Exhibit 10.20
AMENDED, RESTATED, AND CONSOLIDATED SECURITY AGREEMENT
Dated July 24, 2002
made by
THE GRANTORS REFERRED TO HEREIN,
as Grantors,
to
FOOTHILL CAPITAL CORPORATION,
as Collateral Agent
TABLE OF CONTENTS
Page
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Section 1. Definitions.....................................................................................2
Section 2. Grant of Security...............................................................................4
Section 3. Security for Obligations........................................................................7
Section 4. Grantors Remain Liable..........................................................................7
Section 5. Delivery and Control of Security Collateral.....................................................7
Section 6. Maintaining the Pledged Accounts................................................................8
Section 8. Maintaining Electronic Chattel Paper and Letter-of-Credit Rights and Giving
Notice of Commercial Tort Claims...............................................................10
Section 9. Representations and Warranties.................................................................11
Section 10. Further Assurances.............................................................................14
Section 11. Intellectual Property..........................................................................15
Section 12. Regulatory Approvals...........................................................................16
Section 13. As to Inventory and Equipment..................................................................17
Section 14. Insurance......................................................................................18
Section 15. Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables
and Related Contracts..........................................................................19
Section 16. Voting Rights; Dividends; Etc..................................................................20
Section 17. As to Letter-of-Credit Rights..................................................................21
Section 18. Transfers and Other Liens; Additional Shares...................................................22
Section 19. Collateral Agent Appointed Attorney-in-Fact....................................................22
Section 20. Collateral Agent May Perform...................................................................23
Section 21. The Collateral Agent's Duties..................................................................23
Section 22. Remedies.......................................................................................24
Section 23. Indemnity and Expenses.........................................................................27
(i)
Section 24. Amendments; Waivers; Additional Grantors; Etc..................................................28
Section 25. Notices; Etc...................................................................................28
Section 26. Continuing Security Interest; Assignments under the Credit Agreement, Etc......................28
Section 27. Release; Termination...........................................................................29
Section 28. Execution in Counterparts......................................................................29
Section 29. Governing Law..................................................................................30
Section 30. Waiver of Jury Trial...........................................................................30
Schedules
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Locations of Inventory and Equipment
Schedule III - Location, Chief Executive Office, Federal Tax Identification Number and
Organizational Identification Number
Schedule IV - Changes in Location of Equipment and Inventory, Etc.
Schedule V - Pledged Accounts
Schedule VI - Permitted Unblocked Accounts
Schedule VII - Trade Names
Schedule VIII - Copyrights and Copyright Licenses
Schedule IX - Patents and Patent Licenses
Schedule X - Trademarks and Trademark Licenses
Schedule XI - Commercial Tort Claims
Exhibits
Exhibit A - Assignment for Security (Copyrights)
Exhibit B - Assignment for Security (Patents)
Exhibit C - Assignment for Security (Trademarks)
Exhibit D - Form of Security Agreement Supplement
Exhibit E - Form of Securities Account Control Agreement (Securities Account)
(ii)
AMENDED, RESTATED, AND CONSOLIDATED SECURITY AGREEMENT
AMENDED, RESTATED, AND CONSOLIDATED SECURITY AGREEMENT (this "Security
Agreement") dated July 24, 2002 made by the Persons listed on the signature
pages hereof and the Additional Grantors (as defined in Section 24) (the Persons
so listed and the Additional Grantors being, collectively, the "Grantors"), to
Foothill Capital Corporation (the "Collateral Agent") for the benefit of the
Lenders (as defined in the Credit Agreement referred to below).
RECITALS
(1) Davel Financing Company, LLC, a Delaware limited liability company
("Davel"), PhoneTel Technologies, Inc., an Ohio corporation ("PhoneTel"),
Cherokee Communications, Inc., a Texas corporation ("Cherokee", and together
with Davel and PhoneTel, individually, a "Borrower" and, collectively, the
"Borrowers"), Davel Communications, Inc., a Delaware corporation (the "Parent"),
and each of the domestic subsidiaries of any of the foregoing persons have
entered into an Amended, Restated, and Consolidated Credit Agreement dated as of
the date hereof (said Agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement") with the Collateral Agent and the Lenders (as defined
therein). The Credit Agreement amends, restates and consolidates in their
entirety the Existing Davel Credit Agreement and the Existing PhoneTel Credit
Agreement.
(2) Pursuant to the Existing Davel Credit Agreement and the Existing
PhoneTel Credit Agreement and certain ancillary security agreements pursuant
thereto (the "Existing Security Agreements"), the Grantors have previously
granted to the Davel Lenders and the PhoneTel Lenders, as applicable, security
interests in all or substantially all of their assets. Pursuant to the Credit
Agreement, the Grantors are entering into this Agreement in order to amend,
restate, and consolidate the Existing Security Agreements and confirm and
continue the security interests granted under the Existing Security Agreements.
This Security Agreement is subject to the terms of the Intercreditor Agreement,
as more fully described in Section 31 hereof.
(3) Each Grantor is the owner of the shares (the "Initial Pledged
Shares") of stock set forth opposite such Grantor's name on and as otherwise
described in Part A of Schedule I hereto and issued by the corporations named
therein and of the indebtedness (the "Initial Pledged Debt") set forth opposite
such Grantor's name on and as otherwise described in Part B of Schedule I hereto
and issued by the obligors named therein.
(4) Each of the Borrowers has opened a cash concentration deposit
account and securities account (a "Cash Concentration Account"), with either PNC
Bank, National Association or National City Bank, in the name of such
Borrower(s) but under the control of the collateral agent under the Senior Debt
Agreements and subject to the terms of this Security Agreement, as described in
Part A of Schedule V.
(5) The Borrowers and certain of their subsidiaries have opened other
deposit accounts (the "Other Deposit Accounts") with banks, each in the name of
one of such Credit
Parties and subject to the terms of this Security Agreement, as described in
Parts B and C of Schedule V and in Schedule VI.
(6) It is a condition precedent to the effectiveness of the Credit
Agreement that the Grantors shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Security
Agreement.
(7) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to enter into the Credit Agreement, each Grantor hereby agrees with
the Collateral Agent, for the ratable benefit of the Lenders, to amend, restate,
and consolidate the Existing Security Agreements as follows:
Section 1. DEFINITIONS.
(a) Terms defined in the Credit Agreement and not otherwise defined
in this Security Agreement are used in this Security Agreement as defined in the
Credit Agreement. Further, unless otherwise defined in this Security Agreement
or in the Credit Agreement, terms defined in Article 8 or 9 of the UCC and/or in
the Federal Book Entry Regulations are used in this Security Agreement as such
terms are defined in such Article 8 or 9 and/or the Federal Book Entry
Regulations.
(b) In addition, as used in this Security Agreement, the following
terms shall have the respective meanings indicated below, such meanings to be
applicable equally to both the singular and plural of such terms:
"Copyright Licenses" means all licenses, contracts or other
agreements, whether written or oral, naming any Grantor as licensor, and
providing for the grant of any right to use or sell any works covered by any
Copyright including, without limitation, all Copyright Licenses referred to in
Schedule VIII hereto.
"Copyrights" means (i) 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 Copyrights referred
to in Schedule VIII hereto and (ii) all reissues, divisions, continuations,
continuations in part and extensions or renewals thereof including, without
limitation, any Copyrights referred to in Schedule VIII hereto.
"Federal Book Entry Regulations" means (i) the federal regulations
contained in Subpart B ("Treasury/Reserve Automated Debt Entry System (TRADES)")
governing book-entry securities consisting of U.S. Treasury bonds, notes and
bills and Subpart D ("Additional Provisions") of 31 C.F.R. Part 357, 31 C.F.R.
ss. 357.2, ss. 357.10 though ss. 357.14 and ss. 357.41 though ss. 357.44 and
(ii) to the extent substantially identical to the federal regulations referred
to in clause (i) above (as in effect from time to time), the federal regulations
governing other book-entry securities.
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"General Intangibles" means all "general intangibles" (as defined in
the UCC) of the Grantors, including, without limitation, all right, title and
interest which any Grantor may now or hereafter have in FCC Licenses or State
Licenses, SUBJECT, HOWEVER, to the limitations set forth in subsection 2(i).
"Licenses" means the Copyright Licenses, the Trademark Licenses and the
Patent Licenses.
"Patent Licenses" means all licenses, contracts, or other agreements,
whether written or oral, providing for the grant by or to such Grantor of any
right to manufacture, use or sell any invention covered by a Patent, including,
without limitation, any Patent Licenses referred to in Schedule IX hereto.
"Patents" means (i) all domestic or foreign letters patent and all
reissues and extensions thereof, including, without limitation, any thereof
referred to in Schedule IX hereto and (ii) all domestic and foreign letters
patent and all divisions, continuations, and continuations in part thereof,
including, without limitation, any Patents referred to in Schedule IX hereto.
"State Communications Law" means any law, or any regulation or rule
promulgated pursuant to any such law, in effect from time to time in any state
related to the provision of communication or broadcast services, each as amended
or supplemented from time to time.
"Trademark Licenses" means all licenses, contracts or other agreements,
whether written or oral, naming a Grantor as licensor, and providing for the
grant of any right concerning any Trademark, together with any goodwill
connected with and symbolized by any such Trademark Licenses and the right to
prepare for sale or lease and sell or lease any and all Inventory now or
hereafter owned by such Grantor and now or hereafter covered by such licenses,
including, without limitation, any Trademark Licenses referred to in Schedule X
hereto.
"Trademarks" means (i) all domestic and foreign trademarks, service
marks, collective marks, certifications marks, trade names, business names,
d/b/a's, Internet domain names, trade styles, designs, logos and all general
intangibles of like nature, now or hereafter owned, adopted, acquired or used by
a Grantor, all applications, registrations, and recordings thereof, including,
without limitation any Trademarks referred to in Schedule X hereto and (ii) all
renewals thereof, including, without limitation, any thereof referred to in
Schedule X hereto.
"UCC" means the Uniform Commercial Code as in effect, from
time-to-time, in the State of New York; PROVIDED that, if perfection or the
effect of perfection or non-perfection or the priority of any security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.
"Work" means any work which is subject to copyright protection pursuant
to Title 17 of the United States Code.
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Section 2. GRANT OF SECURITY. Each Grantor hereby assigns and pledges
to the Collateral Agent for the ratable benefit of the Lenders, and hereby
grants to the Collateral Agent for the ratable benefit of the Lenders a security
interest in, such Grantor's right, title and interest in and to the following,
in each case, as to each type of property described below, whether now owned or
hereafter acquired by such Grantor, wherever located, and whether now or
hereafter existing or arising (collectively, the "Collateral"):
(a) all inventory in all of its forms, (including, without
limitation, (i) raw materials and work in process therefor, finished goods
thereof and materials used or consumed in the manufacture, production,
preparation or shipping thereof, (ii) goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind (including,
without limitation, goods in which such Grantor has an interest or right as
consignee) and (iii) goods that are returned to or repossessed or stopped in
transit by such Grantor), and all accessions thereto and products thereof and
documents therefor (any and all such inventory, accessions, products and
documents being the "Inventory");
(b) all accounts, chattel paper (including tangible chattel paper
and electronic chattel paper), instruments (including promissory notes), deposit
accounts, letter-of-credit rights, software, General Intangibles (including
payment intangibles) and other obligations of any kind, whether or not arising
out of or in connection with the sale or lease of goods or the rendering of
services and whether or not earned by performance, and all rights now or
hereafter existing in and to all supporting obligations and in and to all
security agreements, mortgages, liens, leases and other contracts securing or
otherwise relating to the foregoing property (any and all of such accounts,
chattel paper, instruments, deposit accounts, letter-of-credit rights, software,
General Intangibles and other obligations, to the extent not referred to in
clause (c) or (d) below, being the "Receivables", and any and all such
supporting obligations, security agreements, mortgages, liens, leases and other
contracts being the "Related Contracts");
(c) all equipment of any kind and all parts thereof and accessions
thereto (any and all such equipment, parts and accessions being the
"Equipment");
(d) the following (the "Security Collateral"):
(i) (A) 100% (or, if less, the full amount owned by such Grantor)
of the Initial Pledged Shares of the Borrowers and each Domestic Subsidiary and
(B) 65% (or, if less, the full amount owned by such Grantor) of the Initial
Pledged Shares of each Material First Tier Foreign Subsidiary, including,
without limitation, the certificates, if any, representing the Initial Pledged
Shares, and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Initial Pledged Shares;
(ii) (A) 100% (or, if less, the full amount owned by such Grantor)
of all other shares of stock, partnership interests, member interests and other
equity interests issued by any Domestic Subsidiary of the Borrower or by any
other Person that hereafter becomes a Domestic Subsidiary and (B) 65% (or, if
less, the full amount owned by such Grantor) of all other shares of stock,
partnership interests, member interests and other equity interests issued by any
Material First Tier Foreign Subsidiary of the Borrower or by any
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other Person that hereafter becomes a Material First Tier Foreign Subsidiary
(all such shares, together with the Initial Pledged Shares, being the "Pledged
Shares"), including, without limitation, the certificates, if any, representing
such additional shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares;
(iii) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Initial
Pledged Debt;
(iv) all additional indebtedness from time to time owed to such
Grantor by any obligor of the Pledged Debt (such indebtedness, together with the
Initial Pledged Debt, being the "Pledged Debt") and the instruments, if any,
evidencing such indebtedness, and all interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness; and
(v) all other investment property (including, without limitation,
all (A) securities, whether certificated or uncertificated, (B) security
entitlements and (C) securities accounts) in which such Grantor has now, or
acquires from time to time hereafter, any right, title or interest in any
manner, and the certificates or instruments, if any, representing or evidencing
such investment property, and all dividends, interest, distributions, value,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
investment property;
(e) the following (collectively, the "Account Collateral"):
(i) each Cash Concentration Account, all financial
assets from time to time credited to such Cash Concentration
Account (including, without limitation, all Cash Equivalents from
time to time credited to such Cash Concentration Account), all
dividends, interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such financial assets, and all
funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing such Cash
Concentration Account;
(ii) the Regulatory Receipts Account, all financial
assets from time to time credited to the Regulatory Receipts
Account (including, without limitation, all Cash Equivalents from
time to time credited to the Regulatory Receipts Account), all
dividends, interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such financial assets, and all
funds held therein and all certificates and instruments, if any,
from time to time representing or evidencing the Regulatory
Receipts Account;
(iii) each Other Deposit Account, all financial assets
from time to time credited to such Other Deposit Account
(including, without limitation, all
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Cash Equivalents from time to time credited to such Other Deposit
Account), all dividends, interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
financial assets, and all funds held therein and all certificates
and instruments, if any, from time to time representing or
evidencing such Other Deposit Account;
(iv) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time delivered
to or otherwise possessed by the Collateral Agent for or on behalf
of such Grantor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the
then existing Account Collateral; and
(v) all interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral;
(f) all commercial tort claims described in Schedule XI
(collectively the "Commercial Tort Claims Collateral");
(g) all books and records (including, without limitation, customer
lists, credit files, computer programs, software, printouts and other computer
materials and records) of such Grantor pertaining to any of the Collateral;
(h) all Licenses, Copyrights, Patents and Trademarks;
(i) all FCC Licenses and State Licenses of such Grantor and all
goodwill and going concern value relating thereto; PROVIDED, HOWEVER, that such
security interest does not include at any time any FCC License or State License
to the extent, but only to the extent, that such Grantor is prohibited at that
time from granting a security interest therein pursuant to the Communications
Law or State Communications Law, the policies and regulations promulgated
thereunder and all other applicable laws, but includes, to the maximum permitted
by applicable law, all rights incident or appurtenant to any such FCC License or
State License and the rights to receive all proceeds derived from or in
connection with the sale, assignment or transfer of any FCC License or State
License; and PROVIDED FURTHER, to the extent that such Grantor is so prohibited
from granting a security interest in any FCC License or State License, such
Grantor agrees that a security interest shall automatically attach to any such
FCC License or State License, all rights incident or appurtenant thereto, and
the rights to receive proceeds derived from or in connection with the sale,
assignment or transfer of any such FCC License or State License, at such time
that a security interest is permitted by applicable law; and
(j) all proceeds of, collateral for, and supporting obligations
relating to, any and all of the Collateral (including, without limitation,
proceeds, collateral and supporting obligations that constitute property of the
types described in clauses (a) though (i) of this Section 2 and this clause (j))
and, to the extent not otherwise included, all (i) payments under insurance
(whether or not the Collateral Agent is the loss payee thereof), or any
indemnity,
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warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral, (ii) commercial tort claims and
(iii) cash.
The Grantors and the Collateral 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 Secured
Obligations (as defined in Section 3 herein), whether now existing or hereafter
arising and (ii) is not to be construed as an absolute assignment of any
Licenses, Copyrights, Patents, Trademarks, FCC Licenses or State Licenses.
Section 3. SECURITY FOR OBLIGATIONS. This Security Agreement secures,
in the case of each Grantor, the payment of all Obligations (as defined in the
Credit Agreement) and all obligations of the Guarantors under Article III of the
Credit Agreement of such Grantor, now existing or hereafter arising pursuant to
the Loan Documents, howsoever evidenced, created, incurred or acquired, whether
primary, secondary, direct or indirect, absolute or contingent, whether for
principal, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise (all such Obligations of all
Grantors being the "Secured Obligations").
Section 4. GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Security Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral and (c) neither the Collateral Agent nor any of the
Lenders shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Security Agreement or
any other Loan Document, nor shall the Collateral Agent or any Lender be
obligated to perform any of the obligations or duties of any Grantor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
Section 5. DELIVERY AND CONTROL OF SECURITY COLLATERAL. (a) Subject to
SECTION 31 hereof, immediately upon release by the Senior Lenders, all
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. Subject to the rights of the
Senior Lenders as set forth in SECTION 31 hereof, the Collateral Agent shall
have the right, at any time, after and during the continuance of a Default, in
its discretion and without notice to any Grantor, to transfer to or to register
in the name of the Collateral Agent or any of its nominees any or all of the
Security Collateral. In addition, after and during the continuance of a Default,
the Collateral Agent shall have the right, subject to the rights of the Senior
Lenders as set forth in SECTION 31 hereof, at any time to exchange certificates
or instruments representing or evidencing Security Collateral for certificates
or instruments of smaller or larger denominations. Also, the Collateral Agent
shall have the right, subject to the rights of the Senior Lenders as set forth
in SECTION 31 hereof, at any time to convert Security Collateral consisting of
financial assets
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credited to any securities account to Security Collateral consisting of
financial assets held directly by the Collateral Agent, and to convert Security
Collateral consisting of financial assets held directly by the Collateral Agent
to Security Collateral consisting of financial assets credited to any securities
account.
(b) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes an uncertificated
security, such Grantor will cause the issuer thereof, subject to SECTION 31
hereof, either (i) to register the Collateral Agent as the registered owner of
such security or (ii) to agree in an authenticated record with such Grantor and
the Collateral Agent that such issuer will comply with instructions with respect
to such security originated by the Collateral Agent without further consent of
such Grantor, such authenticated record to be in form and substance satisfactory
to the Collateral Agent.
(c) With respect to any Security Collateral in which any Grantor
has any right, title or interest and that constitutes a security entitlement,
such Grantor, subject to SECTION 31 hereof, will cause the securities
intermediary with respect to such security entitlement either (i) to identify in
its records the Collateral Agent as the entitlement holder of such security
entitlement against such securities intermediary or (ii) to agree in an
authenticated record with such Grantor and the Collateral Agent that such
securities intermediary will comply with entitlement orders (that is,
notifications communicated to such securities intermediary directing transfer or
redemption of the financial asset to which such Grantor has a security
entitlement) originated by the Collateral Agent without further consent of such
Grantor, such authenticated record to be in substantially the form of Exhibit E
hereto or otherwise in form and substance satisfactory to the Collateral Agent
(such agreement being a "Securities Account Control Agreement").
(d) No Grantor will change or add any securities intermediary that
maintains any securities account in which any of the Collateral is credited or
carried, or change or add any such securities account, in each case without
first complying with the above provisions of this Section 5 in order to perfect
the security interest granted hereunder in such Collateral.
Section 6. MAINTAINING THE PLEDGED ACCOUNTS. So long as any Loan or any
other Obligation of any Credit Party under any Loan Document shall remain
unpaid:
(a) Each Grantor, subject to SECTION 31 hereof, will
maintain deposit accounts (collectively, including the Cash
Concentration Accounts, the "Pledged Accounts") only with banks
listed on Schedule V hereto (the "Pledged Account Banks"). Each
Pledged Account Bank listed on Part A of Schedule V hereto has
agreed, and each Grantor will cause each Pledged Account Bank
listed on Part B of Schedule V hereto to agree, subject to SECTION
31 hereof, in each case in a record authenticated by such Grantor,
the Collateral Agent and such Pledged Account Bank, to (1) comply
with instructions originated by the Collateral Agent directing the
disposition of funds in the respective Pledged Accounts without the
further consent of such Grantor and (2) waive or subordinate in
favor of the Collateral Agent all claims of such Pledged Account
Bank (including claims by way of a security interest, right of
setoff or right of recoupment) to such Pledged Accounts, which
authenticated record shall be in form and substance satisfactory to
the Collateral Agent (a "Pledged Account Letter").
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(b) Each Grantor, subject to SECTION 31 hereof, will
(i) immediately upon the request of the Collateral Agent after the
occurrence and during the continuance of a Default, instruct each
Person obligated at any time to make any payment to such Grantor
for any reason (an "Obligor") to make such payment to a Pledged
Account of such Grantor or to a Cash Concentration Account and (ii)
deposit in a Pledged Account of such Grantor or a Cash
Concentration Account or, subject to SECTION 31 hereof, pay to the
Collateral Agent for deposit in a Cash Concentration Account, at
the end of each Business Day, all proceeds of Collateral and all
other cash of such Grantor.
(c) Concurrently with or promptly after entering into
a Pledged Account Letter with any Pledged Account Bank, each
Grantor, subject to SECTION 31 hereof, will instruct such Pledged
Account Bank to transfer to the applicable Cash Concentration
Account, at the end of each Business Day (or in the case of Pledged
Account Banks listed on Part C of Schedule V, each week, or at such
interval at set forth in Part C), in same day funds, an amount
equal to the credit balance of each Pledged Account (other than a
Cash Concentration Account) in such Pledged Account Bank. If any
Grantor shall fail to give any such instructions to any Pledged
Account Bank, the Collateral Agent, subject to SECTION 31 hereof,
may do so without further notice to any Grantor.
(d) Each Grantor agrees that it will not add any bank
as a Pledged Account Bank or add any account as a Pledged Account
to those listed in Schedule V hereto, unless the Collateral Agent
shall have received at least 10 days' prior written notice of such
addition and, subject to SECTION 31 hereof, shall have received a
Pledged Account Letter authenticated by such new Pledged Account
Bank and such Grantor or a supplement to an existing Pledged
Account Letter covering such new Pledged Account, as the case may
be (and, upon the receipt by the Collateral Agent of such Pledged
Account Letter or supplement thereto, Schedule V hereto shall be
automatically amended to include such Pledged Account Bank or
Pledged Account). Each Grantor agrees that it will not terminate
any bank as a Pledged Account Bank or terminate any account as a
Pledged Account, except that any Grantor may terminate a Pledged
Account, and terminate a bank as a Pledged Account Bank with
respect to such Pledged Account if it gives the Collateral Agent at
least 10 days' prior written notice of such termination (and, upon
such termination, Schedule V hereto shall be automatically amended
to delete such Pledged Account Bank or Pledged Account). Each
Grantor agrees that it will not amend, modify or supplement any
standing instructions with any Pledged Account Bank pursuant to
which funds are transferred from any Pledged Account maintained
with such Pledged Account Bank, subject to SECTION 31 hereof,
without the prior written approval of the Collateral Agent.
(e) Upon any termination of any Pledged Account Letter
or other agreement with respect to the maintenance of a Pledged
Account by any Grantor or any Pledged Account Bank with respect
thereto, such Grantor, subject to SECTION 31 hereof, will
immediately notify all Obligors that were making payments to such
Pledged Account to make all future payments to another Pledged
Account listed in Schedule V or to a Cash Concentration Account.
Each Grantor agrees to terminate any or all Pledged Accounts and
Pledged Account Letters, subject to SECTION 31 hereof, upon request
by the Collateral Agent.
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(f) So long as no Event of Default shall have occurred
and be continuing, (i) each Borrower will draw checks on, and
otherwise withdraw amounts only from a Cash Concentration Account
in such amounts as may be required in the ordinary course of
business (including, without limitation, withdrawals by Staffing
Concepts of Florida, Inc. acting on behalf of one or more Credit
Parties pursuant to the employee leasing agreement and the
Authorization Agreement For Direct Deposits (ACH Debts), dated
December 14, 2001, between Staffing Concepts of Florida, Inc. and
Telaleasing Enterprises, Inc.) and (ii) the Collateral Agent will,
to the extent funds are available in a Cash Concentration Account,
permit the transfer of amounts on deposit in such Cash
Concentration Account to the extent necessary to pay all checks
drawn on, and all amounts otherwise withdrawn from, such Cash
Concentration Account.
(g) Each Grantor agrees that it will not add any
account as an unblocked account to those listed in Schedule VI
hereto and will not terminate any account as an unblocked account,
unless the Collateral Agent, subject to SECTION 31 hereof, shall
have received at least 10 days' prior written notice of such
addition or termination (and, upon such addition or termination,
Schedule VI hereto shall be automatically amended to add or delete
such account, as applicable).
(h) The Collateral Agent shall have sole right to
direct the disposition of funds with respect to each of the Cash
Concentration Accounts and the Other Deposit Accounts, subject to
the provisions of this Security Agreement and the rights of the
Senior Lenders as set forth in SECTION 31 hereof.
Section 7. INVESTING OF AMOUNTS IN THE CASH CONCENTRATION ACCOUNTS.
Subject to SECTION 31 hereof, the Collateral Agent will, subject to the
provisions of Sections 6 and 21, from time to time (a) permit the investment of
amounts received with respect to any Cash Concentration Account in such Cash
Equivalents credited to (i) such Cash Concentration Account as the applicable
Borrower may select and the Collateral Agent may approve or (ii) in the case of
Cash Equivalents consisting of Securities Collateral, a securities account
subject to a Securities Account Control Agreement and (b) invest interest paid
on the Cash Equivalents referred to in clause (a) above, and reinvest other
proceeds of any such Cash Equivalents that may mature or be sold, in each case
in such Cash Equivalents credited in the same manner. Interest and proceeds that
are not invested or reinvested in Cash Equivalents as provided above shall be
deposited and held in the relevant Cash Concentration Account. In addition, the
Collateral Agent shall have the right, subject to the rights of the Senior
Lenders as set forth in SECTION 31 hereof, at any time to exchange such Cash
Equivalents for similar Cash Equivalents of smaller or larger denominations, or
for other Cash Equivalents, credited to the Cash Concentration Account.
Section 8. MAINTAINING ELECTRONIC CHATTEL PAPER AND LETTER-OF-CREDIT
RIGHTS AND GIVING NOTICE OF COMMERCIAL TORT CLAIMS. So long as any Loan or any
other Obligation shall remain unpaid:
(a) subject to SECTION 31 hereof,each Grantor will
maintain all electronic chattel paper so that the Collateral Agent
has control of the electronic chattel paper in the manner specified
in Section 9-105 of the UCC;
10
(b) subject to SECTION 31 hereof, each Grantor will
maintain all letter-of-credit rights assigned to the Collateral
Agent so that the Collateral Agent has control of the
letter-of-credit rights in the manner specified in Section 9-107 of
the UCC; and
(c) each Grantor will immediately give notice to the
Collateral Agent of any commercial tort claim that may arise in the
future and will immediately execute or otherwise authenticate a
supplement to this Security Agreement, and otherwise take all
necessary action, to subject such commercial tort claim to the lien
of this Security Agreement.
Section 9. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants as follows on behalf of itself and its Subsidiaries:
(a) Such Grantor's exact legal name, as defined in
Section 9-503(a) of the UCC, is correctly set forth on Schedule III
of this Security Agreement. Such Grantor is an organization of the
type specified on Schedule III hereto and is organized under the
laws of the jurisdiction specified on Schedule III hereto. During
the past five years, such Grantor has not previously changed its
name, identity or corporate structure, except as disclosed in
Schedule IV hereto.
(b) All of the Inventory and Equipment of such Grantor
is located at the places specified therefor in Schedule II hereto,
as such Schedule II may be amended from time to time pursuant to
Section 13. The chief executive office of such Grantor, and the
original copies of each Related Contract to which such Grantor is a
party and all originals of all chattel paper that evidence
Receivables of such Grantor, are located at the address specified
therefor in Schedule III hereto. Such Grantor is located (within
the meaning of Section 9-307 of the UCC) in the state or
jurisdiction set forth in Schedule III hereto. Such Grantor's
federal tax identification number and organizational identification
number, to the extent available, are set forth opposite such
Grantor's name in Schedule III hereto. Since January 1, 2002, such
Grantor has not changed the location of its inventory, its chief
executive office, its location (within the meaning of Section 9-307
of the UCC), its federal tax identification number and its
organizational identification number, except as disclosed in
Schedule IV. All Security Collateral consisting of certificated
securities and instruments have been delivered to the Senior
Lender.
(c) Such Grantor is the legal and beneficial owner of
the Collateral of such Grantor free and clear of any Lien, claim,
option or right of others, except for the security interest created
under this Security Agreement or permitted under the Credit
Agreement. No filed financing statement or other instrument similar
in effect covering all or any part of such Collateral or listing
such Grantor or any trade name of such Grantor as debtor is on file
in any recording office, except such as may have been filed in
favor of the Collateral Agent relating to the Loan Documents or as
otherwise permitted under the Credit Agreement. Such Grantor has
the trade names listed on Schedule VII hereto.
(d) Such Grantor has exclusive possession and control
of the Inventory other than Inventory stored at any leased premises
or warehouse for which a landlord's or warehouseman's agreement, in
form and substance satisfactory to the Collateral Agent, is
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in effect and which leased premises or warehouse is so indicated by
an asterisk on Schedule II hereto, as such Schedule II may be
amended from time to time pursuant to Section 15.
(e) Other than Payphones in such Grantor's possession
pursuant to a contract for repair (to the extent such Payphones
could be characterized as Inventory), no Inventory is held by such
Grantor pursuant to consignment, sale or return, sale on approval
or similar arrangement.
(f) No Payphone of such Grantor that constitutes
Collateral is a Fixture.
(g) All of such Grantor's Equipment is in normal
operating condition or repair, ordinary wear and tear excepted, and
is suitable for the uses to which it is customarily put in the
conduct of such Grantor's business.
(h) The Pledged Shares pledged by such Grantor
hereunder have been duly authorized and validly issued and are
fully paid and non-assessable. The Pledged Debt pledged by such
Grantor hereunder has been duly authorized, authenticated or issued
and delivered, is the legal, valid and binding obligation of the
issuers thereof, may be evidenced by one or more promissory notes
(which notes have been delivered to the Senior Lenders) and is not
in default.
(i) The Initial Pledged Shares constitute the
percentage of the issued and outstanding shares of stock of the
issuers thereof indicated on Schedule I hereto as of the Effective
Date. The Initial Pledged Debt constitutes all of the outstanding
indebtedness owed to such Grantor by the issuers thereof and is
outstanding, as of the Effective Date, in the principal amount
indicated on Schedule I hereto as of the Effective Date.
(j) All of the investment property owned by such
Grantor as of the Closing Date is listed on Schedule I hereto.
(k) Such Grantor has no Pledged Accounts or other
deposit accounts other than the Pledged Accounts listed on Schedule
V hereto, as such Schedule V may be amended from time to time
pursuant to Section 6(d) and the permitted unblocked accounts
listed on Schedule VI hereto, as such Schedule VI may be amended
from time to time pursuant to Section 6(g). Binding and enforceable
Pledged Account Letters are in effect for each Pledged Account,
except to the extent such Pledged Account Letters are not required
by Section 6(a). Such Grantor has, to the extent requested by the
Collateral Agent, instructed all existing Obligors to make all
payments to a Pledged Account or a Cash Concentration Account.
(l) All filings and other actions (including actions
necessary to obtain control of Collateral as provided in Section
9-104, 9-105, 9-106 and 9-107 of the UCC) necessary or desirable to
perfect and protect the security interest in the Collateral of such
Grantor created under this Security Agreement have been duly made
or taken and are in full force and effect, and this Security
Agreement creates in favor of the Collateral Agent for the benefit
of the Lenders a valid and, together with such filings and other
actions,
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perfected security interest in the Collateral of such Grantor,
securing the payment of the Secured Obligations.
(m) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the
grant by such Grantor of the assignment, pledge and security
interest granted hereunder or for the execution, delivery or
performance of this Security Agreement by such Grantor, (ii) the
perfection or maintenance of the assignment, pledge and security
interest created hereunder, except for the filing of financing
statements (or assignments of existing financing statements) and
continuation statements under the Uniform Commercial Code, which
financing statements have been duly filed and are in full force and
effect, and the actions described in Section 5 with respect to
Security Collateral, which actions have been taken and are in full
force and effect, or (iii) for the exercise by the Collateral Agent
of its voting or other rights provided for in this Security
Agreement or the remedies in respect of the Collateral pursuant to
this Security Agreement, except as may be required in connection
with the disposition of any portion of the Security Collateral by
laws affecting the offering and sale of securities generally.
(n) The Inventory that has been produced or
distributed by such Grantor has been produced or distributed in
compliance with all requirements of applicable law, including,
without limitation, any Communications Law or State Communications
Law.
(o) Such Grantor shall not alter, modify or otherwise
take any action with respect to the Inventory that would affect the
rights of the Collateral Agent to sell, liquidate or otherwise
dispose of the Inventory.
(p) Intellectual Property.
(i) Schedules VIII, IX, and X hereto (as updated
from time to time) include all Licenses, Copyrights, Patents, Trademarks (except
for non-material unregistered trademarks and service marks, collectively
"Intellectual Property") owned by such Grantor in its own name as of the date
hereof.
(ii) To the best of such Grantor's knowledge, all
such Intellectual Property of such Grantor is valid, subsisting, unexpired and
enforceable.
(iii) Except as set forth in Schedules VIII, IX,
and X hereto, none of such Intellectual Property is the subject of any licensing
or franchise agreement.
(iv) All applications pertaining to the
Intellectual Property of such Grantor have been duly and properly filed, and all
registrations or letters pertaining to such Intellectual Property have been duly
and properly filed and issued, and all such Intellectual Property is valid and
enforceable, except as could not reasonably be expected to have a Material
Adverse Effect.
(v) Except for licenses to third parties in the
ordinary course of business, such Grantor has not made any assignment or
agreement in conflict with the security interest in the Intellectual Property of
any Grantor hereunder.
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Section 10. FURTHER ASSURANCES. (a) Each Grantor agrees that from time
to time, at the request of the Collateral Agent and at the expense of such
Grantor, but subject to the rights of the Senior Lenders as set forth in SECTION
31, such Grantor will promptly execute and deliver, or otherwise authenticate,
all further instruments and documents, and take all further action, that may be
reasonably necessary or desirable, or that the Collateral Agent may reasonably
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, subject to SECTION 31 hereof, each Grantor will
promptly with respect to Collateral of such Grantor: (i) at the request of the
Collateral Agent, xxxx conspicuously each document included in Inventory and
each of its records pertaining to such Collateral with a legend, in form and
substance satisfactory to the Collateral Agent, indicating that such document or
Collateral is subject to the security interest granted hereby; (ii) if any such
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the Collateral Agent hereunder such note or instrument duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Collateral Agent; (iii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Collateral Agent may request, in order to perfect and
preserve the security interest granted or purported to be granted by such
Grantor hereunder; (iv) deliver and pledge to the Collateral Agent for benefit
of the Lenders certificates representing Security Collateral that constitutes
certificated securities, accompanied by undated stock or bond powers executed in
blank; (v) take all action necessary to insure that the Collateral Agent has
control of Collateral consisting of deposit accounts, electronic chattel paper,
investment property and letter-of-credit rights as provided in Sections 9-104,
9-105, 9-106 and 9-107 of the of the UCC; (vi) with regard to Copyrights,
execute an Assignment for Security (Copyrights) in the form of Exhibit A
attached hereto, (vii) with regard to Patents, execute an Assignment for
Security (Patents) with the United States Patent and Trademark Office in the
form of Exhibit B attached hereto; (viii) with regard to Trademarks, execute an
Assignment for Security (Trademarks) for filing with the United States Patent
and Trademark Office in the form of Exhibit C attached hereto; and (ix) deliver
to the Collateral Agent evidence that all other action that the Collateral Agent
may deem reasonably necessary or desirable in order to perfect and protect the
security interest created by such Grantor under this Security Agreement has been
taken.
(b) Each Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral of such Grantor without the signature of
such Grantor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
(d) Each Grantor will allow the Collateral Agent or its
representatives to inspect the Collateral.
14
(e) With respect to new Copyrights, Patents, Trademarks, each
Grantor will promptly provide the Collateral 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,
subject to the rights of the Senior Lenders as set forth in SECTION 31 hereof, a
duly executed Assignment of Security (Copyrights), (B) with respect to Patents,
subject to the rights of the Senior Lenders as set forth in SECTION 31 hereof, a
duly executed Assignment of Security (Patents)s, (C) with respect to Trademarks,
subject to the rights of the Senior Lenders as set forth in SECTION 31 hereof, a
duly executed Assignment of Security (Trademarks) or (D) such other duly
executed documents as the Collateral Agent may reasonably request in a form
acceptable to counsel for the Collateral Agent and suitable for recording to
evidence the security interest in the Copyright, Patent or Trademark which is
the subject of such new application.
Section 11. INTELLECTUAL PROPERTY. So long as any Loan or any other
Obligation shall remain unpaid, each Grantor shall:
(a) employ the Copyright for each Work with such notice of
copyright as may be required by law to secure copyright protection;
(b) not do any act or knowingly omit to do any act whereby any
material Copyright may become invalidated and (i) not do any act, or knowingly
omit to do any act, whereby any material Copyright may become injected into the
public domain; (ii) notify the Collateral Agent immediately if it knows, or has
reason to know, that any material 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 such
Grantor's ownership of any such Copyright or its validity; (iii) 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 material Copyright owned by such
Grantor including, without limitation, filing of applications for renewal where
necessary; and (iv) promptly notify the Collateral Agent of any material
infringement of any material Copyright of such Grantor 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;
(c) not make any assignment or agreement in conflict with the
security interest in the Copyrights of such Grantor other than in the ordinary
course of business;
(d) subject to such Grantor's reasonable business judgment or as
permitted in the Credit Agreement, (i) continue to use each material Trademark
in order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) employ such Trademark with the
appropriate notice of registration, (iv) not adopt or use any xxxx which is
confusingly similar or a colorable imitation of such Trademark unless the
Collateral Agent, for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such xxxx pursuant
15
to this Security Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material Trademark may become invalidated;
(e) not do any act, or omit to do any act, whereby any material
Patent may become abandoned or dedicated;
(f) promptly notify the Collateral Agent if it knows, or has reason
to know, that any application or registration relating to any material Patent or
material 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
Grantor's ownership of any such Patent or Trademark or its right to register the
same or to keep and maintain the same;
(g) if such Grantor, 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, such Grantor shall report such filing to the Collateral Agent within 10
Business Days after the last day of the fiscal quarter in which such filing
occurs, and upon request of the Collateral Agent, shall execute and deliver any
and all agreements, instruments and other documents as the Collateral Agent may
reasonably request to evidence the Collateral Agent's and the Lenders' security
interest in any Patent or Trademark and the goodwill and General Intangibles of
a Grantor relating thereto or represented thereby;
(h) 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 all material Patents
and material Trademarks, including, without limitation, filing of applications
for renewal, affidavits of use and affidavits of incontestability;
(i) promptly notify the Collateral Agent after it learns that any
material Patent or material Trademark included in the Collateral is infringed,
misappropriated or diluted by a third party and promptly xxx for infringement,
misappropriation or dilution, seek injunctive relief where appropriate and
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; and
(j) except for licenses to third parties in the ordinary course of
business, not make any assignment or agreement in conflict with the security
interest in the Patents or Trademarks, whether now or hereafter existing, of
such Grantor.
Section 12. REGULATORY APPROVALS. So long as any Loan or any other
Obligation shall remain unpaid, each Grantor, subject to the rights of the
Senior Lenders as set forth in SECTION 31 hereof, shall promptly, and at its
expense, execute and deliver, or cause to be executed and delivered, all
applications, certificates, instruments, registration statements and all other
16
documents the Collateral Agent may reasonably request and as may be required by
law in connection with the obtaining of any consents from the FCC or any state
authorities or the consent, approval, registration, qualification or
authorization of any other Person necessary or deemed by the Collateral Agent to
be appropriate for the effective exercise of any of its rights under this
Security Agreement. Without limiting the generality of the foregoing, if an
Event of Default shall have occurred and be continuing, each Grantor, subject to
the rights of the Senior Lenders as set forth in SECTION 31 hereof, shall take
any action which the Collateral Agent may reasonably request in order to
transfer and assign to the Collateral Agent, or to such one or more third
parties as the Collateral Agent may designate, or to a combination of the
foregoing, each FCC License, State License or other Government Approval of such
Grantor. To enforce the provisions of this Section 12, upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent, subject to
the rights of the Senior Lenders as set forth in SECTION 31 hereof, is empowered
to request the appointment of a receiver from any court of competent
jurisdiction. Such receiver shall be instructed to seek from the FCC or other
Governmental Authority an involuntary transfer of control of each such FCC
License, State License or other Governmental Approval for the purpose of seeking
a bona fide purchaser to whom control will ultimately be transferred. Each
Grantor hereby agrees to authorize such an involuntary transfer of control upon
the request of the receiver so appointed, and, if such Grantor shall refuse to
authorize the transfer, its approval may be required by the court. Upon the
occurrence and continuance of an Event of Default, such Grantor shall further
use its reasonable best efforts to assist in obtaining the consent of the FCC or
any state authority or other governmental approvals, if required, for any action
or transaction contemplated by this Security Agreement, including, without
limitation, the preparation, execution and filing with the FCC or other
governmental authority of such Grantor's portion of any necessary or appropriate
application for the approval of the transfer or assignment of any portion of the
assets (including any FCC Licenses, State Licenses or other Governmental
Approval) of such Grantor. Because each Grantor agrees that the Collateral
Agent's remedy at law for failure of such Grantor to comply with the provisions
of this Section 12 would be inadequate and that such failure would not be
adequately compensable in damages, such Grantor agrees that the covenants
contained in this Section 12 may be specifically enforced, and such Grantor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
Section 13. AS TO INVENTORY AND EQUIPMENT. (a) Each Grantor will keep
the Inventory and Equipment of such Grantor (other than Inventory sold in the
ordinary course of business) at the places specified therefor in Section 9(b)
or, upon 30 days' (or such lesser period as the Collateral Agent, in its
discretion, agrees) prior written notice to the Collateral Agent, at such other
places designated by such Grantor in such notice. Upon the giving of such
notice, Schedule II hereto shall be automatically amended to add any new
locations specified in the notice.
(b) Each Grantor will promptly furnish to the Collateral Agent a
statement respecting any material loss or damage to any of the Inventory or
Equipment of such Grantor.
(c) Each Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Inventory or Equipment of such Grantor. In producing or
distributing its Inventory, each Grantor will comply with all
17
requirements of applicable law, including, without limitation, any
Communications Law or State Communications Law.
Section 14. INSURANCE. (a) Each Grantor will, at its own expense and in
addition to insurance required to be maintained by such Grantor under the Credit
Agreement, maintain insurance with respect to the Inventory and Equipment of
such Grantor in such amounts, against such risks, in such form and with such
insurers, as shall be satisfactory to the Collateral Agent from time to time.
Each policy of each Grantor for liability insurance shall provide for all losses
to be paid, subject to the rights of the Senior Lenders as set forth in SECTION
31 hereof, on behalf of the Collateral Agent and such Grantor as their interests
may appear, and each policy for property damage insurance shall provide for all
losses to be paid, subject to the rights of the Senior Lenders as set forth in
SECTION 31 hereof, directly to the Collateral Agent or deposited directly into a
Cash Concentration Account. Each such policy shall in addition (i) name such
Grantor and the Collateral Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as their
interests may appear, (ii) contain the agreement by the insurer that any loss
thereunder shall be payable to the Collateral Agent, subject to the rights of
the Senior Lenders as set forth in SECTION 31 hereof, notwithstanding any
action, inaction or breach of representation or warranty by such Grantor, (iii)
provide that there shall be no recourse against the Collateral Agent for payment
of premiums or other amounts with respect thereto and (iv) provide that at least
10 days' prior written notice of cancellation or of lapse shall be given to the
Collateral Agent by the insurer. Each Grantor will, if so requested by the
Collateral Agent, deliver to the Collateral Agent original or duplicate policies
of such insurance and, as often as the Collateral Agent may reasonably request,
a report of a reputable insurance broker with respect to such insurance.
Further, each Grantor will, at the request of the Collateral Agent, duly execute
and deliver instruments of assignment of such insurance policies to comply with
the requirements of Section 10 and cause the insurers to acknowledge notice of
such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 14 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Inventory or Equipment when subsection (c) of this Section 14 is not
applicable, the applicable Grantor will make or cause to be made the necessary
repairs to or replacements of such Inventory or Equipment, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required hereunder or by the Credit Agreement, to
pay or as reimbursement for the costs of such repairs or replacements.
(c) So long as no Default shall have occurred and be continuing,
all insurance payments received by the Collateral Agent in connection with any
loss, damage or destruction of any Inventory or Equipment will be released by
the Collateral Agent to the applicable Grantor for the repair, replacement or
restoration thereof, subject to such terms and conditions with respect to the
release thereof as the Collateral Agent may reasonably require. To the extent
that (i) the amount of any such insurance payments exceeds the cost of any such
repair, replacement or restoration, or (ii) such insurance payments are not
otherwise required by the applicable Grantor to complete any such repair,
replacement or restoration required hereunder, the Collateral Agent will not be
required to release the amount thereof to such Grantor and may hold or continue
to hold such amount in the Collateral Account as additional
18
security for the Secured Obligations of such Grantor (except that the Collateral
Agent will direct the applicable Pledged Account Bank to release to such Grantor
any such amount if and to the extent that any prepayment of Obligations is
required under the Credit Agreement in connection with the receipt of such
amount and such prepayment has been made). Upon the occurrence and during the
continuance of any Default or the actual or constructive total loss of any
Inventory or Equipment, all insurance payments in respect of such Inventory or
Equipment shall be deposited directly into a Cash Concentration Account or,
subject to SECTION 31 hereof, paid to the Collateral Agent and, if paid directly
to the Collateral Agent, shall, in the Collateral Agent's sole discretion, (i)
be released to the applicable Grantor to be applied as set forth in the first
sentence of this subsection (c) or (ii) be held as additional Collateral
hereunder or applied as specified in Section 22(b).
Section 15. POST-CLOSING CHANGES; BAILEES; COLLECTIONS ON ASSIGNED
AGREEMENTS, RECEIVABLES AND RELATED CONTRACTS. (a) No Grantor will change its
name, identity, corporate structure, federal tax identification number,
organizational identification number, or location from those set forth in
Section 9(a) and (b) without first giving at least 30 days' prior written notice
to the Collateral Agent and taking all action required by the Collateral Agent
for the purpose of perfecting or protecting the liens granted by this Security
Agreement. Each Grantor will not become bound by a security agreement signed or
authenticated by another Person (determined as provided in Section 9-203(d) of
the UCC) without giving the Collateral Agent 10 days' prior written notice
thereof and taking all action required by the Collateral Agent to insure that
the perfection and priority of the Collateral Agent's lien on the Collateral
will be maintained. Each Grantor will also keep all originals of all chattel
paper that evidence Receivables of such Grantor, at the location therefor
specified in Section 9(b) or, upon 10 days' prior written notice to the
Collateral Agent, at such other location designated in such notice. Each Grantor
will hold and preserve its records relating to the Collateral and chattel paper
and will permit representatives of the Collateral Agent at any time during
normal business hours to inspect and make abstracts from such records and other
documents.
(b) Subject to SECTION 31 hereof, if any of its Collateral is at
any time in the possession or control of a warehouseman, bailee or agent, or if
the Collateral Agent so requests, such Grantor will (i) notify such
warehouseman, bailee or agent of the security interests, (ii) instruct such
warehouseman, bailee or agent to hold all such Collateral for the Collateral
Agent's account subject to the Collateral Agent's instructions (which shall
permit such Collateral to be removed by such Grantor in the ordinary course of
business until the Collateral Agent notifies such warehouseman, bailee or agent
that an Event of Default has occurred and is continuing), (iii) using
commercially reasonable efforts, cause such warehouseman, bailee or agent to
authenticate a record acknowledging that it holds possession of such Collateral
for the Collateral Agent's benefit and (iv) make such authenticated record
available to the Collateral Agent.
(c) Subject to SECTION 31 hereof, except as otherwise provided in
this subsection (c), each Grantor will continue to collect, at its own expense,
all amounts due or to become due such Grantor under the Receivables (the
"Pledged Receivables") and the Related Contracts. In connection with such
collections, such Grantor may take (and, subject to SECTION 31 hereof, at the
Collateral Agent's direction, will take) such action as such Grantor or the
Collateral Agent may deem necessary or advisable to enforce collection of the
Pledged
19
Receivables and the Related Contracts; PROVIDED, HOWEVER, that the Collateral
Agent, subject to SECTION 31 hereof, shall have the right at any time upon the
occurrence and during the continuance of a Default, upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Pledged
Receivables or Related Contracts of the assignment of such Pledged Receivables
or Related Contracts to the Collateral Agent and to direct such Obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Collateral Agent and, upon such notification and at the expense of such
Grantor, to enforce collection of any such Pledged Receivables or Related
Contracts, and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as such Grantor might have done, and to
otherwise exercise all rights with respect to such Pledged Receivables and
Related Contracts, including, without limitation, those set forth set forth in
Section 9-607 of the UCC. After receipt by any Grantor of the notice from the
Collateral Agent referred to in the proviso to the preceding sentence but
subject to the rights of the Senior Lenders as set forth in SECTION 31 hereof,
(i) all amounts and proceeds (including instruments) received by such Grantor in
respect of the Pledged Receivables and the Related Contracts of such Grantor
shall be received in trust for the benefit of the Collateral Agent hereunder,
shall be segregated from other funds of such Grantor and shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any necessary
indorsement) to be deposited in the Collateral Account and either (A) released
to such Grantor so long as no Default shall have occurred and be continuing or
(B) if any Default shall have occurred and be continuing, applied as provided in
Section 22(b) and (ii) such Grantor will not adjust, settle or compromise the
amount or payment of any Receivable, or amount due on any Related Contract,
release wholly or partly any Obligor thereof, or allow any credit or discount
thereon. No Grantor will permit or consent to the subordination of its right to
payment under any of the Pledged Receivables and Related Contracts to any other
indebtedness or obligations of the Obligor thereof.
Section 16. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Default
shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Security
Collateral of such Grantor or any part thereof for any purpose
other than to originate Entitlement Orders (as defined in any
Securities Account Control Agreement) with respect to any
securities account; PROVIDED, HOWEVER, that such Grantor will not
exercise or refrain from exercising any such right if such action
would have a material adverse effect on the value of the Security
Collateral or any part thereof.
(ii) Each Grantor shall be entitled to receive and
retain any and all dividends, interest and other distributions paid
in respect of the Security Collateral of such Grantor if and to the
extent that the payment thereof is not otherwise prohibited by the
terms of the Loan Documents; PROVIDED, HOWEVER, that subject to
SECTION 31 hereof, any and all
(A) dividends, interest and other
distributions paid or payable other than in cash in
respect of, and instruments and other property
received, receivable or otherwise distributed in
respect of, or in exchange for, any Security
Collateral,
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(B) dividends and other distributions
paid or payable in cash in respect of any Security
Collateral in connection with a partial or total
liquidation or dissolution or in connection with a
reduction of capital, capital surplus or
paid-in-surplus and
(C) cash paid, payable or otherwise
distributed in respect of principal of, or in
redemption of, or in exchange for, any Security
Collateral
shall be, and shall be forthwith delivered to the Collateral Agent
to hold as, Security Collateral and shall, if received by such
Grantor, be received in trust for the benefit of the Collateral
Agent, be segregated from the other property or funds of such
Grantor and be forthwith delivered to the Collateral Agent as
Security Collateral in the same form as so received (with any
necessary indorsement).
(iii) The Collateral Agent will execute and deliver
(or cause to be executed and delivered) to each Grantor all such
proxies and other instruments as such Grantor may reasonably
request for the purpose of enabling such Grantor to exercise the
voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends or interest
payments that it is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of a Default,
subject to SECTION 31 hereof:
(i) All rights of each Grantor (x) to exercise or
refrain from exercising the voting and other consensual rights that
it would otherwise be entitled to exercise pursuant to Section
16(a)(i) shall, upon notice to such Grantor by the Collateral
Agent, cease and (y) to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and
retain pursuant to Section 16(a)(ii) shall automatically cease, and
all such rights shall thereupon become vested in the Collateral
Agent, which shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and
to receive and hold as Security Collateral such dividends, interest
and other distributions.
(ii) All dividends, interest and other distributions
that are received by any Grantor contrary to the provisions of
paragraph (i) of this Section 16(b) shall be received in trust for
the benefit of the Collateral Agent, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the
Collateral Agent as Security Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Collateral Agent shall be authorized to send
to each Securities Intermediary as defined in and under any
Securities Account Control Agreement a Notice of Exclusive Control
as defined in and under such Securities Account Control Agreement.
Section 17. AS TO LETTER-OF-CREDIT RIGHTS. (a) Each Grantor, by
granting a security interest in its Letter-of-Credit Rights to the Collateral
Agent, intends to (and, subject to SECTION 31 hereof, hereby does) assign to the
Collateral Agent its rights (including its contingent
21
rights) to the proceeds of all letters of credit of which it is or hereafter
becomes a beneficiary. Subject to SECTION 31 hereof, each Grantor will promptly
cause the issuer of such letter of credit and each nominated person (if any)
with respect thereto to consent to such assignment of the proceeds thereof and
deliver written evidence of such consent to the Collateral Agent.
(b) If an Event of Default shall have occurred and be continuing
(and subject to SECTION 31 hereof, each Grantor will, promptly upon request by
the Collateral Agent, notify (and such Grantor hereby authorizes the Collateral
Agent to notify) the issuer and each nominated person with respect to each of
its pledged letters of credit that (i) the proceeds thereof have been assigned
to the Collateral Agent hereunder and (ii) any payments due or to become due in
respect thereof are to be made directly to the Collateral Agent or its designee.
Section 18. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. (a) Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Security Agreement and Liens permitted under the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Grantor not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities of each issuer of the Pledged Shares.
Section 19. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Subject to
SECTION 31 hereof, each Grantor hereby irrevocably appoints the Collateral Agent
such Grantor's attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, from time to time in
the Collateral Agent's discretion, to take any action and to execute any
instrument that the Collateral Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement, but only after the
occurrence and during the continuance of an Event of Default. Such actions shall
include each of the following:
(a) to obtain and adjust insurance required to be paid
to the Collateral Agent pursuant to Section 14,
(b) to ask for, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or
other instruments, documents and chattel paper, in connection with
clause (a) or (b) above, and
(d) to file any claims or take any action or institute
any proceedings that the Collateral Agent may deem necessary or
desirable for the collection of any of the Collateral or otherwise
to enforce compliance with the rights of the Collateral Agent with
respect to any of the Collateral.
22
Section 20. COLLATERAL AGENT MAY PERFORM. If any Grantor fails to
perform any agreement contained herein, subject to SECTION 31 hereof, the
Collateral Agent may, as the Collateral Agent deems necessary to protect the
security interest granted hereunder in the Collateral or to protect the value
thereof, but without any obligation to do so and without notice, itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by such Grantor under
Section 23(b).
Section 21. THE COLLATERAL AGENT'S DUTIES. (a) The powers conferred on
the Collateral Agent hereunder are solely to protect the Lenders' interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the exercise of reasonable care with respect to the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty or
liability as to any Collateral, as to ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not the Collateral Agent or any Lender has or is
deemed to have knowledge of such matters, or as to the taking of any necessary
steps to preserve rights against any parties or any other rights pertaining to
any Collateral. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each a "Subagent") for the Collateral
Agent hereunder with respect to all or any part of the Collateral. In the event
that the Collateral Agent so appoints any Subagent with respect to any
Collateral, (i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent, for the ratable benefit of the Lenders, as
security for the Secured Obligations of such Grantor, (ii) such Subagent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent hereunder
with respect to such Collateral and (iii) the term "Collateral Agent," when used
herein in relation to any rights, powers, privileges, interests and remedies of
the Collateral Agent with respect to such Collateral, shall include such
Subagent; PROVIDED, HOWEVER, that no such Subagent shall be authorized to take
any action with respect to any such Collateral unless and except to the extent
expressly authorized in writing by the Collateral Agent.
(c) Notwithstanding anything herein to the contrary, to the extent
this Security Agreement or any other Loan Document purports to require any
Grantor to grant to the Collateral Agent, on behalf of the Lenders, a security
interest in the FCC Licenses or State Licenses of such Grantor, the Collateral
Agent, on behalf of the Lenders, shall only have a security interest in such
licenses at such times and to the extent that a security interest in such
licenses is permitted under applicable law. In further recognition of applicable
FCC or State rules and policies, the parties hereto also agree that,
notwithstanding anything to the contrary contained in this Security Agreement or
any other Loan Document, the Collateral Agent, on behalf of the Lenders, will
not take any action pursuant to this Security Agreement or any other Credit
Document that would constitute or result in any assignment of a FCC License or a
State License or any transfer of control of a Grantor if such assignment of
license or transfer of control would require under then-existing
23
law (including any Communications Law or State Communications Law) prior
consent from the FCC or any state authority without first obtaining such
consents.
(d) The Collateral Agent may release any of the Collateral from
this Security Agreement or may substitute any of the Collateral for other
Collateral without altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this Security Agreement as to any
Collateral not expressly released or substituted, and this Security Agreement
shall continue as a lien, subject to Permitted Liens, on all Collateral not
expressly released or substituted.
Section 22. REMEDIES. If any Event of Default shall have occurred and
be continuing, subject to SECTION 31 hereof:
(a) The Collateral Agent may exercise in respect of
the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and
remedies of a secured party upon default under the UCC (whether or
not the UCC applies to the affected Collateral) and also may: (i)
require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral as directed by
the Collateral Agent and make it available to the Collateral Agent
at a place and time to be designated by the Collateral Agent that
is reasonably convenient to both parties; (ii) without notice
except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Collateral Agent
may deem commercially reasonable; (iii) occupy any premises owned
or leased by any of the Grantors where the Collateral or any part
thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; and (iv)
exercise any and all rights and remedies of any of the Grantors
under or in connection with the Collateral or otherwise in respect
of the Collateral, including, without limitation, (A) any and all
rights of such Grantor to demand or otherwise require payment of
any amount under, or performance of any provision of, the Pledged
Receivables and the Related Contracts and the other Collateral, (B)
withdraw, or cause or direct the withdrawal, of all funds with
respect to the Account Collateral and (C) exercise all other rights
and remedies with respect to the Pledged Receivables, the Related
Contracts and the other Collateral, including, without limitation,
those set forth in Section 9-607 of the UCC. Each Grantor agrees
that, to the extent notice of sale shall be required by law, at
least 10 days' notice to such Grantor of the time and place of any
public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Collateral
Agent and all cash proceeds received by or on behalf of the
Collateral Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, in
the discretion of the Collateral Agent, be held by the Collateral
Agent as collateral for, and/or
24
then or at any time thereafter applied in whole or in part by the
Collateral Agent for the ratable benefit of the Lenders against,
all or any part of the Secured Obligations, in the following
manner:
(i) FIRST, to the payment of all of the
fees, indemnification payments, costs and expenses
that are due and payable to the Collateral Agent under
or in respect of the Loan Documents on such date;
(ii) SECOND, to the payment of all of the
indemnification payments, fees, costs and expenses
that are due and payable to the Lenders under Section
23 hereof, Section 9.05 of the Credit Agreement and
any similar section of any of the other Loan Documents
on such date, ratably based upon the respective
aggregate amounts of all such indemnification
payments, costs and expenses owing to the Lenders on
such date;
(iii) THIRD, to the payment of all of the
accrued and unpaid interest on the Obligations (other
than the Loans) that is due and payable to the
Collateral Agent and the Lenders under Section 2.03 of
the Credit Agreement on such date, ratably based upon
the respective aggregate amounts of all such interest
owing to the Lenders on such date;
(iv) FOURTH, to the payment of all of the
accrued and unpaid interest on the Loans that is due
and payable to the Lenders under Section 2.03 of the
Credit Agreement on such date, ratably based upon the
respective aggregate amounts of all such interest
owing to the Lenders on such date;
(v) FIFTH, to the payment of the
principal of all of the outstanding Loans that is due
and payable to the Lenders on such date, ratably based
upon the respective aggregate amounts of all such
principal owing to the Lenders on such date; and
(vi) SIXTH, to the payment of all other
Obligations of the Credit Parties owing under or in
respect of the Loan Documents that are due and payable
to the Lenders on such date, ratably based upon the
respective aggregate amounts of all such Obligations
owing to the Lenders on such date.
Any surplus of such cash or cash proceeds held by or on the behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) Unless the Collateral Agent has elected to retain
the Collateral pursuant to the applicable provisions of the UCC, in
the event that the proceeds of any sale, collection or realization
are insufficient to pay all amounts to which the Collateral Agent
or the Lenders are entitled as set forth above, the Grantors shall
be jointly and severally liable for the deficiency, together with
interest thereon at the rate specified in Section 2.03 of the
Credit Agreement, together with the costs of collection and the
reasonable fees of any attorneys employed by the Collateral Agent
to collect such deficiency.
25
(d) All payments received by any Grantor in respect of the
Collateral shall be received in trust for the benefit of the Collateral
Agent, shall be segregated from other funds of such Grantor and shall
be forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary indorsement).
(e) The Collateral Agent may, without notice to any Grantor
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against any funds held with respect to the Account Collateral or in any
other deposit account.
(f) If the Collateral Agent shall determine to exercise its
right to sell all or any of the Security Collateral of any Grantor
pursuant to this Section 22, each Grantor agrees that, upon request of
the Collateral Agent, such Grantor will, at its own expense:
(i) execute and deliver, and cause each issuer of
such Security Collateral contemplated to be sold and the
directors and officers thereof to execute and deliver, all
such instruments and documents, and do or cause to be done all
such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register such
Security Collateral under the provisions of the Securities Act
of 1933 (as amended from time to time, the "Securities Act"),
to cause the registration statement relating thereto to become
effective and to remain effective for such period as
prospectuses are required by law to be furnished and to make
all amendments and supplements thereto and to the related
prospectus that, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission
applicable thereto;
(ii) use its best efforts to qualify the Security
Collateral under the state securities or "Blue Sky" laws and
to obtain all necessary governmental approvals for the sale of
such Security Collateral, as requested by the Collateral
Agent;
(iii) cause each such issuer of such Security
Collateral to make available to its security holders, as soon
as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act;
(iv) provide the Collateral Agent with such other
information and projections as may be necessary or, in the
opinion of the Collateral Agent, advisable to enable the
Collateral Agent to effect the sale of such Security
Collateral; and
(v) do or cause to be done all such other acts and
things as may be necessary to make such sale of such Security
Collateral or any part thereof valid and binding and in
compliance with applicable law.
(g) The Collateral Agent is authorized, in connection with any
sale of the Security Collateral pursuant to this Section 22, to deliver
or otherwise disclose to any
26
prospective purchaser of the Security Collateral: (i) any registration
statement or prospectus, and all supplements and amendments thereto,
prepared pursuant to subsection (f)(i) above; (ii) any information and
projections provided to it pursuant to subsection (f)(iv) above; and
(iii) any other information in its possession relating to such Security
Collateral.
(h) Each Grantor acknowledges the impossibility of
ascertaining the amount of damages that would be suffered by the
Lenders by reason of the failure by such Grantor to perform any of the
covenants contained in subsection (f) above and, consequently, agrees
that, if such Grantor shall fail to perform any of such covenants, it
will pay, as liquidated damages and not as a penalty, an amount equal
to the value of the Security Collateral on the date the Collateral
Agent shall demand compliance with subsection (f) above.
(i) The Grantors recognize that the Collateral Agent may deem
it impracticable to effect a public sale of all or any part of the
Security Collateral and that the Collateral Agent may, therefore,
determine to make one or more private sales of any such Security
Collateral to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such Security Collateral for
their own account, for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges that any such
private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no
obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933. Each
Grantor further acknowledges and agrees that any offer to sell Security
Collateral which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such
offer may be advertised without prior registration under the Securities
Act of 1933) or (ii) made privately in the manner described above shall
be deemed to involve a "public sale" under the UCC, notwithstanding
that such sale may not constitute a "public offering" under the
Securities Act of 1933, and the Collateral Agent may, in such event,
bid for the purchase of such Security Collateral.
Section 23. INDEMNITY AND EXPENSES. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless each of the Collateral Agent and
the Lenders, and each of their Affiliates and their respective officers,
directors, employees, agents, trustees and advisors (each, an "Indemnified
Party") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded against
any Indemnified Party, in each case arising out of or in connection with or
resulting from this Security Agreement (including, without limitation,
enforcement of this Security Agreement), except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's gross negligence or willful misconduct.
27
(b) Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Collateral of
such Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Lenders hereunder or (iv) the failure by such
Grantor to perform or observe any of the provisions hereof.
(c) The foregoing indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by a Grantor, its directors,
shareholders or creditors or an Indemnified Party or any other Person.
Section 24. AMENDMENTS; WAIVERS; ADDITIONAL GRANTORS; ETC. (a) No
amendment or waiver of any provision of this Security Agreement, and no consent
to any departure by any Grantor herefrom, shall in any event be effective unless
the same shall be in writing and signed by the Collateral Agent, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Collateral Agent
or any Lender to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof nor shall any single or partial exercise of any such
right preclude any other or further exercise thereof or the exercise of any
other right.
(b) Upon the execution and delivery or authentication by any Person
of a security agreement supplement in substantially the form of Exhibit D hereto
(each a "Security Agreement Supplement"), (i) such Person shall be referred to
as an "Additional Grantor" and shall be and become a Grantor hereunder and each
reference in this Security Agreement and the other Loan Documents to "Grantor"
shall also mean and be a reference to such Additional Grantor, and (ii) the
supplemental schedules attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement the corresponding
Schedules hereto, and the Collateral Agent may attach such supplemental
schedules to such Schedules; and each reference to such Schedules shall mean and
be a reference to such Schedules as supplemented pursuant to each Security
Agreement Supplement.
Section 25. NOTICES; ETC. All notices and other communications provided
for hereunder shall be in writing (including telecopier communication) and
mailed, telecopied or delivered to the addresses specified for notices in the
Credit Agreement, or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and other communications shall, when mailed or telecopied, be effective
when deposited in the mails or telecopied, respectively, addressed as aforesaid,
except that notices and other communications to the Collateral Agent shall not
be effective until received by the Collateral Agent. Delivery by telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Security Agreement or of any Security Agreement Supplement or Schedule hereto
shall be effective as delivery of an original executed counterpart thereof.
Section 26. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT
AGREEMENT, ETC. (a) This Security Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the payment in full in cash of the
28
Secured Obligations, (ii) be binding upon each Grantor, its successors and
assigns and (iii) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Lenders and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(iii), any Lender may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender herein or otherwise, in each case as provided in
Section 9.04(b)of the Credit Agreement. None of the rights or obligations of any
Grantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Collateral Agent, and any such assignment or transfer
shall be null and void.
(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 Collateral Agent or any Lender as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law.
Section 27. RELEASE; TERMINATION. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the Collateral Agent will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; PROVIDED, HOWEVER, that (i) at
the time of such request and such release, no Default shall have occurred and be
continuing, (ii) such Grantor shall have delivered to the Collateral Agent, at
least 10 days prior to the date of the proposed release, a written request for
release describing the item of Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail, including, without
limitation, the price thereof and any expenses in connection therewith, together
with a form of release for execution by the Collateral Agent and a certificate
of such Grantor to the effect that the transaction is in compliance with the
Loan Documents and as to such other matters as the Collateral Agent may request
and (iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied, or any payment to be made in connection therewith, in
accordance with Section 2.04 of the Credit Agreement shall, to the extent so
required, be paid or made to, or in accordance with the instructions of, the
Collateral Agent when and as required under Section 2.04 of the Credit
Agreement.
(b) Upon the payment in full in cash of the Secured Obligations
(except in respect of indemnification that survives repayment of the
indebtedness), the pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the applicable
Grantor. Upon any such termination, the Collateral Agent will, at the applicable
Grantor's expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.
Section 28. EXECUTION IN COUNTERPARTS. This Security Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
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Delivery of an executed counterpart of a signature page to this Security
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Security Agreement.
Section 29. GOVERNING LAW. This Security Agreement shall be governed
by, and construed in accordance with, the laws of the State of California.
Section 30. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 31. SUBORDINATION. Notwithstanding any contrary provision of
this Security Agreement, but subject to this SECTION 31, the parties hereto
covenant and agree that all rights of the Collateral Agent and the Lenders to
the Collateral hereunder shall be subordinated and subject in right of priority
in accordance with the provisions of the Intercreditor Agreement. In furtherance
thereof, for so long as the Senior Debt Agreements and the "Security Agreement"
(as defined therein) shall be in effect, in no event shall any Grantor be
required to take any action hereunder or under any of the other Loan Documents
nor shall the Collateral Agent take any action or be vested with any rights
hereunder or under any of the other Loan Documents, in either case, that would
be inconsistent with, or that would cause such Grantor to be in breach of, any
provision of the Intercreditor Agreement, including, without limitation, the
delivery of any Collateral to the Collateral Agent for its possession or control
or the procuring of any agreement or the taking of any other action that would
vest possession or control in the Collateral Agent over any Collateral.
30
IN WITNESS WHEREOF, each Grantor has caused this Security
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
DAVEL FINANCING COMPANY, L.L.C.,
a Delaware limited liability company
By: DAVEL COMMUNICATIONS, INC.,
its sole managing member
By: /s/Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: President
PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation
By: /s/Xxxx X. Xxxxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
CHEROKEE COMMUNICATIONS, INC.,
a Texas corporation
By: /s/Xxxx X. Xxxxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
DAVEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: President
ADTEC COMMUNICATIONS, INC.,
a Florida corporation
CENTRAL PAYPHONE SERVICES, INC.,
a Georgia corporation
COMMUNICATIONS CENTRAL INC.,
a Georgia corporation
S-1
COMMUNICATIONS CENTRAL OF GEORGIA, INC.,
a Georgia corporation
DAVEL COMMUNICATIONS GROUP, INC.,
an Illinois corporation
DAVEL MEDIA, INC.,
a Delaware corporation
DAVEL MEXICO, LTD.,
an Illinois corporation
DAVELTEL, INC.,
An Illinois corporation
DF MERGER CORP.,
a Delaware corporation
INTERSTATE COMMUNICATIONS, INC.,
a Georgia corporation
INVISION TELECOM, INC.,
a Georgia corporation
PEOPLES ACQUISITION CORPORATION,
a Pennsylvania corporation
PEOPLES COLLECTORS, INC.,
a Delaware corporation
PEOPLES TELEPHONE COMPANY, INC.,
a New York corporation
PEOPLES TELEPHONE COMPANY, INC.,
a New Hampshire corporation
PT MERGER CORP.,
an Ohio corporation
PTC CELLULAR, INC.,
a Delaware corporation
PTC SECURITY SYSTEMS, INC.,
a Florida corporation
SILVERADO COMMUNICATIONS CORP.,
a Colorado corporation
S-2
TELALEASING ENTERPRISES, INC.,
an Illinois corporation
T.R.C.A., INC.,
an Illinois corporation
By: /s/Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
By: ______________________________
Name:
Title:
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