Exhibit 99.21
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (this "Agreement"), dated as of July 21, 1995 by
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and between ACC CORP., a corporation organized under the laws of Delaware
("ACC"), certain Domestic Subsidiaries of ACC listed on the signature pages
hereto (the "Subsidiary Grantors" and, collectively with ACC Corp., the
"Grantors") and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association organized under the laws of the United States, as Administrative
Agent (the "Administrative Agent") for the benefit of itself, and the financial
institutions (the "Lenders") as are, or may from time to time become, parties to
the Credit Agreement (as defined below).
STATEMENT OF PURPOSE
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Pursuant to a Credit Agreement dated as of even date herewith (together
with all amendments and other modifications, if any, from time to time hereafter
made thereto, the "Credit Agreement"), between the Grantors and certain Foreign
Subsidiaries of ACC as Borrowers thereunder (collectively, the "Borrowers"), the
Lenders and the Administrative Agent, the Lenders will extend Loans to the
Borrowers as more specifically described in the Credit Agreement. In order to
induce the Lenders and the Administrative Agent to enter into the Credit
Agreement, and as a condition to the making of the Loans thereunder, the Lenders
require that the Grantors grant a continuing security interest in and to the
"Collateral" (as hereinafter defined) to secure the "Secured Obligations" (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
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otherwise defined herein, when used in this Agreement including its preamble and
recitals, shall have the respective meanings provided for in the Credit
Agreement. The following additional terms, when used in this Agreement, shall
have the following meanings:
"Account Debtor" means any Person who is or may become obligated to any
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Grantor under, with respect to, or on account of, an Account.
"Accounts" means all "accounts" (as defined in the UCC) now or hereafter
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owned or acquired by any Grantor or in which any Grantor now or hereafter has or
acquires any right or interest, and, in any event, shall also include, without
limitation, all accounts receivable, contract rights, book debts, notes, drafts
and other obligations or indebtedness owing to any Grantor arising from the
sale, lease or exchange of goods or other property by it or property to be sold,
leased or exchanged, or the performance of services by it, or to be performed
(including, without limitation, any such obligation which might be characterized
as an account, contract right or general intangible under the Uniform Commercial
Code in effect in any jurisdiction) and all of any Grantor's rights in, to and
under all purchase orders for goods, services or other property,
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and all of any Grantor's rights to any goods, services or other property
represented by any of the foregoing (including returned or repossessed goods and
unpaid sellers' rights of rescission, replevin, reclamation and rights to
stoppage in transit) and all monies due to or to become due to any Grantor under
all contracts for the sale, lease or exchange of goods or other property or the
performance of services by it (whether or not yet earned by performance on the
part of such Grantor), in each case whether now in existence or hereafter
arising or acquired, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.
"Accounts Aging Report" means a detailed aged trial balance of all Accounts
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existing as of a specified date, specifying the name, addresses, account number,
face value and dates of invoices of each Account Debtor obligated on any
Accounts so listed, which report may be requested from time to time by the
Administrative Agent.
"Collateral" means the collective reference to:
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(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Equipment;
(v) Fixtures;
(vi) Instruments;
(vii) General Intangibles;
(viii) The Collateral Account, all cash deposited therein from
time to time, the investments made pursuant to Section 6 and other monies
and property of any kind of any Grantor in the possession or under the
control of the Administrative Agent or any Lender;
(ix) All books and records (including, without limitation,
customer lists, credit files, computer programs, printouts and other
computer materials and records) of any Grantor pertaining to any of the
Collateral;
(x) All other goods and personal property of any Grantor whether
tangible or intangible;
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(xi) All products and Proceeds of all or any of the Collateral
described in clauses (i) through (x) hereof.
"Collateral Account" means a cash collateral account established by the
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Grantors with the Administrative Agent, in the name and under the exclusive
dominion and control of the Administrative Agent, pursuant to Section 6.
"Copyright License" means any written agreement now or hereafter in
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existence granting to any Grantor any right to use any Copyright.
"Copyrights" means, collectively, all of the following now owned or
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hereafter created or acquired by any Grantor: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright registrations
and copyright applications; (b) all renewals of any of the foregoing; (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing, including,
without limitation, damages or payments for past or future infringements of any
of the foregoing; (d) the right to xxx for past, present and future
infringements of any of the foregoing; and (e) all rights corresponding to any
of the foregoing throughout the world.
"Documents" means all "documents" (as defined in the UCC) or other receipts
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covering, evidencing or representing goods or services, now or hereafter owned
or acquired by any Grantor or in which any Grantor now or hereafter has or
acquires any right or interest.
"Equipment" means all "equipment" (as defined in the UCC) of any Grantor,
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wherever located, and all other machinery, equipment and goods (other than
Inventory) of any Grantor used or bought for use primarily in the business of
such Grantor, including all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor, in all such cases whether
now owned or hereafter acquired by any Grantor or in which any Grantor now has
or hereafter acquires any right or interest.
"Financing Statements" means the Uniform Commercial Code Form UCC-1
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Financing Statements executed by each Grantor with respect to the Collateral and
to be filed in the jurisdictions set forth in the Perfection Certificate.
"Fixtures" means all "fixtures" (as defined in the UCC) of any Grantor,
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whether now owned or hereafter acquired, or in which any Grantor now has or
hereafter acquires any right or interest.
"General Intangibles" means all "general intangibles" (as defined in the
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UCC) now or hereafter owned or acquired by any Grantor or in which any Grantor
now or hereafter has or acquires any right or interest, and, in any event, shall
mean and include, without limitation, all rights to indemnification, and all
rights, title and interest which any Grantor may now or hereafter have in or
under all contracts (other than contracts described in the definition of
Accounts), agreements (including without limitation, the Canadian Note Documents
and the
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Canadian Subsidiary Security Documents), permits, licenses (which contracts,
agreements, permits and licenses may be pledged pursuant to the terms thereof)
causes of action, franchises, tax refund claims, customer lists, Intellectual
Property, license royalties, goodwill, trade secrets, data bases, business
records and all other intangible property of every kind and nature.
"Instruments" means all "instruments," "chattel paper" or "letters of
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credit" (each as defined in the UCC), including, without limitation,
instruments, chattel paper and letters of credit evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including (but not limited to)
promissory notes (including without limitation, the Canadian Note Documents),
drafts, bills of exchange and trade acceptances, now or hereafter owned or
acquired by any Grantor or in which any Grantor now or hereafter has or acquires
any right or interest.
"Intellectual Property" means, collectively, (a) all systems software and
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applications software, including, but not limited to, screen displays and
formats, program structures, sequence and organization, all documentation for
such software, including, but not limited to, user manuals, flowcharts,
programmer's notes, functional specifications, and operations manuals, all
formulas, processes, ideas and know-how embodied in any of the foregoing, and
all program materials, flowcharts, notes and outlines created in connection with
any of the foregoing, whether or not patentable or copyrightable, (b) concepts,
discoveries, improvements and ideas, (c) any useful information relating to the
items described in clause (a) or (b), including know-how, technology,
engineering drawings, reports, design information, trade secrets, practices,
laboratory notebooks, specifications, test procedures, maintenance manuals,
research, development, manufacturing, marketing, merchandising, selling,
purchasing and accounting, (d) Patents, Patent rights and Patent applications,
Copyrights and Copyright applications, Trademarks, Trademark rights, trade
names, trade name rights, service marks, service xxxx rights, applications for
registration of Trademarks, trade names and service marks, and Trademark, trade
name and service xxxx registrations and Patent Licenses, Trademark Licenses and
Copyright Licenses, and (e) other licenses to use any of the items described in
the foregoing clauses(a), (b), (c) and (d) or any other similar items of any
Grantor necessary for the conduct of its business.
"Inventory" means all "inventory" (as defined in the UCC) now or hereafter
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owned or acquired by any Grantor or in which any Grantor now or hereafter has or
acquires any right or interest, wherever located and, in any event, shall mean
and include, without limitation, all raw materials, inventory and other
materials and supplies, work-in-process, finished goods, all accessions thereto,
documents therefor and any products made or processed therefrom and all
substances, if any, commingled therewith or added thereto.
"Patent License" means any written agreement now or hereafter in existence
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granting to any Grantor any right to use any invention on which a Patent is in
existence.
"Patents" means, collectively, all of the following now owned or hereafter
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created or acquired by any Grantor: (a) all patents and patent applications
including all patentable inventions; (b) all reissues, divisions, continuations,
renewals, extensions and continuations-in-
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part of any of the foregoing; (c) all income, royalties, damages or payments now
or hereafter due and/or payable under any of the foregoing or with respect to
any of the foregoing, including, without limitation, damages or payments for
past or future infringements of any of the foregoing; (d) the right to xxx for
past, present and future infringements of any of the foregoing; and (e) all
rights corresponding to any of the foregoing throughout the world.
"Perfection Certificate" means a certificate dated as of even date
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herewith, setting forth the corporate names, chief executive office or principal
place of business in each state and other current locations of Collateral of
each Grantor and such other information as the Administrative Agent deems
pertinent to the perfection of security interests, completed and supplemented
with the schedules and attachments contemplated thereby to the satisfaction of
the Administrative Agent, and duly certified by the chief executive or chief
financial officer of each Grantor so authorized to act.
"Permitted Investments" means investments described in Section 9.4 of the
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Credit Agreement.
"Permitted Liens" means all such Liens respecting the Collateral permitted
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pursuant to Section 9.3 of the Credit Agreement.
"Proceeds" means all proceeds of, and all other profits, rentals or
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receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, Collateral,
including, without limitation, all claims of any Grantor against third parties
for loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral and the following types of property acquired with cash proceeds:
Accounts, Inventory, Documents, Fixtures, Instruments, General Intangibles and
Equipment.
"Secured Obligations" means the Obligations as defined in the Credit
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Agreement and any renewals or extensions of any of the Obligations.
"Security Interests" means the security interests granted pursuant to
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Section 2, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means any written agreement now or hereafter in
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existence granting to any Grantor any right to use any Trademark.
"Trademarks" means, collectively, all of the following now owned or
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hereafter created or acquired by any Grantor: (a) all Trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all registrations and
recordings thereof, and all applications in connection therewith, including
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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 thereof or any other country or any political subdivision of any thereof,
including without limitation any thereof referred to on Schedule I hereto; (b)
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all reissues, extensions and renewals of any of the foregoing; (c) all income,
royalties, damages and payments now or hereafter due and/or payable under any of
the foregoing or with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (d) the right to xxx for past, present and future infringements of
any of the foregoing; and (e) all rights corresponding to any of the foregoing
throughout the world.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
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the State of North Carolina; provided that if by reason of mandatory provisions
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of law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than North Carolina, "UCC" means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
SECTION 2. The Security Interests.
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(a) In order to secure the Credit Agreement in accordance with the terms
thereof, and to secure the payment and performance of all of the Secured
Obligations, each Grantor hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a continuing security interest in and
to all of such Grantor's estate, right, title and interest in and to all
Collateral whether now or hereafter owned or acquired by such Grantor or in
which such Grantor now has or hereafter has or acquires any rights, and wherever
located.
(b) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any Lender to, or transfer to the
Administrative Agent or any Lender, or in any way affect or modify, any
obligation or liability of any Grantor with respect to any of the Collateral or
any transaction in connection therewith.
SECTION 3. Representations and Warranties. Each Grantor represents and
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warrants as follows:
(a) Such Grantor has the corporate power and authority and the legal right
to execute and deliver, to perform its obligations under, and to grant the
Security Interests in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the Security Interests in the Collateral pursuant
to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding obligation of
such Grantor enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy,
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insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of any Applicable Law or contractual obligation of such
Grantor and will not result in the creation or imposition of any Lien on any of
the properties or revenues of such Grantor pursuant to any Applicable Law or
contractual obligation of such Grantor, except as contemplated hereby.
(d) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of such
Grantor), is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement.
(e) No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of such Grantor after
due inquiry, threatened by or against such Grantor or against any of its
properties or revenues with respect to this Agreement or any of the transactions
contemplated hereby.
(f) Such Grantor has good and marketable title to all of its respective
Collateral, free and clear of any Liens other than the Permitted Liens.
(g) Such Grantor has not performed or failed to perform any acts that would
prevent or hinder the Administrative Agent from enforcing any of the terms of
this Agreement. Other than financing statements or other similar or equivalent
documents or instruments with respect to Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral of such Grantor is on file
or of record in any jurisdiction. No Collateral of such Grantor is in the
possession of any Person (other than such Grantor) asserting any claim thereto
or security interest therein, except that the Administrative Agent or its
designee may have possession of the Collateral as contemplated hereby.
(h) All of the information set forth in the Perfection Certificate with
respect to such Grantor is true and correct as of the date hereof.
(i) Such Grantor has, contemporaneously herewith, delivered to the
Administrative Agent possession of all originals of all negotiable Instruments,
documents and chattel paper constituting Collateral currently owned or held by
such Grantor, if any (duly endorsed in blank, if requested by the Administrative
Agent).
(j) With respect to any Intellectual Property of Grantor the loss,
impairment or infringement of which might have a Material Adverse Effect:
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(i) such Intellectual Property is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part;
(ii) such Intellectual Property is valid and enforceable;
(iii) such Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property, including, without
limitation, recordations of all of its interests in the Patents and
Trademarks included in such Intellectual Property in the United States
Patent and Trademark Office and its claims to the Copyrights included in
such Intellectual Property in the United States Copyright Office;
(iv) such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual Property
and no claim has been made that the use of such Intellectual Property does
or may violate the asserted rights of any third party; and
(v) such Grantor has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to
maintain each and every such item of Intellectual Property in full force
and effect.
(k) The Financing Statements executed by such Grantor are in appropriate
form and when filed in the offices specified in the Perfection Certificate, the
Security Interests will constitute valid and perfected security interests in the
Collateral of such Grantor, prior to all other Liens and rights of others
therein except for the Permitted Liens (to the extent that a security interest
therein may be perfected by filing pursuant to the UCC) and all filings and
other actions necessary or desirable to perfect and protect such Security
Interests have been duly taken.
(l) The Inventory, Fixtures and Equipment of such Grantor are insured in
accordance with the requirements hereof and of the Credit Agreement.
SECTION 4. Further Assurances; Covenants.
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(a) General.
(i) Each Grantor agrees not to change the location of its chief
executive office or principal place of business in any state unless it
shall have given the Administrative Agent thirty (30) days prior written
notice thereof, executed and delivered to the Administrative Agent all
financing statements and financing statement amendments which the
Administrative Agent may request in connection therewith and, if requested
by the Administrative Agent, delivered an opinion of counsel with respect
thereto in accordance with Section 4(a)(vii) hereof. Each Grantor agrees
not to change the locations where it keeps or holds any Collateral or any
records relating thereto from the applicable location described in the
Perfection Certificate unless such Grantor shall have given the
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Administrative Agent thirty (30) days prior written notice of such change
of location, executed and delivered to the Administrative Agent all
financing statements and financing statement amendments which the
Administrative Agent may request in connection therewith and, if requested
by the Administrative Agent, delivered an opinion of counsel with respect
thereto in accordance with Section 4(a)(vii) hereof; provided, that such
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Grantor may keep Inventory at, or in transit to, any location described in
the Perfection Certificate. Each Grantor agrees not to, in any event,
change the location of any Collateral if such change would cause the
Security Interests in such Collateral to lapse or cease to be perfected.
(ii) Each Grantor agrees not to change its name, identity or corporate
structure in any manner unless it shall have given the Administrative Agent
thirty (30) days prior written notice thereof, executed and delivered to
the Administrative Agent all financing statements and financing statement
amendments which the Administrative Agent may request in connection
therewith, and, if requested by Administrative Agent, delivered an opinion
of counsel with respect thereto in accordance with Section 4(a)(vii)
hereof.
(iii) Each Grantor will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including without
limitation any filings of financing or continuation statements under the
UCC and any filings with the United States Patent and Trademark Office and
United States Copyright Office) that from time to time may be necessary, or
that the Administrative Agent may reasonably request, in order to create,
preserve, upgrade in rank (to the extent required hereby), perfect, confirm
or validate the Security Interests or to enable the Administrative Agent
and the Lenders to obtain the full benefits of this Agreement, or to enable
the Administrative Agent to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the Collateral. Prior to the
irrevocable payment in full of the Secured Obligations, each Grantor hereby
authorizes the Administrative Agent, upon the failure of such Grantor to so
do within three Business Days after receipt of notice from the
Administrative Agent, to execute and file financing statements, financing
statement amendments or continuation statements without such Grantor's
signature appearing thereon. Each Grantor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. Each Grantor
shall pay the costs of, or incidental to, any recording or filing of the
Financing Statements and any other financing statements, financing
statement amendments or continuation statements concerning the Collateral.
(iv) If any Collateral exceeding in value $50,000 in the aggregate is
at any time in the possession or control of any warehouseman, bailee (other
than a carrier transporting Inventory to a purchaser in the ordinary course
of business), or any Grantor's agents or processors, such Grantor shall
notify in writing such warehouseman, bailee, agent or processor of the
Security Interests created hereby, shall obtain such warehouseman's,
bailee's, agent's or processor's agreement in writing to hold all such
Collateral for the
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Administrative Agent's account subject to the Administrative Agent's
instructions, and shall cause such warehouseman, bailee, agent or processor
to issue and deliver to the Administrative Agent warehouse receipts, bills
of lading or any similar documents relating to such Collateral in the
Administrative Agent's name and in form and substance acceptable to the
Administrative Agent.
(v) Each Grantor will cause the Administrative Agent, for the ratable
benefit of itself and the Lenders, to be named as loss payee on each
insurance policy covering risks relating to any of its Inventory, Fixtures
and Equipment, as reasonably requested by the Administrative Agent. Each
Grantor will deliver to the Administrative Agent, upon request of the
Administrative Agent, the insurance policies for such insurance. Each such
insurance policy shall include effective waivers by the insurer of
subrogation, provide that all insurance proceeds shall be adjusted with and
payable to the Administrative Agent and provide that no cancellation or
termination thereof shall be effective until at least thirty (30) days
have elapsed after receipt by the Administrative Agent of written notice
thereof. Each Grantor shall arrange for appropriate certifications that
the requirements of this Section 4(a)(v) have been satisfied, to be made to
the Administrative Agent and each insured party, as soon as practicable, by
each insurer or its authorized representative with respect thereto.
(vi) Each Grantor will, promptly upon request, provide to the
Administrative Agent all information and evidence the Administrative Agent
may reasonably request concerning the Collateral, and in particular the
Accounts, to enable the Administrative Agent to enforce the provisions of
this Agreement.
(vii) If requested by the Administrative Agent or the Required
Lenders, prior to each date on which any Grantor proposes to take any
action contemplated by Section 4(a)(i) or Section 4(a)(ii) hereof, such
Grantor shall, at its cost and expense, cause to be delivered to the
Administrative Agent and the Lenders an opinion of counsel, in form and
content reasonably satisfactory to the Administrative Agent and the
Required Lenders.
(viii) From time to time upon request by the Administrative Agent,
each Grantor shall, at its cost and expense, cause to be delivered to the
Administrative Agent and the Lenders an opinion or opinions of counsel,
satisfactory to the Administrative Agent, as to the enforceability of the
Loan Documents and the Lien of the Administrative Agent and Lenders on the
Collateral and other property of such Grantor and such other matters
relating to the transactions contemplated hereby as the Administrative
Agent or the Required Lenders may reasonably request.
(ix) Each Grantor will comply in all material respects with all
Applicable Laws applicable to the Collateral or any part thereof or to the
operation of such Grantor's business.
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(x) Each Grantor will pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in respect of
its income or profits therefrom, as well as all claims of any kind
(including, without limitation, claims for labor, materials and supplies)
against or with respect to the Collateral, except that no such charge need
be paid if (A) the validity thereof is being contested in good faith by
appropriate proceedings, (B) such proceedings do not involve any danger of
the sale, forfeiture or loss of or creation of a Lien on any of the
Collateral or any interest therein and (C) such charge is adequately
reserved against on such Grantor's books in accordance with GAAP.
(xi) No Grantor shall
(A) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; or
(B) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure
indebtedness of any Person or entity, except as permitted by the
Credit Agreement.
(b) Accounts, Etc.
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(i) Each Grantor shall use all reasonable efforts to cause to be
collected from its Account Debtors, as and when due, any and all amounts
owing under or on account of each Account (including, without limitation,
Accounts which are delinquent, such Accounts to be collected in accordance
with lawful collection procedures) and to apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of
such Account. The costs and expenses (including, without limitation,
attorney's fees), of collection of Accounts incurred by such Grantor or the
Administrative Agent shall be borne by such Grantor.
(ii) Upon the occurrence and during the continuance of any Event of
Default, upon request of the Administrative Agent or the Required Lenders,
each Grantor will promptly notify (and each Grantor hereby authorizes the
Administrative Agent so to notify) each Account Debtor in respect of any
Account that such Account has been assigned to the Administrative Agent
hereunder and that any payments due or to become due in respect of such
Account are to be made directly to the Administrative Agent or its
designee.
(iii) Each Grantor will perform and comply in all material respects
with all of its obligations in respect of Accounts and General Intangibles
and the exercise by the Administrative Agent of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations.
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(iv) No Grantor will (A) amend, modify, terminate or waive any
material provision of any agreement giving rise to an Account in any manner
which could reasonably be expected to materially adversely affect the value
of such Account as Collateral, (B) fail to exercise promptly and diligently
each and every material right which it may have under each agreement giving
rise to an Account (other than any right of termination) or (C) fail to
deliver to the Administrative Agent a copy of each material demand, notice
or document received by it relating in any way to any agreement giving rise
to an Account.
(v) Other than in the ordinary course of business as generally
conducted by such Grantor over a period of time, no Grantor will grant any
extension of the time of payment of any of the Accounts to any one Account
Debtor with an aggregate face amount in excess of $25,000 or compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partially, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon.
(c) Inventory,Etc. Each Grantor hereby represents, warrants, covenants and
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agrees as follows: (i) all Inventory is, and at shall be at all times,
located at places of business listed in the Perfection Certificate or as to
which such Grantor has complied with the provisions of Section 4(a)(i)
hereof, except Inventory in transit from one such location to another such
location; (ii) no Inventory is, nor shall at any time or times be, subject
to any Lien whatsoever, except for Permitted Liens; and (iii) no Inventory
in aggregate value exceeding $50,000 at any time is, nor shall at any time
or times be, kept, stored or maintained with a bailee, warehouseman,
carrier or similar party (other than a carrier delivering Inventory to a
purchaser in the ordinary course of such Grantor's business) unless the
Required Lenders have given their prior written consent and Grantor has
complied with the provisions of Section 4(a)(iv) hereof.
(d) Equipment, Etc. Each Grantor will maintain each item of Equipment in
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the same condition, repair and working order as when acquired, ordinary
wear and tear and immaterial impairments of value and damage by the
elements excepted, and in accordance with any manufacturer's manual, and
will as quickly as practicable provide all maintenance, service and repairs
necessary for such purpose and will promptly furnish to the Administrative
Agent a statement respecting any material loss or damage to any of the
Equipment.
(e) Intellectual Property.
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(i) Each Grantor shall notify the Administrative Agent promptly (A) of
its acquisition after the Closing Date of any Patent, Patent License,
Trademark or Trademark License and (B) if it knows, or has reason to know
of any adverse determination or development (including, without limitation,
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any court)
regarding such Grantor's ownership of any Patent or Trademark, its right to
- 13 -
register the same, or to keep and maintain the same. In the event that any
Patent, Patent License, Trademark or Trademark License is infringed,
misappropriated or diluted by a third party, each Grantor shall notify the
Administrative Agent promptly after it learns thereof and shall, unless
such Grantor and the Administrative Agent shall jointly determine that any
such action would be of immaterial economic value, promptly xxx for
infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and take such
other actions as may be appropriate under the circumstances to protect such
Patent, Patent License, Trademark or Trademark License. In no event shall
any Grantor, either itself or through any agent, employee or licensee, file
an application for the registration of any Patent or Trademark with the
United States Patent and Trademark Office or any similar office or agency
in any other country or any political subdivision thereof, unless
simultaneously therewith it informs the Administrative Agent, and, upon
issuance of such Patent or Trademark, executes and delivers any and all
agreements, instruments, documents and papers the Administrative Agent may
reasonably request to evidence the Security Interests in such Patent or
Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby. Each Grantor hereby constitutes the
Administrative Agent its attorney-in-fact to execute and file all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power, being coupled with an interest,
shall be irrevocable until the Commitments have terminated and the Secured
Obligations are paid in full.
(ii) Each Grantor shall: (A) preserve and maintain in all material
respects rights in the Intellectual Property; and (B) upon and after the
occurrence of an Event of Default, use its best efforts to obtain any
consents, waivers or agreements necessary to enable Administrative Agent to
exercise its remedies with respect to the Intellectual Property. No
Grantor shall abandon any right to file a Copyright, Patent or Trademark
application that is material to the business of such Grantor nor shall any
Grantor abandon any such pending Copyright, Patent or Trademark
application, or Copyright, Copyright License, Patent, Patent License,
Trademark or Trademark License without the prior written consent of
Administrative Agent.
(iii) Each Grantor hereby Assigns, transfers and conveys to
Administrative Agent, effective upon the occurrence and during the
continuance of any Event of Default, the nonexclusive right and license to
use all Intellectual Property owned or used by such Grantor, together with
any goodwill associated therewith, all to the extent necessary to enable
Administrative Agent to realize on the Collateral (including, without
limitation, completing production of, advertising for sale and selling the
Collateral) and any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Administrative Agent and its
successors, assigns and transferees, whether by voluntary conveyance,
operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of
charge, without requirement that any monetary payment whatsoever be made to
any Grantor by Administrative Agent.
- 14 -
(f) Indemnification. Each Grantor agrees to pay, and to save the
---------------
Administrative Agent and the Lenders harmless from, any and all liabilities,
costs and expenses (including, without limitation, legal fees and expenses) (i)
with respect to, or resulting from, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, complying with any
Applicable Law applicable to any of the Collateral or (iii) in connection with
any of the transactions contemplated by this Agreement (except to the extent any
such liabilities, costs and expenses result from the gross negligence or willful
misconduct of the Administrative Agent or Lenders). In any suit, proceeding or
action brought by the Administrative Agent under any Account for any sum owing
thereunder, or to enforce any provisions of any Account, each Grantor will save,
indemnify and keep the Administrative Agent and the Lenders harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the Account
Debtor or any other obligor thereunder, arising out of a breach by such Grantor
of any obligation thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such Account Debtor or obligor
or its successors from such Grantor (except to the extent any such expense, loss
or damage results from the gross negligence or willful misconduct of the
Administrative Agent or Lenders). The obligations of each Grantor under this
Section 4(f) shall survive the termination of the other provisions of this
Agreement.
SECTION 5. Reporting and Recordkeeping. Each Grantor respectively
---------------------------
covenants and agrees with the Administrative Agent and the Lenders that from and
after the date of this Agreement and until the Commitments have terminated and
all Secured Obligations have been fully satisfied:
(a) Maintenance of Records Generally. Such Grantor will keep and maintain
--------------------------------
at its own cost and expense complete and accurate records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. All chattel paper given to such Grantor with respect to any
Accounts will be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
First Union National Bank of North Carolina, as Administrative Agent". For the
Administrative Agent's and the Lenders' further security, such Grantor agrees
that upon the occurrence and during the continuation of any Event of Default,
such Grantor shall deliver and turn over any such books and records directly to
the Administrative Agent or its designee. Such Grantor shall permit any
representative of the Administrative Agent to inspect such books and records in
accordance with Section 7.11 of the Credit Agreement and will provide
photocopies thereof to the Administrative Agent upon its reasonable request.
(b) Certain Provisions Regarding Maintenance of Records and Reporting Re:
---------------------------------------------------------------------
Accounts.
--------
(i) In the event any amounts due and owing in excess of $75,000 are in
dispute between any Account Debtor and such Grantor, such Grantor shall
provide the Administrative Agent with written notice thereof promptly after
such Grantor's learning
- 15 -
thereof, explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy; provided, that a monthly
--------
report of such items provided within ten (10) days after the end of each
calendar month shall be deemed to be prompt delivery of such notice.
(ii) Such Grantor will promptly notify the Administrative Agent in
writing if any Account arises out of a contract with the United States of
America, or any department, agency, subdivision or instrumentality thereof,
or of any state (or department, agency, subdivision or instrumentality
thereof) where such state has a state assignment of claims act or other law
comparable to the Federal Assignment of Claims Act, and will take any
action required or requested by the Administrative Agent or give notice of
the Administrative Agent's Security Interest in such Accounts under the
provisions of the Federal Assignment of Claims Act or any comparable law or
act enacted by any state or local governmental authority.
(c) Further Identification of Collateral. Such Grantor will, if so
------------------------------------
requested by the Administrative Agent, furnish to the Administrative Agent
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(d) Notices. In addition to the notices required by Section 5(b) hereof,
-------
such Grantor will advise the Administrative Agent promptly, in reasonable
detail, (i) of any material Lien or claim made or asserted against any of the
Collateral, (ii) of any material adverse change in the composition of the
Collateral, and (iii) of the occurrence of any other event which could have a
material adverse effect on the Collateral or on the validity, perfection or
priority of the Security Interests.
SECTION 6. Collateral Account.
------------------
(a) There is hereby established with the Administrative Agent a Collateral
Account in the name and under the exclusive dominion and control of the
Administrative Agent. There shall be deposited from time to time into such
account the cash proceeds of the Collateral required to be delivered to the
Administrative Agent pursuant to Section 6(b) or any other provision of this
Agreement. Any income received by the Administrative Agent with respect to the
balance from time to time standing to the credit of the Collateral Account,
including any interest or capital gains on investments of amounts on deposit in
the Collateral Account, shall remain, or be deposited, in the Collateral Account
together with any investments from time to time made pursuant to subsection (c)
of this Section 6, shall vest in the Administrative Agent, shall constitute part
of the Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied thereto as hereinafter provided.
(b) Upon the occurrence and during the continuance of an Event of Default,
if requested by the Administrative Agent, each Grantor shall instruct all
Account Debtors and other Persons obligated in respect of all Accounts to make
all payments in respect of the Accounts
- 16 -
either (i) directly to the Administrative Agent (by instructing that such
payments be remitted to a post office box which shall be in the name and under
the exclusive dominion and control of the Administrative Agent) or (ii) to one
or more other banks in any state in the United States (by instructing that such
payments be remitted to a post office box which shall be in the name and under
the exclusive dominion and control of such bank) under arrangements, in form and
substance satisfactory to the Administrative Agent, pursuant to which such
Grantor shall have irrevocably instructed such other bank (and such other bank
shall have agreed) to remit all proceeds of such payments directly to the
Administrative Agent for deposit into the Collateral Account or as the
Administrative Agent may otherwise instruct such bank, and thereafter if the
proceeds of any Collateral shall be received by such Grantor, such Grantor will
promptly deposit such proceeds into the Collateral Account and until so
deposited, all such proceeds shall be held in trust by such Grantor for and as
the property of the Administrative Agent, for the benefit of itself and the
Lenders and shall not be commingled with any other funds or property of such
Grantor. At any time after the occurrence and during the continuance of an
Event of Default, the Administrative Agent may itself so instruct such Grantor's
Account Debtors and each Grantor hereby constitutes and appoints the
Administrative Agent (and the president, any vice president or any assistant
vice president of the Administrative Agent from time to time) as its attorney-
in-fact with full power and authority to so instruct such Grantor's Account
Debtors. All such payments made to the Administrative Agent shall be deposited
in the Collateral Account.
(c) The balance from time to time standing to the credit of the Collateral
Account shall, except upon the occurrence and continuation of an Event of
Default, be distributed to the Grantors upon the order of the Grantors. If
immediately available cash on deposit in the Collateral Account is not
sufficient to make any distribution to the Grantors referred to in the previous
sentence of this Section 6(c), the Administrative Agent shall liquidate as
promptly as practicable such investments as required to obtain sufficient cash
to make such distribution and, notwithstanding any other provision of this
Section 6, such distribution shall not be made until such liquidation has taken
place. Upon the occurrence and continuation of an Event of Default, the
Administrative Agent shall, if so instructed by the Required Lenders, apply or
cause to be applied (subject to collection) any or all of the balance from time
to time standing to the credit of the Collateral Account in the manner specified
in Section 10.
(d) Amounts on deposit in the Collateral Account shall be invested and
reinvested from time to time in Permitted Investments as the Grantors shall
determine, which investments shall be held in the name and be under the control
of the Administrative Agent; provided, that if an Event of Default has occurred
--------
and is continuing, the Administrative Agent may and, if instructed by the
Required Lenders, shall liquidate any such investments and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 10 hereof; and provided further, that (i) each such
----------------
investment shall mature within thirty (30) days after it is acquired by the
Administrative Agent and (ii) in order to provide the Administrative Agent, for
the ratable benefit of itself and the Lenders, with a perfected security
interest therein, each such investment shall be either:
- 17 -
(A) evidenced by negotiable certificates or Instruments, or if non-
negotiable then issued in the name of the Administrative Agent, which
(together with any appropriate instruments of transfer) are delivered to,
and held by, the Administrative Agent or any agent thereof (which shall not
be any of the Grantors or any of their Affiliates) in the State of North
Carolina; or
(B) in book-entry form and issued by the United States and subject to
pledge under applicable state law and Treasury regulations and as to which
(in the opinion of counsel to the Administrative Agent) appropriate
measures shall have been taken for perfection of the Security Interests.
(e) Upon the occurrence of any Event of Default, the Administrative Agent
is authorized at any time and from time to time, and during the continuance
thereof, without notice to the Grantors, to set off, appropriate and apply any
and all amounts on deposit in the Collateral Account, and the proceeds thereof,
against all Secured Obligations.
SECTION 7. General Authority.
-----------------
(a) Each Grantor hereby irrevocably appoints the Administrative Agent its
true and lawful attorney, with full power of substitution, in the name of such
Grantor, the Administrative Agent, the Lenders or otherwise, for the sole use
and benefit of the Administrative Agent and the Lenders, but at such Grantor's
expense, to exercise, at any time from time to time all or any of the following
powers:
(i) to file the Financing Statements and any financing statements,
financing statement amendments and continuation statements referred to in
Sections 4(a)(i), 4(a)(ii), and 4(a)(iii) hereof,
(ii) to demand, xxx for, collect, receive and give acquittance for any
and all monies due or to become due with respect to any Collateral or by
virtue thereof,
(iii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect to any Collateral,
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral and the Proceeds thereof, as fully and effectually as if the
Administrative Agent were the absolute owner thereof, and
(v) to extend the time of payment and to make any allowance and other
adjustments with reference to the Collateral;
provided that the Administrative Agent shall not take any of the actions
--------
described in this Section 7 except those described in clause (i) above unless an
Event of Default shall have occurred and be continuing and the Administrative
Agent shall give such Grantor not less than
- 18 -
ten (10) days' prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market. Each Grantor agrees that any such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the UCC (to the extent such Section is applicable).
(b) Each Grantor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(c) Each Grantor also authorizes the Administrative Agent at any time and
from time to time, to execute, in connection with the sale provided for in
Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
SECTION 8. Remedies Upon Event of Default.
------------------------------
(a) If any Event of Default has occurred and is continuing, the
Administrative Agent may exercise on behalf of itself and the Lenders all rights
of a secured party under the UCC (whether or not in effect in the jurisdiction
where such rights are exercised) and, in addition, the Administrative Agent may
(i) withdraw all cash, if any, in the Collateral Account and investments made
with amounts on deposit in the Collateral Account, and apply such monies,
investments and other cash, if any, then held by it as Collateral as specified
in Section 10 hereof and (ii) if there shall be no such monies, investments or
cash or if such monies, investments or cash shall be insufficient to pay all the
Secured Obligations in full, sell the Collateral or any part thereof at public
or private sale, for cash, upon credit or for future delivery, and at such price
or prices as the Administrative Agent may deem satisfactory. The Administrative
Agent or any Lender may be the purchaser of any or all of the Collateral so sold
at any public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations or if otherwise permitted under applicable law, at any
private sale) and thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind. Each Grantor will execute and deliver such documents
and take such other action as the Administrative Agent deems reasonably
necessary or advisable in order that any such sale may be made in compliance
with law. Upon any such sale the Administrative Agent shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold
(without warranty). Each purchaser at any such sale shall hold the Collateral
so sold to it absolutely, free from any claim or right of whatsoever kind,
including any equity or right of redemption of any Grantor. To the extent
permitted by law, each Grantor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice of such sale shall be given to the
applicable Grantor ten (10) days prior to such sale and (A) in case of a public
sale, state the time and place fixed for such sale, and (B) in the case of a
private sale, state the day after which sale may be consummated. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Administrative Agent may fix in the notice of
such sale. At any such sale the Collateral
- 19 -
may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may determine. The Administrative Agent shall not be
obligated to make any such sale pursuant to any such notice. The Administrative
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction. The Grantors shall remain liable for any deficiency.
(b) For the purpose of enforcing any and all rights and remedies under this
Agreement, the Administrative Agent may if an Event of Default has occurred and
is continuing (i) require each Grantor to, and each Grantor agrees that it will,
at its expense and upon the request of the Administrative Agent, forthwith
assemble all or any part of the Collateral as directed by the Administrative
Agent and make it available at a place designated by the Administrative Agent
which is, in the Administrative Agent's opinion, reasonably convenient to the
Administrative Agent and such Grantor, whether at the premises of such Grantor
or otherwise, (ii) to the extent permitted by applicable law, enter, with or
without process of law and without breach of the peace, any premise where any of
the Collateral is or may be located and, without charge or liability to the
Administrative Agent, seize and remove such Collateral from such premises, (iii)
have access to and use such Grantor's books and records relating to the
Collateral and (iv) prior to the disposition of the Collateral, store or
transfer such Collateral without charge in or by means of any storage or
transportation facility owned or leased by such Grantor, process, repair or
recondition such Collateral or otherwise prepare it for disposition in any
manner and to the extent the Administrative Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
Trademark, trade name, Copyright, Patent or technical process used by such
Grantor.
(c) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Administrative Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any Patents or Trademarks included in the Collateral throughout the
world for such term or terms, on such conditions and in such manner as the
Administrative Agent shall in its sole discretion determine;
(ii) the Administrative Agent may (without assuming any obligations or
liability thereunder), at any time and from time to time, enforce (and
shall have the
- 20 -
exclusive right to enforce) against any licensee or sublicensee all rights
and remedies of any Grantor in, to and under any Patent Licenses or
Trademark Licenses and take or refrain from taking any action under any
thereof, provided, that no such actions shall result in the failure of such
--------
Patent Licenses or Trademark Licenses to remain in compliance with all
Applicable Law, and each Grantor hereby releases the Administrative Agent
and each of the Lenders from and against any claims arising out of, any
lawful action so taken or omitted to be taken with respect thereto except
with respect to the gross negligence or willful misconduct of the
Administrative Agent or the Lenders; and
(iii) upon request by the Administrative Agent, each Grantor will
execute and deliver to the Administrative Agent a power of attorney, in
form and substance satisfactory to the Administrative Agent, for the
implementation of any lease, assignment, license, sublicense, grant or
option, sale or other disposition of a Patent or Trademark. In the event
of any such disposition pursuant to this Section, each Grantor shall supply
its know-how and expertise relating to the manufacture and sale of the
products bearing Trademarks or the products or services made or rendered in
connection with Patents, and its customer lists and other records relating
to such Patents or Trademarks and to the distribution of said products, to
the Administrative Agent.
SECTION 9. Limitation on Duty of Administrative Agent in Respect of
--------------------------------------------------------
Collateral. Beyond reasonable care in the custody thereof, the Administrative
----------
Agent shall have no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or any income thereon or as to
the preservation of rights against prior parties or any other rights pertaining
thereto. The Administrative Agent shall be deemed to have exercised reasonable
care in the custody of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords its own
property, and the Administrative Agent shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any warehouseman, carrier,
forwarding agency, consignee or other agent or bailee selected by the
Administrative Agent in good faith.
SECTION 10. Application of Proceeds. Upon the occurrence and during the
-----------------------
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied by the
Administrative Agent as follows:
first, to payment of the out-of-pocket expenses of such sale or other
-----
realization, including all reasonable out-of-pocket expenses, liabilities
and advances incurred or made by the Administrative Agent in connection
therewith, and any other unreimbursed expenses for which the Administrative
Agent or any Lender is to be reimbursed pursuant to Section 13.2 of the
Credit Agreement, or Section 4(f) or 13 hereof or any corresponding
provision of any of the other Loan Documents;
second, to payment of any fees owing to the Administrative Agent or
------
any Lender under the Credit Agreement in accordance with the
provisions of the Credit Agreement;
- 21 -
third, to ratable payment of accrued but unpaid interest (including post-
-----
petition interest) on the Secured Obligations and any termination payments
due in respect of any Hedging Agreement with any Lender (pro rata in
--- ----
accordance with all such amounts due);
fourth, to the ratable payment of unpaid principal of the Secured
------
Obligations;
fifth, to the ratable payment of all other Secured Obligations, until
-----
all Secured Obligations shall have been paid in full; and
finally, to payment to the applicable Grantors or their respective
-------
successor or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds.
The Administrative Agent may make distribution hereunder in cash or in kind or,
on a ratable basis, in any combination thereof.
SECTION 11. Concerning the Administrative Agent. The provisions of
-----------------------------------
Article XI of the Credit Agreement shall inure to the benefit of the
Administrative Agent in respect of this Agreement and shall be binding upon the
parties to the Credit Agreement in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the Administrative Agent
therein set forth:
(a) The Administrative Agent is authorized to take all such action as
is provided to be taken by it as Administrative Agent hereunder and all
other action incidental thereto. As to any matters not expressly provided
for herein, the Administrative Agent may request instructions from the
Lenders and shall act or refrain from acting in accordance with written
instructions from the Required Lenders (or, when expressly required by this
Agreement or the Credit Agreement, all the Lenders) or, in the absence of
such instructions, in accordance with its discretion.
(b) The Administrative Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the
validity, perfection, priority or enforceability of the Security Interests,
whether impaired by operation of law or by reason of any action or omission
to act on its part (other than any such action or inaction constituting
gross negligence or willful misconduct. The Administrative Agent shall
have no duty to ascertain or inquire as to the performance or observance of
any of the terms of this Agreement by any Grantor.
SECTION 12. Appointment of Collateral Agents. At any time or times, in
--------------------------------
order to comply with any legal requirement in any jurisdiction or in order to
effectuate any provision of the Loan Documents, the Administrative Agent may
appoint another bank or trust company or one or more other Persons, either to
act as collateral agent or agents, jointly with the Administrative Agent or
separately, on behalf of the Administrative Agent and the Lenders with such
power and authority as may be necessary for the effectual operation of the
provisions hereof
- 22 -
and specified in the instrument of appointment (which may, in the discretion of
the Administrative Agent, include provisions for the protection of such
collateral agent similar to the provisions of Section 11 hereof).
SECTION 13. Expenses. In the event that any Grantor fails to comply with
--------
the provisions of the Credit Agreement, this Agreement or any other Loan
Document, such that the value of any Collateral or the validity, perfection,
rank or value of the Security Interests are thereby diminished or potentially
diminished or put at risk, the Administrative Agent if requested by the Required
Lenders may, but shall not be required to, effect such compliance on behalf of
such Grantor, and such Grantor shall reimburse the Administrative Agent for the
reasonable costs thereof on demand. All insurance expenses and all reasonable
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, any and all excise, stamp, intangibles, transfer,
property, sales, and use taxes imposed by any state, federal, or local authority
or any other Governmental Authority on any of the Collateral, or in respect of
the sale or other disposition thereof, shall be borne and paid by the Grantors;
and if any Grantor fails promptly to pay any portion thereof when due, the
Administrative Agent or any Lender may, at its option, but shall not be required
to, pay the same and charge such Grantor's account therefor, and such Grantor
agrees to reimburse the Administrative Agent or such Lender therefor on demand.
All sums so paid or incurred by the Administrative Agent or any Lender for any
of the foregoing and any and all other sums for which any Grantor may become
liable hereunder and all costs and expenses (including reasonable attorneys'
fees, legal expenses and court costs) incurred by the Administrative Agent or
any Lender in enforcing or protecting the Security Interests or any of their
rights or remedies thereon shall be payable by the Grantors on demand and shall
bear interest (after as well as before judgment) until paid at the rate then
applicable to Base Rate Loans under the Credit Agreement and shall be additional
Secured Obligations hereunder.
SECTION 14. Notices. All notices, communications and distributions
-------
hereunder shall be given or made in accordance with Section 13.1 of the Credit
Agreement.
SECTION 15. Waivers, Non-Exclusive Remedies. No failure on the part of
-------------------------------
the Administrative Agent or any Lender to exercise, and no delay in exercising
and no course of dealing with respect to, any right under the Credit Agreement,
this Agreement or any other Loan Document shall operate as a waiver thereof or
hereof; nor shall any single or partial exercise by the Administrative Agent or
any Lender of any right under the Credit Agreement, this Agreement or any other
Loan Document preclude any other or further exercise thereof, and the exercise
of any rights in this Agreement, the Credit Agreement and the other Loan
Documents are cumulative and are not exclusive of any other remedies provided by
law. This Agreement is a Loan Document executed pursuant to the Credit
Agreement.
SECTION 16. Successors and Assigns. This Agreement is for the benefit of
----------------------
the Administrative Agent and the Lenders and their successors and assigns (as
permitted by the Credit Agreement), and in the event of an assignment of all or
any of the Secured Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with such
- 23 -
indebtedness. This Agreement shall be binding on each Grantor and its successor
and assigns; provided, that such Grantor may not assign any of its rights or
--------
obligations hereunder without the prior written consent of the Administrative
Agent and the Lenders.
SECTION 17. Changes in Writing. Neither this Agreement nor any provision
------------------
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each Grantor and the Administrative Agent with the consent of
the Required Lenders (or, when expressly required by this Agreement or the
Credit Agreement, all of the Lenders).
SECTION 18. Powers Coupled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
-------------
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT
REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
SECTION 20. Consent to Jurisdiction. Each Grantor hereby irrevocably
-----------------------
consents to the personal jurisdiction of the state and federal courts located in
Mecklenburg County, North Carolina, in any action, claim or other proceeding
arising out of or any dispute in connection with this Agreement, any rights or
obligations hereunder, or the performance of such rights and obligations. Each
Grantor hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the
Administrative Agent or any Lender in connection with this Agreement, any rights
or obligations hereunder, or the performance of such rights and obligations, on
behalf of itself or its property, in the manner provided in Section 13.1 of the
Credit Agreement. Nothing in this Section 20 shall affect the right of the
Administrative Agent or any Lender to serve legal process in any other manner
permitted by Applicable Law or affect the right of the Administrative Agent or
any Lender to bring any action or proceeding against any Grantor or its
properties in the courts of any other jurisdictions.
SECTION 21. Waiver of Jury Trial. NOTWITHSTANDING ANY OTHER PROVISION
--------------------
CONTAINED HEREIN, IN THE EVENT ANY JUDICIAL PROCEEDING IS INSTITUTED IN
CONNECTION WITH THIS AGREEMENT, TO THE EXTENT PERMITTED BY LAW, THE
ADMINISTRATIVE AGENT AND EACH LENDER BY THEIR ACCEPTANCE OF THIS AGREEMENT OR
THE BENEFITS HEREOF AND EACH GRANTOR HEREBY IRREVOCABLY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF OR ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR
OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
SECTION 22. Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall
- 24 -
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Administrative Agent and the Lenders in order to carry
out the intentions of the parties hereto as nearly as may be possible; and (b)
the invalidity or unenforceability of any provisions hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.
SECTION 23. Headings. The various headings of this Agreement are inserted
--------
for convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
SECTION 24. Counterparts. This Agreement may be executed by the parties
-------------
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
- 25 -
IN WITNESS WHEREOF, the parties hereto have caused this supplement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
[CORPORATE SEAL] ACC CORP.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Vice President-Finance
-------------------------
[CORPORATE SEAL] ACC LONG DISTANCE CORP.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Controller
-------------------------
[CORPORATE SEAL) ACC NATIONAL TELECOM CORP.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Controller
-------------------------
[CORPORATE SEAL] ACC LONG DISTANCE OF
MASSACHUSETTS CORP.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Controller
-------------------------
[CORPORATE SEAL] ACC RADIO CORP.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Controller
-------------------------
[CORPORATE SEAL] ACC NATIONAL LONG DISTANCE CORP.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
-------------------------
Title: Controller
-------------------------
- 26 -
Administrative Agent:
[CORPORATE SEAL] FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Administrative Agent
By: /s/ Xxx X. Xxxxxx
---------------------------
Name: Xxx X. Xxxxxx
-----------------------
Title: Sr. Vice President
----------------------
- 27 -
Schedule I
to
Security Agreement
Trademark Registrations
-----------------------
Xxxx Reg. No. Date Goods
------------ --------- -------- ------------------
Flying ACC 1,371,741 11/19/85 Telecomm. Services
Design 1,607,689 7/24/89 Telecomm. Services
Trademark Applications
----------------------
Xxxx Serial No. Goods
-------------- ---------- ------------------
ACC &
Design (fed) 74/607003 Telecomm. Services
Digitrunk 74/499613 Telecomm. Services
Trademark Licenses
------------------
None
ANNEX I
(to Security Agreement)
SECURITY AGREEMENT SUPPLEMENT
-----------------------------
SECURITY AGREEMENT SUPPLEMENT, dated as of _____________________, (the
"Supplement"), made by [INSERT NAME OF NEW SUBSIDIARY], a ________________
-----------
(the "New Grantor"), in favor of First Union National Bank of North
-----------
Carolina, as Administrative Agent (in such capacity, the "Administrative Agent")
--------------------
under the Credit Agreement (as defined in the Security Agreement referred to
below) for the ratable benefit of itself and the Lenders (as so defined).
1. Reference is hereby made to the Security Agreement dated
as of ___________, 1995, made by ACC Corp. and certain Subsidiaries
of ACC Corp. (collectively, the "Grantors"), in favor of the Administrative
Agent (as amended, supplemented or otherwise modified as of the date hereof, the
"Security Agreement"). This Supplement supplements the Security Agreement,
forms a part thereof and is subject to the terms thereof. Capitalized terms
used and not defined herein shall have the meanings given thereto or referenced
in the Security Agreement.
2. In order to secure the Credit Agreement, in accordance with the terms
thereof, and to secure the payment and performance of all of the Secured
Obligations, the New Grantor hereby grants to the Administrative Agent, for the
ratable benefit of itself and the Lenders, a continuing security interest in and
to all of the New Grantor's estate, right, title and interest in and to all
Collateral whether now or hereafter owned or acquired by the New Grantor or in
which the New Grantor now has or hereafter has or acquires any rights, and
wherever located (the "New Collateral").
3. The Security Interests are granted as security only and shall not
subject the Administrative Agent or any Lender to, or transfer to the
Administrative Agent or any Lender, or in any way affect or modify, any
obligation or liability of the New Grantor with respect to any of the New
Collateral or any transaction in connection therewith.
4. The New Grantor hereby agrees that it is a party to the Security
Agreement as if a signatory thereto on the Closing Date of the Credit Agreement,
and the New Grantor shall comply with all of the terms, covenants, conditions
and agreements and hereby makes each representation and warranty, in each case
set forth therein. The New Grantor agrees that "Collateral" as used therein
shall include all New Collateral pledged pursuant hereto and the Security
Agreement and "Security Agreement" or "Agreement" as used therein shall mean the
Security Agreement as supplemented hereby.
5. Attached hereto are (i) a Perfection Certificate in the form of the
Perfection Certificate delivered to the Administrative Agent on the Closing Date
and (ii) updated Schedules to the Security Agreement revised to include all
required information with respect to the New Grantor.
- 2 -
6. The New Grantor hereby acknowledges it has received a copy of the
Security Agreement and that it has read and understands the terms thereof.
7. The New Grantor hereby agrees that it shall deliver to the
Administrative Agent such UCC Financing Statements and all other certificates or
other documents and take such action as the Administrative Agent shall
reasonably request in order to effectuate the terms hereof and the Security
Agreement.
IN WITNESS WHEREOF, the undersigned hereby causes this Supplement to be
executed and delivered as of the date first above written.
[CORPORATE SEAL [INSERT NAME OF NEW SUBSIDIARY]
By:_____________________________
Name: ________________________
Title: _______________________
