EXHIBIT 4.9
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT is entered into as of March 21, 2003 by
and between United Stationers Supply Co., an Illinois corporation (the
"Borrower"), United Stationers Inc., a Delaware corporation (the "Parent"), and
the other Subsidiaries of the Parent listed on the signature page hereto
(together with the Borrower and the Parent, collectively, the "Initial
Grantors," and together with any additional Domestic Subsidiaries, whether now
existing or hereafter formed which become parties to this Security Agreement by
executing a Supplement hereto in substantially the form of Annex I, the
"Grantors"), and Bank One, NA, a national banking association having its
principal office in Chicago, Illinois, in its capacity as agent (the "Agent")
for the lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
The Borrower, the Parent, the Agent and the Lenders are entering into a
Five-Year Revolving Credit Agreement dated as of March 21, 2003 (as it may be
amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"). The Grantors are entering into this Pledge and Security
Agreement (as it may be amended, restated, supplemented or otherwise modified
from time to time, the "Security Agreement") in order to induce the Lenders to
enter into and extend credit to the Borrower under the Credit Agreement.
ACCORDINGLY, the Grantors and the Agent, on behalf of the Holders of
Secured Obligations, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used herein
and not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.
1.2. TERMS DEFINED IN NEW YORK UNIFORM COMMERCIAL CODE. Terms defined in
the New York UCC which are not otherwise defined in this Security Agreement are
used herein as defined in the New York UCC.
1.3. DEFINITIONS OF CERTAIN TERMS USED HEREIN. As used in this Security
Agreement, in addition to the terms defined in the Preliminary Statement, the
following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the New York
UCC or in the PPSA, as applicable.
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Chattel Paper" shall have the meaning set forth in Article 9 of the New
York UCC or in the PPSA, as applicable.
"Collateral" means all Accounts, Chattel Paper, Commercial Tort Claims,
Documents, Equipment, Fixtures, General Intangibles, Instruments, Inventory,
Investment Property, Pledged Deposits, Pledged Stock and Other Collateral,
wherever located, in which any Grantor now has or hereafter acquires any right
or interest, and the proceeds (including Stock Rights), insurance proceeds and
products thereof, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer materials and
records related thereto.
"Commercial Tort Claims" means those certain currently existing commercial
tort claims of any Grantor, including each commercial tort claim specifically
described in Exhibit "E".
"Control" shall have the meaning set forth in Article 8 or, if applicable,
in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the New York UCC.
"Customer Advance Notes" shall mean customer advance notes permitted under
the Credit Agreement.
"Default" means an event described in Section 5.1.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the New
York UCC.
"Documents" shall have the meaning set forth in Article 9 of the New York
UCC.
"Equipment" shall have the meaning set forth in Article 9 of the New York
UCC or in the PPSA, as applicable.
"Exhibit" refers to a specific exhibit to this Security Agreement, unless
another document is specifically referenced.
"Fixtures" shall have the meaning set forth in Article 9 of the New York
UCC.
"General Intangibles" shall have the meaning set forth in Article 9 of the
New York UCC or the meaning of "intangibles" as set forth in the PPSA, as
applicable.
"Instruments" shall have the meaning set forth in Article 9 of the New York
UCC or in the PPSA, as applicable.
"Inventory" shall have the meaning set forth in Article 9 of the New York
UCC or in the PPSA, as applicable.
"Investment Property" shall have the meaning set forth in Article 9 of the
New York UCC.
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"New York UCC" means the New York Uniform Commercial Code AS IN EFFECT FROM
TIME TO TIME.
"Other Collateral" means any property of the Grantors, other than real
estate, not included within the defined terms Accounts, Chattel Paper,
Commercial Tort Claims, Documents, Equipment, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property and Pledged Deposits, including,
without limitation, all cash on hand, letter-of-credit rights, letters of
credit, Stock Rights and Deposit Accounts or other deposits (general or special,
time or demand, provisional or final) with any bank or other financial
institution, it being intended that the Collateral include all property of the
Grantors other than real estate (subject to the limitations set forth in
Article II).
"Paid in Full" means (i) the payment in full in cash of the Secured
Obligations (other than contingent indemnity obligations), (ii) the termination
of all Commitments and (iii) the termination and/or cash collateralization of
all Facility LCs, in each case, in accordance with the Credit Agreement. The
term "Payment in Full" shall have a correlative meaning.
"Pledged Deposits" means all time deposits of money (other than Deposit
Accounts and Instruments), whether or not evidenced by certificates, which a
Grantor may from time to time designate as pledged to the Agent or to any Holder
of Secured Obligations as security for any Obligation, and all rights to receive
interest on said deposits.
"Pledged Stock" means, with respect to any Grantor, the shares of common
and preferred stock (or other ownership interest) of each issuer identified in
Exhibit "C" under the name of such Grantor and all other shares of capital stock
(or other ownership interest) of whatever class of each such issuer, now or
hereafter owned by such Grantor, and all certificates evidencing the same, and
shall include, without limitation, all of the capital stock of the Parent's
Domestic Subsidiaries (other than TOPCO) owned by such Grantor and the requisite
percentage of the capital stock of all Material Foreign Subsidiaries required to
be pledged pursuant to the Credit Agreement and owned by such Grantor.
"PPSA" shall mean the PERSONAL PROPERTY SECURITY ACT in effect from time to
time in the Province of Ontario or such similar legislation in effect in any
other Province of Canada, as applicable, as amended or supplemented from time to
time.
"Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments or Pledged Deposits, and any other rights or claims to
receive money which are General Intangibles or which are otherwise included as
Collateral.
"Required Secured Parties" means (x) prior to an acceleration of the
Secured Obligations under the Credit Agreement, the Required Lenders, (y) after
an acceleration of the Secured Obligations under the Credit Agreement but prior
to the date upon which the Credit Agreement has terminated by its terms and all
of the Secured Obligations thereunder have been paid in full, Lenders and their
Affiliates holding in the aggregate more than 50% of the total of (i) the unpaid
principal amount of the Aggregate Outstanding Credit Exposure and (ii) the
aggregate net early termination payments and all other amounts then due and
unpaid from the Borrower to the Lenders or their Affiliates under Rate
Management Transactions, as determined by the Agent in
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its reasonable discretion, and (z) after the Credit Agreement has terminated by
its terms and all of the Secured Obligations thereunder have been paid in full
(whether or not the Secured Obligations under the Credit Agreement were ever
accelerated), Lenders and their Affiliates (at the time of such termination)
holding in the aggregate more than 50% of the aggregate net early termination
payments and all other amounts then due and unpaid from the Borrower to the
Lenders or their Affiliates under Rate Management Transactions, as determined by
the Agent in its reasonable discretion.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security" has the meaning set forth in Article 8 of the New York UCC or in
the PPSA, as applicable.
"Stock Rights" means any securities, dividends or other distributions and
any other right or property which any Grantor shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which any Grantor now has or hereafter
acquires any right, issued by an issuer of such securities.
"Supporting Obligation" shall have the meaning set forth in Article 9 of
the New York UCC.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
Each of the Grantors hereby pledges, assigns and grants to the Agent, on
behalf of and for the ratable benefit of the Holders of Secured Obligations, a
security interest in all of such Grantor's right, title and interest, whether
now owned or hereafter acquired, in and to the Collateral to secure the prompt
and complete payment and performance of the Secured Obligations.
Notwithstanding the foregoing, the Collateral shall not include (i) (a) any
Accounts, General Intangibles, Chattel Paper, Instruments, Documents or
Investment Property which constitute Receivables subject to any Receivables
Purchase Facility permitted under the Credit Agreement, and (b) any Deposit
Accounts maintained in accordance with the requirements of the applicable
Receivables Purchase Facility into which collections and other amounts related
to those items described in clause (i)(a) are deposited (collectively, the
"Securitization Collateral"), (ii) any Property to the extent that such grant of
a security interest is prohibited by any applicable law or governmental
authority, requires a consent not obtained of any governmental authority
pursuant to any applicable law or is prohibited by, or constitutes a breach or
default under or results in the termination of or requires any consent not
obtained under, any contract, license,
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agreement, instrument or other document evidencing or giving rise to such
property or, in the case of any investment property, any applicable shareholder
or similar agreement, except to the extent that such applicable law or the term
in such contract, license, agreement, instrument or other document or
shareholder or similar agreement providing for such prohibition, breach, default
or termination of requiring such consent is ineffective under applicable law,
(iii) with respect to any shares of stock or other ownership interests in any
first-tier Foreign Subsidiary, the excess over 65% of all of the voting shares
of stock or equity interests in such Foreign Subsidiary and (iv) any stock or
other ownership interests of any Subsidiary of any first-tier Foreign
Subsidiary. The Agent's security interest in any item constituting
Securitization Collateral shall be released upon the sale, contribution or
transfer thereof under the terms of the applicable Receivables Purchase
Facility.
Each of the Grantors acknowledges, for the purposes of the PPSA, that (i)
value has been given, (ii) it has rights in the Collateral (other than
after-acquired Collateral), (iii) it has not agreed to postpone the time of
attachment of the security interest in the Collateral and (iv) it has received a
duplicate copy of this Security Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Initial Grantors represents and warrants to the Agent and the
Holders of Secured Obligations, and each Grantor that becomes a party to this
Security Agreement pursuant to the execution of a Security Agreement Supplement
in substantially the form of Annex I represents and warrants (after giving
effect to supplements to each of the Exhibits hereto with respect to such
subsequent Grantor as attached to such Security Agreement Supplement), that:
3.1. TITLE, AUTHORIZATION, VALIDITY AND ENFORCEABILITY. Such Grantor has
good and valid rights in or the power to transfer the Collateral owned by it and
title to the Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except for Liens
permitted under Section 4.1.3, and has full corporate, limited liability company
or partnership, as applicable, power and authority to grant to the Agent the
security interest in such Collateral pursuant hereto. The execution and delivery
by such Grantor of this Security Agreement has been duly authorized by proper
corporate, limited liability company or partnership, as applicable, proceedings,
and this Security Agreement constitutes a legal, valid and binding obligation of
such Grantor and creates a security interest which is enforceable against such
Grantor in all Collateral it now owns or hereafter acquires, except as
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyances, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) general equitable principles
(whether considered in a proceeding in equity or at law), and (iii) requirements
of reasonableness, good faith and fair dealing. When financing statements have
been filed in the appropriate offices against such Grantor in the locations
listed on Exhibit "D", the Agent will have a fully perfected first priority
security interest in the Collateral owned by such Grantor in which a security
interest may be perfected by filing under the applicable Uniform Commercial Code
or PPSA, as applicable, subject to Liens permitted under Section 6.15 of the
Credit Agreement, provided that nothing herein shall be deemed to constitute an
agreement to
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subordinate any of the Liens of the Agent under the Loan Documents to any Liens
otherwise permitted under Section 6.15 of the Credit Agreement (other than
Permitted Priority Liens).
3.2. CONFLICTING LAWS AND CONTRACTS. Neither the execution and delivery
by such Grantor of this Security Agreement, the creation and perfection of the
security interest in the Collateral granted hereunder, nor compliance with the
terms and provisions hereof will violate (i) any applicable law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on such
Grantor, or (ii) such Grantor's charter, articles or by-laws (or similar
constitutive documents), or (iii) the provisions of any indenture, material
instrument or material agreement to which such Grantor is a party or is subject,
or by which it, or its Property is bound or affected, or conflict with or
constitute a default thereunder, or result in or require the creation or
imposition of any Lien in, of or on the Property of such Grantor pursuant to the
terms of any such indenture, material instrument or material agreement (other
than any Lien of the Agent on behalf of the Holders of Secured Obligations).
3.3. TYPE AND JURISDICTION OF ORGANIZATION. As of the date of the
compliance certificate most recently delivered to the Agent pursuant to
Section 6.1.3 of the Credit Agreement in connection with the most recent annual
financial statements of the Parent delivered pursuant to Section 6.1.1 of the
Credit Agreement (or, for the period prior to the delivery of the first such
compliance certificate, as of the Closing Date) (such date being the "Reference
Date"), the Borrower is a corporation organized under the laws of the State of
Illinois; each of United Stationers Technology Services LLC and United
Stationers Financial Services LLC is a limited liability company organized under
the laws of the State of Illinois; each of the Parent and Azerty Incorporated is
a corporation organized under the laws of the State of Delaware; and Xxxxxxx,
Inc. is a corporation organized under the laws of the State of Louisiana, in
each case, except to the extent such Person has been merged with or into any
other Person in a transaction permitted by the Credit Agreement or such Person
has complied with the requirements of Section 4.1.4, and in each case, this
representation shall be deemed amended to make reference to the correct Person,
type of entity and/or jurisdiction, as applicable.
3.4. PRINCIPAL LOCATION. As of the Reference Date, such Grantor's mailing
address and the location of its place of business (if it has only one) or its
chief executive office (if it has more than one place of business), is disclosed
in Exhibit "A"; such Grantor has no other places of business except those set
forth in Exhibit "A".
3.5. PROPERTY LOCATIONS. As of the Reference Date, the Inventory,
Equipment and Fixtures of each Grantor are located solely at the locations of
such Grantor described in Exhibit "A", except for such Inventory, Equipment or
Fixtures which (i) are out for repair, (ii) have been sold or otherwise disposed
of in accordance with the terms of the Credit Agreement, (iii) are in transit to
a place described in Exhibit "A" or (iv) when taken together, have a net book
value in the aggregate of $10,000,000 or less. All of said locations are owned
by such Grantor except for locations (i) which are leased by such Grantor as
lessee and designated in Part B of Exhibit "A" and (ii) at which Inventory or
Equipment is held in a public warehouse or is otherwise held by a bailee or on
consignment by such Grantor as designated in Part C of Exhibit "A".
3.6. NO OTHER NAMES. Except as set forth on Exhibit "A", during the three
year period prior to the Closing Date and from the Closing Date through and
including the Reference Date,
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such Grantor has not conducted business under any name except the name in which
it has executed this Security Agreement, which is the exact name as it appears
in such Grantor's organizational documents, as amended, as filed with such
Grantor's jurisdiction of organization as of the Closing Date.
3.7. ACCOUNTS AND CHATTEL PAPER. The names of the obligors, amounts
owing, due dates and other information with respect to the Accounts and Chattel
Paper owned by such Grantor are correctly stated, in all material respects, in
all records of such Grantor relating thereto and in all invoices and reports
with respect thereto furnished to the Agent by such Grantor from time to time.
As of the time when each Account or each item of Chattel Paper arises, such
Grantor shall be deemed to have represented and warranted that such Account or
Chattel Paper, as the case may be, and all records relating thereto, are genuine
and in all material respects what they purport to be.
3.8. FILING REQUIREMENTS. As of the Reference Date, none of the Equipment
owned by such Grantor is covered by any certificate of title required to be
delivered pursuant to Section 4.3.2, except for the vehicles described in Part A
of Exhibit "B". As of the Reference Date, none of the Collateral owned by such
Grantor is of a type for which security interests or liens may be perfected by
filing under any federal statute except for (i) the vehicles described in Part B
of Exhibit "B" and (ii) patents, trademarks and copyrights held by such Grantor
and described in Part C of Exhibit "B".
3.9. NO FINANCING STATEMENTS. No financing statement describing all or
any portion of the Collateral which has not lapsed or been terminated naming
such Grantor as debtor has been filed in any jurisdiction except financing
statements (i) naming the Agent on behalf of the Holders of Secured Obligations
as the secured party and (ii) in respect of Liens permitted by Section 6.15 of
the Credit Agreement; PROVIDED, that nothing herein shall be deemed to
constitute an agreement to subordinate any of the Liens of the Agent under the
Loan Documents to any Liens otherwise permitted under Section 6.15 of the Credit
Agreement (other than Permitted Priority Liens).
3.10. FEDERAL EMPLOYER IDENTIFICATION NUMBER; STATE ORGANIZATION NUMBER.
Such Grantor's Federal employer identification number is, and if such Grantor is
a registered organization, such Grantor's State organization number is set forth
on Exhibit "A".
3.11. PLEDGED SECURITIES AND OTHER INVESTMENT PROPERTY. As of the
Reference Date, Exhibit "C" sets forth a complete and accurate list of the
Pledged Stock, and to the extent the same has a value in excess of $5,000,000
individually or $10,000,000 in the aggregate, Instruments, Securities and other
Investment Property (to the extent the same do not constitute Cash Equivalent
Investments or Customer Advance Notes) delivered to the Agent. Each Grantor is
the direct and beneficial owner of each Instrument, Security and other type of
Investment Property listed on Exhibit "C" as being owned by it, free and clear
of any Liens, except for the security interest granted to the Agent for the
benefit of the Holders of Secured Obligations hereunder. Each Grantor further
represents and warrants that (i) all Pledged Stock which are shares of stock in
a corporation or ownership interests in a partnership or limited liability
company have been (to the extent such concepts are relevant with respect to such
Pledged Stock) duly and validly issued, are fully paid and non-assessable and
constitute, as of the Reference
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Date, the percentage of the issued and outstanding shares of stock (or other
equity interests) of the respective issuers thereof indicated on Exhibit "C"
hereto and (ii) with respect to any certificates delivered to the Agent
representing an ownership interest in a partnership or limited liability
company, either such certificates are Securities as defined in Article 8 of the
Uniform Commercial Code of the applicable jurisdiction or in the PPSA, as
applicable, as a result of actions by the issuer or otherwise, or, if such
certificates are not Securities, such Grantor has so informed the Agent so that
the Agent may take steps to perfect its security interest therein as a General
Intangible.
ARTICLE IV
COVENANTS
From the date of this Security Agreement and thereafter until this Security
Agreement is terminated in accordance with Section 8.14, each of the Initial
Grantors agrees, and from and after the effective date of any Security Agreement
Supplement applicable to any Grantor (and after giving effect to supplements to
each of the Exhibits hereto with respect to such subsequent Grantor as attached
to such Security Agreement Supplement) and thereafter until this Security
Agreement is terminated in accordance with Section 8.14 each such subsequent
Grantor agrees:
4.1. GENERAL.
4.1.1 COMPLIANCE WITH CREDIT AGREEMENT. Each of the Grantors
covenants that, so long as any Lender has any Commitment outstanding under
the Credit Agreement or any amount payable under the Credit Agreement or
any other Secured Obligations (other than contingent indemnity obligations)
shall remain unpaid, it will, and, if necessary, will enable the Borrower
and the Parent to, fully comply with those covenants and agreements of the
Borrower and the Parent applicable to such Grantor set forth in the Credit
Agreement.
4.1.2 FINANCING STATEMENTS AND OTHER ACTIONS; DEFENSE OF TITLE.
Each Grantor hereby authorizes the Agent to file, and if requested will
execute and deliver to the Agent, all financing statements describing the
Collateral owned by such Grantor and other documents and take such other
actions as may from time to time reasonably be requested by the Agent in
order to maintain a first perfected security interest in and, if
applicable, Control of, the Collateral owned by such Grantor, subject to
Liens permitted under Section 6.15 of the Credit Agreement, provided that
nothing herein shall be deemed to constitute an agreement to subordinate
any of the Liens of the Agent under the Loan Documents to any Liens
otherwise permitted under Section 6.15 of the Credit Agreement (other than
Permitted Priority Liens). Such financing statements may describe the
Collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such property in any
other manner as the Agent may determine, in its sole discretion, is
necessary, advisable or prudent to ensure that the perfection of the
security interest in the Collateral granted to the Agent herein. Each
Grantor will take any and all actions necessary to defend title to the
Collateral owned by such Grantor against all persons and to defend the
security interest of the Agent in such Collateral and the priority thereof
against any Lien not expressly
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permitted hereunder. During the continuance of a Default the Borrower
shall, upon the request of the Agent, provide a written summary of each
property on which any Fixtures are located by any Grantor, including the
legal description, county and street address of such property, together
with the name and address of the record owner of each such property.
4.1.3 LIENS. No Grantor will create, incur, or suffer to exist any
Lien on the Collateral owned by such Grantor except Liens permitted
pursuant to Section 6.15 of the Credit Agreement, provided that nothing
herein shall be deemed to constitute an agreement to subordinate any of the
Liens of the Agent under the Loan Documents to any Liens otherwise
permitted under Section 6.15 of the Credit Agreement (other than Permitted
Priority Liens).
4.1.4 CHANGE IN CORPORATE EXISTENCE, TYPE OR JURISDICTION OF
ORGANIZATION, LOCATION, NAME. Each Grantor will, subject to Section 6.11 of
the Credit Agreement:
(i) preserve its existence and corporate structure as in effect on the
Closing Date;
(ii) not change its jurisdiction of organization;
(iii) not maintain its place of business (if it has only one) or its chief
executive office (if it has more than one place of business) at a
location other than a location specified on Exhibit "A;" and
(iv) not (a) have any Inventory, Equipment or Fixtures or proceeds or
products thereof at a location other than a location specified in
Exhibit "A", except for such Inventory, Equipment or Fixtures which
(W) are out for repair, (X) have been sold or otherwise disposed of
in accordance with the terms of the Credit Agreement, (Y) are in
transit to a place described in Exhibit "A" or (Z) when taken
together, have an aggregate net book value of $10,000,000 or less,
(b) change its name or taxpayer identification number or (c) change
its mailing address,
unless, in each such case, such Grantor shall have given the Agent not less
than 15 Business Days' (or such shorter time as to which the Agent and the
Grantor shall agree) prior written notice of such event or occurrence and
the Agent shall have either (x) determined that such event or occurrence
will not adversely affect the validity, perfection or priority of the
Agent's security interest in the Collateral, or (y) taken such steps (with
the cooperation of such Grantor to the extent necessary or advisable) as
are necessary or advisable to properly maintain the validity, perfection
and priority of the Agent's security interest in the Collateral owned by
such Grantor.
4.1.5 OTHER FINANCING STATEMENTS. No Grantor will suffer to exist,
or sign or authorize the signing on its behalf or the filing of any
financing statement naming it as debtor covering all or any portion of the
Collateral owned by such Grantor, except any financing statement (i)
authorized under Section 4.1.2 or (ii) filed to perfect a Lien permitted by
Section 6.15 of the Credit Agreement; PROVIDED, that nothing herein shall
be deemed to constitute an agreement to subordinate any of the Liens of the
Agent under the
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Loan Documents to any Liens otherwise permitted under Section 6.15 of the
Credit Agreement (other than Permitted Priority Liens).
4.2. RECEIVABLES.
4.2.1 COLLECTION OF RECEIVABLES. Except as otherwise provided in
this Security Agreement, each Grantor will collect and enforce, at such
Grantor's sole expense and in its ordinary course of business, all amounts
due or hereafter due to such Grantor under the Receivables owned by such
Grantor.
4.2.2 DELIVERY OF INVOICES. Each Grantor will deliver to the Agent
promptly upon its request after the occurrence and during the continuance
of a Default duplicate invoices with respect to each Account owned by such
Grantor and otherwise constituting Collateral hereunder bearing such
language of assignment as the Agent shall specify.
4.2.3 DISCLOSURE OF RECEIVABLES. Upon the reasonable request of
the Agent, each Grantor shall deliver to the Agent copies of any periodic
reports prepared with respect to Receivables in connection with any
Receivables Purchase Facility.
4.3. INVENTORY AND EQUIPMENT.
4.3.1 BAILMENT AGREEMENTS, ETC. With respect to each location
(other than properties owned or leased by such Grantor) at which Inventory
(other than catalogs) and/or Equipment with a net book value in excess of
$10,000,000 is located, each Grantor shall deliver bailment agreements,
warehouse receipts, financing statements or other documents reasonably
satisfactory to the Agent to protect the Agent's and the Holders of Secured
Obligations' security interest in such Inventory and/or Equipment.
4.3.2 TITLED VEHICLES. Upon the occurrence and during the
continuance of a Default, each Grantor will give the Agent notice of its
acquisition of any vehicle covered by a certificate of title the net book
value of which, when taken together with all other vehicles covered by a
certificate of title owned by any Grantor, exceeds $10,000,000 in the
aggregate, and deliver to the Agent, upon request, the original of any
vehicle title certificate and do all things necessary to have the Lien of
the Agent noted on any such certificate to eliminate such excess.
4.4. INSTRUMENTS, SECURITIES, CHATTEL PAPER, DOCUMENTS AND PLEDGED
DEPOSITS. Each Grantor will (i) deliver to the Agent immediately upon execution
of this Security Agreement the originals of all Pledged Stock, and, to the
extent the same has a value in excess of $5,000,000 individually or $10,000,000
in the aggregate, originals of all Chattel Paper, Securities and Instruments
constituting Collateral (if any then exist and other than those constituting
Cash Equivalent Investments or Customer Advance Notes), (ii) hold in trust for
the Agent upon receipt and immediately thereafter deliver to the Agent any
Pledged Stock, and, to the extent the same has a value in excess of $5,000,000
individually or $10,000,000 in the aggregate, originals of Chattel Paper,
Securities and Instruments constituting Collateral (other than those
constituting Cash Equivalent Investments or Customer Advance Notes), (iii) upon
the designation of any Pledged Deposits (as set forth in the definition
thereof), deliver to the Agent such Pledged Deposits which are evidenced by
certificates included in the Collateral endorsed in blank,
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marked with such legends and assigned as the Agent shall specify, and (iv) upon
the Agent's request, after the occurrence and during the continuance of a
Default, deliver to the Agent (and thereafter hold in trust for the Agent upon
receipt and immediately deliver to the Agent) any Document evidencing or
constituting Collateral. No Grantor shall permit any Person other than such
Grantor or the Agent to maintain possession of any Customer Advance Note.
4.5. UNCERTIFICATED SECURITIES AND CERTAIN OTHER INVESTMENT PROPERTY.
Each Grantor will permit the Agent (i) from time to time to cause each
Subsidiary of the Parent that is an issuer (and, if held with a securities
intermediary, such securities intermediary) of uncertificated securities or
other types of Investment Property not represented by certificates which are
Collateral owned by such Grantor, and (ii) after the occurrence and during the
continuance of a Default to cause the appropriate other issuers (and, if held
with a securities intermediary, such securities intermediary) of any other
uncertificated securities or other types of Investment Property not represented
by certificates which are Collateral owned by such Grantor, in each case, to
xxxx their books and records with the numbers and face amounts of all such
uncertificated securities or other types of Investment Property not represented
by certificates and all rollovers and replacements therefor to reflect the Lien
of the Agent granted pursuant to this Security Agreement. Each Grantor will use
all commercially reasonable efforts, (i) at all times with respect to each
Subsidiary of the Parent that is an issuer of Investment Property constituting
Collateral owned by such Grantor held with a financial intermediary, and (ii)
after the occurrence and during the continuance of a Default with respect to all
other Investment Property constituting Collateral owned by such Grantor held
with a financial intermediary, to cause such financial intermediary to enter
into a control agreement with the Agent in form and substance reasonably
satisfactory to the Agent.
4.6. STOCK AND OTHER OWNERSHIP INTERESTS.
4.6.1 CHANGES IN CAPITAL STRUCTURE OF ISSUERS. No Grantor will (i)
permit or suffer any issuer of Pledged Stock owned by such Grantor to
dissolve, liquidate, retire any of its capital stock or other Instruments,
Securities or other Investment Property evidencing ownership, reduce its
capital or merge or consolidate with any other entity, or (ii) vote any of
the Instruments, Securities or other Investment Property in favor of any of
the foregoing, except to the extent permitted under the Credit Agreement.
4.6.2 ISSUANCE OF ADDITIONAL SECURITIES. No Grantor will permit or
suffer (i) any issuer of Pledged Stock that is a Guarantor to issue any
such securities or other ownership interests, any right to receive the same
or any right to receive earnings, except to such Grantor or (ii) any issuer
of Pledged Stock that is not a Guarantor to issue any such securities or
other ownership interests, any right to receive the same or any right to
receive earnings unless such issuance is made or offered to each holder of
such securities based on their proportionate holdings thereof.
4.6.3 REGISTRATION OF PLEDGED SECURITIES AND OTHER INVESTMENT
PROPERTY. Each Grantor will permit any registerable Collateral owned by
such Grantor to be registered in the name of the Agent or its nominee at
any time at the option of the Required Secured Parties following the
occurrence and during the continuance of an Event of Default and without
any further consent of such Grantor.
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4.6.4 EXERCISE OF RIGHTS IN PLEDGED SECURITIES AND OTHER
INVESTMENT PROPERTY. Each Grantor will permit the Agent or its nominee at
any time during the continuance of a Default, without notice, to exercise
or refrain from exercising any and all voting and other consensual rights
pertaining to the Collateral owned by such Grantor or any part thereof, and
to receive all dividends and interest in respect of such Collateral.
4.7. DEPOSIT ACCOUNTS. Each Grantor will upon the Agent's request during
the continuance of a Default, (i) cause each bank or other financial institution
in which it maintains (a) a Deposit Account to enter into a control agreement
with the Agent, in form and substance reasonably satisfactory to the Agent in
order to give the Agent Control of the Deposit Account or (b) other deposits
(general or special, time or demand, provisional or final) to be notified of the
security interest granted to the Agent hereunder and cause each such bank or
other financial institution to acknowledge such notification in writing and/or
(ii) deliver to each such bank or other financial institution a letter, in form
and substance acceptable to the Agent, transferring ownership of the Deposit
Account to the Agent or transferring dominion and control over each such other
deposit to the Agent until such time as no Default exists. In the case of
deposits maintained with Lenders, the terms of such letter shall be subject to
the provisions of the Credit Agreement regarding setoffs. The provisions of this
Section shall not apply to (x) a deposit account for which the Agent or any
other Lender is the depositary bank and is in automatic control thereof and (y)
any deposit accounts specially and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of any
Grantor's salaried employees or any other trust accounts.
4.8. LETTER-OF-CREDIT RIGHTS. Each Grantor will, upon the Agent's
request, use commercially reasonable efforts to cause each issuer of a letter of
credit that constitutes Collateral (other than letters of credit that constitute
Supporting Obligations in respect of Collateral) having a face value in excess
of $5,000,000, to consent to the assignment of proceeds of the letter of credit
in order to give the Agent Control of the letter-of-credit rights to such letter
of credit.
4.9. INTELLECTUAL PROPERTY. If, after the Closing Date, any Grantor
obtains rights to any federally registered patent, trademark or copyright, or
applies for or seeks federal registration of any new patentable invention,
trademark or copyright, in addition to the patents, trademarks and copyrights
described in Part C of Exhibit "B", which are all of such Grantor's federally
registered patents, trademarks and copyrights as of the Closing Date, then such
Grantor shall, on an annual basis or, after the occurrence and during the
continuance of a Default, upon the request of the Agent, give the Agent notice
thereof. Each Grantor agrees promptly upon request by the Agent to execute and
deliver to the Agent any supplement to this Security Agreement or any other
document reasonably requested by the Agent to evidence such security interest in
a form appropriate for recording in the applicable federal office. Each Grantor
also hereby authorizes the Agent to modify this Security Agreement unilaterally
by amending Part C of Exhibit "B" to include any future patents, trademarks
and/or copyrights of which the Agent receives notification from such Grantor
pursuant hereto.
4.10. COMMERCIAL TORT CLAIMS. If, after the date hereof, any Grantor
identifies the existence of a commercial tort claim belonging to such Grantor in
respect of which such Grantor shall have filed a suit, and having, individually
or together with all other such commercial tort
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claims, in such Grantor's reasonable business judgment a value in excess of
$10,000,000, that has arisen in the course of such Grantor's business in
addition to the commercial tort claims described in Exhibit "E", which are all
of such Grantor's commercial tort claims as of the Closing Date, then such
Grantor shall give the Agent prompt notice thereof, but in any event not less
frequently than quarterly. Each Grantor agrees promptly upon request by the
Agent to execute and deliver to the Agent any supplement to this Security
Agreement or any other document reasonably requested by the Agent to evidence
the grant of a security interest therein in favor of the Agent.
ARTICLE V
DEFAULT
5.1. DEFAULT. The occurrence of any "Default" under, and as defined in,
the Credit Agreement shall constitute a Default hereunder.
5.2. ACCELERATION AND REMEDIES. Upon the acceleration of the Secured
Obligations under the Credit Agreement pursuant to Section 8.1 thereof, the
Obligations and, to the extent provided for under the Rate Management
Transactions evidencing the same, the Rate Management Obligations constituting
Secured Obligations, shall immediately become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, and the Agent may, with the concurrence or at the direction of
the Required Secured Parties, exercise any or all of the following rights and
remedies:
5.2.1 Those rights and remedies provided in this Security
Agreement, the Credit Agreement, or any other Loan Document, PROVIDED that
this Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Agent and the Holders of Secured Obligations prior to a
Default.
5.2.2 Those rights and remedies available to a secured party under
the New York UCC or the PPSA, as applicable (whether or not the New York
UCC or the PPSA applies to the affected Collateral) or under any other
applicable law (including, without limitation, any law governing the
exercise of a bank's right of setoff or bankers' lien) when a debtor is in
default under a security agreement.
5.2.3 Without notice except as specifically provided in
Section 8.1 or elsewhere herein, sell, lease, assign, grant an option or
options to purchase or otherwise dispose of the Collateral or any part
thereof in one or more parcels at public or private sale, for cash, on
credit or for future delivery, and upon such other terms as the Agent may
deem commercially reasonable.
5.2.4 Appoint by instrument in writing a receiver (which term as
used in this Security Agreement includes a receiver and manager) or agent
of all or any part of the Collateral and remove or replace from time to
time any such receiver or agent.
5.2.5 Institute proceedings in any court of competent jurisdiction
for the appointment of a receiver of all or any part of the Collateral.
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5.2.6 Borrow for the purposes of carrying on the business of the
Grantor or for the maintenance, preservation or protection of the
Collateral and grant a security interest in the Collateral, whether or not
in priority to the security interest granted herein, to secure repayment.
The Agent, on behalf of the secured parties, may comply with any applicable
state, Canadian provincial or federal law requirements in connection with a
disposition of the Collateral, and such compliance will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
If, after the Credit Agreement has terminated by its terms and all of the
Obligations have been paid in full, there remain Rate Management Obligations
outstanding, the Required Secured Parties may exercise the remedies provided in
this Section 5.2 upon the occurrence of any event which would allow or require
the termination or acceleration of any Rate Management Obligations pursuant to
the terms of the agreement governing any Rate Management Transaction.
5.3. GRANTORS' OBLIGATIONS UPON DEFAULT. Upon the request of the Agent
during the continuance of a Default, each Grantor will:
5.3.1 ASSEMBLY OF COLLATERAL. Assemble and make available to the
Agent the Collateral and all records relating thereto at any place or
places specified by the Agent which is reasonably convenient to both
parties.
5.3.2 SECURED PARTY ACCESS. Permit the Agent, to the extent such
Grantor has the authority to do so, by the Agent's representatives and
agents, to enter any premises where all or any part of the Collateral, or
the books and records relating thereto, or both, are located, to take
possession of all or any part of the Collateral and to remove all or any
part of the Collateral.
5.4. LICENSE. The Agent is hereby granted a license or other right to
use, following the occurrence and during the continuance of a Default, without
charge, each Grantor's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, customer lists and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral, and, following the occurrence and during the continuance of a
Default, such Grantor's rights under all licenses and all franchise agreements
shall inure to the Agent's benefit. In addition, each Grantor hereby irrevocably
agrees that the Agent may, following the occurrence and during the continuance
of a Default, sell any of such Grantor's Inventory directly to any person,
including without limitation persons who have previously purchased such
Grantor's Inventory from such Grantor and in connection with any such sale or
other enforcement of the Agent's rights under this Security Agreement, may sell
Inventory which bears any trademark owned by or licensed to such Grantor and any
Inventory that is covered by any copyright owned by or licensed to such Grantor
and the Agent may finish any work in process and affix any trademark owned by or
licensed to such Grantor and sell such Inventory as provided herein.
5.5. RECEIVER'S POWERS.
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(a) Any receiver appointed by the Agent shall be vested with the rights
and remedies which could have been exercised by the Agent in respect of each
Grantor or the Collateral and such other powers and discretions as are granted
in the instrument of appointment and any supplemental instruments. The identity
of the receiver, its replacement and its remuneration shall be within the sole
and unfettered discretion of the Agent or any other Holder of Secured
Obligations.
(b) Any receiver appointed by the Agent shall act as agent for the Agent
or any other Holder of Secured Obligations for the purposes of taking possession
of the Collateral, but otherwise and for all other purposes (except as provided
below), as agent for each Grantor. The receiver may sell, lease, or otherwise
dispose of Collateral as agent for each Grantor or as agent for the Agent as the
Agent may determine in its discretion. Each Grantor agrees to ratify and confirm
all actions of the receiver acting as agent for each Grantor, and to release and
indemnify the receiver in respect of all such actions.
(c) The Agent, in appointing or refraining from appointing any receiver,
shall not incur liability to the receiver, each Grantor or otherwise and shall
not be responsible for any misconduct or negligence of the receiver.
ARTICLE VI
WAIVERS, AMENDMENTS AND REMEDIES
Each of the Holders of Secured Obligations agrees that, except to the
extent provided in Section 5.2, this Security Agreement may be enforced only by
the actions of the Agent for the benefit of the Holders of Secured Obligations,
and that no other Holder of Secured Obligations shall have any right
individually to seek to enforce or to enforce this Security Agreement or to
realize upon the security to be granted hereby (other than the right of setoff
provided for in the Loan Documents). No delay or omission of the Agent to
exercise any right or remedy granted under this Security Agreement shall impair
such right or remedy or be construed to be a waiver of any Default or an
acquiescence therein, and any single or partial exercise of any such right or
remedy shall not preclude any other or further exercise thereof or the exercise
of any other right or remedy. No waiver, amendment or other variation of the
terms, conditions or provisions of this Security Agreement whatsoever shall be
valid unless in writing signed by the Agent with the concurrence or at the
direction of the Lenders required under Section 8.2 of the Credit Agreement and
each Grantor, and then only to the extent in such writing specifically set
forth, provided that the addition of any Domestic Subsidiary as a Grantor
hereunder by execution of a Security Agreement Supplement in the form of Annex I
(with such modifications as shall be acceptable to the Agent) shall not require
receipt of any consent from or execution of any documentation by any other
Grantor party hereto. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to
the Agent until the non-contingent Secured Obligations have been paid in full.
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ARTICLE VII
PROCEEDS; COLLECTION OF RECEIVABLES
7.1. LOCKBOXES. Upon request of the Agent after the occurrence and during
the continuance of a Default, each Grantor shall execute and deliver to the
Agent irrevocable lockbox agreements in the form provided by or otherwise
acceptable to the Agent, which agreements shall be accompanied by an
acknowledgment by the bank where the lockbox is located of the Lien of the Agent
granted hereunder and of irrevocable instructions to wire all amounts collected
therein to a special collateral account at the Agent.
7.2. COLLECTION OF RECEIVABLES. The Agent may at any time after the
occurrence of a Default, by giving each Grantor written notice, elect to require
that the Receivables be paid directly to the Agent for the benefit of the
Holders of Secured Obligations. In such event, each Grantor shall, and shall
permit the Agent to, promptly notify the account debtors or obligors under the
Receivables owned by such Grantor of the Agent's interest therein and direct
such account debtors or obligors to make payment of all amounts then or
thereafter due under such Receivables directly to the Agent. Upon receipt of any
such notice from the Agent, each Grantor shall thereafter hold in trust for the
Agent, on behalf of the Holders of Secured Obligations, all amounts and proceeds
received by it with respect to the Receivables and Other Collateral and
immediately and at all times thereafter deliver to the Agent all such amounts
and proceeds in the same form as so received, whether by cash, check, draft or
otherwise, with any necessary endorsements. The Agent shall hold and apply funds
so received as provided by the terms of Sections 7.3 and 7.4.
7.3. SPECIAL COLLATERAL ACCOUNT. The Agent may require all cash proceeds
of the Collateral to be deposited in a special non-interest bearing cash
collateral account with the Agent and held there as security for the Secured
Obligations. No Grantor shall have any control whatsoever over said cash
collateral account. If no Default is continuing, the Agent shall from time to
time deposit the collected balances in said cash collateral account into the
applicable Grantor's general operating account with the Agent. If any Default
has occurred and is continuing, the Agent may (and shall, at the direction of
the Required Lenders), from time to time, apply the collected balances in said
cash collateral account to the payment of the Secured Obligations whether or not
the Secured Obligations shall then be due.
7.4. APPLICATION OF PROCEEDS. The proceeds of the Collateral shall be
applied by the Agent to payment of the Secured Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:
(a) FIRST, to payment of all costs and expenses of the Agent
incurred in connection with the collection and enforcement of the Secured
Obligations or of the security interest granted to the Agent pursuant to
this Security Agreement;
(b) SECOND, to payment of that portion of the Secured
Obligations constituting accrued and unpaid interest and fees, pro rata
among the Lenders and their Affiliates in accordance with the amount of
such accrued and unpaid interest and fees owing to each of them;
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(c) THIRD, to payment of the principal of the Secured
Obligations and the net early termination payments and any other Rate
Management Obligations then due and unpaid from the Borrower to any of the
Lenders or their Affiliates, pro rata among the Lenders and their
Affiliates in accordance with the amount of such principal and such net
early termination payments and other Rate Management Obligations then due
and unpaid owing to each of them;
(d) FOURTH, to payment of any Secured Obligations (other than
those listed above) pro rata among those parties to whom such Secured
Obligations are due in accordance with the amounts owing to each of them;
and
(e) FIFTH, the balance, if any, after all of the Secured
Obligations have been satisfied, shall be distributed by the Agent to the
applicable Grantor or at its direction.
ARTICLE VIII
GENERAL PROVISIONS
8.1. NOTICE OF DISPOSITION OF COLLATERAL; CONDITION OF COLLATERAL. Each
Grantor hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Borrower, addressed as set forth in Article IX, at least ten days prior to (i)
the date of any such public sale or (ii) the time after which any such private
sale or other disposition may be made. Agent shall have no obligation to
clean-up or otherwise prepare the Collateral for sale.
8.2. COMPROMISES AND COLLECTION OF COLLATERAL. Each Grantor and the Agent
recognize that setoffs, counterclaims, defenses and other claims may be asserted
by obligors with respect to certain of the Receivables, that certain of the
Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, each Grantor agrees that the Agent
may at any time and from time to time, if a Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Agent in its sole discretion shall
determine or abandon any Receivable, and any such action by the Agent shall be
commercially reasonable so long as the Agent acts in good faith based on
information known to it at the time it takes any such action.
8.3. SECURED PARTY PERFORMANCE OF GRANTOR'S OBLIGATIONS. Without having
any obligation to do so, the Agent may perform or pay any obligation which any
Grantor has agreed to perform or pay in this Security Agreement and such Grantor
shall reimburse the Agent for any reasonable amounts paid by the Agent pursuant
to this Section 8.3. Each Grantor's obligation to reimburse the Agent pursuant
to the preceding sentence shall be a Secured Obligation payable on demand.
8.4. AUTHORIZATION FOR SECURED PARTY TO TAKE CERTAIN ACTION. Each Grantor
irrevocably authorizes the Agent at any time and from time to time in the sole
discretion of the
17
Agent and appoints the Agent as its attorney in fact (i) to execute on behalf of
such Grantor as debtor and to file financing statements necessary or desirable
in the Agent's sole discretion to perfect and to maintain the perfection and
priority of the Agent's security interest in the Collateral, (ii) to indorse and
collect any cash proceeds of the Collateral, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement and to file
any other financing statement or amendment of a financing statement (which does
not add new collateral or add a debtor) in such offices as the Agent in its sole
discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the Agent's security interest in the Collateral, (iv)
to contact and enter into one or more agreements with the issuers of
uncertificated securities which are Collateral owned by such Grantor and which
are Securities or with financial intermediaries holding other Investment
Property as may be necessary or advisable to give the Agent Control over such
Securities or other Investment Property, (v) to enforce payment of the
Instruments, Accounts and Receivables in the name of the Agent or such Grantor,
(vi) to apply the proceeds of any Collateral received by the Agent to the
Secured Obligations as provided in Article VII and (vii) to discharge past due
taxes, assessments, charges, fees or Liens on the Collateral (except for such
Liens as are specifically permitted hereunder or under any other Loan Document),
and each Grantor agrees to reimburse the Agent on demand for any reasonable
payment made or any reasonable expense incurred by the Agent in connection
therewith, provided that this authorization shall not relieve any Grantor of any
of its obligations under this Security Agreement or under the Credit Agreement.
Notwithstanding the foregoing, such powers of attorney granted with respect to
clause (ii) and clauses (iv) through (vii) above shall be exercisable by the
Agent only after the occurrence and during the continuance of a Default.
8.5. SPECIFIC PERFORMANCE OF CERTAIN COVENANTS. Each Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 4.4, 5.3,
or 8.7 or in Article VII will cause irreparable injury to the Agent and the
Holders of Secured Obligations, that the Agent and Holders of Secured
Obligations have no adequate remedy at law in respect of such breaches and
therefore agrees, without limiting the right of the Agent or the Holders of
Secured Obligations to seek and obtain specific performance of other obligations
of the Grantors contained in this Security Agreement, that the covenants of the
Grantors contained in the Sections referred to in this Section 8.5 shall be
specifically enforceable against the Grantors.
8.6. USE AND POSSESSION OF CERTAIN PREMISES. Upon the occurrence and
during the continuance of a Default, the Agent shall be entitled to occupy and
use any premises owned or leased by the Grantors where any of the Collateral or
any records relating to the Collateral are located until the non-contingent
Secured Obligations are paid or the Collateral is removed therefrom, whichever
first occurs, without any obligation to pay any Grantor for such use and
occupancy.
8.7. DISPOSITIONS NOT AUTHORIZED. No Grantor is authorized to sell or
otherwise dispose of the Collateral except as set forth in the Credit Agreement
and notwithstanding any course of dealing between any Grantor and the Agent or
other conduct of the Agent, no authorization to sell or otherwise dispose of the
Collateral (except as set forth in the Credit Agreement) shall be binding upon
the Agent or the Holders of Secured Obligations unless such authorization is in
writing signed by the Agent with the consent or at the direction of the Required
Lenders.
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8.8. BENEFIT OF AGREEMENT. The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantors, the
Agent and the Holders of Secured Obligations and their respective successors and
permitted assigns (including all persons who become bound as a debtor to this
Security Agreement), except that the Grantors shall not have the right to assign
their rights or delegate their obligations under this Security Agreement or any
interest herein (other than pursuant to a transaction permitted by the Credit
Agreement), without the prior written consent of the Agent.
8.9. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Grantors contained in this Security Agreement shall survive the execution
and delivery of this Security Agreement.
8.10. TAXES AND EXPENSES. The Grantors shall reimburse the Agent for any
and all reasonable out-of-pocket expenses, costs and charges (including but not
limited to reasonable outside attorneys', auditors' and accountants' fees and
receiver's or agent's remuneration) paid or incurred by the Agent in connection
with the preparation, execution, delivery, administration, collection and
enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including,
to the extent permitted by Section 6.9 of the Credit Agreement, the expenses and
charges associated with any periodic or special audit of the Collateral). Any
and all costs and expenses incurred by the Grantors in the performance of
actions required pursuant to the terms hereof shall be borne solely by the
Grantors.
8.11. CONSENT. Each Grantor hereby consents to the holding of any Pledged
Stock by the Agent for and on behalf of each and every one of the Holders of
Secured Obligations. The Agent hereby acknowledges having received, as of the
date hereof, evidence in writing of the security by the Grantor on the Pledged
Stock and the share certificates in respect thereof.
8.12. CURRENCY. All references in this Security Agreement to dollars,
unless otherwise specifically indicated, are expressed in currency of the United
States of America.
8.13. HEADINGS. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.14. TERMINATION. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until the Secured Obligations (other than contingent
indemnity obligations) have been Paid in Full. Notwithstanding the foregoing,
the security interests granted hereunder (and any Grantor's obligations
hereunder) shall be released in accordance with the provisions of Section 10.15
of the Credit Agreement.
8.15. ENTIRE AGREEMENT. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Grantors and the Agent relating to the Collateral.
8.16. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
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LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAWS OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES) BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
8.17. INDEMNITY. Each Grantor hereby agrees, jointly with the other
Grantors and severally, to indemnify the Agent and the Holders of Secured
Obligations, and their respective successors, permitted assigns, agents and
employees, from and against any and all liabilities, damages, penalties, suits,
costs, and expenses of any kind and nature (including, without limitation, all
expenses of litigation or preparation therefor whether or not the Agent or any
Holder of Secured Obligations is a party thereto) imposed on, incurred by or
asserted against the Agent or the Holders of Secured Obligations, or their
respective successors, assigns, agents and employees, in any way relating to or
arising out of this Security Agreement, or the manufacture, purchase,
acceptance, rejection, ownership, delivery, lease, possession, use, operation,
condition, sale, return or other disposition of any Collateral (including,
without limitation, latent and other defects, whether or not discoverable by the
Agent or the Holders of Secured Obligations or any Grantor, and any claim for
patent, trademark or copyright infringement), except to the extent the same are
caused by the gross negligence or willful misconduct of such Person or solely by
reason of the Agent's breach of the express terms of this Agreement.
8.18. SUBORDINATION OF INTERCOMPANY INDEBTEDNESS. Each Grantor agrees that
any and all claims of such Grantor against any other Grantor (each an "Obligor")
with respect to any "Intercompany Indebtedness" (as hereinafter defined), any
endorser, obligor or any other guarantor of all or any part of the Secured
Obligations, or against any of its properties shall be subordinate and subject
in right of payment to the prior Payment in Full of all Secured Obligations
(other than contingent indemnity obligations). Notwithstanding any right of any
Grantor to ask, demand, xxx for, take or receive any payment from any Obligor,
all rights, liens and security interests of such Grantor, whether now or
hereafter arising and howsoever existing, in any assets of any other Obligor
shall be and are subordinated to the rights of the Holders of Secured
Obligations and the Agent in those assets. No Grantor shall have any right to
possession of any such asset or to foreclose upon any such asset, whether by
judicial action or otherwise, unless and until all of the Secured Obligations
(other than contingent indemnity obligations) shall have been Paid in Full. If
all or any part of the assets of any Obligor, or the proceeds thereof, are
subject to any distribution, division or application to the creditors of such
Obligor, whether partial or complete, voluntary or involuntary, and whether by
reason of liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding, or if the business of
any such Obligor is dissolved or if substantially all of the assets of any such
Obligor are sold, then, and in any such event (such events (other than any such
events permitted by the Credit Agreement) being herein referred to as an
"Insolvency Event"), any payment or distribution of any kind or character,
either in cash, securities or other property, which shall be payable or
deliverable upon or with respect to any indebtedness of any Obligor to any
Grantor ("Intercompany Indebtedness") shall be paid or delivered directly to the
Agent for application on any of the Secured Obligations, due or to become due,
until such Secured Obligations (other than contingent indemnity obligations)
shall have first been Paid in Full. Should any payment, distribution, security
or instrument or proceeds thereof be received by the applicable Grantor upon or
with respect to the Intercompany Indebtedness after any Insolvency Event and
prior to the satisfaction of all of the Secured Obligations (other than
contingent
20
indemnity obligations) and the termination or expiration of all Commitments of
the Lenders and Facility LCs issued pursuant to the Credit Agreement, such
Grantor shall receive and hold the same in trust, as trustee, for the benefit of
the Holders of Secured Obligations and shall forthwith deliver the same to the
Agent, for the benefit of the Holders of Secured Obligations, in precisely the
form received (except for the endorsement or assignment of the Grantor where
necessary), for application to any of the Secured Obligations, due or not due,
and, until so delivered, the same shall be held in trust by the Grantor as the
property of the Holders of Secured Obligations. If any such Grantor fails to
make any such endorsement or assignment to the Agent, the Agent or any of its
officers or employees is irrevocably authorized to make the same. Each Grantor
agrees that until the Secured Obligations (other than the contingent indemnity
obligations) have been Paid in Full, no Grantor will assign or transfer to any
Person (other than the Agent or the Borrower or another Grantor) any claim any
such Grantor has or may have against any Obligor.
ARTICLE IX
NOTICES
9.1. SENDING NOTICES. Any notice required or permitted to be given under
this Security Agreement shall be sent (and deemed received) in the manner and to
the addresses set forth in Article XIII of the Credit Agreement; and any such
notice delivered to the Borrower shall be deemed to have been delivered to all
of the Grantors.
9.2. CHANGE IN ADDRESS FOR NOTICES. Each of the Grantors, the Agent and
the Lenders may change the address for service of notice upon it by a notice in
writing to the other parties.
ARTICLE X
THE AGENT
Bank One, NA has been appointed Agent for the Holders of Secured
Obligations hereunder pursuant to Article X of the Credit Agreement. It is
expressly understood and agreed by the parties to this Security Agreement that
any authority conferred upon the Agent hereunder is subject to the terms of the
delegation of authority made by the Holders of Secured Obligations to the Agent
pursuant to the Credit Agreement, and that the Agent has agreed to act (and any
successor Agent shall act) as such hereunder only on the express conditions
contained in such Article X. Any successor Agent appointed pursuant to Article X
of the Credit Agreement shall be entitled to all the rights, interests and
benefits of the Agent hereunder.
ARTICLE XI
EXHIBITS
The Grantors may from time to time update the Exhibits to this
Security Agreement in writing such that any representations and warranties made
hereunder as of a particular Reference Date shall be made in reference to the
Exhibits to this Security Agreement as in effect on such Reference Date.
Notwithstanding the foregoing, to the extent any action or
21
inaction resulting in a change to the information contained in any Exhibit to
this Security Agreement independently required compliance with any other
provision of the Security Agreement (or the Credit Agreement), then the updating
of the relevant Exhibit shall not relieve, waive or excuse the independent
Default arising under the Credit Agreement from such Grantor's non-compliance
with any such provision pertaining to the underlying action or inaction.
22
IN WITNESS WHEREOF, each of the Grantors and the Agent have executed this
Security Agreement as of the date first above written.
UNITED STATIONERS INC. AZERTY INCORPORATED
By: By:
--------------------------------- -------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Senior Vice President and Treasurer Title: Vice President and Treasurer
XXXXXXX, INC. UNITED STATIONERS TECHNOLOGY
SERVICES LLC
By: By:
--------------------------------- -------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer Title: Vice President and Treasurer
UNITED STATIONERS FINANCIAL SERVICES LLC UNITED STATIONERS SUPPLY CO.
By: By:
--------------------------------- -------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer Title: Senior Vice President,
Treasurer and Assistant
Secretary
BANK ONE, NA (MAIN OFFICE
CHICAGO), as Agent
By:
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Director, Capital Markets
SIGNATURE PAGE TO PLEDGE AND SECURITY AGREEMENT
STATE OF ILLINOIS )
) SS
COUNTY OF XXXX )
The foregoing instrument was acknowledged before me this 21st day of March,
2003.
--------------------------------------
Xxxxxx X. Xxxxxxx
Notary Public
My commission expires: 1-25-205
1
EXHIBIT "A"
(See Sections 3.3, 3.4, 3.5, 3.6, 3.11 and 4.1.4 of Security Agreement)
Place of Business (if it has only one) or Chief Executive Office (if more than
one place of business) and Mailing Address, other names, Federal employer
identification number, where applicable, and, if such Grantor is a registered
organization, the State organization number:
--------------------------
--------------------------
--------------------------
--------------------------
Attention:
----------------
FEIN:
Organization Number:
Other Names:
Locations of Inventory and Equipment and Fixtures:
A. PROPERTIES OWNED BY THE GRANTORS:
B. PROPERTIES LEASED BY THE GRANTORS:
C. PUBLIC WAREHOUSES OR OTHER LOCATIONS PURSUANT TO BAILMENT OR CONSIGNMENT
ARRANGEMENTS:
2
EXHIBIT "B"
(See Section 3.9 of Security Agreement)
A. Vehicles subject to certificates of title:
Description Title Number & State Where Issued
----------- ---------------------------------
B. Aircraft/engines, ships, railcars and other vehicles governed by federal
statute:
Description Registration Number
----------- -------------------
C. Patents, copyrights, trademarks protected under federal law*:
----------
* For (i) trademarks, show the trademark itself, the registration date and the
registration number; (ii) trademark applications, show the trademark applied
for, the application filing date and the serial number of the application; (iii)
patents, show the patent number, issue date and a brief description of the
subject matter of the patent; and (iv) patent applications, show the serial
number of the application, the application filing date and a brief description
of the subject matter of the patent applied for. Any licensing agreements for
patents or trademarks should be described on a separate schedule.
3
EXHIBIT "C"
List of Pledged Securities
(See Section 3.13 of Security Agreement)
A. STOCKS:
Issuer Certificate Number Number of Shares
------ ------------------ ----------------
X. XXXXX:
Issuer Number Face Amount Coupon Rate Maturity
------ ------ ----------- ----------- --------
C. GOVERNMENT SECURITIES:
Issuer Number Type Face Amount Coupon Rate Maturity
------ ------ ---- ----------- ----------- --------
D. OTHER SECURITIES OR OTHER INVESTMENT PROPERTY
(CERTIFICATED AND UNCERTIFICATED):
Issuer Description of Collateral Percentage Ownership Interest
------ ------------------------- -----------------------------
4
EXHIBIT "D"
(See Section 3.1 of Security Agreement)
OFFICES IN WHICH FINANCING STATEMENTS HAVE BEEN FILED
5
EXHIBIT "E"
(See Definition of "Commercial Tort Claims")
COMMERCIAL TORT CLAIMS
[Describe parties, case number(if applicable), nature of dispute]
6
ANNEX I
to
SUBSIDIARY
SECURITY AGREEMENT
Reference is hereby made to the Subsidiary Security Agreement (the
"Agreement"), dated as of March 21, 2003, made by each of
United Stationers
Supply Co., an Illinois Corporation (the "Borrower"), United Stationers Inc., a
Delaware corporation (the "Parent"), and the other Subsidiaries of the Parent
listed on the signature pages thereto (together with the Borrower and the
Parent, collectively, the "Grantors") (each an "Initial Grantor", and together
with any additional Domestic Subsidiaries, including the undersigned, which
become parties thereto by executing a Supplement in substantially the form
hereof, the "Grantors"), in favor of the Agent. Capitalized terms used herein
and not defined herein shall have the meanings given to them in the Agreement.
By its execution below, the undersigned, [NAME OF NEW GRANTOR], a
[__________________________] [corporation/limited liability company] agrees to
become, and does hereby become, a Grantor under the Agreement and agrees to be
bound by such Agreement as if originally a party thereto. By its execution
below, the undersigned represents and warrants as to itself that all of the
representations and warranties contained in the Agreement are true and correct
in all respects as of the date hereof. [NAME OF NEW GRANTOR] represents and
warrants that the supplements to the Exhibits to the Agreement attached hereto
are true and correct in all respects and such supplements set forth all
information required to be scheduled under the Agreement. [NAME OF NEW GRANTOR]
shall take all steps necessary to perfect, in favor of the Agent, a
first-priority security interest in and lien against [NAME OF NEW GRANTOR]'s
Collateral, including, without limitation, delivering all certificated
Securities to the Agent, and taking all steps necessary to properly perfect the
Agent's interest in any uncertificated equity or membership interests.
IN WITNESS WHEREOF, [NAME OF NEW GRANTOR], a [__________________]
[corporation/limited liability company] has executed and delivered this Annex I
counterpart to the Agreement as of this ___________ day of ____________, ____.
[NAME OF NEW GRANTOR]
By:
----------------------------
Title:
-------------------------
7
