PLEDGE SECURITY AGREEMENT
-------------------------
(Investment Account)
The undersigned, Unidigital Inc., a Delaware corporation, executes and
delivers this Pledge Security Agreement (the "Agreement") to THE CHASE MANHATTAN
BANK ("Chase"), having an office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
further to induce Chase to enter into that certain Waiver And Amendment
Agreement of even date herewith by and among Chase, the undersigned and certain
subsidiaries of the undersigned and for other good and valuable consideration.
Unless otherwise defined herein capitalized terms shall have the meaning
ascribed to them in that certain Guarantee Agreement dated as of April 3, 1997
(the "Guarantee Agreement") made by the undersigned to Chase.
1. Certain Definitions. The term "Liabilities" shall mean: (i) the
Obligations, and (ii) any and all other indebtedness, obligations and
liabilities of any kind of the undersigned to Chase and also to others to the
extent of their participations granted to or interests therein created or
acquired for them by Chase, now or hereafter existing, arising directly between
the undersigned and Chase or acquired outright, conditionally, as a
participation or as collateral security from another by Chase, absolute or
contingent, joint and/or several, secured or unsecured, due or not due,
contractual or tortuous, liquidated or unliquidated, arising by operation of law
or otherwise, direct or indirect.
The term "Collateral" means all property in which the undersigned grants a
security interest pursuant to the "Grant of Security Interest" paragraph set
forth below.
The term "Obligor" means the undersigned or any maker, drawer, acceptor,
indorser, guarantor, surety, accommodation party or other person liable upon or
for any of the Liabilities or the Collateral.
2. Grant of Security Interest. As security for the payment of the
Liabilities, the undersigned hereby grants to Chase a security interest in, a
general lien upon and/or right of setoff against (as applicable) and pledges to
Chase the following Collateral and in all increases, profits or rights received
from it, in all substitutions and additions together with any proceeds:
All commercial paper and any other investment or other property now or hereafter
held in or credited to Money Center Account #00000000 maintained by the
undersigned with Chase (the "Collateral Account"), all present and future
entitlements of the undersigned with respect to such property and Collateral
Account, all income, dividends and other disbursements in respect of the
foregoing, and all proceeds of any of the foregoing.
The undersigned agrees that Chase's records will be the accurate record of
any substitutions in and additions to the Collateral.
Chase shall release its security interest in the Collateral upon the
repayment by the undersigned of that certain indebtedness in the aggregate
original principal amount of $2,600,000 evidenced by its unsubordinated
promissory notes dated May 21, 1997 as certified to the Lender to the
Chief Financial Officer of the undersigned; provided, however, that the Lender
shall not release its security interest if an Event of Default has occurred.
3. Covenants. As long as any part of the Liabilities remains unpaid, the
undersigned shall:
(a) defend the Collateral against all claims, keep the Collateral free
from other security interests and not dispose of any portion of the
Collateral without Chase's written consent;
(b) notify Chase promptly of any changes in the undersigned's name or
address;
(c) notify Chase of any change in legal entity structure, if applicable;
(d) execute and deliver any financing statements or other documents, pay
any costs of title searches and filing fees, and take any other action
Chase requests in relation to the security interest;
(e) pay all taxes and other charges, which may be levied against the
Collateral; and
(f) at all times maintain Collateral in the Collateral Account (including
for the purpose of this covenant, only readily marketable investment
grade debt securities of Persons other than the Credit Parties) having
a fair market value as determined by Chase of not less than $350,000.
4. Warranties. As long as any part of the Liabilities remains unpaid the
undersigned warrants to Chase that:
(a) each document representing the Collateral is genuine;
(b) the undersigned owns the Collateral;
(c) the undersigned (and its officer executing this Agreement on behalf of
the undersigned) is fully authorized and has taken all necessary
corporate and shareholder action to enter into and perform this
Agreement; and
(d) the undersigned shall not grant or suffer to exist any Lien in the
Collateral to or in favor of any Person other than Lender.
5. Voting Rights. If the Collateral is investment securities, the
undersigned authorizes Chase to transfer them into Chase's name or the name of
any nominee. So long as no Event of Default (as hereinafter defined) occurs, the
undersigned shall have all voting rights with respect investment securities
which constitute Collateral and Chase will mail the undersigned all
communications and proxies addressed to Chase, within a reasonable time so that
the undersigned may exercise such rights; provided, however, that the failure of
Lender so to do shall not entitle the undersigned to any damages by way of
separate action, offset or otherwise. After an Event of Default, Chase shall not
be required to send the undersigned further communications and any proxies
issued by the undersigned will be invalid. Chase shall then have the right to
vote in person or by proxy without any direction from the undersigned.
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6. Default. Any of the following will constitute an Event of Default
hereunder:
(a) an "Event of Default" under the Credit Agreement; or
(b) the fair market value of the Collateral (including, for the purpose of
this provision, only readily marketable investment grade debt
securities) in the Account shall be less than $350,000 for a period of
3 consecutive Business Days (as defined in the Credit Agreement) after
notice from Chase that the fair market value of the Collateral
Account, as determined by it in its sole discretion, is less than such
amount;
(c) any Obligor shall default in the performance of any of its agreements
herein or in any instrument or document delivered pursuant to this
Agreement or any of the Liabilities or in connection herewith, and
such default shall continue for 30 days after notice thereof by the
Lender to the Obligor (except that there shall be no grace period for
any default under paragraphs 3(f) or(d) hereof);
Upon the occurrence of an Event of Default, unless and to the extent that
Chase shall otherwise elect, all of the Liabilities shall become and be due and
payable forthwith. THE RIGHTS OF CHASE SET FORTH IMMEDIATELY ABOVE ARE WITHOUT
LIMITATION OF, AND IN ADDITION TO, ANY OTHER RIGHT OF CHASE UNDER ANY OTHER
DOCUMENT EVIDENCING OR EXECUTED IN CONNECTION WITH THE LIABILITIES (INCLUDING
BUT NOT LIMITED TO ANY RIGHT OF ACCELERATION OF PAYMENT PURSUANT TO THE
PROVISIONS THEREOF OR ANY RIGHT OF CHASE TO MAKE DEMAND FOR PAYMENT THEREUNDER
WITHOUT REFERENCE TO ANY PARTICULAR CONDITION OR EVENT).
7. Dividends/Income. So long as no Event of Default occurs, the undersigned
shall have the right to receive all cash income from the Collateral. If Chase
receives any cash income before the occurrence of an Event of Default, Chase
agrees to turn it over to the undersigned. Once an Event of Default occurs, the
undersigned will no longer be entitled to receive any cash income and if the
undersigned receives any, the undersigned agrees to turn it over to Chase. If an
event of Default exists, Chase may apply such receipts to the Liabilities in any
order in which it may determine in its sole discretion, but Chase will account
for such receipts and pay over to the undersigned any cash which remains on hand
after the Liabilities are satisfied.
8. General Waivers. Without affecting the liability of the undersigned to
Chase, any of the following may be done without notice to the undersigned:
(a) change, renew or extend the time for repayment of any part of the
Liabilities;
(b) change the rate of interest or any other provisions with respect to
any part of the Liabilities;
(c) surrender, sell or otherwise dispose of any money or property which is
in Chase's possession as collateral security for the Liabilities;
(d) release or discharge any party liable to Chase in whole or in part for
the Liabilities or accept any additional parties or guarantors;
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(e) delay or refrain from exercising any of Chase's rights;
(f) settle or compromise any and all claims; and/or
(g) apply any money or property of the undersigned or that of any other
party liable to Chase for any part of the Liabilities, to the
Liabilities in any order Chases chooses in its sole discretion.
9. Custody of Collateral. Chase agrees to use reasonable care to protect
any Collateral in its possession. However, Chase shall not be required to:
(a) vote any stock;
(b) collect any debt;
(c) exercise any conversion rights; and/or
(d) take any steps necessary to preserve rights against prior parties;
(e) notify the undersigned of any maturities, calls, conversions, or other
similar matters concerning the Collateral, except for forwarding to
the undersigned those communications which are addressed to the
undersigned.
10. Changes in Collateral. Whether or not an Event of Default has occurred,
the undersigned authorizes Chase to:
(a) receive and hold as additional collateral any non-cash increases in or
profits on the Collateral; and/or
(b) surrender the Collateral and receive any payment or distribution upon
redemption, dissolution or liquidation of the issuer of the
Collateral.
If the undersigned receive any of the payments or distributions described above
the undersigned agrees promptly to turn them over to Chase.
11. Further Assurances. The undersigned appoints Chase as its
attorney-in-fact to take any necessary steps, including the filing of financing
statements, to perfect Chase's security interest in the Collateral without first
obtaining the undersigned's signature. Upon Chase's request, the undersigned
will execute any amendments, including UCC-3 forms, which are necessary or
appropriate as determined by Chase in its sole discretion to perfect and
continue Chase's security interest in the Collateral.
12. Fees and Expenses. The undersigned agrees to pay all Chase's costs,
including reasonable attorneys' fees for necessary court process, in enforcing
this Agreement or realizing upon the Collateral.
13. Modification. This Agreement cannot be modified except by a written
agreement between the parties.
14. Notices. The undersigned waives any right to notice of any action Chase
may take with respect to the Collateral. If Chase shall provide such notice, the
undersigned agrees that notice will be sufficiently given if sent to the
undersigned's address shown in this Agreement or to a
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new address which the undersigned shall have notified Chase of in writing. The
undersigned agrees that notice of foreclosure sale sent at least five days
before the sale provides the undersigned with a reasonable opportunity to
exercise any right of redemption of the Collateral and any other legal rights.
15. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. The undersigned
consents to the nonexclusive jurisdiction and venue of the state or federal
courts located in such state. In the event of a dispute hereunder, suit may be
brought against the undersigned in such courts or in any jurisdiction where the
undersigned or any of its assets may be located. Service of process by Chase in
connection with any dispute shall be binding on the undersigned if sent to the
undersigned by registered mail at the address specified below or to such other
address as the undersigned may specify to Chase in writing.
16. Miscellaneous. This Agreement shall constitute an additional Loan
Document and Security Document within the meaning of the Credit Agreement and
shall not supersede any other Loan Document or Security Document, and the
Collateral herein pledged to the Chase is in addition to all other collateral
heretofore pledged by the undersigned or any of the Borrowers to Chase under any
of the Security Documents.
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IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed and delivered by its duly authorized officer as of this 1st day of
July, 1997.
UNIDIGITAL INC.
By:/s/ Xxxxxxx X. Xxx
----------------------------
Name: Xxxxxxx X. Xxx
Title: President and CEO
Address for Notices:
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxx, President
Telecopy: (000) 000-0000
THE CHASE MANHATTAN BANK
By:/s/ Xxxxxx Xxxxxx
----------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
Address for Notices:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, Vice President
Telecopy: (000) 000-0000
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