SECURITY AGREEMENT
Dated as of December 31, 1998
From
AUDIO BOOK CLUB, INC.,
ABC INTERNET SERVICES, INC.,
CLASSIC RADIO HOLDING CORP.,
CLASSIC RADIO ACQUISITION CORP.,
ABC INVESTMENT CORP.
and
CH ACQUISITIONS CORP.
as Grantors
to
FLEET NATIONAL BANK,
as Administrative Agent
TABLE OF CONTENTS
SECURITY AGREEMENT .................................................. 1
PRELIMINARY STATEMENTS .............................................. 1
Section 1. Grant of Security ................................ 2
Section 2. Security for Obligations ......................... 6
Section 3. Grantors Remain Liable ........................... 6
Section 4. Delivery of Security Collateral and
Account Collateral ............................. 6
Section 5. Maintaining the L/C Cash Collateral Account ...... 6
Section 6. Investing of Amounts in the L/C
Cash Collateral Account ........................ 7
Section 7. Release of Amounts ............................... 7
Section 8. Representations and Warranties ................... 7
Section 9. Further Assurances ............................... 9
Section 10. As to Equipment and Inventory .................... 10
Section 11. Insurance ........................................ 10
Section 12. Place of Perfection; Record;
Collection of Receivables ...................... 11
Section 13. Voting Rights; Dividends; Etc .................... 12
Section 14. As to the Assigned Agreements .................... 14
Section 15. Payments Under the Assigned Agreements ........... 14
Section 16. Transfers and Other Liens;
Additional Shares .............................. 15
Section 17. Administrative Agent Appointed
Attorney-in-Fact ............................... 15
Section 18. Administrative Agent May Perform ................. 16
Section 19. Administrative Agent's Duties .................... 16
Section 20. Remedies ......................................... 16
Section 21. Registration Rights; Private Sale ................ 17
Section 22. Indemnity and Expenses ........................... 18
Section 23. Security Interest Absolute ....................... 19
Section 24. Amendments; Waivers; Etc ......................... 19
Section 25. Addresses for Notices ............................ 20
Section 26. Continuing Security Interest;
Assignments under the Credit Agreement ......... 20
Section 27. Release and Termination .......................... 20
Section 28. Governing Law; Terms ............................. 21
Section 29. JURISDICTION ..................................... 21
Section 30. WAIVER OF JURY TRIAL ............................. 22
Section 31. Counterparts ..................................... 22
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Schedules
Schedule I Pledged Shares and Pledged Debt
Schedule II Locations of Equipment and Inventory
Schedule III Trade Names
Exhibits
Exhibit A Form of Cash Collateral Account Letter
Exhibit B Form of Consent and Agreement
Exhibit C Form of Security Agreement Supplement
ii
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of December 31, 1998, by
and among Audio Book Club, Inc., a Florida corporation having an office at 0000
Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 (the "Borrower"
or a "Grantor"), ABC Internet Services, Inc., a New York corporation having an
office at 0000 Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000
("ABC"), Classic Radio Holding Corp., a Delaware corporation having an office at
0000 Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 ("Classic
Holding"), Classic Radio Acquisition Corp., a Delaware corporation having an
office at 0000 Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000
("Classic Acquisition"), ABC Investment Corp., a Delaware corporation, with an
office at 103 Springer Building, 0000 Xxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000, and CH Acquisitions Corp., a Delaware corporation having an office at
0000 Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 ("CH
Acquisitions Corp.") the Additional Grantors (as defined in Section 24(c)
hereof) (the Additional Grantors, together with the Borrower, ABC, Classic
Holding, Classic Acquisition, ABC Investment Corp. and CH Acquisitions Corp.,
the "Grantors") and Fleet National Bank ("Fleet"), as administrative agent (in
such capacity, together with its successors in such capacity, the
"Administrative Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS
(1) The Borrower has entered into a Credit Agreement, dated as of even date
herewith (said Agreement, as it may hereafter be amended, restated,
supplemented, extended or otherwise modified from time to time, the "Credit
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined), with the banks, financial institutions and
other institutional lenders party thereto (the "Lenders"), Fleet, as Initial
Issuing Bank, as Swing Line Bank and as Administrative Agent.
(2) Each Grantor is the owner of the shares (such shares being the "Pledged
Shares") set forth opposite such Grantor's name in Part I of Schedule I hereto
and issued by the corporations named therein and of the indebtedness for
borrowed money (the "Pledged Debt") set forth opposite such Grantor's name in
Part II of Schedule I and issued by the obligors named therein.
(3) If and when determined by the Administrative Agent, the Administrative
Agent will open a non-interest bearing cash collateral account (the "L/C Cash
Collateral Account") with Fleet at its office at Fleet National Bank, Xxx
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, (or at such other institution as
may be acceptable to the Administrative Agent), in the name of the Borrower but
under the sole control and dominion of the Administrative Agent and subject to
the terms of this Agreement.
(4) Each Grantor other than the Borrower is a wholly-owned Subsidiary of
the Borrower and will derive substantial benefit from the Advances made to, and
the issuance of Letters of Credit on behalf of, the Borrower.
(5) It is a condition precedent to the Lenders' making of Advances, the
Issuing Bank's issuing of Letters of Credit under the Credit Agreement and the
Hedge Banks entering into Bank Hedge Agreements with the Borrower from time to
time that the Borrower shall have granted the assignment and security interest
and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lenders to make Advances under the Credit Agreement, the Issuing Bank to issue
Letters of Credit under the Credit Agreement and the Hedge Banks to enter into
Bank Hedge Agreements with the Borrower from time to time, each of the Grantors
hereby agrees with the Administrative Agent, for the benefit of the
Administrative Agent and the ratable benefit of the Secured Parties, as follows:
Section 1. Grant of Security. Each of the Grantors hereby assigns and
pledges to the Administrative Agent, for the benefit of the Administrative Agent
and the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, a security interest in the following
(collectively, the "Collateral"):
(a) all of such Grantor's machinery and equipment in all of its forms,
whether now owned or hereafter arising or acquired, wherever located, now
or hereafter existing, all fixtures and all parts thereof and all
accessions thereto (any and all such equipment, fixtures, parts and
accessions, the "Equipment");
(b) all of such Grantor's inventory in all of its forms, whether now
owned or hereafter arising or acquired, wherever located, now or hereafter
existing (including, without limitation, (i) raw materials and work in
process, (ii) finished goods, (iii) materials used or consumed in the
manufacture or production thereof, (iv) goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which such Grantor has an interest
or right as consignee) and (v) goods that are returned to or repossessed by
such Grantor), and all accessions thereto, products thereof and documents
therefor (any and all such inventory, accessions, products and documents,
the "Inventory");
(c) all of such Grantor's accounts, contract rights, chattel paper,
instruments, deposit accounts and other claims of any kind, whether now
owned or hereafter arising or acquired, now or hereafter existing, whether
or not arising out of or in connection with the sale or lease of goods or
the rendering of services, and all rights now or hereafter existing in and
to all security agreements, leases and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel paper,
instruments, deposit accounts or claims, except that the Grantor shall not
grant, for so long as such grant would be prohibited by the terms of any
such agreements, leases or other
2
contracts or by applicable law, a security interest in any such agreements,
leases or other contracts with respect to which the grant of any security
interest or collateral assignment contemplated hereby is prohibited by its
terms or by applicable law (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts and claims, to the extent not
referred to in clause (d), (e) or (f) below, being the "Receivables", and
any and all such leases, security agreements and other contracts being the
"Related Contracts");
(d) all of such Grantor's right, title and interest, whether now
existing or hereafter arising or acquired, in and to the following (the
"Security Collateral"), without duplication:
(i) the Pledged Shares and the certificates representing the
Pledged Shares, including without limitation, the shares of capital
stock of all of such Grantor's Subsidiaries, and the certificates
representing the Pledged Shares; provided, however, that only 65% of
the shares of capital stock of such Grantor's Foreign Subsidiaries
shall be pledged, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
Pledged Shares;
(ii) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Debt;
(iii) all additional shares of stock of any issuer of the Pledged
Shares from time to time acquired by such Grantor in any manner,
provided, however, that only 65% of the shares of capital stock of
such Grantor's Foreign Subsidiaries shall be pledged pursuant to this
Agreement, and the certificates representing such additional shares,
and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
(iv) all additional indebtedness for borrowed money from time to
time owed to such Grantor by any obligor of the Pledged Debt and the
instruments evidencing such indebtedness, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such indebtedness;
(v) all additional "investment property" (as defined in the UCC)
now owned or hereafter arising or acquired by such Grantor including,
without limitation, (A) all securities, whether certificated or
uncertificated, including, without limitation, stocks, bonds,
interests in limited liability companies, partnership interests,
treasuries, certificates of deposit, and mutual fund shares; (B) all
security
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entitlements of such Grantor including, without limitation, the rights
of such Grantor to any securities account and the financial assets
held by a securities intermediary in such securities account and any
free credit balance or other money owing by any securities
intermediary with respect to that account; (C) all securities accounts
held by such Grantor; (D) all commodity contracts held by such
Grantor; and (E) all commodity accounts held by such Grantor.
(e) each of the agreements to which such Grantor is now or may
hereafter become a party, and each Hedge Agreement to which such Grantor is
now or may hereafter become a party, in each case as such agreements may be
amended, restated or otherwise modified from time to time, unless and for
so long as the Grantor is not permitted to grant a security interest
therein or collateral assignment thereof (collectively, the "Assigned
Agreements"), including, without limitation, (i) all rights of such Grantor
to receive moneys due and to become due under or pursuant to the Assigned
Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of such Grantor for damages arising out of or for
breach of or default under the Assigned Agreements, and (iv) the right of
such Grantor to terminate the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder
(all such Collateral being the "Agreement Collateral");
(f) all of such Grantor's right, title and interest, whether now
existing or hereafter arising or acquired, in and to the following
(collectively, the "Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(ii) all deposit accounts of such Grantor, all funds held therein
and all certificates and instruments, if any, from time to time
representing or evidencing such deposit accounts;
(iii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or
otherwise possessed by the Administrative Agent for or on behalf of
such Grantor in substitution for or in addition to any or all of the
then existing Account Collateral; and
(v) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral;
4
(g) all of such Grantor's corporate and business records, customer
lists, credit files, computer program printouts and other computer
materials and records;
(h) without limitation of any of the foregoing, all of such Grantor's
general intangibles, including, without limitation,
(i) all choses in action, claims and causes of action or rights
of recovery or set-off of every kind and character, and the goodwill
of the business of such Grantor as a going concern;
(ii) (A) all rights of such Grantor to receive moneys due and to
become due under or pursuant to any general intangibles, (B) all
rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to any general
intangibles, (C) claims of such Grantor for damages arising out of or
for breach of or default under any general intangibles, and (D) the
right of such Grantor to terminate any general intangibles, to perform
thereunder and to compel performance and otherwise exercise all
remedies thereunder;
(iii) all of such Grantor's right, title and interest, whether
now owned or hereafter arising or acquired, in and to the following
(individually a "Copyright" and collectively, "Copyrights"): (A) all
copyrights and general intangibles of like nature (whether registered
or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all
applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office or
in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision
thereof, and (B) all reissues, extensions or renewals thereof;
(iv) all rights of such Grantor now owned or hereafter arising or
acquired under any and all agreements granting any right to use any
Copyright;
(v) all of such Grantor's right, title and interest, whether now
existing or hereafter arising or acquired, in and to the following
(individually a "Patent" and collectively, "Patents"): (A) all letters
patent of the United States or any other country, all registrations
and recordings thereof, and all applications for letters patent of the
United States or any other country, including registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
State or Territory thereof,
5
or any other country, and (B) all reissues, continuations,
continuations-in-part or extensions thereof;
(vi) all rights of such Grantor now owned or hereafter arising or
acquired under any and all agreements granting any right with respect
to any invention on which a Patent is in existence;
(vii) all of such Grantor's right, title and interest, whether
now existing or hereafter arising or acquired, in and to the following
(individually a "Trademark" and collectively, "Trademarks"): (A) all
trademarks, trade names, corporate names, business names, trade
styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any political
subdivision thereof; and (B) all reissues, extensions or renewals
thereof; and
(viii) all rights of such Grantor now owned or hereafter arising
or acquired under all agreements granting any right to use any
Trademark or Trademark registration.
(i) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) - (h) of this Section 1) and, to the extent
not otherwise included, all (i) payments under insurance (whether or not
the Administrative Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral and (ii) cash.
Section 2. Security for Obligations. This Agreement secures the payment of
all Obligations of each Grantor now or hereafter existing under the Loan
Documents, whether for principal, interest, fees, expenses or otherwise (all
such Obligations being the "Secured Obligations"). Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Secured Obligations and would be owed by such
Grantor to the Administrative Agent or the Secured Parties under the Loan
Documents and the Bank Hedge Agreements but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included
6
in the Collateral to which it is a party to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Agent of any of the rights hereunder shall not release any Grantor from any of
its duties or obligations under the contracts and agreements included in the
Collateral to which it is a party and (c) neither the Administrative Agent nor
any Secured Party shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall the
Administrative Agent or any Secured Party be obligated to perform any of the
obligations or duties of any Grantor under such contracts and agreements
included in the Collateral to which it is a party or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 4. Delivery of Security Collateral and Account Collateral. All
certificates or instruments representing or evidencing Security Collateral or
Account Collateral (except those relating to cash accounts and deposit
instruments not required by the Administrative Agent to be delivered to the
Administrative Agent on the Closing Date (but which it retains the right to
require) shall be delivered to and held by or on behalf of the Administrative
Agent pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Administrative Agent. The
Administrative Agent shall have the right, upon the occurrence and during the
continuation of an Event of Default and on five (5) business days' notice to the
Borrower, to transfer to or to register in the name of the Administrative Agent
or any of its nominees any or all of the Security Collateral and the Account
Collateral, subject only to the revocable rights specified in Section 13(a). In
addition, the Administrative Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Security Collateral or
Account Collateral for certificates or instruments of smaller or larger
denominations.
Section 5. Maintaining the L/C Cash Collateral Account. So long as any
Advance shall remain unpaid, any Letter of Credit shall be outstanding or any
Lender shall have any Commitment under the Credit Agreement or any Hedge Bank or
any Loan Party shall have any obligations under any Hedge Agreement:
(a) The Borrower will maintain the L/C Cash Collateral Account with
Fleet.
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account and, except as
otherwise provided by the provisions of Section 7 and Section 20, that no
amount (including interest on Collateral Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
any Grantor or any other Person from the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations, of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
7
Section 6. Investing of Amounts in the L/C Cash Collateral Account. If
requested by the Borrower, the Administrative Agent will, subject to the
provisions of Section 7 and Section 20, from time to time invest (a) amounts on
deposit in the L/C Cash Collateral Account in such Cash Equivalents as the
Borrower may select, in each case which investments shall be made in the name of
the Administrative Agent on behalf of the Borrower, and (b) interest paid on the
Cash Equivalents referred to in clause (a) above, and reinvest other proceeds of
any such Cash Equivalents that may mature or be sold, in each case in such Cash
Equivalents as the Borrower may select, in each case which investments shall be
made in the name of the Administrative Agent on behalf of the Borrower (the Cash
Equivalents referred to in clauses (a) and (b) above being collectively
"Collateral Investments"). Interest and proceeds that are not invested or
reinvested in Collateral Investments as provided above shall be deposited and
held in the L/C Cash Collateral Account.
Section 7. Release of Amounts. Upon the drawing of any Letter of Credit for
which funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Bank or the Revolving Credit Lenders, as
applicable, as provided in the Credit Agreement.
Section 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) All of such Grantor's existing Equipment and Inventory are located
at the places specified for such Grantor on Schedule II hereto. The chief
place of business and chief executive office of such Grantor and the office
where such Grantor keeps its records concerning the Receivables, and, to
the extent possessed, the original copies of each Assigned Agreement and
all originals of all chattel paper that evidence Receivables, are currently
located at the address specified below the name of such Grantor on the
signature pages hereof (or in the case of any Additional Grantor at the
address specified below the name of such Additional Grantor on the
signature page of the Security Agreement Supplement (as defined in Section
24(c)) executed and delivered by such Additional Grantor). None of the
material Receivables or Agreement Collateral is evidenced by a promissory
note or other instrument.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by such Grantor hereunder free and clear of any Lien, except for
security interests created or permitted under the Loan Documents
(including, without limitation, any Liens disclosed on Schedule 6.1(c) to
the Credit Agreement). No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in
any recording office, except such as may have been filed: (i) in favor of
the Administrative Agent relating to this Agreement or (ii) with respect to
Permitted Liens or as otherwise permitted pursuant to the Credit Agreement.
(c) Set forth below each Grantor's name on Schedule III hereto is a
complete and accurate list of (i) all names under which such Grantor is or
has been doing business within the last five years (including, without
limitation, all trade names, division names and fictitious names), (ii) all
trade names that such Grantor owns or is licensed to use (including the
expiration date of such
8
license) and (iii) all trade names that such Grantor has established the
right to use (collectively, the " Trade Names"). Such Grantor has not
changed within the past six months its name or identity, by reorganization
or otherwise, or its address set forth below the name of such Grantor on
the signature pages hereof or the Security Agreement Supplement executed
and delivered by it, as the case may be, except as set forth on Schedule
III hereto.
(d) Except as set forth for each Grantor on Schedule II hereto, such
Grantor has exclusive possession and control of the existing Equipment and
Inventory pledged by such Grantor hereunder.
(e) The Pledged Shares owned by such Grantor have been duly authorized
and validly issued and are fully paid and non-assessable. To the best
knowledge of such Grantor, the Pledged Debt owed to such Grantor has been
duly authorized, authenticated or issued and delivered and, is the legal,
valid and binding obligation of the issuers thereof and is not in default.
(f) The Pledged Shares constitute the percentage of the issued and
outstanding shares of stock of the issuers thereof indicated on Schedule I.
The Pledged Debt is outstanding in the principal amount indicated on
Schedule I.
(g) The Assigned Agreements to which such Grantor is a party have been
duly authorized, executed and delivered by such Grantor. There exists no
default under any material Assigned Agreement to which such Grantor is a
party, by Grantor or, to Grantor's knowledge, any other party thereto,
except under any Assigned Agreement which involves a sum not in excess of
$50,000 individually or $250,000 in the aggregate per annum for any default
which individually or in the aggregate with other defaults would not
reasonably be expected to have a Material Adverse Effect. If reasonably
required by the Administrative Agent each party to the Assigned Agreements
to which such Grantor is a party, other than such Grantor, has executed and
delivered to such Grantor a consent, in substantially the form of Exhibit C
hereto, to the assignment of the Agreement and Collateral to the
Administrative Agent pursuant to this Agreement.
(h) Upon either the filing by the Administrative Agent or its
representatives of the proper financing statements referred to in Section
3.1(a)(ii) of the Credit Agreement or the taking of possession thereof, as
applicable, this Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto create a valid and perfected first priority security interest in the
Collateral of such Grantor which can be perfected by such filings or by the
taking of possession, to the extent possession is so taken by the
Administrative Agent, securing the payment of the Secured Obligations, and
all filings and other actions necessary or desirable to perfect and protect
such security interest shall have been duly taken.
(i) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required either (i)
for the grant by such Grantor of the assignment and security interest
granted hereby, for the pledge by such Grantor of the Security Collateral
pursuant hereto or for the
9
execution, delivery or performance of this Agreement by such Grantor, (ii)
for the perfection or maintenance of the pledge, assignment and security
interest created hereby (including the first priority nature of such
pledge, assignment or security interest), except for the filing of
financing and continuation statements under the Uniform Commercial Code,
which financing statements are in proper form and are duly executed and
except for any other actions required to be taken as requested by the
Administrative Agent which have been duly taken, or (iii) for the exercise
by the Administrative Agent of its voting or other rights provided for in
this Agreement or the remedies in respect of the Collateral pursuant to
this Agreement, except as may be required in connection with the
disposition of any portion of the Security Collateral by laws affecting the
offering and sale of securities generally.
(j) The Inventory which has been produced by such Grantor has been
produced in compliance with all requirements of the Fair Labor Standards
Act.
Section 9. Further Assurances.
(a) Each of the Grantors agrees that from time to time, at the expense
of the Borrower, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary, or that the Administrative Agent may reasonably request, in
order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby or to enable the Administrative
Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
foregoing, such Grantor will, upon any such reasonable request of the
Administrative Agent: (i) upon the occurrence and during the continuance of
an Event of Default xxxx conspicuously each document included in the
Inventory pledged by such Grantor hereunder, each chattel paper included in
the Receivables pledged by such Grantor hereunder, each Related Contract
pledged by such Grantor hereunder, each Assigned Agreement pledged by such
Grantor hereunder and each of its records pertaining to the Collateral with
a legend, in form and substance satisfactory to the Administrative Agent,
indicating that such document, chattel paper, Related Contract, Assigned
Agreement or Collateral is subject to the security interest granted hereby;
(ii) if any Collateral pledged by such Grantor hereunder shall be evidenced
by a promissory note or other instrument or chattel paper, deliver and
pledge to the Administrative Agent hereunder such note or instrument or
chattel paper duly indorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Administrative Agent; and (iii) execute such financing or continuation
statements, or amendments thereto, and such other instruments or notices as
may be reasonably requested by the Administrative Agent in order to perfect
and preserve the pledge, assignment and security interest granted or
purported to be granted hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral pledged by such Grantor
hereunder, without the signature of such Grantor where permitted by law in
order to perfect and preserve the pledge, assignment and security interest
granted or purported to be granted hereby. A copy of each such statement
and amendment will be timely
10
provided to such Grantor. A photocopy or other reproduction of this
Agreement or any financing statement covering its Collateral or any part
thereof shall be sufficient as a financing statement where permitted by
law.
(c) Each Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the
Collateral and such reports in connection with its Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
(d) Each Grantor hereby agrees, upon the request of the Administrative
Agent at any time following the occurrence and during the continuance of an
Event of Default, and at the expense of the Borrower, (i) within fourteen
(14) days after such request deliver to the Administrative Agent a letter
agreement among such Grantor, Fleet and the Administrative Agent in respect
of the main cash concentration account of such Grantor, which agreement
shall be in substantially the form of Exhibit A hereto, (ii) within
twenty-one (21) days after such request deliver to the Administrative Agent
a letter agreement, in substantially the form of Exhibit B hereto, in
respect of each lockbox and blocked deposit account of such Grantor, (iii)
within thirty (30) days after such request, take whatever action
(including, without limitation, the filing of Uniform Commercial Code
financing statements) as may be reasonably necessary or advisable in the
sole discretion of the Administrative Agent to vest in the Administrative
Agent (or in any representative of the Administrative Agent designated by
it), for the benefit of the Administrative Agent and the ratable benefit of
the Secured Parties, valid and subsisting Liens on the main cash
concentration accounts of the Borrower and each other Grantor and the
lockboxes and blocked deposit accounts of the Grantors, and (iv) at any
time and from time to time, promptly execute and deliver any and all
further instruments and documents and take all such other action as the
Administrative Agent may deem reasonably necessary in obtaining the full
benefits of the Liens on, or in preserving the Liens in, such main
concentration accounts, lockboxes and blocked deposit accounts.
Section 10. As to Equipment and Inventory.
(a) Each Grantor shall keep the Equipment and Inventory (other than
Inventory sold in the ordinary course of business) pledged by such Grantor
hereunder at the places therefor specified in Section 8(a) or, upon fifteen
(15) days' prior written notice to the Administrative Agent, at such other
places in a jurisdiction where all action required by this Agreement to
maintain the security interest of the Administrative Agent in such
Equipment and Inventory granted hereby shall have been taken with respect
to such Equipment and Inventory.
(b) Each Grantor shall cause the Equipment pledged by such Grantor
hereunder which individually or in the aggregate is material to such
Grantor's business to be maintained and preserved in good working
condition, repair and working order, ordinary wear and tear excepted and
except for insured casualty losses and shall forthwith, or in the case of
any loss or damage to any of such Equipment, as quickly as practicable
after the occurrence thereof, make or cause to be made all repairs,
replacements and other improvements in connection therewith that are
necessary or desirable to such end. Each Grantor shall promptly furnish to
the Administrative Agent a statement respecting
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any loss or damage to any of the Equipment pledged by such Grantor
hereunder (other than immaterial loss or damage) or loss or damage to
Equipment which individually or in the aggregate is not material to such
Grantor's business.
(c) Each Grantor shall timely pay when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory pledged by such Grantor hereunder; provided,
however, that such Grantor shall not be required to pay any such tax,
assessment, charge or claim that is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against the Borrower or any of its
Subsidiaries. In producing the Inventory pledged by such Grantor hereunder,
each Grantor shall comply in all material respects with all requirements of
the Fair Labor Standards Act.
Section 11. Insurance.
(a) Each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory pledged by such Grantor hereunder in
such amounts, against such risks, in such form and with such insurers, as
required by the Credit Agreement. Each policy for liability insurance shall
provide for all losses to be paid on behalf of the Administrative Agent and
each Grantor as their interests may appear and each policy for property
damage insurance shall provide for all losses (except so long as the payor
shall not have received notice from the Administrative Agent to the effect
that an Event of Default shall have occurred and is continuing for losses
of less than $250,000 per occurrence) to be paid directly to the
Administrative Agent and with respect to losses of $250,000 or more per
occurrence but not in excess of $500,000 per occurrence or $500,000 in the
aggregate, the Administrative Agent shall, unless an Event of Default shall
have occurred and then be continuing, make such insurance proceeds
available to the subject Grantor for the repair or replacement of the
subject Collateral. Each such policy shall in addition (i) name such
Grantor and the Administrative Agent as insured parties thereunder (without
any representation or warranty by or obligation upon the Administrative
Agent) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder in excess of $250,000 per occurrence
unless an Event of Default shall have occurred and be continuing shall be
payable to the Administrative Agent notwithstanding any action, inaction or
breach of representation or warranty by such Grantor, (iii) provide that
there shall be no recourse against the Administrative Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that the
insurer shall endeavor to provide at least thirty (30) days' prior written
notice of cancellation or of lapse to the Administrative Agent. Each
Grantor shall, if so requested by the Administrative Agent, deliver to the
Administrative Agent original or duplicate policies of such insurance and,
as often as the Administrative Agent may reasonably request, a report of a
reputable insurance broker with respect to such insurance. Further, each
Grantor shall, at the request of the Administrative Agent, duly exercise
and deliver instruments of assignment of its insurance policies to comply
with the requirements of Section 9 and cause the insurers to acknowledge
notice of such assignment.
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(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any
loss involving damage to Equipment or Inventory which individually or in
the aggregate is material to such Grantor's business when subsection (c) of
this Section 11 is not applicable, the Grantor that owns such Equipment or
Inventory shall make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory out of available net proceeds
of insurance maintained by such Grantor pursuant to this Section 11.
(c) Upon the occurrence and during the continuance of any Event of
Default or the loss (equal to or in excess of $500,000 per occurrence or in
the aggregate) of any Equipment or Inventory, all insurance payments in
respect of such Equipment or Inventory shall, except as provided in Section
11(a), be paid to and applied by the Administrative Agent as specified in
Section 20(b).
Section 12. Place of Perfection; Record; Collection of Receivables.
(a) Each of the Grantors shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning
the Collateral, and, to the extent possessed, the original copies of the
Assigned Agreements and all originals of all chattel paper that evidence
Receivables, at the location therefor specified in Section 8(a) or, upon
fifteen (15) days' prior written notice to the Administrative Agent, at
such other locations in a jurisdiction where all actions required by this
Agreement to maintain the security interest of the Administrative Agent in
such Collateral granted hereby shall have been taken with respect to the
Collateral. Each of the Grantors shall hold and preserve such records,
Assigned Agreements and chattel paper and shall permit representatives of
the Administrative Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), each of the
Grantors shall continue to collect, at its own expense, all amounts due or
to become due such Grantor under the Receivables pledged by such Grantor
hereunder provided that, so long as no Event of Default has occurred and is
continuing, each Grantor may settle or compromise the amount of payment of
any of its Receivables, release wholly or partly any Obligor thereof, or
allow any credit or discount thereon in the ordinary course of business. In
connection with such collections, each Grantor may take such action as such
Grantor may deem necessary or advisable to enforce collection of the
Receivables pledged by such Grantor hereunder; provided, however, that the
Administrative Agent shall have the right at any time, upon the occurrence
and during the continuance of an Event of Default and upon five business
(5) days' written notice to the Borrower of its intention to do so, to
notify the obligors under any Receivables of the assignment of such
Receivables to the Administrative Agent and to direct such Obligors to make
payment of all amounts due or to become due to such Grantor thereunder
directly to the Administrative Agent and, upon such notification and at the
expense of such Grantor, to enforce collection of any such Receivables, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done. After
receipt by any Grantor of the notice from the Administrative Agent
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referred to in the proviso of the preceding sentence upon the occurrence
and during the continuance of an Event of Default, (i) all amounts and
proceeds (including instruments) received by such Grantor in respect of the
Receivables pledged by such Grantor hereunder shall be received in trust
for the benefit of the Administrative Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
endorsement) to be applied as provided by Section 20(b) and (ii) without
the prior consent of the Administrative Agent, such Grantor shall not
adjust, settle or compromise the amount or payment of any of its
Receivables, release wholly or partly any Obligor thereof, or allow any
credit or discount thereon.
Section 13. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) The Grantors shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral or
any part thereof for any purpose not inconsistent with the terms of
this Agreement or the other Loan Documents; provided, however, that
the Grantors shall not exercise or refrain from exercising any such
right if such action would reasonably be expected to have a material
adverse effect on the value of the Security Collateral or any part
thereof.
(ii) The Grantors shall be entitled to receive and retain any and
all dividends and interest paid in respect of the Security Collateral;
provided, however, that any and all
(A) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral in connection with a
partial or total liquidation or dissolution or in connection with
a reduction of capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any
Security Collateral
shall be, and shall be forthwith, delivered to the Administrative
Agent to hold as Security Collateral and shall, if received by any of
the Grantors, be received in trust for the benefit of the
Administrative Agent, be segregated from the other property or funds
of such Grantor and be forthwith delivered to the Administrative Agent
as Security Collateral in the same form as so received (with any
necessary endorsement); provided further, however, that the Grantors
shall be entitled to retain any such payments referred to in clause
(A), (B) or (C) above to the extent such payments are made between the
Borrower and its Subsidiaries or between the Borrower's Subsidiaries
and in each case are otherwise permitted by the terms of the Credit
Agreement, including without limitation Sections
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6.4 and 6.7 thereof and in each case to the extent relating to
Investments prior to the occurrence and during the continuance of a
Default subject however to any prepayment requirements under the
Credit Agreement.
(iii) The Administrative Agent shall execute and deliver (or
cause to be executed and delivered) to each of the Grantors all such
proxies and other instruments as such Grantor may request for the
purpose of enabling such Grantor to exercise, prior to the occurrence
and during the continuance of an Event of Default, the voting and
other rights that it is entitled to exercise pursuant to paragraph (i)
above and to receive the dividends or interest payments that it is
authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an Event of
Default:
(i) All rights of each of the Grantors (x) to exercise or refrain
from exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 13(a)(i) shall
automatically cease and (y) to receive the dividends and interest
payments that it would otherwise be authorized to receive and retain
pursuant to Section 13(a)(ii) shall automatically cease, and all such
rights shall thereupon be vested solely in the Administrative Agent,
which shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and
hold as Security Collateral such dividends and interest payments.
(ii) All dividends and interest payments that are received by any
of the Grantors contrary to the provisions of paragraph (i) of this
Section 13(b) shall be received in trust for the benefit of the
Administrative Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Administrative Agent
as Security Collateral in the same form as so received (with any
necessary endorsement).
Section 14. As to the Assigned Agreements.
(a) Each of the Grantors shall, at its expense:
(i) perform and observe all the material terms and provisions of
the Assigned Agreements to which such Grantor is a party to be
performed or observed by it, maintain such Assigned Agreements in full
force and effect and enforce such Assigned Agreements in accordance
with their terms, except where the failure to do so would not be
reasonably likely to have a Material Adverse Effect and take all such
action to such end as may be from time to time reasonably requested by
the Administrative Agent; and
(ii) furnish to the Administrative Agent promptly upon receipt
thereof copies of all material notices received by such Grantor (other
than those created or arising in the ordinary course) under or
pursuant to the Assigned Agreements to which such Grantor is a party
relating to any breach or default by any party which could reasonably
be expected to have a Material Adverse Effect, and from time to time
(A) furnish to the Administrative Agent such information and
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reports regarding the Collateral pledged by such Grantor hereunder as
the Administrative Agent may reasonably request and (B) upon the
reasonable request of the Administrative Agent, make to each other
party to any such Assigned Agreement such demands and requests for
information and reports or for action as such Grantor is entitled to
make thereunder.
(b) Each of the Grantors agrees that it shall not without the consent
of the Administrative Agent if any such action would reasonably be expected
to be adverse to the interests of, or impair the security value of such
Collateral to, the Administrative Agent or the Lenders (except if adverse,
or causing an impairment, in each case only in an immaterial way or with
respect to Collateral which individually or in the aggregate is not
material to such Grantor's business) and shall not in any event take any
such action at any time following the occurrence and during the continuance
of a Default or an Event of Default:
(i) cancel or terminate any Assigned Agreement to which such
Grantor is a party, or consent to or accept any cancellation or
termination thereof;
(ii) amend or otherwise modify any Assigned Agreement to which
such Grantor is a party, or give any consent, waiver or approval
thereunder;
(iii) waive any material default under or material breach of any
Assigned Agreement to which such Grantor is a party;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with any Assigned Agreement to which
such Grantor is a party, except as expressly provided therein; or
(v) take any other action in connection with any Assigned
Agreement to which such Grantor is a party, that would impair the
value of the interest or rights of such Grantor thereunder or that
would impair the interest or rights of the Administrative Agent.
Section 15. Payments Under the Assigned Agreements. Following the
occurrence and continuance of an Event of Default, if requested by the
Administrative Agent, each of the Grantors shall effectively instruct each other
party to each Assigned Agreement to which such Grantor is a party, that all
payments due or to become due under or in connection with such Assigned
Agreement shall be made in accordance with the instructions of the
Administrative Agent. In such event the Administrative Agent shall instruct such
party to make (A) such payments to the Borrower so long as no Event of Default
shall have occurred and be continuing or (B) such payments to the Administrative
Agent if any Event of Default shall have occurred and be continuing. Any payment
made to the Administrative Agent under this Section 15 shall be applied as
provided in Section 20(b).
Section 16. Transfers and Other Liens; Additional Shares.
16
(a) Each of the Grantors agrees that it shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option
with respect to, any of the Collateral, except sales of Inventory in the
ordinary course of business or sales or other dispositions of other assets
permitted by the Credit Agreement, or (ii) create or suffer to exist any
Lien upon or with respect to any of the Collateral except for (A) the
pledge, assignment and security interest created by this Agreement and (B)
any other Liens expressly permitted under Section 6.1 of the Credit
Agreement.
(b) Each of the Grantors agrees that it shall (i) cause each issuer of
the Pledged Shares which it controls not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to such Grantor and except as otherwise permitted by
the Credit Agreement, and (ii) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities owned by such Grantor of each issuer of the
Pledged Shares; provided, however, that in no event shall more than 65% of
the capital stock of any Foreign Subsidiary of a Grantor be pledged
pursuant to this Agreement except if and to the extent otherwise provided
in the Credit Agreement.
Section 17. Administrative Agent Appointed Attorney-in-Fact. Each of the
Grantors hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of the Borrower and
in the name of the Borrower or otherwise, upon the occurrence and during the
continuance of an Event of Default, to take any action and to execute any
instrument that the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 11,
(b) to ask for, demand, collect, xxx for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of its Collateral,
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the
collection of any of its Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Administrative Agent with respect to any of its Collateral.
Section 18. Administrative Agent May Perform. If any of the Grantors fails
to perform any agreement contained herein, the Administrative Agent may itself,
upon reasonable prior notice to such Grantor, perform, or cause performance of,
such agreement, and the reasonable and
17
actual expenses of the Administrative Agent incurred in connection therewith
shall be payable by such Grantor under Section 22(b).
Section 19. Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Security Collateral, whether or not the
Administrative Agent or any Secured Party has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral. The
Administrative Agent shall exercise reasonable care in the custody and
preservation of any Collateral in its possession and shall accord such
Collateral treatment equal to that which Fleet accords other similar property in
its possession.
Section 20. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the Uniform Commercial Code in effect in the State of
New York at such time (the "N.Y. Uniform Commercial Code") (whether or not
the N.Y. Uniform Commercial Code applies to the affected Collateral) and
also may (i) require any or all of the Grantors to, and each Grantor hereby
agrees that it will at its expense and upon request of the Administrative
Agent forthwith, assemble all or part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative Agent at a
place to be designated by the Administrative Agent that is reasonably
convenient to both parties and (ii) without notice except as specified
below and as required by law, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any of the Administrative
Agent's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Administrative Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice except as
required by law, be made at the time and place to which it was so
adjourned.
(b) Any cash held by or on behalf of the Administrative Agent as
Collateral and all cash proceeds received by the Administrative Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may, in the discretion of the Administrative
Agent, be held by the Administrative Agent as Collateral for, and/or then
or at any time thereafter applied (after payment of any amounts payable to
the Administrative Agent pursuant to Section 22)
18
in whole or in part by the Administrative Agent for the ratable benefit of
the Secured Parties against, all or any part of the Secured Obligations in
such order as is specified by the Credit Agreement and, if the Credit
Agreement does not so specify an order of application against the
Obligations, in such order as the Administrative Agent shall elect,
provided, however, that this Section 20(b) shall be subject to the
provisions of Section 11(a). Any surplus of such cash or cash proceeds held
by the Administrative Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to the applicable Grantors or to
whomsoever may be lawfully entitled to receive such surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of any of the Grantors under or in connection with the Assigned
Agreements or otherwise in respect of the Collateral, including, without
limitation, any and all rights of any Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of,
any Assigned Agreement.
(d) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid
over to the Administrative Agent in the same form as so received (with any
necessary endorsement or assignment).
(e) The Administrative Agent may, with reasonable notice to any of the
Grantors and at any time or from time to time, charge, set-off or otherwise
apply all or any part of the Secured Obligations against the L/C Cash
Collateral Account or any part thereof; provided, however, that the failure
to give notice shall not affect the validity of such charge, set-off or
application.
(f) Each Grantor will furnish to the Administrative Agent correct and
complete customer lists and updates thereof as the Administrative Agent may
reasonably request, all in reasonable detail.
Section 21. Registration Rights; Private Sale. (a) If the Administrative
Agent shall determine to exercise its right to sell all or any of the Security
Collateral pursuant to Section 20 pursuant to a public offering (it being
understood by each of the Grantors that the Administrative Agent shall be under
no obligation to do so and may, in its sole discretion, dispose of the Security
Collateral in any manner permitted by law that the Administrative Agent may
select), each Grantor agrees that, upon request of the Administrative Agent,
such Grantor will, at its own expense:
(i) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver all such instruments and documents, and
do or cause to be done all such other acts and things as may be
necessary or, in the sole discretion of the Administrative Agent,
desirable to register its Security Collateral under the provisions of
the Securities Act of 1933, as amended (the "Securities Act"), to
cause a registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are required
by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus that, in the sole discretion of
the Administrative
19
Agent, are necessary or desirable, all in conformity with the
requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify its Security Collateral
under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Security
Collateral, as requested by the Administrative Agent in its sole
discretion;
(iii) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 10(a) of the Securities Act;
(iv) provide the Administrative Agent with such other information
and projections as may be necessary or, in the sole discretion of the
Administrative Agent, desirable to enable the Administrative Agent to
effect the sale of its Security Collateral; and
(v) do or cause to be done all such other acts and things as may
be necessary to make such sale of its Security Collateral or any part
thereof valid and binding and in compliance with applicable law.
The Administrative Agent is authorized, in connection with any sale of the
Security Collateral pursuant to Section 20, to deliver or otherwise disclose to
any prospective purchaser of the Security Collateral (A) any registration
statement or prospectus, and all supplements and amendments thereto, prepared
pursuant to clause (i) above, (B) any information and projections provided to it
pursuant to clause (iv) above and (C) any other information in its possession
relating to the Security Collateral.
(b) The Grantors recognize that, upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may be unable to
effect a public sale of all or a part of the Security Collateral, and may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. The Grantors acknowledge that any such private
sales may be at places and on terms less favorable to the sellers than if sold
at public sales and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner, and that the Administrative Agent has
no obligation to delay the sale of any such securities for the period of time
necessary to permit any such securities to be registered for public sale.
Section 22. Indemnity and Expenses.
(a) Each of the Grantors hereby agrees, jointly and severally, to
indemnify the Administrative Agent from and against any and all claims,
losses and liabilities arising out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from the Administrative Agent's
gross negligence or willful misconduct as determined by a final judgment of
a court of competent jurisdiction.
20
(b) The Borrower will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees
and expenses of its counsel and of any experts and agents, that the
Administrative Agent may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Secured Parties hereunder or (iv) the failure
by the Borrower or any other Grantor to perform or observe any of the
provisions hereof.
Section 23. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against each Grantor to enforce
this Agreement, irrespective of whether any action is brought against the
Borrower or any other Grantor or whether the Borrower or any other Grantor is
joined in any such action or actions. All rights of the Administrative Agent and
the pledge, assignment and security interest hereunder, and all obligations of
each Grantor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment
or waiver of or any consent to any departure from any Loan Document,
including, without limitation, any increase in the Secured Obligations
resulting from the extension of additional credit to the Borrower or any
Guarantor or any of their subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Borrower or any Guarantor or any of their
subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any Guarantor or any of their
subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third party grantor of a
security interest.
Section 24. Amendments; Waivers; Etc.
(a) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be
21
in writing and signed by the Administrative Agent, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
(b) No failure on the part of the Administrative Agent to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.
(c) Upon the execution and delivery by any Person of a supplement to
this Agreement, in each case in substantially the form of Exhibit D hereto
(each a "Security Agreement Supplement"), (i) such Person shall be referred
to as an "Additional Grantor" and shall be and become a Grantor, and each
reference in this Agreement to an "Additional Grantor" or a "Grantor" shall
also mean and be a reference to such Additional Grantor and each reference
in any other Loan Document to a "Grantor" or a "Loan Party" shall also mean
and be a reference to such Additional Grantor, and (ii) the supplements
attached to each Security Agreement Supplement shall be incorporated into
and become a part of and supplement the Schedules to this Agreement, as
appropriate, and the Administrative Agent may attach such supplements to
such Schedules, and each reference to such Schedules shall mean and be a
reference to such Schedules, as supplemented pursuant hereto.
Section 25. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
if to any Grantor addressed to it at the address set forth below its name on the
signature pages hereof; if to any Additional Grantor, addressed to it at the
address set forth below its name on the signature pages to the Security
Agreement Supplement executed and delivered by such Additional Grantor; if to
the Administrative Agent, addressed to it at its address set forth in Section
11.2 of the Credit Agreement or, as to each other party, at such other address
as shall be designated by such party in a written notice to the Grantors and the
Administrative Agent. All such notices and communications shall, when mailed by
certified mail, return receipt requested, telegraphed, telecopied or telexed, be
effective three (3) Business Days after mailing, or two (2) Business Days after
being deposited with a recognized overnight delivery service with all changes
prepaid or billed to the account of the sender, or upon transmission to the
telegraph company, upon delivery by telecopier or upon confirmation by telex
answerback, respectively, addressed as aforesaid. Any party hereto may change
the Person, address or telecopier number to whom or which notices are to be
given hereunder, by notice duly given hereunder; provided, however, that any
such notice shall be deemed to have been given hereunder only when actually
received by the party to which it is addressed.
Section 26. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the later of (i)
the indefeasible payment in full in cash of the Secured Obligations and (ii) the
Termination Date, (b) be binding upon each Grantor, its successors and assigns
and (c) inure, together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Administrative Agent, the Lender Parties and
their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any
22
Lender may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Advances owing to it and the Note or Notes
held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender herein or
otherwise, in each case as provided in Section 11.7 of the Credit Agreement.
Notwithstanding the foregoing, no Grantor may assign any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent, which consent may be withheld for any reason.
Section 27. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any item of
Collateral in accordance with the express terms of the Loan Documents, the
Administrative Agent will, at the Grantors' expense, execute and deliver to
each Grantor such documents as such Grantor shall reasonably request to
evidence the release of such item of Collateral from the assignment and
security interest granted hereby; provided, however, that (i) at the time
of such request and such release no Default shall have occurred and be
continuing, (ii) such Grantor shall deliver to the Administrative Agent, at
least ten (10) days prior to the date of the proposed release, a written
request for release describing the item of Collateral and the terms of the
sale, lease, transfer or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
form of release for execution by the Administrative Agent and a
certification by such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request, and (iii) the proceeds of any such sale,
lease, transfer or other disposition required to be applied in accordance
with Section 2.6 or any other provision of the Credit Agreement shall be
applied as required by the terms of the Credit Agreement.
(b) Upon the latest of (i) the indefeasible payment in full in cash of
the Secured Obligations, (ii) the expiration, termination or cancellation
of all of the Letters of Credit and (iii) the Termination Date, the pledge,
assignment and security interest granted by each of the Grantors hereby
shall terminate and all rights to the Collateral shall revert to the
appropriate Grantor. Upon any such termination, the Administrative Agent
will, at the Grantors' expense, execute and deliver to the appropriate
Grantor such documents as such Grantor shall reasonably request to evidence
such termination.
(c) To the extent any one or more provisions of this Agreement shall
conflict with one or more provisions in the Credit Agreement, the
provisions of the Credit Agreement shall control and supersede any such
conflicting provision(s) of this Agreement.
Section 28. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein
23
or in the Credit Agreement, terms used in Article 9 of the N.Y. Uniform
Commercial Code are used herein as therein defined.
Section 29. JURISDICTION. EACH OF THE PARTIES HERETO 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 CITY, NEW YORK AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW YORK STATE
COURT 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 ANY LENDER PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE
COURTS OF ANY JURISDICTION.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT 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 ANY OF THE OTHER LOAN DOCUMENTS
TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. 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.
Section 30. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LOAN PARTIES,
THE ADMINISTRATIVE AGENT AND THE SECURED PARTIES VOLUNTARILY, INTENTIONALLY AND
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, THE ADVANCES OR
THE ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR THE SECURED PARTIES AND THE ADMINISTRATIVE AGENT TO
ENTER INTO THIS AGREEMENT AND TO MAKE ADVANCES PURSUANT TO THE LOAN DOCUMENTS.
Section 31. Counterparts. This Agreement may be executed in any number of
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one
24
and the same instrument. Delivery by telecopier of an executed counterpart of a
signature page to this Agreement shall be as effective as delivery of a manually
executed counterpart to this Agreement.
[SIGNATURE PAGE FOLLOWS]
25
IN WITNESS WHEREOF, each of the Grantors has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
AUDIO BOOK CLUB, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Title: CO-CEO
----------------------------------
Address: 0000 Xxxxxxxxx Xxxxxxxxx, X.X.
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
ABC INTERNET SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Title: CO-CEO
----------------------------------
Address: 0000 Xxxxxxxxx Xxxxxxxxx, X.X.
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
CLASSIC RADIO HOLDING CORP.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Title: CO-CEO
----------------------------------
Address: 0000 Xxxxxxxxx Xxxxxxxxx, X.X.
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
CLASSIC RADIO ACQUISITION CORP.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Title: CO-CEO
----------------------------------
Address: 0000 Xxxxxxxxx Xxxxxxxxx, X.X.
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
ABC INVESTMENT CORP.
By: /s/ Xxxx Xxxx
-------------------------------------
Title: EVP
----------------------------------
Address: 000 Xxxxxxxx Xxxxxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
CH ACQUISITIONS CORP.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Title: CEO
----------------------------------
Address: 0000 Xxxxxxxxx Xxxxxxxxx, X.X.
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
ACCEPTED:
FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT
By: /s/ Xxxx Xxxx
-----------------------------------------
Title: President
--------------------------------------
EXHIBIT A TO
SECURITY AGREEMENT
[Grantor Name and Address]
_____________, ____
[Name of Depository Account Bank]
[Address]
Ladies and Gentlemen:
Reference is made to deposit account no.[_________] (the "Cash Collateral
Account") maintained with you by [GRANTOR NAME], a [_____________] corporation
(the "Grantor"). Pursuant to the Security Agreement, dated November ___, 1998
(as amended, supplemented, renewed, restated, extended or otherwise modified
from time to time, the "Security Agreement"; terms defined therein unless
otherwise defined herein being used herein as therein defined), the Grantor has
granted to Fleet National Bank, as administrative agent (together with any
successor appointed pursuant to Article X of the Credit Agreement (as
hereinafter defined), the "Administrative Agent") for the Secured Parties
referred to in the Credit Agreement, dated as of ________, ____ (as such
agreement may be amended, supplemented, renewed, extended or otherwise modified
from time to time, the "Credit Agreement"), by and among Audio Book Club, Inc.,
(the "Borrower"), the Lender Parties party thereto, the Secured Parties named
therein and Fleet National Bank, as Swing Line Bank, as Issuing Bank and as the
Administrative Agent, a security interest in certain property and assets of the
Grantor, including, among other things, the following (the "Account
Collateral"): (a) the Cash Collateral Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Cash Collateral Account; (b) all interest, dividends, cash,
instruments and other property and assets from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the then
existing Account Collateral; and (c) all proceeds of any and all of the
foregoing Account Collateral and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Administrative Agent is the loss
payee thereof) or any indemnity, warranty or guaranty payable by reason of loss
or damage to or otherwise with respect to any of the foregoing Account
Collateral, and (ii) cash. It is a condition to the continued maintenance of the
Cash Collateral Account with you that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of the Security
Agreement and the terms and conditions thereof related to the Account Collateral
and confirm to the Administrative Agent that (a) the Cash Collateral Account is
maintained with you at your offices at the address set forth above, is entitled
as set forth in subparagraph (i) below and the account
Exhibit A - Page 1
number therefor is as set forth in the first paragraph of this letter agreement
and (b) you have received no notice of any other pledge or assignment of, or any
lien on or security interest in, the Cash Collateral Account. Further, you
hereby agree with the Administrative Agent that:
(i) The Cash Collateral Account shall be maintained solely for the
benefit of the Administrative Agent, on behalf of itself and the other
Secured Parties, shall be entitled "[NAME OF GRANTOR], cash collateral
account for the benefit of Fleet National Bank, as Administrative Agent"
and shall be subject to written instructions only from an officer of the
Administrative Agent or, so long as you have not been notified by the
Administrative Agent or the Grantor that a Default has occurred and is
continuing and solely to the extent set forth in subparagraph (iv)(B)
below, an officer of the Grantor, as agent for, and with the consent of,
the Administrative Agent.
(ii) The Cash Collateral Account is and shall be subject to the terms
and conditions of the Security Agreement, and such applicable laws and
regulations of the Board of Governors of the Federal Reserve System and of
any other appropriate banking or governmental authority, as are in effect
from time to time, and to the extent any term or condition of this letter
agreement is inconsistent with the terms and conditions of the Security
Agreement, the terms and conditions of the Security Agreement shall govern.
(iii) You shall maintain a record of all deposits received in and all
disbursements made from the Cash Collateral Account and, in addition to
providing the Grantor with records and other documents of such deposits and
disbursements on a daily basis in accordance with the arrangements in
effect between you and the Grantor on the date hereof, furnish to the
Administrative Agent a monthly statement of the Cash Collateral Account to
be mailed to the Administrative Agent in accordance with the provisions of
this letter agreement.
(iv) (A) Upon the instructions of the Administrative Agent, you shall
transfer, in immediately available funds, on each of your business days,
all amounts to be applied by the Administrative Agent on such day to
obligations then due and payable under the Credit Agreement and the other
Loan Documents to the following account (the "Administrative Agent's
Account"), which amounts shall be specified to you by the Administrative
Agent:
Fleet Bank, as Administrative Agent
Account No. ___________________
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Loan Administration
Ref: __________________________
Any funds remaining in the Cash Collateral Account after effecting the
release of funds set forth in the immediately preceding sentence shall be
released to the Grantor in accordance with subparagraph (iv)(B) below.
Exhibit A - Page 2
(B) After transferring to the Administrative Agent all available
amounts on deposit in the Cash Collateral Account in accordance with
subparagraph (iv)(A) above, and so long as neither the Administrative
Agent nor the Grantor has notified you that an Event of Default has
occurred and is continuing, you shall transfer, in accordance with the
instructions from the Grantor, acting as agent for, and with the
consent of, the Administrative Agent, all or a portion of the
available remaining amounts on deposit in the Cash Collateral Account
that are required for the conduct of the business of the Grantor and
its subsidiaries in the ordinary course, which instructions shall
specify the person or entity or the account therefor to which such
amounts shall be transferred.
(C) After complying with the provisions of subparagraphs (iv)(A)
and (iv)(B) above, you shall hold any remaining amounts in the Cash
Collateral Account as Collateral for the Secured Obligations.
Except as provided in subparagraph (iv)(B) above, in no event shall you
release any amounts on deposit in the Cash Collateral Account at the
request of any Person or entity other than the Administrative Agent. Each
such transfer of funds shall neither comprise only part of a remittance nor
reflect the rounding off of any funds so transferred.
(v) All transfers from the Cash Collateral Account referred to in
subparagraph (iv) above shall be made by you irrespective of, and without
deduction for, any counterclaim, defense, recoupment or set off and shall
be final, and you will not seek to recover from the Administrative Agent
for any reason any such payment once made.
(vi) All service charges and fees with respect to the Cash Collateral
Account shall be payable by the Grantor, but may be charged to another
account maintained by the Grantor with you (other than the Cash Collateral
Account or any Lock Box Account maintained with you). In the event you are
unable to obtain sufficient funds from such charges to cover such service
charges and fees, the Grantor shall indemnify you therefor.
(vii) The Administrative Agent shall be entitled to exercise any and
all rights of the Grantor in respect of the Cash Collateral Account in
accordance with the terms of the Security Agreement, and you shall comply
in all respects with such exercise. You hereby acknowledge that
notwithstanding any other provision of this letter agreement, upon notice
from the Grantor or the Administrative Agent of an Event of Default under
the Credit Agreement, you will only accept instructions in respect of the
Cash Collateral Account and the other Account Collateral from the
Administrative Agent.
(viii) The security interest of the Administrative Agent, on behalf of
the Secured Parties, in the Cash Collateral Account and the other Account
Collateral shall not be terminated until you receive notice of such
termination from the Administrative Agent.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of, and be enforceable by, the
Administrative Agent and the other Secured Parties and their respective
successors, transferees and assigns. You may terminate this letter
Exhibit A - Page 3
agreement upon thirty (30) days' prior written notice to the Grantor and the
Administrative Agent. Upon any such termination, you (a) shall close the Cash
Collateral Account and transfer all available funds in the Cash Collateral
Account in accordance with the instructions of the Administrative Agent and (b)
shall nonetheless remain obligated to transfer promptly to the Administrative
Agent, at the account designated by the Administrative Agent at such time, all
funds and other property received in respect of the Cash Collateral Account.
You shall exercise reasonable care in maintaining the Cash Collateral
Account and any Account Collateral received in respect thereof and in fulfilling
your obligations under or in respect of this letter agreement. You shall not be
held liable for any claims, damages, losses or expenses incurred by the Grantor
or the Administrative Agent in connection therewith other than for (a) claims,
damages, losses or expenses resulting from your gross negligence or wilful
misconduct or (b) failure to maintain the Cash Collateral Account or any such
Account Collateral or to fulfill your obligations under or in respect of this
letter agreement with reasonable care as required by the first sentence of this
paragraph. Any liability incurred by you pursuant to the terms of this paragraph
shall be limited to damages directly caused by you or resulting from, or in
connection with, your actions or omissions to act, and shall not be for any
incidental, indirect, punitive or consequential damages.
All notices and other communications provided for under this letter
agreement shall be by (a) telephone promptly confirmed in writing or (b) in
writing (including telegraphic, telecopy or telex communication) and delivered
by hand or overnight courier, telegraphed, telecopied or telexed, to each party
at the address set forth below the name of such party on the signature pages of
this letter agreement or to such other address as such party may specify in
writing to each other party. All such notices and communications shall (i) when
made by telephone, be effective when promptly confirmed in writing or (ii) when
delivered by hand or overnight courier, telegraphed, telecopied or telexed, be
effective upon delivery by hand, one (1) day after delivery to the courier
company, when delivered to the telegraph company, when transmitted by telecopier
or when confirmed by telex answerback, respectively, addressed as aforesaid.
This letter agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery by telecopier of an executed
counterpart of a signature page to this letter agreement shall be as effective
as delivery of a manually executed counterpart of this letter agreement.
Exhibit A - Page 4
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of New York (without giving effect to its conflict
of laws principles).
Very truly yours,
FLEET NATIONAL BANK,
as Administrative Agent
By________________________________
Name:
Title:
Person and Address for Notices:
Fleet National Bank
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: __________________________
Telephone: _________________________
Facsimile No.: _______________________
[NAME OF GRANTOR, as Grantor]
By________________________________
Name:
Title:
Person and Address for Notices:
[Name]
[Address]
[Address]
[Address]
Acknowledged and agreed to as
of the date first above written:
Exhibit A - Page 5
[NAME OF DEPOSITORY ACCOUNT BANK]
By__________________________________
Name:
Title:
Person and Address for Notices:
[Name]
[Address]
[Address]
[Address]
Exhibit A - Page 6
EXHIBIT B TO
SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the terms
and provisions of, the Security Agreement, dated as of November ___, 1998 (the
"Security Agreement"; the terms defined therein being used herein as therein
defined), from [Name of Grantor], (the "Grantor") to Fleet National Bank, as
administrative agent (the "Administrative Agent") for the Secured Parties
referred to therein, and hereby agrees with the Administrative Agent that:
(a) The undersigned will make all payments to be made by it under or
in connection with the ________ Agreement, dated _________, 19__ (the
"Assigned Agreement"), between the undersigned and Grantor in accordance
with the instructions of the Administrative Agent.
(b) All payments referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from the Administrative Agent or any
Lender Party for any reason any such payment once made.
(c) The Administrative Agent shall be entitled to exercise any and all
rights and remedies of the Grantor under the Assigned Agreement and the
undersigned shall comply in all respects with any such exercise.
(d) The undersigned shall not, without the prior written consent of
the Administrative Agent, (i) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof, (ii) amend,
restate or otherwise modify the Assigned Agreement or (iii) except as
expressly provided therein, make any prepayment of amounts to become due
under or in connection with the Assigned Agreement.
This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure, together with the rights and remedies
of the Administrative Agent hereunder, to the benefit of the Administrative
Agent, the Lender Parties and their respective successors, transferees and
assigns. THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS
CONFLICTS OF LAWS PROVISIONS).
Exhibit B - Page 1
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set forth below.
Dated: ________, 1998 [NAME OF OBLIGOR]
By:___________________________________
Title:________________________________
Exhibit B - Page 2
EXHIBIT C TO
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
____________, ___
Fleet Bank, as Administrative Agent
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Corporate Banking Group
Security Agreement, dated as of November ___,
1998, made by Audio Book Club, Inc.
and the other Grantors party thereto, to Fleet National Bank,
as Administrative Agent for the Secured Parties
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such Security
Agreement, as in effect on the date hereof and as it may hereafter be amended,
supplemented, restated, or otherwise modified from time to time, the "Security
Agreement"). Capitalized terms used and not otherwise defined herein have the
meanings ascribed to them in the Security Agreement.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Administrative Agent, for
the benefit of the Administrative Agent and the ratable benefit of the Lenders,
the Swing Line Bank and the Issuing Bank, and hereby grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, as security for the Secured Obligations,
a lien on, and security interest in, all of the right, title and interest of the
undersigned, whether now owned or hereafter acquired, in and to the Collateral
owned by the undersigned, including, but not limited to, the property listed on
the attached supplements to Schedules I through IV to the Security Agreement.
The undersigned hereby certifies that such supplements have been
Exhibit C - Page 1
prepared by the undersigned in substantially the form of such Schedules and are
true, accurate and complete as of the date hereof.
The undersigned hereby makes each representation and warranty set forth in
Section 8 of the Security Agreement (as modified by the attached supplements to
the Schedules to the Security Agreement) to the same extent as each other
Grantor and hereby agrees to be bound as a Grantor by all of the terms and
provisions of the Security Agreement to the same extent as each other Grantor.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS
PROVISIONS).
EACH OF THE PARTIES HERETO 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
CITY, NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH NEW YORK STATE COURT 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 ANY
LENDER PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY
JURISDICTION.
EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT 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 ANY OF THE OTHER LOAN DOCUMENTS
TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. 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.
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF THE LOAN
Exhibit C - Page 2
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE ACTIONS OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING
BANK IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
[Address of chief executive office]
[Address of chief executive office]
By: ________________________________
Title:______________________________
