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EXHIBIT 10.05
PARENT PLEDGE AGREEMENT
DATED AS OF JANUARY 1, 1997
BETWEEN
FIREARMS TRAINING SYSTEMS, INC.
AND
NATIONSBANK, N.A. (SOUTH),
AS AGENT
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TABLE OF CONTENTS
ARTICLE SECTION PAGE
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ARTICLE I DEFINITIONS............................................................... 1
SECTION 1.01. Terms Defined in Credit Agreement........................... 1
SECTION 1.02. Definition of Certain Terms Used Herein..................... 1
SECTION 1.03. UCC Definitions............................................. 2
SECTION 1.04. Terms Generally............................................. 2
ARTICLE II SECURITY INTERESTS....................................................... 2
SECTION 2.01. The Security Interests...................................... 2
SECTION 2.02. Continuing Liability of the Pledgor......................... 2
SECTION 2.03. Delivery of Pledged Securities.............................. 2
SECTION 2.04. Security Interests Absolute................................. 3
SECTION 2.05. Release of Collateral....................................... 3
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................... 4
SECTION 3.01. Credit Agreement............................................ 4
SECTION 3.02. Pledged Securities.......................................... 4
SECTION 3.03. Validity, Perfection and Priority of Security Interests..... 4
SECTION 3.04. Place of Business; Location of Collateral................... 4
SECTION 3.05. Effectiveness............................................... 4
ARTICLE IV COVENANTS................................................................ 5
SECTION 4.01. Perfection of Security Interests............................ 5
SECTION 4.02. Further Actions............................................. 5
SECTION 4.03. Change of Name, Identity or Structure....................... 5
SECTION 4.04. Place of Business and Collateral............................ 6
SECTION 4.05. Maintenance of Records...................................... 6
SECTION 4.06. Compliance with Laws, etc. ................................. 6
SECTION 4.07. Payment of Taxes, etc. ..................................... 6
SECTION 4.08. Limitation on Liens on Collateral........................... 6
SECTION 4.09. Limitations on Dispositions of Collateral................... 6
SECTION 4.10. Notices..................................................... 6
SECTION 4.11. Change of Law............................................... 6
SECTION 4.12. Reimbursement Obligation.................................... 6
ARTICLE V DISTRIBUTIONS ON PLEDGED SECURITIES; VOTING............................... 7
SECTION 5.01. Right to Receive Distributions on Pledged Collateral; 7
Voting......................................................
ARTICLE VI REMEDIES; RIGHTS UPON DEFAULT............................................ 8
SECTION 6.01. UCC Rights.................................................. 8
SECTION 6.02. Sale of Collateral.......................................... 8
SECTION 6.03. Rights of Purchasers........................................ 9
SECTION 6.04. Additional Rights of the Agent.............................. 9
SECTION 6.05. Securities Act, etc. ....................................... 9
SECTION 6.06. Remedies Not Exclusive...................................... 10
SECTION 6.07. Waiver and Estoppel......................................... 11
SECTION 6.08. Power of Attorney........................................... 11
SECTION 6.09. Application of Proceeds..................................... 12
ARTICLE VII MISCELLANEOUS........................................................... 13
SECTION 7.01. Notices..................................................... 13
SECTION 7.02. Survival of Agreement....................................... 13
SECTION 7.03. Counterparts; Effectiveness................................. 13
SECTION 7.04. Amendments, Etc. ........................................... 13
SECTION 7.05. Assignments................................................. 13
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ARTICLE SECTION PAGE
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SECTION 7.06. Savings Clause.............................................. 13
SECTION 7.07. Governing Law............................................... 14
SECTION 7.08. Entire Agreement............................................ 14
SECTION 7.09. No Waiver; Remedies......................................... 14
SECTION 7.10. Headings.................................................... 14
SECTION 7.11. Submission to Jurisdiction.................................. 14
SECTION 7.12. No Oral Agreements.......................................... 14
SCHEDULES
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Schedule 1 Chief Executive Office and Principal Place of Business;
Locations of Records of Receivables and General Intangibles
Schedule 2 Pledged Securities
Schedule 3 Trade Names, Division Names, etc.
Schedule 4 Required Filings and Recordings
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PLEDGE AGREEMENT dated as of January 1, 1997 between FIREARMS TRAINING
SYSTEMS, INC., a Delaware corporation (the "Pledgor"), and NATIONSBANK, N.A.
(SOUTH), as Agent (in such capacity, the "Agent") for the Lenders (as defined
herein).
Reference is made to (a) the Credit Agreement dated as of July 31, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among FATS, Inc. (the "Borrower", which simultaneously with the
execution and delivery of this Agreement has assumed all of the Obligations (as
such term is defined in the Credit Agreement) of Firearms Training Systems, Inc.
pursuant to Section 6.05(a)(iv) E) of the Credit Agreement), the financial
institutions party thereto as lenders (the "Lenders") and NationsBank, N.A.
(South), as Agent, as Swingline Lender and as Issuing Bank.
The Lenders and the Swingline Lenders have respectively agreed to extend
credit to the Borrower, and the Issuing Bank has agreed to issue Letters of
Credit for the account of the Borrower, pursuant to, and upon the terms and
subject to the conditions set forth in, the Credit Agreement. The obligations of
the Lenders and the Swingline Lenders to extend credit and of the Issuing Bank
to issue Letters of Credit under the Credit Agreement are conditioned on, among
other things, the execution and delivery by the Pledgor of a Pledge Agreement in
the form hereof in connection with the consummation of the Permitted Drop Down
Transaction. As consideration therefor and in order to induce the Lenders to
make Loans, the Pledgor is willing to execute and deliver this Agreement.
Accordingly, the Pledgor, intending to be legally bound, hereby agrees with
the Agent, for the ratable benefit of the Secured Parties, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Terms Defined in Credit Agreement. Terms used herein and not
otherwise defined herein shall have the meanings set forth in the Credit
Agreement; provided that as used herein, the term "Loan Party" when used in
connection with the obligations of the Pledgor, shall mean the Borrower, the
Subsidiaries, the Buyers and the Seller.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Collateral" shall have the meaning assigned to such term in Section
2.01.
"General Intangibles" of the Pledgor shall mean (a) all contract
rights to receive dividends, liquidating dividends, distributions, options,
rights to subscribe, cash, instruments and other property and proceeds from
time to time in respect of or in exchange for any or all of the Capital
Stock of the Borrower and (b) all rights of the Pledgor (including all
choses in action and causes of action) under all agreements that in any way
relate to such Capital Stock.
"Pledged Securities" shall mean (a) the Capital Stock listed and
described on Schedule 2 hereto, and the certificates, if any, representing
such Capital Stock, (b) all additional Capital Stock from time to time
acquired by the Pledgor in any manner (which shares shall be considered to
be Pledged Securities under this Agreement), together in each case with the
certificates representing such additional Capital Stock and (c) all
dividends, liquidating dividends, stock dividends, distributions, stock or
partnership rights, options, rights to subscribe, cash, instruments and
other property and proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
listed Capital Stock referenced in clause (a) above or such additional
Capital Stock referenced in clause (b) above.
"Proceeds" shall mean all proceeds, including (a) whatever is received
upon any collection, exchange, sale or other disposition of any of the
Collateral and any property into which any of the Collateral is converted,
whether cash or non-cash and (b) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral.
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"Secured Obligations" of the Pledgor shall mean (a) all amounts now or
hereafter payable by the Pledgor under the Parent Guarantee Agreement and
(b) all expenses (including reasonable counsel fees and expenses) incurred
in enforcing any rights of the Agent and the Secured Parties against the
Pledgor under this Agreement.
"UCC" shall mean at any time the Uniform Commercial Code as the same
may from time to time be in effect in the State of New York; provided that
if, by reason of mandatory provisions of law, the validity or perfection of
any security interest granted herein is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, then, as to the
validity or perfection of such security interest, "UCC" shall mean the
Uniform Commercial Code in effect in such other jurisdiction.
SECTION 1.03. UCC Definitions. The uncapitalized terms "contract right",
"instrument", "general intangible", "money" and "proceeds", as used in Section
1.02 or elsewhere in this Agreement shall have the meanings ascribed thereto in
the UCC.
SECTION 1.04. Terms Generally. The definitions in the Credit Agreement and
in Section 1.02 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. Unless
otherwise expressly provided herein, the word "day" means a calendar day.
ARTICLE II
SECURITY INTERESTS
SECTION 2.01. The Security Interests. To secure the due and punctual
payment of all Secured Obligations of the Pledgor, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing or due or to become due, in accordance with the terms thereof, (a) the
Pledgor hereby grants to the Agent, its successors and its assigns, for the
ratable benefit of the Secured Parties, a security interest in and (b) the
Pledgor hereby pledges to the Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, all of the Pledgor's right, title and interest
in, to and under the following, whether now existing or hereafter acquired (all
of which are herein collectively called the "Collateral"):
(i) all General Intangibles;
(ii) all Pledged Securities; and
(iii) to the extent not otherwise included, all Proceeds and products
of any or all of the foregoing, whether existing on the date hereof or
arising hereafter.
SECTION 2.02. Continuing Liability of the Pledgor. Anything herein to the
contrary notwithstanding, the Pledgor shall remain liable to observe and perform
all the terms and conditions to be observed and performed by it under any
contract, agreement, warranty or other obligation with respect to the
Collateral, and shall do nothing to impair the security interests herein
granted. Neither the Agent nor any Secured Party shall have any obligation or
liability under any such contract, agreement, warranty or obligation by reason
of or arising out of this Agreement or the receipt by the Agent or any Secured
Party of any payment relating to any Collateral, nor shall the Agent or any
Secured Party be required to perform or fulfill any of the obligations of the
Pledgor with respect to any of the Collateral, to make any inquiry as to the
nature or sufficiency of any payment received by it or the sufficiency of the
performance of any party's obligations with respect to any Collateral.
Furthermore, neither the Agent nor any Secured Party shall be required to file
any claim or demand to collect any amount due or to enforce the performance of
any party's obligations with respect to the Collateral.
SECTION 2.03. Delivery of Pledged Securities. All certificates or
instruments representing or evidencing the Pledged Securities shall be delivered
to and held by or on behalf of the Agent, for the ratable benefit of
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the Secured Parties, pursuant hereto and shall be in suitable form for transfer
by delivery, duly endorsed and shall be accompanied by duly executed instruments
of transfer or assignments in blank, with signatures appropriately guaranteed,
and accompanied in each case by any required transfer tax stamps, all in form
and substance satisfactory to the Agent. The Agent shall have the right, at any
time in its discretion and without notice to the Pledgor after the occurrence
and continuance of an Event of Default, to cause any or all of the Pledged
Securities to be transferred of record into the name of the Agent or its
nominee.
SECTION 2.04. Security Interests Absolute. All rights of the Agent and the
Secured Parties hereunder, and all obligations of the Pledgor hereunder, shall
be absolute and unconditional and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any Secured Obligation or any document securing any Secured
Obligation, by operation of law or otherwise;
(b) any modification or amendment or supplement to the Credit
Agreement, any Collateral Document, or any other document evidencing or
securing any Secured Obligation;
(c) any release, non-perfection or invalidity of any direct or
indirect security for any Secured Obligation;
(d) any change in the existence, structure or ownership of the
Borrower, the Pledgor or other Loan Party, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower, the
Pledgor or other Loan Party or its assets or any resulting disallowance,
release or discharge of all or any portion of the Secured Obligations;
(e) the existence of any claim, set-off or other right which the
Pledgor may have at any time against the Borrower, any other Loan Party,
the Agent, any Secured Party or any other corporation or person, whether in
connection herewith or any unrelated transactions; provided that nothing
herein shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;
(f) any invalidity or unenforceability for any reason of any Secured
Obligation relating to or against the Borrower, the Pledgor or any other
Loan Party, or any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower, the Pledgor or any other Loan Party
of the Secured Obligations;
(g) any failure by the Agent or any Secured Party (i) to file or
enforce a claim against the Borrower, the Pledgor or any other Loan Party
or its estate (in a bankruptcy or other proceeding), (ii) to give notice of
the existence, creation or incurrence by the Borrower, the Pledgor or any
other Loan Party of any new or additional indebtedness or obligation under
or with respect to the Secured Obligations, (iii) to commence any action
against the Borrower, the Pledgor or any other Loan Party, (iv) to disclose
to the Borrower, the Pledgor or any other Loan Party any facts which the
Agent or any Secured Party may now or hereafter know with regard to the
Borrower, the Pledgor or any other Loan Party or (v) to proceed with due
diligence in the collection, protection or realization upon any collateral
securing the Secured Obligations; or
(h) any other act or omission to act or delay of any kind by the
Borrower, the Pledgor, any other Loan Party, the Agent, any Secured Party
or any other person or any other circumstance whatsoever which might, but
for the provisions of this clause, constitute a legal or equitable
discharge of the Pledgor's obligations hereunder.
SECTION 2.05. Release of Collateral. Upon (a) the indefeasible payment in
full in cash of all of the Secured Obligations, (b) the termination of the
Commitments, (c) the cancellation or expiration of all Letters of Credit and the
reimbursement in full of all Letter of Credit Disbursements and (d) the
satisfaction by the Borrower of all terms and conditions hereof, the Credit
Agreement, the Notes, the Collateral Documents and all other documents or
agreements governing the Secured Obligations, the Agent will (as soon as
reasonably practicable after receipt of notice from the Pledgor requesting the
same, but at the expense of the Pledgor) execute and send to the Pledgor, (i)
for each filing made under Section 4.01 or 4.02 to perfect the security
interests granted to the Agent and the Secured Parties hereunder, a termination
statement
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prepared by the Pledgor to the effect that the Agent and the other Secured
Parties no longer claim a security interest under such filing and (ii) all
documents and instruments previously pledged to the Agent hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants to the Agent and each of the Secured Parties
that:
SECTION 3.01. Credit Agreement. All representations and warranties
contained in the Credit Agreement that relate to the Pledgor are true and
correct. The Pledgor agrees to comply with each of the covenants contained in
the Credit Agreement that imposes or purports to impose, through agreements with
the Borrower, restrictions or obligations on the Pledgor. The Pledgor
acknowledges that any default in the due observance or performance by the
Pledgor of any covenant, condition or agreement contained herein may constitute
an Event of Default under Article VII of the Credit Agreement. There are no
conditions precedent to the effectiveness of this Agreement that have not been
satisfied or waived.
SECTION 3.02. Pledged Securities. All Pledged Securities have been duly
authorized and validly issued by the Borrower and are fully paid and
nonassessable. The Pledgor owns good, valid and marketable title to all the
outstanding Capital Stock of the Borrower, free and clear of all Liens, other
than the Liens of the Collateral Documents, of every kind, whether absolute,
matured, contingent or otherwise. None of the Pledged Securities is subject to
options to purchase or similar rights of any person. The Pledgor is not and will
not become a party to or otherwise bound by any agreement, other than this
Agreement, which restricts in any manner the rights of any present or future
holder of any of the Pledged Securities with respect thereto. The Pledged
Securities constitute and will at all times constitute 100% of the Capital Stock
of the Borrower.
SECTION 3.03. Validity, Perfection and Priority of Security Interests. (a)
By complying with Section 4.01 and by delivering all certificates or
instruments, if any, representing or evidencing the Collateral to the Agent, the
Pledgor will have created a valid and duly perfected security interest in favor
of the Agent for the benefit of the Secured Parties as security for the due and
punctual payment of all Secured Obligations of the Pledgor in all Collateral and
identifiable Proceeds of such Collateral, as to which a security interest may be
perfected by (i) filing UCC financing statements and (ii) possession. Continuing
compliance by the Pledgor with the provisions of Section 4.02 will also (i)
create and duly perfect valid security interests in all Collateral acquired or
otherwise coming into existence after the date hereof and in all identifiable
Proceeds of such Collateral as security for the due and punctual payment of all
Secured Obligations of the Pledgor and (ii) cause such security interests in all
Collateral and in all Proceeds which are (A) identifiable cash Proceeds of
Collateral covered by financing statements required to be filed hereunder and
(B) identifiable Proceeds in which a security interest may be perfected by such
filing under the UCC to be duly perfected under the UCC.
(b) The security interests of the Agent in the Collateral rank first in
priority. Other than financing statements or other similar documents perfecting
the security interests of the Agent, no financing statements or similar
documents covering all or any part of the Collateral are on file or of record in
any government office in any jurisdiction in which such filing or recording
would be effective to perfect a security interest in such Collateral, nor is any
of the Collateral in the possession of any person (other than the Pledgor)
asserting any claim thereto or security interest therein.
SECTION 3.04. Place of Business; Location of Collateral. Schedule 1
correctly sets forth (a) the Pledgor's chief executive office and principal
place of business and (b) the offices of the Pledgor where records concerning
the General Intangibles are kept.
SECTION 3.05. Effectiveness. The pledge and grant effected hereby is
effective to vest in the Agent, on behalf of the Secured Parties, the rights of
the Agent in the Collateral as set forth herein.
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ARTICLE IV
COVENANTS
The Pledgor covenants and agrees with the Agent that until (a) all the
Secured Obligations have been indefeasibly paid in full in cash, (b) the
Commitments have been terminated, (c) all Letters of Credit have been cancelled
or have expired and all Letter of Credit Disbursements have been reimbursed in
full and (d) all terms and conditions hereof, the Credit Agreement, the
Collateral Documents and all other documents or agreements governing the Secured
Obligations have been satisfied, the Pledgor will comply with the following:
SECTION 4.01. Perfection of Security Interests. The Pledgor will, at its
own expense, cause all filings and recordings and other actions specified on
Schedule 4 to have been completed and filed on or prior to the Effective Date
(as defined in Section 7.03).
SECTION 4.02. Further Actions. (a) At all times after the Effective Date,
the Pledgor will, at its own expense, comply with the following:
(i) as to all General Intangibles and Pledged Securities, it will
cause UCC financing statements and continuation statements to be filed and
to be on file in all applicable jurisdictions as required to perfect the
security interests granted to the Agent and the Secured Parties hereunder,
to the extent that applicable law permits perfection of a security interest
by filing under the UCC;
(ii) as to all Proceeds, it will cause all UCC financing statements
and continuation statements filed in accordance with clause (i) above to
include a statement or a checked box indicating that Proceeds of all items
of Collateral described therein are covered; and
(iii) as to any Capital Stock hereafter acquired by the Pledgor, the
Pledgor will immediately pledge and deliver the corresponding certificates,
upon the acquisition or certification thereof, or other instruments to the
Agent as part of the Pledged Securities duly endorsed in a manner
satisfactory to the Agent.
(b) The Pledgor will, from time to time and at its own expense, execute,
deliver, file or record such financing statements pursuant to the UCC and such
other statements, assignments, instruments, documents, agreements or other
papers and take any other action that may be necessary or desirable, or that the
Agent may reasonably request, in order to create, preserve, perfect, confirm or
validate the security interests, to enable the Agent and the Secured Parties to
obtain the full benefits of this Agreement or to enable the Agent to exercise
and enforce any of its rights, powers and remedies hereunder, including, without
limitation, its right to take possession of the Collateral.
(c) To the fullest extent permitted by law, the Pledgor authorizes the
Agent (i) to sign and file financing and continuation statements and amendments
thereto with respect to the Collateral without its signature thereon and (ii) to
the extent permissible by applicable law, file this Agreement in any UCC filing
jurisdiction as a financing statement with respect to the Collateral. In
furtherance of the foregoing, the Pledgor hereby irrevocably constitutes and
appoints the Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Pledgor and in the name of the Pledgor, or in its own name, from
time to time in the Agent's reasonable discretion, to execute, deliver, file or
record financing statements pursuant to the UCC as may be necessary or desirable
in order to create, preserve, perfect, confirm or validate the security
interests.
SECTION 4.03. Change of Name, Identity or Structure. The Pledgor will not
change its name, identity or corporate structure in any manner unless it shall
have given the Agent at least 30 days' prior written notice thereof and shall
have taken all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by the Agent to amend any financing
statement or continuation statement relating to the security interests granted
hereby in order to preserve such security interests and to effectuate or
maintain the priority thereof against all persons.
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SECTION 4.04. Place of Business and Collateral. The Pledgor will not
change the location of its chief executive office unless, prior to such change,
(i) it notifies the Agent of such change, (ii) makes all UCC filings required by
Section 4.02 and (iii) takes all other action necessary or that the Agent may
reasonably request to preserve, perfect, confirm and protect the security
interests granted hereby.
SECTION 4.05. Maintenance of Records. The Pledgor will keep and maintain
at its own cost and expense complete books and records relating to the
Collateral which are satisfactory to the Agent, including, without limitation, a
record of all dividends received with respect to the Collateral and all of its
other dealings with the Collateral. The Pledgor will provide the Agent with
access to or copies of such records promptly upon Agent's request therefor.
SECTION 4.06. Compliance with Laws, etc. The Pledgor will comply in all
material respects with all applicable statutes, rules, regulations, and orders
of, and all applicable restrictions imposed by, the United States of America,
foreign countries, states, provinces and municipalities, and of or by any
Governmental Authority, including any court, arbitrator or grand jury, in
respect of the Collateral except such as are being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor and the failure to so comply could not reasonably
be expected to have a Material Adverse Effect.
SECTION 4.07. Payment of Taxes, etc. The Pledgor will pay all taxes,
assessments and other governmental charges or levies imposed upon the Collateral
or in respect of any of its income or profits therefrom when the same become due
and payable, but in any event before any penalty or interest accrues thereon,
and all claims (including claims for labor, services, materials and supplies)
for sums which have become due and payable and which by law have or might become
a Lien upon any of its properties or assets, and promptly reimburse the Agent or
any Secured Party for any such taxes, assessments, charges or claims paid by
them; provided that no such tax, assessment, charge or claim need be paid or
reimbursed if being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and if such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor
and be adequate in the good faith judgment of the Pledgor.
SECTION 4.08. Limitation on Liens on Collateral. The Pledgor will not,
create, permit or suffer to exist, but will defend the Collateral and the
Pledgor's rights with respect thereto against and take such other action as is
necessary to remove, any security interest, encumbrance, claim or other Lien in
respect of the Collateral.
SECTION 4.09. Limitations on Dispositions of Collateral. The Pledgor will
not, directly or indirectly, sell, transfer, lease or otherwise dispose of any
of the Collateral (or any interest therein), or attempt, offer or contract to do
so. The inclusion of Proceeds of the Collateral under the security interest
granted hereby shall not be deemed a consent by the Agent to any sale or
disposition of any Collateral.
SECTION 4.10. Notices. The Pledgor will advise the Agent promptly and in
reasonable detail, (a) of any security interest, encumbrance or claim made or
other Lien asserted against any of the Collateral, (b) of any material change in
the composition of the Collateral and (c) of the occurrence of any other event
which would have a material effect on the aggregate value of the Collateral or
on the security interests granted to the Agent in this Agreement.
SECTION 4.11. Change of Law. The Pledgor shall promptly notify the Agent
in writing of any change in law known to it which (i) adversely affects or will
adversely affect the validity, perfection or priority of the security interests
granted hereby, (ii) requires or will require a change in the procedures to be
followed in order to maintain and protect such validity, perfection and priority
or (iii) could result in the Agent not having a perfected security interest in
any of the Collateral.
SECTION 4.12. Reimbursement Obligation. Should the Pledgor fail to comply
with the provisions of this Agreement or any other agreement relating to the
Collateral such that the value of any Collateral or the validity, perfection,
rank or value of any security interest granted to the Agent hereunder or
thereunder is thereby diminished or potentially diminished in any material
respect or put at risk in any material respect (as reasonably determined by the
Agent), the Agent on behalf of the Pledgor may, but shall not be required to,
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effect such compliance on behalf of the Pledgor, and the Pledgor shall reimburse
the Agent for the costs thereof on demand, and interest shall accrue on any such
unpaid reimbursement obligation from the date the relevant costs are incurred
until reimbursement thereof in full at the default rate provided in Section 2.07
of the Credit Agreement.
SECTION 4.13. Pledgor's Business. The Pledgor will not engage in any
activity (including any merger, consolidation or sale of assets), issue any
securities, incur any Indebtedness, incur any other material liability or create
or permit to exist any Lien on its assets, other than the ownership of the
common stock of the Borrower and related de minimis activities incidental
thereto. Notwithstanding the foregoing sentence, the Pledgor may, so long as any
such action is not prohibited by any other applicable provision of this
Agreement, (i) engage in any activity incidental to the maintenance of the
corporate existence of the Pledgor and compliance with applicable law, (ii)
enter into and perform the obligations of the Pledgor under the Parent Guarantee
Agreement and the Parent Pledge Agreement, (iii) enter into (or issue, as
applicable), perform the obligations of the Pledgor under and exercise the
rights of the Pledgor under (A) stock options exercisable for Common Stock
granted to employees of the Borrower and directors of the Borrower or the
Pledgor and other customary participants or an employee stock option plan
established for the benefit of employees of the Borrower and directors of the
Borrower or the Pledgor and other customary participants, (B) the Shareholders
Agreement, (C) the Recapitalization Agreement and (D) the Seller Registration
Rights Agreement and the Buyer Registration Rights Agreement, (iv) issue
additional shares of the Common Stock or receive any capital contribution, so
long as 100% of the net cash proceeds, if any, of any such issuance or
contribution are contributed by the Pledgor to the capital of the Borrower and
(v) engage in the Permitted Drop Down Transaction and administer on behalf of
the Borrower, pursuant to an agency agreement satisfactory to the Agent and the
Required Lenders (which shall be assigned to the Agent on behalf of the Secured
Parties), any nontransferable assets which remain owned by the Pledgor after
consummation of the Permitted Drop Down Transaction.
ARTICLE V
DISTRIBUTIONS ON PLEDGED SECURITIES; VOTING
SECTION 5.01. Right to Receive Distributions on Pledged Collateral;
Voting. (a) So long as no Event of Default shall have occurred and be
continuing:
(i) The Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Securities or any part
thereof for any purpose permitted by the terms of this Agreement, the
Credit Agreement and the other Loan Documents.
(ii) The Pledgor shall be entitled to receive and retain any and all
dividends, interest and principal paid in cash on the Pledged Securities to
the extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with, the
terms and conditions of the Credit Agreement and applicable laws. Other
than pursuant to the first sentence of this paragraph (a)(ii), all
principal, all noncash dividends, interest and principal, and all
dividends, interest and principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, return of
capital, capital surplus or paid-in surplus, and all other distributions
made on or in respect of Pledged Securities, whether paid or payable in
cash or otherwise, whether resulting from a subdivision, combination or
reclassification of the outstanding Capital Stock of the Borrower or
received in exchange for Pledged Securities or any part thereof, or in
redemption thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which the Borrower may be a
party or otherwise, shall be and become part of the Collateral, and, if
received by the Pledgor, shall not be commingled by the Pledgor with any of
its other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Agent and shall be forthwith
delivered to the Agent in the form in which received (with any necessary
endorsement).
(iii) The Agent shall execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies, powers of attorney, consents,
ratifications and waivers and other instruments as the Pledgor
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may reasonably request for the purpose of enabling the Pledgor to exercise
the voting and other rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends or interest payments which
it is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 5.01(a)(ii) shall cease, and all such rights shall
thereupon become vested in the Agent which shall thereupon have the sole
right to receive and hold as Collateral such dividends and interest
payments.
(ii) All dividends and interest payments which are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 5.01(b)
shall be received in trust for the benefit of the Agent, shall be
segregated from other funds of the Pledgor and shall be forthwith paid over
to the Agent as Collateral in the same form as so received (with any
necessary endorsement).
(c) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section 5.01(a)(i)
shall cease, and all such rights shall thereupon become vested in the Agent,
which shall thereupon have the sole right to exercise such voting and other
consensual rights. After all Events of Default have been cured or waived, the
Pledgors will have the right to exercise the voting and consensual rights and
powers to which they would otherwise be entitled pursuant to the terms of
paragraph (a)(i).
ARTICLE VI
REMEDIES; RIGHTS UPON DEFAULT
SECTION 6.01. UCC Rights. If any Event of Default shall have occurred, the
Agent may, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, exercise all rights and remedies of a
secured party under the UCC and all other rights available to the Agent at law
or in equity.
SECTION 6.02. Sale of Collateral. (a) The Pledgor expressly agrees that if
an Event of Default shall occur and be continuing, the Agent, without demand of
performance or other demand or notice of any kind (except the notice specified
below of the time and place of any public or private sale) to the Pledgor or any
other person (all of which demands and/or notices are hereby waived by the
Pledgor), may forthwith collect, receive, appropriate and realize upon the
Collateral and/or forthwith sell, lease, assign, give an option or options to
purchase or otherwise dispose of and deliver the Collateral (or contract to do
so) or any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any office of the Agent or elsewhere in such
manner as is commercially reasonable and as the Agent may deem best, for cash or
on credit or for future delivery without assumption of any credit risk. The
Agent or any Secured Party shall have the right upon any such public sale and,
to the extent permitted by law, upon any such private sale, to purchase the
whole or any part of the Collateral so sold. The Pledgor further agrees, at the
Agent's request, to assemble the Collateral, and to make it available to the
Agent at places which the Agent may reasonably select. To the extent permitted
by applicable law, the Pledgor waives all claims, damages and demands against
the Agent arising out of the sale of the Collateral except to the extent that a
court of competent jurisdiction shall have determined by final nonappealable
judgment that any action taken by the Agent or any Secured Party with respect to
such sale constitutes gross negligence or willful misconduct.
(b) Unless the Collateral threatens to decline speedily in value or is of a
type customarily sold in a recognized market, the Agent shall give the Pledgor
10 days' written notice of its intention to make any such public or private sale
or sale at a broker's board or on a securities exchange. Such notice shall (i)
in the case of a public sale, state the time and place fixed for such sale, (ii)
in the case of a sale at a broker's board or on a securities exchange, state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or any portion thereof being sold, will first be offered for sale
and (iii) in the case of a private sale, state the day after which such sale may
be consummated. The Agent shall not be required or obligated to
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make any such sale pursuant to any such notice. The Agent may adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so adjourned. In the case of any
sale of all or any part of the Collateral for credit or for future delivery, the
Collateral so sold may be retained by the Agent until the selling price is paid
by the purchaser thereof, but the Agent shall not incur any liability in case of
failure of such purchaser to pay for the Collateral so sold and, in the case of
such failure, such Collateral may again be sold upon like notice.
SECTION 6.03. Rights of Purchasers. Upon any sale of the Collateral
(whether public or private), the Agent shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral so sold. Each purchaser
(including the Agent and the other Secured Parties) at any such sale shall hold
the Collateral so sold free from any claim or right of whatever kind, including
any equity or right of redemption of the Pledgor, and the Pledgor, to the extent
permitted by law, hereby specifically waives (to the extent permitted by law)
all rights of redemption, stay, valuation and appraisal which it has or may at
any time in the future have under any law now existing or hereafter adopted.
SECTION 6.04. Additional Rights of the Agent. Upon the occurrence and
during the continuance of an Event of Default:
(a) The Agent shall have the right and power to institute and maintain
such suits and proceedings as it may deem appropriate to protect and
enforce the rights vested in it by this Agreement and may proceed by suit
or suits at law or in equity to enforce such rights and to foreclose upon
and sell the Collateral or any part thereof pursuant to the judgment or
decree of a court of competent jurisdiction.
(b) The Agent shall, to the extent permitted by law and without regard
to the solvency or insolvency at the time of any person then liable for the
payment of any of the Secured Obligations or the then value of the
Collateral, and without requiring any bond from any party to such
proceedings, be entitled to the appointment of a special receiver or
receivers (who may be the Agent or any other Secured Party) for the
Collateral or any part thereof and for the rents, issues, tolls, profits,
royalties, revenues and other income therefrom, which receiver shall have
such powers as the court making such appointment shall confer, and to the
entry of an order directing that the rents, issues, tolls, profits,
royalties, revenues and other income of the property constituting the whole
or any part of the Collateral be segregated, sequestered and impounded for
the benefit of the Agent and the other Secured Parties, and the Pledgor
irrevocably consents to the appointment of such receiver or receivers and
to the entry of such order.
SECTION 6.05. Securities Act, etc. (a) In view of the position of the
Pledgor in relation to its Pledged Securities, or because of other present or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being herein called the "Federal Securities Laws"), with respect to
any disposition of the Pledged Securities permitted hereunder. The Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Agent if the Agent were to attempt to dispose
of all or any part of the Pledged Securities, and might also limit the extent to
which or the manner in which any subsequent transferee of any such Pledged
Securities could dispose of the same. Similarly, there may be other legal
restrictions or limitations affecting the Agent and the other Secured Parties in
any attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect.
Accordingly, the Pledgor expressly agrees that the Agent is authorized, in
connection with any sale of the Pledged Securities, if it deems it advisable so
to do, (i) to restrict the prospective bidders on or purchasers of any of the
Pledged Securities to a limited number of sophisticated investors who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Pledged Securities, (ii) to cause to be placed on certificates for any or all of
the Pledged Securities or on any other securities pledged hereunder a legend to
the effect that such security has not been registered under the Federal
Securities Laws and may not be disposed of in violation of the provision of the
Federal Securities Laws and (iii) to impose such other limitations or conditions
in connection with any such sale as the Agent deems necessary or advisable in
order to comply with the Federal Securities Laws or any other law.
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The Pledgor covenants and agrees that it will execute and deliver such documents
and take such other action as the Agent deems necessary or advisable in order to
comply with the Federal Securities Laws or any other law. The Pledgor
acknowledges and agrees that such limitations may result in prices and other
terms less favorable to the seller than if such limitations were not imposed,
and, notwithstanding such limitations, agrees that any such sale shall be deemed
to have been made in a commercially reasonable manner, it being the agreement of
the Pledgor, the Agent and the other Secured Parties that the provisions of this
Section 6.05 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Agent sells the Pledged Securities. The Agent shall be under
no obligation to delay a sale of any Pledged Securities for a period of time
necessary to permit the issuer of any securities contained therein to register
such securities under the Federal Securities Laws, or under applicable state
securities laws, even if the issuer would agree to do so.
(b) If the Agent shall determine to exercise its right to sell all or any
of the Pledged Securities and if in the opinion of counsel for the Agent it is
necessary, or if in the opinion of the Agent it is advisable, to have the
securities included in the Pledged Securities or the portion thereof to be sold
registered under the provisions of the Federal Securities Laws, the Pledgor
agrees, at its own expense, (i) to execute and deliver, and to use its best
efforts to cause the Borrower and its directors and officers to execute and
deliver, all such instruments and documents, and to do or cause to be done all
other such acts and things, as may be necessary or, in the opinion of the Agent,
advisable to register such securities under the provisions of the Federal
Securities Laws and 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 or cause to be made all amendments
and supplements thereto and to the related prospectus which, in the opinion of
the Agent, are necessary or advisable, all in conformity with the requirements
of the Federal Securities Laws and the rules and regulations of the Securities
and Exchange Commission thereunder, (ii) to use its best efforts to cause the
Borrower to agree to prepare, and to make available to its security holders as
soon as practicable, an earnings statement (which need not be audited) covering
the period of at least 12 months beginning with the first month after the
effective date of any such registration statement, which earning statement will
satisfy the provisions of Section 11(a) of the Federal Securities Laws, (iii) to
use its best efforts to qualify such securities under state Blue Sky or
securities laws and to obtain the approval of any governmental authorities for
the sale of such securities as requested by the Agent and (iv) at the request of
the Agent, to indemnify and hold harmless the Agent, any other Secured Party and
any underwriters (and any person controlling any of the foregoing) from and
against any loss, liability, claim, damage and expense (and reasonable counsel
fees incurred in connection therewith) under the Federal Securities Laws or
otherwise insofar as such loss, liability, claim, damage or expense arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement or prospectus or in any
preliminary prospectus or any amendment or supplement thereto, or arises out of
or is based upon any omission or alleged omission to state therein a material
fact required to be stated or necessary to make the statements therein not
misleading, such indemnification to remain operative regardless of any
investigation made by or on behalf of the Agent, any other Secured Party or any
underwriters (or any person controlling any of the foregoing); provided that the
Pledgor shall not be liable in any case to the extent that any such loss,
liability, claim, damage or expense arises out of or is based on an untrue
statement or alleged untrue statement or an omission or an alleged omission made
in reliance upon and in conformity with written information furnished to such
person by the Agent or any underwriter expressly for use in such registration
statement or prospectus.
SECTION 6.06. Remedies Not Exclusive. (a) No remedy conferred upon or
reserved to the Agent in this Agreement is intended to be exclusive of any other
remedy or remedies, but every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law, in equity or by statute.
(b) If the Agent shall have proceeded to enforce any right, remedy or power
under this Agreement and the proceeding for the enforcement thereof shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Agent, the Pledgor and the Agent shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights under this
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Agreement, and thereafter all rights, remedies and powers of the Agent shall
continue as though no such proceedings had been taken.
(c) All rights of action under this Agreement may be enforced by the Agent
without the possession of any instrument evidencing any Secured Obligation or
the production thereof at any trial or other proceeding relative thereto, and
any suit or proceeding instituted by the Agent shall be brought in its name and
any judgment shall be held as part of the Collateral.
SECTION 6.07. Waiver and Estoppel. (a) The Pledgor, to the extent it may
lawfully do so, agrees that it will not at any time in any manner whatsoever
claim or take the benefit or advantage of any appraisement, valuation, stay,
extension, moratorium, turnover or redemption law, or any law now or hereafter
in force permitting it to direct the order in which the Collateral shall be sold
which may delay, prevent or otherwise affect the performance or enforcement of
this Agreement and the Pledgor hereby waives the benefits or advantage of all
such laws, and covenants that it will not hinder, delay or impede the execution
of any power granted to the Agent in this Agreement but will permit the
execution of every such power as though no such law were in force; provided that
nothing contained in this Section 6.07 shall be construed as a waiver of any
rights of the Pledgor under any applicable Federal bankruptcy law.
(b) The Pledgor, to the extent it may lawfully do so, on behalf of itself
and all who may claim through or under it, including any and all subsequent
creditors, vendees, assignees and lienors, waives and releases all rights to
demand or to have any marshalling of the Collateral upon any sale, whether made
under any power of sale granted herein or pursuant to judicial proceedings or
upon any foreclosure or any enforcement of this Agreement and consents and
agrees that all of the Collateral may at any such sale be offered and sold as an
entirety.
(c) The Pledgor, to the extent it may lawfully do so, waives presentment,
demand, protest and any notice of any kind (except notices explicitly required
hereunder) in connection with this Agreement and any action taken by the Agent
with respect to the Collateral.
SECTION 6.08. Power of Attorney. The Pledgor hereby irrevocably
constitutes and appoints the Agent, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Pledgor and in the name of the Pledgor or in its own
name, from time to time in the Agent's discretion for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives the Agent the power and right, on
behalf of the Pledgor, without notice to or assent by the Pledgor to do the
following:
(a) upon the occurrence and during the continuance of any Event of
Default, to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral; and
(b) upon the occurrence and during the continuance of any Event of
Default and otherwise to the extent provided in this Agreement, (i) to
direct any party liable for any payment under any of the Collateral to make
payment of any and all moneys due and to come due thereunder directly to
the Agent or as the Agent shall direct; (ii) to receive payment of and
receipt for any and all moneys, claims and other amounts due and to become
due at any time in respect of or arising out of any Collateral; (iii) to
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any thereof and to enforce any other right in respect of any Collateral;
(iv) to defend any suit, action or proceeding brought against the Pledgor
with respect to any Collateral; (v) to settle, compromise and adjust any
suit, action or proceeding described above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and
(vi) generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and to
do, at the option of the Agent and the Pledgor's expense, at any time, or
from time to time, all acts and things which the Agent deems necessary to
protect, preserve or realize upon the
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Collateral and the Agent's security interest therein, in order to effect
the intent of this Agreement, all as fully and effectively as the Pledgor
might do.
The Pledgor hereby ratifies all that such attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
Except as provided by law or the UCC or its equivalent, nothing herein
contained shall be construed as requiring or obligating the Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Agent, or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby, and the Agent
shall not be liable hereunder for any action taken by the Agent or omitted to be
taken with respect to the Collateral or any part thereof (other than any action
or inaction that a court of competent jurisdiction shall have determined by
final and nonappealable judgment to constitute gross negligence or willful
misconduct). It is understood and agreed that the appointment of the Agent as
the agent of the Pledgor for the purposes set forth above in this Section 6.08
is coupled with an interest and is irrevocable. The provisions of this Section
6.08 shall in no event relieve the Pledgor of any of its obligations hereunder
with respect to the Collateral or any part thereof or impose any obligation on
the Agent to proceed in any particular manner with respect to the Collateral or
any part thereof, or in any way limit the exercise by the Agent of any other or
further right which it may have on the date of this Agreement or hereafter,
whether hereunder or by law or otherwise.
SECTION 6.09. Application of Proceeds. (a) The Agent shall apply the
proceeds of any collection, sale or other disposition of the Collateral as
follows:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Agent (in its capacity as such hereunder or under any other Loan
Document) and the Lenders in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Secured
Obligations, including all court costs and the reasonable fees and expenses
of their agents and legal counsel, the repayment of all reasonable advances
made by the Agent and the Lenders hereunder or under any other Loan
Document and all reasonable costs or expenses incurred in connection with
the exercise of any right or remedy hereunder or under any other Loan
Document;
SECOND, to the payment in full of the Secured Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Secured Obligations owed to them on the
date of any such distribution); and
THIRD, to the Pledgor, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.
(b) In the event that the proceeds of any collection, recovery, receipt,
appropriation, realization, or sale as aforesaid are insufficient to pay all
amounts to which the Agent or any or all of the Lenders are legally entitled,
the Pledgor will be jointly and severally liable for the deficiency, together
with interest thereon, at the applicable default rate under Section 2.07 of the
Credit Agreement, and the reasonable fees of any attorneys employed by the Agent
or any or all of the Lenders to collect such deficiency, pursuant to the Credit
Agreement.
The Agent shall have absolute discretion as to the time of application of
any such proceeds, moneys or balances in accordance with this Agreement. Upon
any sale of the Collateral by the Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of the Agent or
of the officer making the sale shall be a sufficient discharge to the purchaser
or purchasers of the Collateral so sold and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Agent or such officer or be answerable in any way for the
misapplication thereof.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices. Unless otherwise specified herein, all notices,
requests or other communications to any party hereunder shall be in writing,
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy and shall be given to such party at its
address or telecopy number set forth in Section 8 of the Parent Guarantee
Agreement or at any other address or telecopy number which such party shall have
specified for the purpose of communications hereunder by notice to the other
parties hereunder. All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly addressed) to such party as provided in this Section 7.01 or in
accordance with the latest unrevoked direction from such party given in
accordance with this Section 7.01.
SECTION 7.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Pledgor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Agent and the Secured Parties and shall survive the making by the Lenders of the
Loans and the execution and delivery to the Lenders of the Notes evidencing such
Loans, regardless of any investigation made by the Lenders or on their behalf,
and shall continue in full force and effect until the Secured Obligations have
been indefeasibly paid in full in cash, the Commitments have been terminated,
all Letters of Credit have been cancelled or have expired, all Letter of Credit
Disbursements have been reimbursed in full and all terms and conditions hereof,
the Credit Agreement, the Collateral Documents and all other documents or
agreements governing the Secured Obligations have been satisfied. This Agreement
shall terminate when the security interests granted hereunder have terminated
and the Collateral has been released as provided in Section 2.05; provided that
the obligations of the Pledgor under Section 4.12 shall survive any such
termination.
SECTION 7.03. Counterparts; Effectiveness. (a) This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
instrument.
(b) This Agreement shall be effective with respect to the Pledgor on the
date (the "Effective Date") when a counterpart hereof which bears the signature
of the Pledgor shall have been delivered to the Agent.
SECTION 7.04. Amendments, Etc. No amendment, modification or waiver of any
provision of this Agreement and no consent to any departure by the Pledgor
therefrom shall in any event be effective unless the same shall be in writing
and shall be executed and delivered in accordance with Section 9.08 of the
Credit Agreement, and then such amendment, modification, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
SECTION 7.05. Assignments. This Agreement and the terms, covenants and
conditions hereof shall be binding upon the Pledgor and its successors and shall
inure to the benefit of the Agent and the Secured Parties and their respective
successors and assigns. Upon the assignment by any Lender of all or any portion
of its rights and obligations under the Credit Agreement (including all or any
portion of its Commitment and the Loans owing to it) to any other person, such
other person shall thereupon become vested with all the benefits in respect
thereof granted to such transferor or assignor herein or otherwise. The Pledgor
shall not be permitted to assign, transfer or delegate any of its rights or
obligations under this Agreement (and any such purported assignment, transfer or
delegation without such consent shall be void).
SECTION 7.06. Savings Clause. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect with respect to the Pledgor, no party hereto shall
be required to comply with such provision with respect to the Pledgor for so
long as such provision is held to be invalid, illegal or unenforceable, and the
validity, legality and enforceability of the remaining provisions contained
herein, and of such invalid, illegal or unenforceable provision with respect to
any other party, shall not in any way be affected or impaired. The parties shall
endeavor in good-faith negotiations to
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replace any invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.07. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the state of New York.
SECTION 7.08. Entire Agreement. This Agreement, the other Loan Documents
and the Fee Letter constitute the entire contract between the parties relative
to the subject matter hereof. Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement, the other
Loan Documents and the Fee Letter. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto and
the Secured Parties, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
SECTION 7.09. No Waiver; Remedies. No failure on the part of the Agent or
any Secured Party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy by such person preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder and under the Loan Documents are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 7.10. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 7.11. Submission to Jurisdiction. (a) The Pledgor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York, New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Agent or any Secured Party may otherwise have to bring
any action or proceeding relating to this Agreement or the other Loan Documents
against the Pledgor or its properties in the courts of any jurisdiction.
(b) The Pledgor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State court or Federal court of the United States of America sitting in
New York, New York. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 7.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 7.12. No Oral Agreements. This Agreement and the instruments and
documents executed in connection herewith represent the final agreement between
the parties and may not be contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties.
14
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first written above.
FIREARMS TRAINING SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
NATIONSBANK, N.A. (SOUTH),
as Agent
By: /s/ XXXX XXXXXXX
------------------------------------
Name: Xxxx XxXxxxx
Title: Vice President
15
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SCHEDULE 1
CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS
NAME MAILING ADDRESS COUNTY STATE
---- --------------- ------ -----
Firearms Training Systems, Inc.................. 0000 XxXxxxxx Xxxxx Xxxx Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
LOCATIONS OF RECORDS OF RECEIVABLES AND GENERAL INTANGIBLES
NAME MAILING ADDRESS COUNTY STATE
---- --------------- ------ -----
Firearms Training Systems, Inc.................. 0000 XxXxxxxx Xxxxx Xxxx Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
20
SCHEDULE 2
PLEDGED SECURITIES
ISSUER OWNERSHIP INTERESTS
------ -------------------
FATS, Inc.......................... 1000 shares of Common Stock, par
value $1.00 per share
21
SCHEDULE 3
TRADE NAMES, DIVISION NAMES, ETC.
PLEDGOR TRADE NAMES, DIVISION NAMES, ETC.
------- ---------------------------------
Firearms Training Systems, Inc............................. F.A.T.S.
FATS
F.A.T.S., Inc.
FATS, Inc.
22
SCHEDULE 4
REQUIRED FILINGS AND RECORDINGS
PLEDGOR UCC FILINGS & LOCATIONS OTHER FILINGS
------- ----------------------- -------------
Firearms Training Systems, Inc.......... Any county in the state of Georgia None
