of this Security Agreement
and the other Credit Documents, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.
24. Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Borrower), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence of any Event of Default, and the Agent and
the Lenders shall have the right, in their sole discretion, to determine which
rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto,
21
without in any way modifying or affecting any of them or any of the Agent's and
the Lender's rights or the Secured Obligations under this Security Agreement or
under any other of the Credit Documents.
25. Joint and Several Obligations of Borrowers.
(a) Each of the Borrowers is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under the Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Borrowers and in consideration of
the undertakings of each of the Borrowers to accept joint and several
liability for the obligations of each of them.
(b) Each of the Borrowers jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers with
respect to the payment and performance of all of the Secured Obligations
arising under this Security Agreement and the other Credit Documents, it
being the intention of the parties hereto that all the Secured Obligations
shall be the joint and several obligations of each of the Borrowers
without preferences or distinction among them.
(c) Anything else in this Security Agreement notwithstanding, the
grant by each Borrower hereunder of a security interest in the Collateral
owned by such Borrower shall secure the Secured Obligations only for the
maximum amount that can be incurred without rendering this Security
Agreement, as it relates to such Borrower, void or voidable under
applicable law relating to fraudulent obligations, fraudulent conveyance
or fraudulent transfer, and not any greater amount.
26. Rights of Required Lenders. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
27. Conflicts with Credit Agreement. Notwithstanding any other provision
hereof, in the event of any conflict between the terms of this Agreement and
the Credit Agreement, the provisions of the Credit Agreement shall govern and
apply.
[remainder of page intentionally left blank]
22
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWERS: NATIONAL EQUIPMENT SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
NES ACQUISITION CORP.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
BAT ACQUISITION CORP.,
a Delaware Corporation
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
AERIAL PLATFORMS, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
AGENT: FIRST UNION COMMERCIAL CORPORATION,
as Agent
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
23
SCHEDULE 4(f)(i)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated
as of July 1, 1997 (as the same may be amended, modified,
extended or restated from time to time, the "Security
Agreement") by and among the Borrowers party thereto (each
a "Borrower" and collectively, the "Borrowers") and First
Union Commercial Corporation, as Agent (the "Agent") for
the lenders referenced therein (the "Lenders"), the
undersigned Borrower has granted a continuing security
interest in and continuing lien upon, the copyrights and
copyright applications shown below to the Agent for the
ratable benefit of the Lenders:
COPYRIGHTS
Date of
Copyright No. Description of Copyright Copyright
------------- ------------------------ ---------
Copyright Applications
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
---------------- ------------------------- ------------------
The undersigned Borrower and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing
copyrights and copyright applications (i) may only be terminated in
accordance with the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any copyright or copyright application.
24
Very truly yours,
__________________________________
[Borrower]
By:
Name:
Title:
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
Name:
Title:
25
SCHEDULE 4(f)(ii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement
dated as of July 1, 1997 (the "Security Agreement")
by and among the Borrowers party thereto (each a
"Borrower" and collectively, the "Borrowers") and
First Union Commercial Corporation, as Agent (the
"Agent") for the lenders referenced therein (the
"Lenders"), the undersigned Borrower has granted a
continuing security interest in and continuing lien
upon, the patents and patent applications shown
below to the Agent for the ratable benefit of the
Lenders:
PATENTS
Description of Patent Date of
Patent No. Item Patent
---------- ----------- ------
Patent Applications
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
---------------- --------------------- ------------------
The undersigned Borrower and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing patents
and patent applications (i) may only be terminated in accordance with the
terms of the Security Agreement and (ii) is not to be construed as an
assignment of any patent or patent application.
26
Very truly yours,
__________________________________
[Borrower]
By:
Name:
Title:
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
Name:
Title:
27
SCHEDULE 4(f)(iii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as
of July 1, 1997 (the "Security Agreement") by and among the
Borrowers party thereto (each a "Borrower" and collectively,
the "Borrowers") and First Union Commercial Corporation, as
Agent (the "Agent") for the lenders referenced therein (the
"Lenders"), the undersigned Borrower has granted a continuing
security interest in and continuing lien upon, the trademarks
and trademark applications shown below to the Agent for the
ratable benefit of the Lenders:
TRADEMARKS
Description of Trademark Date of
Trademark No. Item Trademark
------------- --------- ---------
Trademark Applications
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
---------------- ------------------------ -----------------
The undersigned Borrower and the Agent, on behalf of the
Lenders, hereby acknowledge and agree that the security
interest in the foregoing trademarks and trademark
applications (i) may only be terminated in accordance with
the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any trademark or trademark
application.
28
Very truly yours,
__________________________________
[Borrower]
By:
Name:
Title:
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
Name:
Title:
