EXHIBIT 10.3
SECURITY AGREEMENT
Dated February 19, 2002
made by
THE GRANTORS REFERRED TO HEREIN,
as Grantors,
to
XXXXXXXXX L.L.C.,
as Collateral Agent
TABLE OF CONTENTS
Page
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Section 1. Definitions............................................................. 2
Section 2. Grant of Security....................................................... 3
Section 3. Security for Obligations................................................ 6
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.......................................... 10
Section 10. Further Assurances...................................................... 13
Section 11. Intellectual Property................................................... 14
Section 12. Regulatory Approvals.................................................... 16
Section 13. As to Inventory and Equipment........................................... 17
Section 14. Insurance............................................................... 17
Section 15. Post-Closing Changes; Bailees; Collections on Assigned
Agreements, Receivables and Related Contracts........................... 18
Section 16. Voting Rights; Dividends; Etc........................................... 20
Section 17. As to Letter-of-Credit Rights........................................... 21
Section 18. Transfers and Other Liens; Additional Shares............................ 21
Section 19. Collateral Agent Appointed Attorney-in-Fact............................. 21
Section 20. Collateral Agent May Perform............................................ 22
Section 21. The Collateral Agent's Duties........................................... 22
Section 22. Remedies................................................................ 23
Section 23. Indemnity and Expenses.................................................. 27
(i)
Section 24. Amendments; Waivers; Additional Grantors; Etc........................... 27
Section 25. Notices; Etc............................................................ 28
Section 26. Continuing Security Interest; Assignments under the Credit
Agreement, Etc.......................................................... 28
Section 27. Release; Termination.................................................... 28
Section 28. Execution in Counterparts............................................... 29
Section 29. Governing Law........................................................... 29
Section 30. Waiver of Jury Trial.................................................... 29
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)
SECURITY AGREEMENT
SECURITY AGREEMENT dated February 19, 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 Xxxxxxxxx L.L.C (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
(the "Davel Borrower"), PhoneTel Technologies, Inc., an Ohio corporation
("PhoneTel"), Cherokee Communications, Inc., a Texas corporation ("Cherokee",
and together with PhoneTel, collectively the "PhoneTel Borrowers" and
individually a "PhoneTel Borrower"), Davel Communications, Inc., a Delaware
corporation (the "Davel Parent"), and each of the domestic subsidiaries of any
of the foregoing persons have entered into a Credit Agreement dated as of
February 19, 2002 (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 Lenders (as defined therein).
(2) Pursuant to the Credit Agreement, the Grantors are entering into
this Agreement in order to grant to the Collateral Agent for the ratable benefit
of the Lenders a security interest in the Collateral (as hereinafter defined).
(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 Davel Borrower and the PhoneTel Borrowers
(collectively the "Borrowers" and individually a "Borrower) 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 and
subject to the terms of this 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 Loan Parties and subject to the terms of this Agreement, as
described in Parts B and C of Schedule V and in Schedule VI.
(6) It is a condition precedent to the making of Loans by the Lenders
under the Credit Agreement that the Grantors shall have granted the assignment
and security interest and made the pledge and assignment contemplated by this
Agreement.
(7) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
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NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Loans under the Credit Agreement, each Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Lenders as
follows:
Section 1. Definitions.
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(a) Terms defined in the Credit Agreement and not otherwise
defined in this Agreement are used in this Agreement as defined in the Credit
Agreement. Further, unless otherwise defined in this 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 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 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. (S) 357.2, (S) 357.10 though (S) 357.14 and (S) 357.41 though (S)
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.
"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
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2(j).
"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
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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.
"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
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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.
Section 2. Grant of Security. Each Grantor hereby assigns and pledges
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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
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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 Borrower 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 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, 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
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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 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
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(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
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such security interest does not include at any time any FCC License of 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
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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, 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 Agreement secures, in the
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case of each Grantor, the payment of all Obligations (as defined in the Credit
Agreement) of such Grantor, now existing or hereafter arising pursuant to the
Loan Documents, howsoever evidenced, created, incurred or acquired, whether
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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 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) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party 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) All
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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. 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 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 at any time to convert Security Collateral
consisting of financial assets 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 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 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
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the form of Exhibit C 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
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or any other Obligation of any Loan Party under any Loan Document shall remain
unpaid or any Lender shall have any Commitment under the Credit Agreement:
(a) Each Grantor 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, within 30 days of the Closing Date, 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").
(b) Each Grantor 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 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 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 may do so
without further notice to any Grantor.
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(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 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 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 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 upon
request by the Collateral Agent.
(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 Davel 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
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).
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(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
Agreement.
Section 7. Investing of Amounts in the Cash Concentration Accounts.
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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 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 or any Lender shall have any Commitment
under the Credit Agreement:
(a) 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;
(b) 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
Agreement, and otherwise take all necessary action, to subject such
commercial tort claim to the first priority lien of this 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
Agreement. Such Grantor is an organization of the type specified on the
first page of this Agreement and is organized under the laws of the
jurisdiction specified on the first page of this Agreement. 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
10
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 are set forth opposite such Grantor's name in
Schedule III hereto. [Since January 1, 2001,] 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
Collateral Agent.
(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
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 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 Collateral
Agent) and is not in default.
11
(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 5(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
Agreement have been duly made or taken and are in full force and effect,
and this Agreement creates in favor of the Collateral Agent for the benefit
of the Lenders a valid and, together with such filings and other actions,
perfected first priority 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 Agreement by such Grantor, (ii)
the perfection or maintenance of the assignment, pledge and security
interest created hereunder (including the first priority nature of such
assignment, pledge or security interest), except for the filing of
financing 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 Agreement or the remedies in respect of the
Collateral pursuant to this 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.
12
(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.
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, 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, 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
13
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 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.
(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, a
duly executed Assignment of Security (Copyrights), (B) with respect to Patents,
a duly executed Assignment of Security (Patents)s, (C) with respect to
Trademarks, a duly executed Assignment of Security (Trademarks) or (D) such
other duly executed documents as the Collateral Agent may 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 or any Lender shall have any Commitment under the
Credit Agreement, 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;
14
(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 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 an 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
15
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 or any Lender shall have any Commitment under the
Credit Agreement, each Grantor 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 documents the Collateral
Agent may reasonably request and as may be required by law in connection with
the obtaining of any FCC Consents, State Consents 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 Agreement. Without limiting the generality of the
foregoing, if an Event of Default shall have occurred and be continuing, each
Grantor 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 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 FCC Consents, State
Consents 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
16
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 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 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 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 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
17
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 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 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 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 first priority nature 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
18
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) 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) 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, 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 Receivables and the Related Contracts; provided,
--------
however, that the Collateral Agent 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, (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.
19
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 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,
(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:
(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
20
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 hereby does) assign to the Collateral Agent its rights
(including its contingent rights) to the proceeds of all letters of credit of
which it is or hereafter becomes a beneficiary. 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,
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 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. Each Grantor
-------------------------------------------
hereby irrevocably appoints the Collateral Agent such Grantor's attorney-in-
fact, with full
21
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 Agreement. Such
actions shall include each of the following, but only after the occurrence and
during the continuance of an Event of Default.
(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.
Section 20. Collateral Agent May Perform. If any Grantor fails to
----------------------------
perform any agreement contained herein, 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
22
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 Credit 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 Credit 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 law (including
any Communications Law or State Communications Law) prior FCC Consents or State
Consents without first obtaining such FCC Consents or State Consents.
(d) The Collateral Agent may release any of the Collateral from
this 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 Agreement as to any Collateral not expressly
released or substituted, and this Security Agreement shall continue as a first
priority 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:
(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
23
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 then or at any time
thereafter applied (after payment of any amounts payable to the Collateral
Agent pursuant to Section 23) 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, Section 8.06 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 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;
24
(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
-----
Loan 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.
(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
25
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 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
26
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 Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents 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 Agreement
(including, without limitation, enforcement of this 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.
(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
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 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
27
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
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, in the case of the Borrower or the
Parent, addressed to it at its address specified in the Credit Agreement and, in
the case of each Grantor other than the Borrower and the Parent, addressed to it
at its address set forth opposite such Grantor's name on the signature pages
hereto or on the signature page to the Security Agreement Supplement pursuant to
which it became a party hereto; 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 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 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 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 (including, without limitation, all or any portion of its Commitments)
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 8.05(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 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
28
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 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. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.
Section 29. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
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.
29
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Address for Notices: 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: President & Chief Executive Officer
CHEROKEE COMMUNICATIONS, INC.,
a Texas corporation
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President & 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
30
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
31
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
32
