Exhibit 10.3
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT (this "Agreement") dated as of
October 30, 1998, is among AMERICAN CAPITAL STRATEGIES, LTD. (the "Company");
the other persons or entities which are listed on the signature pages hereof as
debtors or which from time to time become parties hereto as debtors
(collectively, including the Company, the "Debtors" and individually each a
"Debtor"); and LASALLE NATIONAL BANK in its capacity as agent for the Lender
Parties referred to below (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company has entered into a Credit Agreement dated as of
October 30, 1998 (as amended, amended and restated, supplemented, extended or
otherwise modified from time to time, the "Credit Agreement") with various
financial institutions and the Agent, pursuant to which such financial
institutions have agreed to make loans to the Company;
WHEREAS, each of the other Debtors has executed and delivered a
guaranty (as amended or otherwise modified from time to time, the "Guaranty") of
certain obligations of the Company, including all obligations of the Company
under the Credit Agreement; and
WHEREAS, the obligations of the Company under the Credit Agreement and
the obligations of each other Debtor under the Guaranty are to be secured
pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Company under or in
connection with the Credit Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, (a) the terms Certificated Security,
Chattel Paper, Deposit Account, Document, Equipment, Financial Asset, Fixture,
Goods, Inventory, Instrument, Investment Property, Security, Security
Entitlement, Uncertificated Security and Securities Intermediary have the
respective meanings assigned thereto in the UCC (as defined below); (b)
capitalized terms which are not otherwise defined have the respective meanings
assigned thereto in the Credit Agreement; and (c) the following terms have the
following meanings (such definitions to be applicable to both the singular and
plural forms of such terms):
Account Control Agreement means any Account Control Agreement from time
to time executed and delivered among a Securities Intermediary, the Agent and
the Company pursuant to which the Agent has and retains control (as defined in
the UCC) over the relevant Investment Property of a Debtor held by such
Securities Intermediary.
Account Debtor means the party who is obligated on or under any Account
Receivable, Contract Right or General Intangible.
Account Receivable means, with respect to any Debtor, any right of such
Debtor to payment for goods sold or leased or for services rendered.
Assignee Deposit Account - see Section 6.
Collateral means, with respect to any Debtor, all property and rights
of such Debtor in which a security interest is granted hereunder.
Computer Hardware and Software means, with respect to any Debtor, all
of such Debtor's rights (including rights as licensee and lessee) with respect
to (i) computer and other electronic data processing hardware, including all
integrated computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard and soft
disk drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware; (ii) all
software programs designed for use on the computers and electronic data
processing hardware described in clause (i) above, including all operating
system software, utilities and application programs in whatsoever form (source
code and object code in magnetic tape, disk or hard copy format or any other
listings whatsoever); (iii) any firmware associated with any of the foregoing;
and (iv) any documentation for hardware, software and firmware described in
clauses (i), (ii) and (iii) above, including flow charts, logic diagrams,
manuals, specifications, training materials, charts and pseudo codes.
Contract Right means, with respect to any Debtor, any right of such
Debtor to payment under a contract for the sale or lease of goods or the
rendering of services, which right is at the time not yet earned by performance.
Custodian means, with respect to the Company, LaSalle in its capacity
as custodian, or any other custodian approved in writing by the Required Banks
and, with respect to any other Debtor, a custodian who is in possession of any
Collateral pursuant to a custodial arrangement with such Debtor.
Custody Control Agreement means any Custody Control Agreement among the
Custodian, the Agent and the Company pursuant to which the Custodian acts as the
perfection and control agent and bailee for the Agent for the purpose of
perfecting the Agent's security interest in any Pledged Debt and Pledged
Securities held by the Custodian, as such agreement may be amended, amended and
restated, supplemented or modified from time to time.
Default means the occurrence of: (i) any Unmatured Event of Default
under Section 12.1.1 or 12.1.4 of the Credit Agreement; or (ii) any Event of
Default.
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General Intangibles means, with respect to any Debtor, all of such
Debtor's "general intangibles" as defined in the UCC and, in any event, includes
(without limitation) all of such Debtor's trademarks, trade names, patents,
copyrights, trade secrets, customer lists, inventions, designs, software
programs, mask works, goodwill, registrations, licenses, franchises, tax refund
claims, insurance policies and proceeds, title insurance policies and proceeds,
guarantee claims, security interests and rights to indemnification.
Intellectual Property means all past, present and future: trade secrets
and other proprietary information; trademarks, service marks, business names,
designs, logos, indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations or applications
for registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights (including copyrights for computer programs)
and copyright registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world and all tangible
property embodying the copyrights; unpatented inventions (whether or not
patentable); patent applications and patents; industrial designs, industrial
design applications and registered industrial designs; license agreements
related to any of the foregoing and income therefrom; books, records, writings,
computer tapes or disks, flow diagrams, specification sheets, source codes,
object codes and other physical manifestations, embodiments or incorporations of
any of the foregoing; the right to xxx for all past, present and future
infringements of any of the foregoing; and all common law and other rights
throughout the world in and to all of the foregoing.
Lender Party means each Bank under and as defined in the Credit
Agreement and any Affiliate of such a Bank which is a party to a Hedging
Agreement with the Company.
Liabilities means, as to each Debtor, all obligations (monetary or
otherwise) of such Debtor under the Credit Agreement, any Note, the Guaranty,
any other Loan Document or any other document or instrument executed in
connection therewith and, in the case of the Company, all Hedging Obligations
owed to any Lender Party, in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.
Non-Tangible Collateral means, with respect to any Debtor,
collectively, such Debtor's Accounts Receivable, Contract Rights and General
Intangibles.
Perfection Documents means, collectively, any Custodian Agreement, any
Account Control Agreement, any endorsements, endorsements in blank, assignments,
blank stock or bond powers executed pursuant hereto and any filings made
pursuant hereto, in each case as amended, amended and restated, modified or
supplemented from time to time.
Pledged Debt means the indebtedness described on Schedule I hereto
(including all Instruments, Securities, Investment Property and other property
relating thereto), as Schedule I may from time to time be supplemented, together
with all principal, interest, cash, instruments or other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such indebtedness; and any and all future or additional
indebtedness from time to time owed to any Debtor (including all Instruments,
Securities, Investment Property and other property relating thereto), together
with all principal, 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 future or additional indebtedness.
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Pledged Securities means the Subsidiary Stock and all shares of capital
stock, warrants and other equity interest listed on Schedule I hereto (including
all Securities and Investment Property and other property relating thereto), as
Schedule I may from time to time be supplemented, together with any and all
stock certificates, warrants, options or rights of any nature whatsoever that
may be issued or granted to any Debtor in connection therewith; and any and all
future or additional shares of capital stock, warrants and other equity
interests from time to time issued to any Debtor (including all Securities and
Investment Property and other property relating thereto).
Subsidiary Stock means, any Instrument, Security or other Investment
Property owned by the Company directly or indirectly and issued by a Subsidiary.
UCC means the Uniform Commercial Code as in effect in the State of
Illinois on the date of this Agreement; provided that, as used in Section 8
hereof, "UCC" shall mean the Uniform Commercial Code as in effect from time to
time in any applicable jurisdiction.
2. Pledge and Grant of Security Interest. As security for the payment
of all Liabilities, each Debtor hereby pledges and assigns to the Agent for the
benefit of the Lender Parties, and grants to the Agent for the benefit of the
Lender Parties a continuing security interest in, the following, whether now or
hereafter existing or acquired:
All of such Debtor's:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties,
service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Financial Assets;
(ix) General Intangibles;
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(x) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and
therefor;
(xi) Instruments;
(xii) Intellectual Property;
(xiii) Investment Property;
(xiv) money (of every jurisdiction whatsoever);
(xv) Security Entitlements;
(xvi) Uncertificated Securities;
(xvii) Pledged Debt;
(xviii) Pledged Securities; and
(xix) to the extent not included in the foregoing, other personal
property of any kind or description;
together with all books, records, writings, data bases,
information and other property relating to, used or useful in
connection with, or evidencing, embodying, incorporating or
referring to any of the foregoing, and all proceeds, products,
offspring, rents, issues, profits and returns of and from any of
the foregoing; provided that to the extent that the provisions of
any lease or license of Computer Hardware and Software or
Intellectual Property expressly prohibit (which prohibition is
enforceable under applicable law) the assignment thereof, and the
grant of a security interest therein, such Debtor's rights in such
lease or license shall be excluded from the foregoing assignment
and grant for so long as such prohibition continues, it being
understood that upon request of the Agent, such Debtor will in
good faith use reasonable efforts to obtain consent for the
creation of a security interest in favor of the Agent in such
Debtor's rights under such lease or license. Such Debtor agrees to
deliver to the Agent, promptly upon receipt and in due form for
transfer (i.e., endorsed in blank or accompanied by undated stock
powers executed in blank), any Collateral (other than dividends
which the Company is entitled to receive and retain pursuant to
Section 5 hereof) which may at any time or from time to time come
into the possession or control of such Debtor; and prior to the
delivery thereof to the Agent, such Collateral shall be held by
such Debtor separate and apart from its other property and in
express trust for the Agent. Each Debtor acknowledges and agrees
that the Pledged Debt and Pledged Securities may be held by the
Custodian, which in addition to its custodial duties shall hold
such Collateral as bailee for the Agent for the purpose of
perfection of the pledge and security interest granted hereunder.
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3. Warranties. Each Debtor warrants that:
(i) no financing statement (other than any which may have been
filed on behalf of the Agent or in connection with liens
expressly permitted by the Credit Agreement ("Permitted
Liens")) covering any of the Collateral is on file in any
public office;
(ii) such Debtor is and will be the lawful owner of all Collateral,
free of all liens and claims whatsoever, other than the
security interest hereunder and Permitted Liens, with full
power and authority to execute this Agreement and perform such
Debtor's obligations hereunder, and to subject the Collateral
to the security interest hereunder;
(iii) all information with respect to Collateral and Account Debtors
set forth in any schedule, certificate or other writing at any
time heretofore or hereafter furnished by such Debtor to the
Agent or any Lender Party is and will be true and correct in
all material respects as of the date furnished, including
Schedule I hereto which sets forth a complete and accurate
list of all Pledged Debt and Pledged Securities and other
Instruments, Securities and Investment Property owned by each
of the Debtors;
(iv) such Debtor's chief executive office and principal place of
business are as set forth on Schedule II hereto (and such
Debtor has not maintained its chief executive office and
principal place of business at any other location at any time
after December 31, 1997);
(v) each other location where such Debtor maintains a place of
business and the location of any Custodian or Securities
Intermediary of such Debtor is set forth on Schedule III
hereto;
(vi) except as set forth on Schedule IV hereto, such Debtor is not
now known and during the five years preceding the date hereof
has not previously been known by any trade name;
(vii) except as set forth on Schedule IV hereto, during the five
years preceding the date hereof such Debtor has not been known
by any legal name different from the one set forth on the
signature pages of this Agreement nor has such Debtor been the
subject of any merger or other corporate reorganization;
(viii) Schedule V hereto contains a complete listing of all of such
Debtor's Intellectual Property which is subject to
registration statutes;
(ix) such Debtor is a corporation duly organized, validly existing
and in good standing under the laws of the state of its
incorporation;
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(x) the execution and delivery of this Agreement and the
Perfection Documents and the performance by such Debtor of its
obligations hereunder and thereunder are within such Debtor's
corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary governmental
approval (if any shall be required), and do not and will not
contravene or conflict with any provision of law or of the
charter or by-laws of such Debtor or of any material
agreement, indenture, instrument or other document, or any
material judgment, order or decree, which is binding upon such
Debtor;
(xi) this Agreement and each of the Perfection Documents is a
legal, valid and binding obligation of such Debtor,
enforceable in accordance with its terms, except that the
enforceability of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law);
(xii) such Debtor is in compliance with the requirements of all
applicable laws (including the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every
governmental authority, the non-compliance with which would
reasonably be expected to result in a Material Adverse Effect;
(xiii) the pledge and delivery of the Pledged Debt and Pledged
Securities hereto pursuant to this Agreement (or pursuant to
the Custody Control Agreement) will create a valid perfected
first-priority security interest in the Collateral in favor of
the Agent;
(xiv) all Pledged Securities which are shares of stock in a
corporation or ownership interests in a partnership or limited
liability company have been (to the extent such concepts are
relevant with respect to such Instrument, Security or other
type of Investment Property) duly and validly issued, are
fully paid and non-assessable;
(xv) to the Company's knowledge, all Pledged Debt has been duly
authorized, authenticated, issued and delivered and is the
legal, valid and binding obligation of the obligors thereof,
and is not in default;
(xvi) the Pledged Debt constitutes all of the outstanding
indebtedness owed to any Debtor and is outstanding in the
principal amount indicated on Schedule I; no Debtor has
agreed, and no holder of any Pledged Debt shall be obligated,
to remit any payments made under the Pledged Debt for the
account of any other Person; to the Company's knowledge, none
of the Pledged Debt is subject to any defense or setoff;
(xvii) with respect to any certificates delivered to the Agent, the
Custodian, or any Securities Intermediary representing an
ownership interest in a partnership or limited liability
company, either such certificates are Securities under Article
8 of the UCC of the applicable jurisdiction as a result of
actions by the issuer or otherwise, or, if such certificates
are not Securities, such Debtor has so informed the Agent so
that the Agent may take steps to perfect its security interest
therein as a General Intangible;
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(xviii) as to each issuer of Pledged Securities whose name appears in
Schedule I hereto, such Pledged Securities represent on the
date hereof not less than the applicable percentage (as shown
in Schedule I hereto) of the total shares of capital stock
issued and outstanding of such issuer; and
(xiv) no Debtor has knowledge of any facts or circumstances that
would preclude, upon delivery of the Pledged Securities, with
the transfer power executed in blank, and the Pledged Debt,
endorsed in blank, to the Agent or the Custodian, the Agent
from being a "bona fide purchaser" of the Pledge Securities
under Article 8 of the UCC or a "holder in due course" of the
Pledged Debt under Article 3 of the UCC.
4. Holding in Name of Agent, etc. With respect to the Collateral listed
on Schedule I hereto, the Agent may from time to time after the occurrence and
during the continuance of a Default, without notice to the Debtors, take all or
any of the following actions: (a) transfer all or any part of such Collateral
into the name of the Agent or any nominee or sub-agent for the Agent, with or
without disclosing that such Collateral is subject to the lien and security
interest hereunder, (b) appoint one or more sub-agents or nominees for the
purpose of retaining physical possession of such Collateral, (c) notify the
parties obligated on any of such Collateral to make payment to the Agent of any
amounts due or to become due thereunder, (d) endorse any checks, drafts or other
writings in the name of the appropriate Debtor to allow collection of such
Collateral, (e) enforce collection of any of such Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof, or
compromise or renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with respect thereto, (f)
take control of any proceeds of such Collateral, (g) exercise any and all rights
of conversion, exchange, subscription and any other rights, privileges or
options pertaining to such Collateral as if it were the absolute owner thereof
(including the right to exchange at its discretion any and all of such
Collateral upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate structure of any Portfolio Company, or
upon the exercise by any Debtor or the Agent of any right, privilege or option
pertaining to such Collateral, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Securities with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions it may determine), all without liability except to account for
property actually received by it, but the Agent shall have no duty to any Debtor
to exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing, and (h) the Agent shall have the
right to (i) take possession of any or all of such Collateral from the Custodian
and (ii) to notify the Custodian to remit directly to the Agent, as received,
all payments, however characterized, received by the Custodian with respect to
such Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding certain
provisions of Section 4 hereof, so long as the Agent has not given the notice
referred to in paragraph (b) below:
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(i) Each Debtor shall be entitled to exercise any and all voting
or consensual rights and powers and stock purchase or
subscription rights (but any such exercise by a Debtor of
stock purchase or subscription rights may be made only from
funds of such Debtor not comprising part of the Collateral)
relating or pertaining to the Pledged Debt or Pledged
Securities or any part thereof for any purpose; provided that
such Debtor agrees that it will not exercise any such right or
power in any manner prohibited by the Credit Agreement or
which would have a material adverse effect on the value of the
Collateral or any part thereof.
(ii) The Debtors shall be entitled to receive and retain any and
all lawful dividends and payments payable in respect of the
Pledged Debt or Pledged Securities which are paid in cash by
any issuer if such dividends are permitted by the Credit
Agreement, but all dividends, payments and distributions in
respect of the Pledged Debt and Pledged Securities or any part
thereof made in shares of stock or other property or
representing any return of capital, whether resulting from a
subdivision, combination or reclassification of the Pledged
Debt or Pledged Securities or any part thereof or received in
exchange for the Pledged Debt or Pledged Securities or any
part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets to which any issuer
may be a party or otherwise or as a result of any exercise of
any stock purchase or subscription right, shall be and become
part of the Collateral hereunder and, if received by any
Debtor, shall be forthwith delivered to the Agent or the
Custodian in due form for transfer (i.e., endorsed in blank or
accompanied by stock or bond powers executed in blank) to be
held for the purposes of this Agreement.
(iii) The Agent shall execute and deliver, or cause to be executed
and delivered, to the appropriate Debtor all such proxies,
powers of attorney, dividend orders and other instruments as
any Debtor may request for the purpose of enabling such Debtor
to exercise the rights and powers which it is entitled to
exercise pursuant to clause (i) above and to receive the
dividends which it is authorized to retain pursuant to clause
(ii) above.
(b) Upon notice from the Agent during the existence of a Default, and
so long as the same shall be continuing, all rights and powers which any Debtor
is entitled to exercise pursuant to Section 5(a)(i) hereof, and all rights of
any Debtor to receive and retain dividends and other payments pursuant to
Section 5(a)(ii) hereof, shall forthwith cease, and all such rights and powers
shall thereupon become vested in the Agent which shall have, during the
continuance of such Default, the sole and exclusive authority to exercise such
rights and powers and to receive such dividends and other payments. Any and all
money and other property paid over to or received by the Agent pursuant to this
paragraph (b) shall be retained by the Agent as additional Collateral hereunder
and applied in accordance with the provisions hereof.
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(c) Without limitation on Section 5(a) above, if any Debtor shall, as a
result of its ownership of any Collateral, become entitled to receive or shall
receive any note, stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any certificate issued
in connection with any reorganization), warrant, option or rights, whether in
addition to, in substitution of, as a conversion of, or in exchange for any of
the Collateral, or otherwise in respect thereof, such Debtor shall accept the
same as the agent of the Agent, hold the same in trust for the Agent and deliver
the same forthwith to the Agent or the Custodian (with copies to the Agent) in
the form received, duly indorsed by such Debtor to the Agent, if required,
together with an undated transfer power and irrevocable proxy covering such
certificate or other instrument duly executed in blank by such Debtor and with,
if the Agent so requests, signature guaranteed, to be held by the Custodian, for
the benefit of the Agent and the Banks, subject to the terms hereof and the
Custody Control Agreement, as additional collateral security for the
Liabilities. In addition, any sums paid upon or in respect of any Collateral
upon the liquidation or dissolution of any Portfolio Company shall be paid over
to the Agent or the Custodian, for the benefit of the Agent and the Banks, to be
held by it hereunder and under the Custody Control Agreement as additional
collateral security for the Liabilities, and in case any distribution of capital
shall be made on or in respect of any Collateral or any property shall be
distributed upon or with respect to any Collateral pursuant to the
recapitalization or reclassification of the capital of any Portfolio Company or
pursuant to the reorganization thereof, the property so distributed shall be
delivered to the Agent or the Custodian, for the benefit of the Agent and the
Banks, to be held by it hereunder and under the Custody Control Agreement as
additional collateral security for the Liabilities. If any sums of money or
property so paid or distributed in respect of any Collateral shall be received
by any Debtor, such Debtor shall, until such money or property is paid or
delivered to the Agent or the Custodian, hold such money or property in trust
for the Agent, segregate from other funds of any Debtor, as additional
collateral security for the Liabilities.
6. Collections, etc. Until such time during the existence of a Default
as the Agent shall notify such Debtor of the revocation of such power and
authority, each Debtor (a) may, in the ordinary course of its business, at its
own expense, sell, lease or furnish under contracts of service any of the
Inventory normally held by such Debtor for such purpose, use and consume, in the
ordinary course of its business, any raw materials, work in process or materials
normally held by such Debtor for such purpose, and use, in the ordinary course
of its business (but subject to the terms of the Credit Agreement), the cash
proceeds of Collateral and other money which constitutes Collateral, (b) will,
at its own expense, endeavor to collect, as and when due, all amounts due under
any of the Non-Tangible Collateral and Pledged Debt, including the taking of
such action with respect to such collection as the Agent may reasonably request
or, in the absence of such request, as such Debtor may deem advisable, and (c)
may grant, in the ordinary course of business, to any party obligated on any of
the Non-Tangible Collateral, any rebate, refund or allowance to which such party
may be lawfully entitled, and may accept, in connection therewith, the return of
Goods, the sale or lease of which shall have given rise to such Non-Tangible
Collateral. The Agent, however, may, at any time that a Default exists, whether
before or after any revocation of such power and authority or the maturity of
any of the Liabilities, notify any parties obligated on any of the Non-Tangible
Collateral to make payment to the Agent of any amounts due or to become due
thereunder and enforce collection of any of the Non-Tangible Collateral by suit
or otherwise and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder or evidenced thereby. Upon the
request of the Agent during the existence of a Default, each Debtor will, at its
own expense, notify any or all parties obligated on any of the Non-Tangible
Collateral to make payment to the Agent of any amounts due or to become due
thereunder.
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Upon request by the Agent during the existence of a Default, each
Debtor will forthwith, upon receipt, transmit and deliver to the Agent, in the
form received, all cash, checks, drafts and other instruments or writings for
the payment of money (properly endorsed, where required, so that such items may
be collected by the Agent) which may be received by such Debtor at any time in
full or partial payment or otherwise as proceeds of any of the Collateral.
Except as the Agent may otherwise consent in writing, any such items which may
be so received by any Debtor will not be commingled with any other of its funds
or property, but will be held separate and apart from its own funds or property
and upon express trust for the Agent until delivery is made to the Agent. Each
Debtor will comply with the terms and conditions of any consent given by the
Agent pursuant to the foregoing sentence.
During the existence of a Default, all items or amounts which are
delivered by any Debtor to the Agent on account of partial or full payment or
otherwise as proceeds of any of the Collateral shall be deposited to the credit
of a deposit account (each an "Assignee Deposit Account") of such Debtor with
LaSalle (or another financial institution selected by the Agent) over which the
Agent has sole dominion and control, as security for payment of the Liabilities.
No Debtor shall have any right to withdraw any funds deposited in the applicable
Assignee Deposit Account. The Agent may, from time to time, in its discretion,
and shall upon request of the applicable Debtor made not more than once in any
week, apply all or any of the then balance, representing collected funds, in the
Assignee Deposit Account toward payment of the Liabilities, whether or not then
due, in such order of application as the Agent may determine, and the Agent may,
from time to time, in its discretion, release all or any of such balance to the
applicable Debtor.
The Agent (or any designee of the Agent) is authorized to endorse, in
the name of the applicable Debtor, any item, howsoever received by the Agent,
representing any payment on or other proceeds of any of the Collateral.
7. Certificates, Schedules and Reports. Each Debtor will from time to
time, as the Agent may request, deliver to the Agent such schedules,
certificates and reports respecting all or any of the Collateral at the time
subject to the security interest hereunder, and the items or amounts received by
such Debtor in full or partial payment of any of the Collateral, as the Agent
may reasonably request. Any such schedule, certificate or report shall be
executed by a duly authorized officer of such Debtor and shall be in such form
and detail as the Agent may specify. Each Debtor shall immediately notify the
Agent of the occurrence of any event causing any loss or depreciation in the
value of its Inventory or other Goods which is material to the Company and its
Subsidiaries taken as a whole, and such notice shall specify the amount of such
loss or depreciation.
8. Agreements of the Debtors. Each Debtor will:
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(i) upon request of the Agent, execute such financing statements
and other documents (and pay the cost of filing or recording
the same in all public offices reasonably deemed appropriate
by the Agent) and do such other acts and things (including,
delivery to the Agent, Custodian, or Securities Intermediary,
as appropriate, of any Instruments, Securities or other
Investment Property which constitute Collateral), all as the
Agent may from time to time reasonably request, to establish
and maintain a valid security interest in the Collateral (free
of all other liens, claims and rights of third parties
whatsoever, other than Permitted Liens) to secure the payment
of the Liabilities;
(ii) so long as any of the Liabilities shall be outstanding or any
commitment shall exist on the part of the Agent or any Lender
Party with respect to the creation of any Liabilities, not,
without the express prior written consent of the Agent, sell,
assign, exchange, pledge or otherwise transfer, encumber, or
grant any option, warrant or other right to purchase such
Collateral which is pledged hereunder, or otherwise diminish
or impair any of its rights in, to or under any such
Collateral, except to the extent permitted by the Credit
Agreement;
(iii) execute and deliver to the Agent such stock powers,
endorsements and similar documents relating to the Collateral
(including, but not limited to, any custody agreement or
account control agreement), satisfactory in form and substance
to the Agent, as the Agent may reasonably request;
(iv) not, without the express written consent of the Agent, amend,
restate, modify or terminate the Custodian Control Agreement
or any other agreement relating to the administration of the
Collateral;
(v) keep all its Inventory at, and will not maintain any place of
business at any location other than, its address(es) shown on
Schedules II and III hereto or at such other addresses of
which such Debtor shall have given the Agent not less than ten
(10) days' prior written notice;
(vi) keep its records concerning the Non-Tangible Collateral in
such a manner as will enable the Agent or its designees to
determine at any time the status of the Non-Tangible
Collateral;
(vii) furnish the Agent such information concerning such Debtor, the
Collateral, the Account Debtors, the Custodian and the
Securities Intermediary as the Agent may from time to time
reasonably request;
(viii) permit the Agent and its designees, from time to time, on
reasonable notice and at reasonable times and intervals during
normal business hours (or at any time without notice during
the existence of a Default) to inspect such Debtor's Inventory
and other Goods, and to inspect, audit and make copies of and
extracts from all records and other papers in the possession
of such Debtor pertaining to the Collateral and the Account
Debtors, and will, upon request of the Agent during the
existence of a Default, deliver to the Agent all of such
records and papers;
(ix) upon request of the Agent, stamp on its records concerning the
Collateral, and add on all Chattel Paper constituting a
portion of the Collateral, a notation, in form satisfactory to
the Agent, of the security interest of the Agent hereunder;
12
(x) not, except for the sale or lease of Inventory in the ordinary
course of its business and sales of Equipment which is no
longer useful in its business or which is being replaced by
similar Equipment, sell, lease, assign or create or permit to
exist any Lien on any Collateral other than Permitted Liens;
(xi) without limiting the provisions of Section 10.3 of the Credit
Agreement, at all times keep all of its Inventory and other
Goods insured under policies maintained with reputable,
financially sound insurance companies against loss, damage,
theft and other risks to such extent as is customarily
maintained by companies similarly situated, and cause all such
policies to provide that loss thereunder shall be payable to
the Agent as its interest may appear (it being understood that
(a) so long as no Default shall be existing, the Agent shall
deliver any proceeds of such insurance which may be received
by it to such Debtor and (b) whenever a Default shall be
existing, the Agent may apply any proceeds of such insurance
which may be received by it toward payment of the Liabilities,
whether or not due, in such order of application as the Agent
may determine), and such policies or certificates thereof
shall, if the Agent so requests, be deposited with or
furnished to the Agent;
(xii) take such actions as are reasonably necessary to keep its
Inventory in good repair and condition;
(xiii) take such actions as are reasonably necessary to keep its
Equipment in good repair and condition and in good working
order, ordinary wear and tear excepted;
(xiv) promptly pay when due all license fees, registration fees,
taxes, assessments and other charges which may be levied upon
or assessed against the ownership, operation, possession,
maintenance or use of its Equipment and other Goods;
(xv) upon request of the Agent, (a) cause to be noted on the
applicable certificate, in the event any of its Equipment is
covered by a certificate of title, the security interest of
the Agent in the Equipment covered thereby, and (b) deliver
all such certificates to the Agent or its designees;
(xvi) take all steps reasonably necessary to protect, preserve and
maintain all of its rights in the Collateral;
(xvii) except as listed on Schedule VI, keep all of the tangible
Collateral in the United States;
(xviii) upon the consummation of each Portfolio Investment provide the
Agent with an updated Schedule I reflecting such Portfolio
Investment and take all such further action as the Agent may
reasonably request to perfect its security interest in such
Portfolio Investment; and
13
(xix) reimburse the Agent for all expenses, including reasonable
attorney's fees and charges (including time charges of
attorneys who are employees of the Agent), incurred by the
Agent in seeking to collect or enforce any rights in respect
of such Debtor's Collateral.
Any expenses incurred in protecting, preserving or maintaining any
Collateral shall be borne by the applicable Debtor. Whenever a Default shall be
existing, the Agent shall have the right to bring suit to enforce any or all of
the Intellectual Property or licenses thereunder, in which event the applicable
Debtor shall at the request of the Agent do any and all lawful acts and execute
any and all proper documents required by the Agent in aid of such enforcement
and such Debtor shall promptly, upon demand, reimburse and indemnify the Agent
for all costs and expenses incurred by the Agent in the exercise of its rights
under this Section 8. Notwithstanding the foregoing, the Agent shall have no
obligation or liability regarding the Collateral or any part thereof by reason
of, or arising out of, this Agreement.
9. Default and Remedies. Whenever a Default shall exist, the Agent may
exercise from time to time any rights and remedies available to it under the
UCC. Without limiting the foregoing, whenever a Default shall exist the Agent
(a) may, to the fullest extent permitted by applicable law, without notice,
advertisement, hearing or process of law of any kind, (i) sell any or all of the
Collateral, free of all rights and claims of any Debtor therein and thereto, at
any public or private sale or brokers' board and (ii) bid for and purchase any
or all of the Collateral at any such public sale and (b) shall have the right,
for and in the name, place and stead of any Debtor, to execute endorsements,
assignments, stock powers and other instruments of conveyance or transfer with
respect to all or any of the Collateral. Each Debtor hereby expressly waives, to
the fullest extent permitted by applicable law, any and all notices,
advertisements, hearings or process of law in connection with the exercise by
the Agent of any of its rights and remedies during the continuance of a Default.
Any notification of intended disposition of any of the Collateral shall be
deemed reasonably and properly given if given at least ten days before such
disposition. The Agent or any Bank shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Debtor, which right or equity is hereby
waived or released. The Agent shall apply any proceeds from time to time held by
it and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental to the care of
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Agent and the Banks hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel thereto, to the payment
in whole or in part of the Liabilities. The Debtors shall remain liable for any
deficiency if the proceeds of any sale or other disposition of Collateral are
insufficient to pay the Liabilities and the fees and disbursements of any
attorneys employed by the Agent or any Bank to collect any such deficiency.
14
Each Debtor recognizes that the Agent may be unable to effect a public
sale of any or all the Pledged Securities and/or Pledged Debt, by reason of
certain prohibitions contained in the federal and state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such Pledged Securities and/or Pledged Debt for their own
account for investment and not with a view to the distribution or resale
thereof. Each Debtor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale shall be deemed to have been made in a commercially reasonable manner. The
Agent shall be under no obligation to delay a sale of any of the Pledged
Securities and/or Pledged Debt for the period of time necessary to permit the
issuer thereof to register such securities for public sale under federal or
state securities laws, even if such issuer would agree to do so.
The Agent is hereby authorized to comply with any limitation or
restriction in connection with any sale of Collateral as it may be advised by
counsel is necessary in order to (a) avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders or purchasers and/or further restrict such
prospective bidders or purchasers to persons or entities who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or resale of such Collateral) or (b) obtain any
required approval of the sale or of the purchase by any governmental regulatory
authority or official, and each Debtor agrees that such compliance shall not
result in such sale being considered or deemed not to have been made in a
commercially reasonable manner and that the Agent shall not be liable or
accountable to any Debtor for any discount allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.
Without limitation on the foregoing, the Agent may exercise from time
to time any other right or remedy available to it under applicable law. Each
Debtor agrees, in case of Default, (i) to assemble, at its expense, all its
Inventory and other Goods (other than Fixtures) at a convenient place or places
acceptable to the Agent, and (ii) at the Agent's request, to execute all such
documents and do all such other things which may be necessary or desirable in
order to enable the Agent or its nominee to be registered as owner of the
Intellectual Property with any competent registration authority. Any proceeds of
any disposition by the Agent of any of the Collateral may be applied by the
Agent to payment of expenses in connection with the Collateral, including
reasonable attorney's fees and charges (including time charges of attorneys who
are employees of the Agent), and any balance of such proceeds may be applied by
the Agent toward the payment of such of the Liabilities, and in such order of
application, as the Agent may from time to time elect.
10. Irrevocable Authorization and Instruction to Portfolio Companies.
Each Debtor hereby authorizes and instructs each issuer and obligor under any
Pledged Debt to comply with any instruction received by it from the Agent in
writing that (a) states that Default has occurred and (b) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from any Debtor, and each Debtor agrees that each issuer and
obligor under any Pledged Debt shall be fully protected in so complying.
15
11. General. The Agent shall be deemed to have exercised reasonable
care in the custody and preservation of any of the Collateral in its possession
if it takes such action for that purpose as any applicable Debtor requests in
writing, but failure of the Agent to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of the
Agent to preserve or protect any right with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by any Debtor, shall be deemed of itself a failure
to exercise reasonable care in the custody or preservation of such Collateral.
The Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as the Agent deals
with similar securities and property for its own account. Neither the Agent, any
Bank nor any of their respective directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Debtor or otherwise.
Any notice from the Agent to any Debtor, if mailed, shall be deemed
given five days after the date mailed, postage prepaid, addressed to such Debtor
either at such Debtor's address shown on Schedule II hereto or at such other
address as such Debtor shall have specified in writing to the Agent as its
address for notices hereunder.
Each of the Debtors agrees to pay all expenses, including reasonable
attorney's fees and charges (including time charges of attorneys who are
employees of the Agent or any Lender Party) paid or incurred by the Agent or any
Lender Party in endeavoring to collect the Liabilities of such Debtor, or any
part thereof, and in enforcing this Agreement against such Debtor, and such
obligations will themselves be Liabilities.
No delay on the part of the Agent in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Agent of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
This Agreement shall remain in full force and effect until all
Liabilities have been paid in full and all Commitments have terminated. If at
any time all or any part of any payment theretofore applied by the Agent or any
Lender Party to any of the Liabilities is or must be rescinded or returned by
the Agent or such Lender Party for any reason whatsoever (including the
insolvency, bankruptcy or reorganization of any Debtor), such Liabilities shall,
for the purposes of this Agreement, to the extent that such payment is or must
be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent or such Lender Party, and this
Agreement shall continue to be effective or be reinstated, as the case may be,
as to such Liabilities, all as though such application by the Agent or such
Lender Party had not been made.
This Agreement shall be construed in accordance with and governed by
the laws of the State of Illinois applicable to contracts made and to be
performed entirely within such State, subject, however, to the applicability of
the UCC of any jurisdiction in which any Goods of any Debtor may be located at
any given time. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
The rights and privileges of the Agent hereunder shall inure to the
benefit of its successors and assigns.
16
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement. At any time after the date of this
Agreement, one or more additional Persons may become parties hereto by executing
and delivering to the Agent a counterpart of this Agreement together with
supplements to the Schedules hereto setting forth all relevant information with
respect to such party as of the date of such delivery. Immediately upon such
execution and delivery (and without any further action), each such additional
Person will become a party to, and will be bound by all the terms of, this
Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH DEBTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, TO THE ADDRESS SET FORTH ON SCHEDULE II HERETO (OR SUCH OTHER ADDRESS
AS IT SHALL HAVE SPECIFIED IN WRITING TO THE AGENT AS ITS ADDRESS FOR NOTICES
HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH
DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH DEBTOR, THE AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH
LENDER PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY
OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[signature page to follow]
17
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
DEBTORS:
AMERICAN CAPITAL STRATEGIES, LTD.
By:
-------------------------------
Title:
----------------------------
ACS CAPITAL INVESTMENTS CORPORATION
By:
-------------------------------
Title:
----------------------------
AMERICAN CAPITAL STRATEGIES LABOR
RESEARCH, INC.
By:
-------------------------------
Title:
----------------------------
ACS GENPAR, INC.
By:
-------------------------------
Title:
----------------------------
AGENT:
LASALLE NATIONAL BANK, as Agent
By:
-------------------------------
Title:
----------------------------
18
Signature page for the Security and Pledge Agreement dated as of October
__, 1998 among American Capital Strategies, Ltd., various other parties and
LaSalle National Bank as Agent for the Lender Parties referred to herein.
The undersigned is executing a counterpart hereof for purposes of
becoming a party hereto (and attached to this signature page are supplements to
the Schedules to the Security and Pledge Agreement setting forth all relevant
information with respect to the undersigned):
[ADDITIONAL DEBTOR]
By:
-------------------------------
Title:
----------------------------
19
SCHEDULE I
TO SECURITY AGREEMENT
I. Pledged Securities
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Portfolio Company Owner (holder) of Record Description No. Shares Cert. No.
(Issuer) of Security
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Four-S Baking Company American Capital Strategies, Ltd. Common Stock 25,748 53
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Four-S Baking Company American Capital Strategies, Ltd. Warrant 15,389 W-1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Four-S Baking Company American Capital Strategies, Ltd. Class A Convertible 25,681 PA-1
Preferred Stock
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
The Westwind Group American Capital Strategies, Ltd. Warrant
Holdings, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
BIW Connector Systems, American Capital Strategies, Ltd. Primary Warrant 633.33 PW-1
L.L.C.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
BIW Connector Systems, American Capital Strategies, Ltd. Primary Warrant 6.56 PW-2
L.L.C.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
BIW Connector Systems, American Capital Strategies, Ltd. Conditional Warrant CW-1
L.L.C.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Chance Coach, Inc. American Capital Strategies, Ltd. Class A Convertible 200,500 PA1
Preferred Stock
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Chance Coach, Inc. American Capital Strategies, Ltd. Series B Common Stock 204,643 CB1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Chance Coach, Inc. American Capital Strategies, Ltd. Warrant 431,500 W-2
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Specialty Transportation American Capital Strategies, Ltd. Primary Warrant 500,000 PW-1
Services, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Specialty Transportation American Capital Strategies, Ltd. Conditional Warrant CW-1
Services, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Specialty Transportation American Capital Strategies, Ltd. Common Stock 500,000 3
Services, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Specialty Transportation PNC Bank Common Stock 4,500,000 4
Services, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Specialty Transportation Aasch Transportation Services, Inc. Voting Trust Certificate 4,500,000 VT-1
Services, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
20
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Portfolio Company Owner (holder) of Record Description No. Shares Cert. No.
(Issuer) of Security
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
The New Piper Aircraft, American Capital Strategies, Ltd. Warrant 34,000 W-1
Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
The L.A. Studios, Inc. American Capital Strategies, Ltd. Warrant 34,821 W-1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Cycle Gear, Inc. American Capital Strategies, Ltd. Primary Warrant 11,081 W-1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Cycle Gear, Inc. American Capital Strategies, Ltd. Disbursement Warrant 20,315.3 DW-1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Confluence Holdings, American Capital Strategies, Ltd. Primary Warrant 11,089 PW-1
Corp.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Confluence Holdings, American Capital Strategies, Ltd. Conditional Warrant CW-1
Corp.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
JAG Acquisitions, Inc. American Capital Strategies, Ltd. Warrant 3,000 W-1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
JAG Acquisitions, Inc. Xxxxxx X. Xxxxxxx Common Stock 1,000 C-1
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Biddeford Textile ACS Capital Investments Corporation Class B Common Stock 28,000 B-10
Corporation
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Biddeford Textile ACS Capital Investments Corporation Class B Common Stock 90,000 B-1
Corporation
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Indiana Steel & Wire ACS Capital Investments Corporation Common Stock 6,785.7075 18
Corporation
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Indiana Steel & Wire ACS Capital Investments Corporation Common Stock 761.572 19
Corporation
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Employee Acquisition ACS Capital Investments Corporation Common Stock 270 8
Corporation-14
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Employee Acquisition ACS Capital Investments Corporation Common Stock 26,730 21
Corporation-14
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Good Stuff Food Company ACS Capital Investments Corporation Common Stock 6,335 43
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Xxxxxxx'x Bakery, Inc. ACS Capital Investments Corporation Common Stock 50,000 22
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Mobile Tool ACS Capital Investments Corporation Class B Common Stock 5,000 B004
International, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Mobile Tool ACS Capital Investments Corporation Class B Common Stock 1,000 B034
International, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Mobile Tool ACS Capital Investments Corporation Class B Common Stock 1,133 B035
International, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
Mobile Tool ACS Capital Investments Corporation Class B Common Stock 500 B037
International, Inc.
-------------------------- ------------------------------------ ------------------------- ---------------- -------------
21
II. Pledged Debt
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Portfolio Company Owner (holder) Description of Debt Date of Issue Maturity Date Original Principal
(Issuer) of Record Amount ($)
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Four-S Baking Company American Capital Senior Subordinated 10/14/97 10/14/02 1,918,750
Strategies, Ltd. Note
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
The Westwind Group, Inc. American Capital Restated and Amended 12/17/97 09/30/04 3,553,375.50
Strategies, Ltd. Senior Subordinated
Note-I
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
BIW Connector Systems, American Capital Senior Subordinated 06/09/98 12/31/03 250,000
L.L.C. Strategies, Ltd. Note
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
BIW Connector Systems, American Capital Senior Note 12/22/97 12/31/03 3,890,000
L.L.C. Strategies, Ltd.
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
BIW Connector Systems, American Capital Senior Subordinated 12/22/97 12/31/03 7,000,000
L.L.C. Strategies, Ltd. Note
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Chance Coach, Inc. American Capital Senior Term Note 05/15/97 04/01/06 1,500,000
Strategies, Ltd.
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Chance Coach, Inc. American Capital Senior Subordinated 05/15/97 04/01/07 12,000,000
Strategies, Ltd. Note
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Specialty Transportation American Capital Senior Subordinated 01/30/98 02/01/06 5,500,000
Services, Inc. Strategies, Ltd. Note
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Speciality American Capital Junior Subordinated 01/30/98 02/01/06 2,500,000
Transportation Services, Strategies, Ltd. Note
Inc.
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
The New Piper Aircraft, American Capital Subordinated Note 05/27/98 03/31/08 20,000,000
Inc. Strategies, Ltd. No. 1
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
The L.A. Studios, Inc. American Capital Secured Note 04/03/98 05/01/05 3,250,000
Strategies, Ltd.
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
ELX Holdings, L.L.C. American Capital 14% Senior 07/31/98 12/31/06 7,500,000
Strategies, Ltd. Subordinated Note
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Cycle Gear, Inc. American Capital Senior Secured Note 09/28/98 09/30/05 750,000
Strategies, Ltd.
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Cycle Gear, Inc. American Capital Junior Secured Note 09/28/98 09/30/06 5,250,000
Strategies, Ltd.
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
22
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Portfolio Company Owner (holder) Description of Debt Date of Issue Maturity Date Original Principal
(Issuer) of Record Amount ($)
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Confluence Holdings, American Capital Revolving Note No. 09/30/98 10/01/99 6,000,000
Corp. Strategies, Ltd. RN-2
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Confluence Holdings, American Capital Senior Secured Note 09/30/98 04/01/05 6,000,000
Corp. Strategies, Ltd. SSN-2
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
Confluence Holdings, American Capital Junior Secured Note 09/30/98 10/01/05 6,000,000
Corp. Strategies, Ltd. No. JSN-2
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
JAG Acquisition, Inc. American Capital Working Capital Note 01/12/98 07/11/98 500,000
Strategies, Ltd. No. WCN-1
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
JAG Acquisition, Inc. American Capital Senior Term Note No. 01/12/98 01/01/06 700,000
Strategies, Ltd. STN-1
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
JAG Acquisition, Inc. American Capital Senior Subordinated 01/12/98 01/01/07 2,800,000
Strategies, Ltd. Note No. SSN-1
-------------------------- ------------------ ---------------------- -------------- --------------- --------------------
23
III. Subsidiary Stock
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
Subsidiary Owner of Record No. Shares % of All Class of Shares Certificate
Shares Number
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
ACS Capital Investments American Capital 100 100 Common 1
Corporation Strategies, Ltd.
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
American Capital American Capital 85 100 Common 1
Strategies Labor Strategies, Ltd.
Research, Inc.
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
ACS Genpar, Inc. ACS Capital 1,000 1,000 Common 1
Investments
Corporation
-------------------------- ------------------- ------------------ --------------- ----------------- ----------------
24
SCHEDULE II
TO SECURITY AGREEMENT
CHIEF EXECUTIVE OFFICES
1.
2.
3.
4.
SCHEDULE III
TO SECURITY AGREEMENT
ADDRESSES
SCHEDULE IV
TO SECURITY AGREEMENT
TRADE NAMES, PRIOR LEGAL NAMES, ETC.
SCHEDULE V
TO SECURITY AGREEMENT
-------------------------------------------------------------------------------
PATENTS
-------------------------------------------------------------------------------
----------------- ----------------------- ---------------- -- -----------------
PATENT PATENT/SERIAL NO. COUNTRY CO. NAME HELD IN ISSUE DATE
----------------- ------------------ ---------- -------------------- ----------
----------------- ------------------ ---------- -------------------- ----------
----------------- ------------------ ---------- -------------------- ----------
-------------------------------------------------------------------------------
TRADEMARKS
--------------------------------------------------------------------------------
---------------------------------------------- --- ---------------- -------- ---
TRADEMARK NAME REGISTRATION/SERIAL NO. COUNTRY CO. NAME HELD IN ISSUE DATE
----------------- ------------------ ---------- -------------------- ----------
----------------- ------------------ ---------- -------------------- ----------
----------------- ------------------ ---------- -------------------- ----------
-------------------------------------------------------------------------------
COPYRIGHTS
-------------------------------------------------------------------------------
--------------------------- --------------- ------------------------- ---------
COPYRIGHT NAME COUNTRY CO. NAME HELD IN ISSUE DATE
--------------------------- --------------- ------------------------- ---------
--------------------------------------------------------------------------------
SCHEDULE VI
TO SECURITY AGREEMENT
COLLATERAL NOT LOCATED IN THE UNITED STATES
