1
EXHIBIT 10.3
EXHIBIT D TO THE
CREDIT AGREEMENT AS
SEPARATELY EXECUTED
SECURITY AGREEMENT
Dated February 4, 1998
from
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF,
as Grantors
to
NATIONSCREDIT COMMERCIAL CORPORATION,
as Collateral Agent
2
TABLE OF CONTENTS
Section Page
------- ----
1. Grant of Security.................................................... 2
2. Security for Obligations............................................. 5
3. Grantors Remain Liable............................................... 5
4. Delivery and Control of Security Collateral,
Account Collateral, Agreement Collateral and
Receivables......................................................... 5
5. Maintaining the Cash Collateral Account and the
L/C Cash Collateral Account......................................... 6
6. Investing of Amounts in the Cash Collateral Account,
the L/C Cash Collateral Account, the
Company Account and the Escrow Account.............................. 7
7. Establishment and Maintenance of the Pledged Accounts................ 7
8. Release of Amounts................................................... 7
9. Representations and Warranties....................................... 8
10. Further Assurances................................................... 10
11. As to Equipment and Inventory........................................ 11
12. Insurance............................................................ 11
13. As to Receivables and Related Contracts.............................. 12
14. Voting Rights; Dividends; Etc........................................ 13
15. As to the Assigned Agreements........................................ 14
16. Transfers and Other Liens; Additional Shares......................... 14
17. Collateral Agent Appointed Attorney-in-Fact.......................... 15
18. Collateral Agent May Perform......................................... 15
19. The Collateral Agent's Duties, Etc................................... 15
20. Remedies............................................................. 16
21. Registration Rights.................................................. 17
22. Indemnity and Expenses............................................... 18
23. Amendments; Waivers; Etc............................................. 18
24. Addresses for Notices................................................ 18
25. Continuing Security Interest; Assignments............................ 19
26. Release and Termination.............................................. 19
27. Security Interest Absolute........................................... 19
28. Execution in Counterparts............................................ 20
29. The Mortgages........................................................ 20
30. Governing Law........................................................ 20
3
ii
Schedules
Schedule I - Initial Pledged Shares, Initial Pledged Debt and
Pledged Security Entitlements
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Trade Names
Schedule V - Pledged Accounts
Exhibits
Exhibit A - Form of Pledged Account Letter
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Security Agreement Supplement
4
Exhibit 10.3
SECURITY AGREEMENT
SECURITY AGREEMENT dated February 4, 1998 made by the Persons listed
on the signature pages hereof and the Additional Grantors (as defined in Section
23(b)) (such Persons so listed and the Additional Grantors being, collectively,
the "Grantors") to NationsCredit Commercial Corporation ("NationsCredit"), as
collateral agent (the "Collateral Agent") for the Secured Parties (as defined in
the Credit Agreement referred to below).
PRELIMINARY STATEMENTS.
(1) APC Holding, Inc., a Delaware corporation (the "Borrower"), has
entered into a Credit Agreement dated as of February 4, 1998 (said Agreement, as
it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Credit Agreement") with certain Lender Parties party thereto,
the Collateral Agent and NationsBridge, L.L.C. ("NationsBridge"), as
administrative agent. Capitalized terms used herein and not otherwise defined
are used herein as defined in the Credit Agreement.
(2) It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
and the entry by the Hedge Banks into Bank Hedge Agreements, if any, with the
Borrower from time to time that each Grantor shall have granted the assignment
and security interest and made the pledge and assignment contemplated by this
Agreement.
(3) Each Grantor is the owner (a) of the shares of stock set forth
opposite such Grantor's name in Part I of Schedule I hereto and issued by the
corporations indicated therein and (b) of the indebtedness set forth opposite
such Grantor's name in Part II of Schedule I hereto and issued by the obligors
indicated therein and (c) of the security entitlements (the "Pledged Security
Entitlements") described in Part III of Schedule I hereto and with respect to
the financial assets described, and the securities intermediary named, and the
securities account referred to, therein.
(4) The Borrower has opened a cash collateral account (the "Cash
Collateral Account") with NationsBank at its office at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, Attention: Corporate Credit Services, Account No.
375-100-8840, in the name of the Borrower but under the sole control and
dominion of the Collateral Agent and subject to the terms of this Agreement.
(5) The Borrower has opened a cash collateral account (the "L/C Cash
Collateral Account") with NationsBank at its office at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, Attention: Corporate Credit Services, Account No.
375-100-8853, in the name of the Borrower but under the sole control and
dominion of the Collateral Agent and subject to the terms of this Agreement.
(6) The Borrower has opened a deposit account (the "Company
Account") with NationsBank at its office at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx,
XX 00000, Attention: Corporate Credit Services, Account No. 375-100-8866, in the
name of the Borrower but under the sole control and dominion of the Collateral
Agent and subject to the terms of this Agreement and the Capital Contribution
Agreement.
(7) The Borrower has opened a deposit account (the "Escrow Account")
with NationsBank at its office at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
Attention: Corporate Credit Services, Account No. 375-100-8879, in the name of
the Borrower but under the sole control and dominion of the Collateral Agent and
subject to the terms of this Agreement and the Escrow Agreement.
5
2
(8) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Credit Agreement.
(9) Unless otherwise defined in this Agreement or in the Credit
Agreement, terms defined in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York ("N.Y. Uniform Commercial Code") are used in
this Agreement as such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and to issue Letters of Credit under
the Credit Agreement and to induce the Hedge Banks to enter into Bank Hedge
Agreements, if any, with the Borrower from time to time, each Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Secured Parties
as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Secured Parties,
and hereby grants to the Collateral Agent for the ratable benefit of the Secured
Parties a security interest in, the following, in each case, as to each type of
property described below, whether now owned or hereafter acquired by such
Grantor, wherever located and whether now or hereafter existing (the
"Collateral"):
(a) All of the following (the "Security Collateral"):
(i) the shares of stock set forth opposite such Grantor's name
in Part I of Schedule I hereto and issued by the corporations
indicated therein (collectively referred to herein as the "Initial
Pledged Shares", and together with the shares referred to in clause
(v) below, the "Pledged Shares"), together with the certificates, if
any, representing such Initial Pledged Shares and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such Initial Pledged Shares; provided, however, that,
in respect of shares of stock entitled to vote in any foreign
Subsidiary, such assignment, grant or pledge, shall be limited to
and include only an assignment grant or pledge of such number of
shares in such foreign Subsidiary as, in the aggregate, possesses
voting power equal to 66% of the votes entitled to be cast by all
holders of common stock of such foreign Subsidiary at any
shareholders' meeting thereof;
(ii) the indebtedness (whether or not evidenced by
instruments) set forth opposite such Grantor's name in Part II of
Schedule I hereto and issued by the obligors indicated therein
(collectively referred to herein as the "Initial Pledged Debt", and
together with the indebtedness referred to in clause (vi) below, the
"Pledged Debt") and the instruments (if any) evidencing such Initial
Pledged Debt, all security therefor and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such Initial Pledged Debt;
(iii) the Pledged Security Entitlements and all dividends,
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 Pledged Security Entitlements; and
(iv) all additional shares of stock of any issuer of any
Initial Pledged Shares or of any other Loan Party or any Subsidiary
of any Loan Party or of any other Person from time to time acquired
by such Grantor in any manner, together with the certificates, if
any, representing such additional shares and all dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such shares; provided, however, that, in respect of
shares of stock entitled to vote
6
3
in any foreign Subsidiary, such assignment, grant or pledge, shall
be limited to and include only an assignment grant or pledge of such
number of shares in such foreign Subsidiary as, in the aggregate,
possesses voting power equal to 66% of the votes entitled to be cast
by all holders of common stock of such foreign Subsidiary at any
shareholders' meeting thereof;
(v) all additional indebtedness from time to time owed to such
Grantor by any obligor of the Initial Pledged Debt (whether or not
evidenced by instruments) and all additional indebtedness owed to
such Grantor by any other obligor, the instruments evidencing such
indebtedness (if any), all security therefor and all interest, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness; and
(vi) All other investment property (including, without
limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, as defined in Section
8-102(a)(17) of the N.Y. Uniform Commercial Code or, in the case of
any U.S. Treasury book-entry securities, as defined in 31 C.F.R.
Section 357.2, or, in the case of any U.S. federal agency book-entry
securities, as defined in the corresponding U.S. federal regulations
governing such book-entry securities, (C) securities accounts, (D)
commodity contracts and (E) commodity accounts) in which such
Grantor has or acquires from time to time any right, title or
interest in any manner, and the certificates or instruments, if any,
representing or evidencing such investment property, and all
dividends, interest, distributions, value, 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
investment property;
(b) All of the following (collectively, the "Account Collateral"):
(i) the Cash Collateral Account, all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the Cash Collateral Account;
(ii) the L/C Cash Collateral Account, all funds held therein
and all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(iii) the Company Account, all funds held therein and all
certificates and instruments, if any, from time to time representing
or evidencing the Company Account;
(iv) the Escrow Account, all funds held therein and all
certificates and instruments, if any, from time to time representing
or evidencing the Escrow Account;
(v) all Pledged Accounts (as hereinafter defined), all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing the Pledged Accounts;
(vi) all other deposit accounts of such Grantor, all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing such deposit accounts;
(vii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time
to time representing or evidencing the Collateral Investments;
7
4
(viii) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered
to or otherwise possessed, or required to be delivered to or
otherwise possessed, by the Collateral Agent for or on behalf of
such Grantor, including, without limitation, those delivered to or
possessed in substitution for or in addition to any or all of the
then existing Account Collateral; and
(ix) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral;
(c) All of such Grantor's right, title and interest in and to all
equipment in all of its forms, wherever located, now or hereafter existing
(including, but not limited to, all (i) furniture, furnishings, trade
fixtures, machinery and appliances, (ii) production, manufacturing,
distribution, selling, data processing, computer and office equipment and
(iii) trucks and other vehicles), fixtures and all parts thereof and all
accessions and additions thereto, parts and appurtenances thereof,
substitutions therefor and replacements thereof (any and all such
equipment, fixtures, accessions, additions, parts, appurtenances,
substitutions and replacements being the "Equipment");
(d) All of such Grantor's right, title and interest in and to all
inventory in all of its forms, wherever located, now or hereafter existing
(including, but not limited to, (i) all raw materials and work in process
therefor, finished goods thereof and materials used or consumed in the
manufacture, production or preparation thereof, (ii) goods in which such
Grantor has an interest in mass or a joint or other interest or right of
any kind (including, without limitation, goods in which such Grantor has
an interest or right as consignee) and (iii) goods that are returned to or
repossessed or stopped in transit by such Grantor), and all accessions
thereto and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "Inventory");
(e) All of such Grantor's right, title and interest in and to all
accounts, contract rights, chattel paper, instruments, deposit accounts
and general intangibles and all other obligations of any kind, now or
hereafter existing, whether or not arising out of or in connection with
the sale or lease of goods or the rendering of services and whether or not
earned by performance (including, without limitation, any rights with
respect to workers' compensation or other deposits made by such Grantor
and any rights to receive tax refunds or other refunds, reimbursements and
payments from any federal, state or local government or any political
subdivision, agency or instrumentality thereof), and all rights now or
hereafter existing in and to all security agreements, leases and other
contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, instruments, deposit accounts, general intangibles
or obligations (any and all such accounts, contract rights, chattel paper,
instruments, deposit accounts, general intangibles and obligations, to the
extent not referred to in clause (a), (b), (f) or (g) of this Section 1,
being the "Receivables", and any and all such leases, security agreements
and other contracts, to the extent not referred to in clause (f) of this
Section 1, being the "Related Contracts");
(f) All of such Grantor's right, title and interest in and to each
of the agreements, if any, listed on Schedule II hereto, and each Hedge
Agreement to which such Grantor is now or may hereafter become a party, in
each case as such agreements may be amended, supplemented or otherwise
modified from time to time (collectively, the "Assigned Agreements"),
including, without limitation, (i) all rights of such Grantor to receive
moneys due and to become due under or pursuant to the Assigned Agreements,
(ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of such Grantor for damages arising out of or for breach of
or default under the Assigned Agreements and (iv) the right of such
Grantor to
8
5
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (all such
Collateral being the "Agreement Collateral");
(g) All general intangibles of such Grantor (other than general
intangibles for money due or to become due to the extent covered by
Section 1(e) above), including, but not limited to, (i) all partnership,
corporate and other interests in and to any Person (other than any
Security Collateral) and (ii) all governmental permits, licenses (and any
subsequent renewals thereof), franchises, registrations, authorizations
and approvals; and
(h) All proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (g) of this Section 1 and, to the
extent not otherwise included, all (i) payments under insurance (whether
or not the Collateral Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral, and (ii) cash.
SECTION 2. Security for Obligations. This Agreement secures, in the
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents, whether direct or indirect,
absolute or contingent, including any extensions, modifications, substitutions,
amendments and renewals thereof, whether for principal (including reimbursement
for amounts drawn under Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations secured hereby being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Secured
Obligations of such Grantor and that would be owed by any Loan Party to the
Secured Parties under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Loan Party.
SECTION 3. Grantors Remain Liable. Anything contained herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of its rights hereunder shall not release any Grantor
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) no Secured Party shall have any obligation
or liability under the contracts and agreements included in the Collateral by
reason of this Agreement or any other Loan Document, nor shall any Secured Party
be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
SECTION 4. Delivery and Control of Security Collateral, Account
Collateral, Agreement Collateral and Receivables. (a) All certificates or
instruments representing or evidencing any Security Collateral, Account
Collateral, Agreement Collateral or Receivables (and, to the extent requested by
the Collateral Agent, any other Collateral) shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent. The Collateral Agent shall have the right, upon the
occurrence and during the continuance of an Event of Default, at any time in its
discretion and without notice to such Grantor, to transfer to or to register in
the name of the Collateral Agent or any of its nominees any or all of the
Security Collateral and Account Collateral, subject only to the revocable rights
specified in Section 14(a). In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing the Security Collateral or Account Collateral for certificates or
instruments of smaller or larger denominations.
9
6
(b) With respect to any Security Collateral that constitutes a
security and is not represented or evidenced by a certificate or an instrument,
each Grantor shall cause the issuer thereof either (i) to register the
Collateral Agent as the registered owner of such security or (ii) to agree in
writing with such Grantor and the Collateral Agent that such issuer will comply
with instructions with respect to such security originated by the Collateral
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Collateral Agent.
(c) With respect to any Security Collateral that constitutes a
security entitlement, such Grantor shall cause the securities intermediary with
respect to such security entitlement either (i) to identify in its records the
Collateral Agent as having such security entitlement against such securities
intermediary or (ii) to agree in writing with such Grantor and the Collateral
Agent that such securities intermediary will comply with entitlement orders
(that is, notifications communicated to such securities intermediary directing
transfer or redemption of the financial asset to which such Grantor has a
security entitlement) originated by the Collateral Agent without further consent
of such Grantor, such agreement to be in form and substance satisfactory to the
Collateral Agent.
(d) With respect to any Security Collateral that constitutes a
commodity contract, each Grantor shall cause the commodity intermediary with
respect to such commodity contract to agree in writing with such Grantor and the
Collateral Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the Collateral
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Collateral Agent.
(e) With respect to any Security Collateral that constitutes a
securities account or a commodity account, each Grantor will, in the case of a
securities account, comply with subsection (c) of this Section 4 with respect to
all security entitlements carried in such securities account and, in the case of
a commodity account, comply with subsection (d) of this Section 4 with respect
to all commodity contracts carried in such commodity account.
SECTION 5. Maintaining the Cash Collateral Account and the L/C Cash
Collateral Account. So long as any Advance shall remain unpaid, any Letter of
Credit shall be outstanding or any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment under the Credit Agreement:
(a) The Borrower will maintain the Cash Collateral Account, the L/C
Cash Collateral Account, the Company Account and the Escrow Account with
NationsCredit.
(b) It shall be a term and condition of each of the Cash Collateral
Account, the L/C Cash Collateral Account, the Company Account and the
Escrow Account, notwithstanding any term or condition to the contrary in
any other agreement relating to the Cash Collateral Account, the L/C Cash
Collateral Account, the Company Account or the Escrow Account, as the case
may be, and except as otherwise provided by the provisions of Section 8
and Section 20, that no amount (including interest on Collateral
Investments) shall be paid or released to or for the account of, or
withdrawn by or for the account of, the Borrower or any other Person from
the Cash Collateral Account, the L/C Cash Collateral Account, the Company
Account or the Escrow Account, as the case may be.
The Cash Collateral Account, the L/C Cash Collateral Account, the Company
Account and the Escrow Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
10
7
SECTION 6. Investing of Amounts in the Cash Collateral Account, the
L/C Cash Collateral Account, the Company Account and the Escrow Account. If
requested by the Borrower, the Collateral Agent will, subject to the provisions
of Sections 8 and 20, from time to time (a) invest amounts on deposit in the
Cash Collateral Account, the L/C Cash Collateral Account, the Company Account
and the Escrow Account in such Cash Equivalents in the name of the Collateral
Agent or as to which all action required by Section 10 shall have been taken as
the Borrower may select and the Collateral Agent may approve and (b) invest
interest paid on the Cash Equivalents referred to in clause (a) above, and
reinvest other proceeds of any such Cash Equivalents that may mature or be sold,
in each case in such Cash Equivalents in the name of the Collateral Agent or as
to which all actions required by Section 10 shall have been taken as the
Borrower may select and the Collateral Agent may approve (the Cash Equivalents
referred to in clauses (a) and (b) above being collectively "Collateral
Investments"). Interest and proceeds that are not invested or reinvested in
Collateral Investments as provided above shall be deposited and held in the Cash
Collateral Account, the L/C Cash Collateral Account, the Company Account or the
Escrow Account, as the case may be.
SECTION 7. Establishment and Maintenance of the Pledged Accounts. So
long as any Advance shall remain unpaid, any Letter of Credit shall be
outstanding, any Bank Hedge Agreement shall be in effect or any Lender Party
shall have any Commitment under the Credit Agreement, within 30 days after the
Closing Date (or such later date as the Collateral Agent and the Borrower shall
agree):
(a) Each Grantor shall maintain pledged deposit accounts ("Pledged
Accounts") only with banks ("Pledged Account Banks") that have entered
into letter agreements with such Grantor and the Collateral Agent, which
letter agreements shall be in substantially the form of Exhibit A hereto
or otherwise in form and substance satisfactory to such Grantor and the
Collateral Agent ("Pledged Account Letters").
(b) Each Grantor (i) shall immediately instruct each Person
obligated at any time to make any payment to such Grantor (an "Obligor")
to make such payment to a Pledged Account or to the Cash Collateral
Account and (ii) shall pay to the Collateral Agent for deposit in the Cash
Collateral Account, at the end of each Business Day, all proceeds of
Collateral and all other cash of the Loan Parties in excess of $250,000 in
the aggregate.
(c) Each Grantor shall instruct each Pledged Account Bank with which
it maintains a Pledged Account to transfer to the Cash Collateral Account,
at the end of each Business Day, in same day funds, an amount equal to the
credit balance of the Pledged Account in such Pledged Account Bank.
(d) Upon any termination of any Pledged Account Letter or other
agreement with respect to the maintenance of a Pledged Account by any
Grantor or any Pledged Account Bank, the applicable Grantor shall
immediately notify all Obligors that were making payments to such Pledged
Account to make all future payments to another Pledged Account with
respect to which a Pledged Account Letter is then in effect or to the Cash
Collateral Account. Each Grantor agrees to terminate any or all Pledged
Accounts and Pledged Account Letters upon request by the Collateral Agent.
SECTION 8. Release of Amounts. (a) So long as no Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have
occurred and be continuing, the Collateral Agent will pay and release to the
Borrower or at its order or, at the request of the Borrower, apply to the
Obligations of the Borrower under the Loan Documents, such amount, if any, as is
then on deposit in the Cash Collateral Account or the L/C Cash Collateral
Account, as the case may be, provided, however, that with respect to amounts
deposited in the L/C Cash Collateral Account pursuant to Section 2.06(b)(iv) of
the Credit Agreement, such amounts shall be released only to the extent
permitted by the terms of such Section.
11
8
(b) The Collateral Agent may pay, release and withdraw amounts on
deposit in, and make deposits to, the Company Account as required or permitted
by, and in accordance with, the Capital Contribution Agreement, provided that,
if a Default under Section 6.01(a) or (f) of the Credit Agreement or an Event of
Default shall have occurred and be continuing, the Collateral Agent may only
pay, release or withdraw amounts on deposit in the Company Account if such
amounts are deposited directly and immediately into the Escrow Account.
(c) So long as no Default under Section 6.01(a) or (f) of the Credit
Agreement or Event of Default shall have occurred and be continuing, the
Collateral Agent may pay, release and withdraw amounts on deposit in, and make
deposits to, the Escrow Account as required or permitted by, and in accordance
with, the Escrow Agreement.
SECTION 9. Representations and Warranties. Each Grantor represents
and warrants as follows:
(a) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others, except for the liens and security interests created under this
Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of such Collateral (including, without
limitation, accounts and general intangibles relating to the Collateral)
or listing such Grantor or any of its Subsidiaries or any trade name of
such Grantor or any of its Subsidiaries as debtor is on file in any
recording office, except such as may have been filed in favor of the
Collateral Agent relating to the Loan Documents.
(b) The Pledged Shares owned by such Grantor have been duly
authorized and validly issued and are fully paid and non-assessable. The
Pledged Debt held by such Grantor has been duly authorized, authenticated
or issued and delivered, is the legal, valid and binding obligation of the
issuers thereof, is evidenced by one or more promissory notes (which notes
have been delivered to the Collateral Agent) and is not in default.
(c) The Initial Pledged Shares owned by such Grantor constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I hereto. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor by
the issuers thereof as of the Closing Date.
(d) All of the investment property owned by such Grantor on the date
hereof is listed on Schedule I hereto. Such Grantor does not maintain any
securities accounts, maintain any commodity accounts, nor does it own or
is it otherwise a party to, any commodity contract.
(e) All of the Equipment and Inventory of such Grantor are located
at the places specified in Schedule III hereto. The chief place of
business and chief executive office of such Grantor and the office where
such Grantor keeps its records concerning the Receivables, and the
original copies of each Assigned Agreement and all originals of all
Related Contracts and all chattel paper, if any, that evidence Receivables
(other than those delivered to the Collateral Agent), are located at the
address set forth on the signature pages hereto beneath such Grantor's
name. Such Grantor has delivered to the Collateral Agent the originals of
all agreements, certificates or instruments representing or evidencing any
Collateral and all security therefor and guaranties thereof, in each case
to the extent that the delivery thereof to the Collateral Agent is
required under Section 4 above. None of the Receivables or Agreement
Collateral is evidenced by a promissory note or other instrument that is
required to be delivered to the Collateral Agent hereunder and has not
been so delivered.
12
9
(f) Such Grantor has exclusive possession and control of the
Equipment and Inventory of such Grantor.
(g) The Assigned Agreements to which such Grantor is a party, true
and complete copies of which have been furnished to each Lender Party,
have been duly authorized, executed and delivered by all parties thereto,
have not been amended or otherwise modified, are in full force and effect
and are binding upon and enforceable against all parties thereto in
accordance with their terms. There exists no default under any Assigned
Agreement to which such Grantor is a party by such Grantor or, to the best
of such Grantor's knowledge, any other party thereto. Each party to any
Assigned Agreement (other than any Assigned Agreement which does not
prohibit the assignment thereof) to which such Grantor is a party (other
than such Grantor) has executed and delivered to such Grantor a consent,
in substantially the form of Exhibit B hereto or otherwise in form and
substance satisfactory to the Collateral Agent, to the assignment of the
Agreement Collateral to the Collateral Agent for the benefit of the
Secured Parties pursuant to this Security Agreement.
(h) Such Grantor has no Pledged Accounts or other deposit accounts
other than, in the case of the Borrower, the Cash Collateral Account and
the Escrow Account, in the case of the Parent, the Company Account, and,
in each case, the Pledged Accounts of such Grantor listed on Schedule V
hereto. Each Grantor has instructed all existing Obligors to make all
payments to a Pledged Account or the Cash Collateral Account.
(i) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto create in favor of the Collateral Agent for the benefit of the
Secured Parties a valid and perfected first priority security interest in
the Collateral of such Grantor, securing the payment of the Secured
Obligations of such Grantor, and all filings and other actions necessary
or desirable to perfect and protect such security interest have been duly
taken.
(j) Such Grantor has no trade names except as set forth on Schedule
IV hereto; such trade names were adopted in good faith; and, to the best
of such Grantor's knowledge, there exist no adverse claims against such
trade names as of the Closing Date.
(k) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person, except for the
authorizations, approvals, actions, notices and filings listed on Schedule
4.01(d) to the Credit Agreement, all of which have been duly obtained,
taken, given or made and are in full force and effect, is required (i) for
the grant by such Grantor of the assignment and security interest granted
hereby, for the pledge by such Grantor of any Security Collateral
hereunder or for the execution, delivery or performance of this Agreement
by such Grantor, (ii) for the perfection or maintenance of the pledge,
assignment and security interest created hereunder (including the first
priority nature of such pledge, assignment and security interest), except
for the filing of financing and continuation statements under the Uniform
Commercial Code and the filing of the Intellectual Property Security
Agreement in the United States Patent and Trademark Office and in the
United States Copyright Office, which financing statements and
Intellectual Property Security Agreement will have been duly filed within
the time period specified therefor in Section 5.01(o) of the Credit
Agreement or (iii) by or on behalf of any Loan Party for the exercise by
the Collateral Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of
any portion of the Security Collateral by laws affecting the offering and
sale of securities generally or in the case of foreign Subsidiaries,
requirements imposed by local laws in connection with foreclosures and
transfers of securities in connection therewith.
13
10
(l) The Inventory that has been produced by such Grantor or any of
its Subsidiaries has been produced by such Grantor or such Subsidiaries in
compliance with all requirements of the Fair Labor Standards Act.
(m) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(n) Such Grantor has, independently and without reliance upon any
Secured Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement, and such Grantor has established adequate means of obtaining
from any other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar with,
the financial condition, operations, properties and prospects of such
other Loan Parties.
SECTION 10. Further Assurances. (a) Each Grantor agrees that from
time to time, at the expense of such Grantor, such Grantor will promptly execute
and deliver, and use its best efforts to cause to be executed and delivered, all
further instruments and documents (including, without limitation, any consents,
waivers or other action by any Subsidiary of such Grantor or any holder of
common stock in, or director or officer of, such Subsidiary) and take all
further action (including amending the constitutive documents of such Grantor or
any Subsidiary of such Grantor), that the Collateral Agent believes may be
necessary or desirable, or that the Collateral Agent may reasonably request, in
order to perfect and protect any pledge, assignment or security interest granted
or purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, each Grantor will: (i) upon
the request of the Collateral Agent, xxxx conspicuously each document included
in the Inventory of such Grantor and each chattel paper, Related Contract and
Assigned Agreement of such Grantor included in the Collateral, and each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to the Collateral Agent, indicating that such document, chattel
paper, Related Contract, Assigned Agreement or other Collateral is subject to
the security interest granted hereby, (ii) if any Collateral shall be evidenced
by a promissory note or other instrument, deliver and pledge to the Collateral
Agent for the benefit of the Secured Parties hereunder such note or instrument
duly indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral Agent,
(iii) deliver and pledge to the Collateral Agent for the benefit of the Secured
Parties hereunder certificates representing the Pledged Shares accompanied by
undated stock powers executed in blank and evidence that all other action that
the Collateral Agent may deem necessary or desirable in order to perfect and
protect the liens and security interests created under this Agreement has been
taken and (iv) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or desirable, or as the Collateral Agent may request, in order to perfect and
preserve the pledge, assignment and security interests granted or purported to
be granted hereunder.
(b) Each Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral without the signature of such Grantor where
permitted by law. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral Agent
may reasonably request, all in reasonable detail.
14
11
(d) The Borrower will furnish to the Collateral Agent, at any time
within six months prior to the fifth anniversary of the Closing Date, an opinion
of counsel acceptable to the Required Lenders to the effect that all financing
or continuation statements have been filed, and all other action has been taken,
to perfect and validate continuously from the date hereof the pledge, assignment
and security interests granted hereunder (excluding, in the case of perfection,
any Collateral in which a security interest may not be perfected by the filing
of a financing statement under the Uniform Commercial Code of any jurisdiction).
SECTION 11. As to Equipment and Inventory. Each Grantor shall:
(a) Keep the Equipment and Inventory of such Grantor (other than
Inventory sold in the ordinary course of business) at the places therefor
specified in Section 9(e) or, upon 30 days' prior written notice to the
Collateral Agent, at such other places in jurisdictions where all action
required by Section 10 shall have been taken with respect to such
Equipment and Inventory.
(b) Cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with any manufacturer's manual and shall
forthwith, or in the case of any loss or damage to any of such Equipment
as soon as practicable after the occurrence thereof, make or cause to be
made all repairs, replacements and other improvements in connection
therewith that are necessary or desirable to such end. The Borrower shall
promptly furnish to the Collateral Agent a statement respecting any loss
or damage to any Equipment which involves loss or damage exceeding
$250,000 in the aggregate during any Fiscal Year for all of the Grantors,
taken as a whole.
(c) Pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Equipment and
Inventory; provided, however, that no Grantor shall be required to pay or
discharge any such tax, assessment charge or levy that is being contested
in good faith by proper proceedings and as to which appropriate reserves
are being maintained, unless and until any Lien resulting therefrom
attaches to its property and becomes enforceable against its other
creditors. In producing Inventory, such Grantor will comply with all
requirements of the Fair Labor Standards Act.
SECTION 12. Insurance. (a) Each Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as shall be
satisfactory to the Collateral Agent from time to time. Each policy for
liability insurance and the life insurance policies required to be entered into
pursuant to Section 3.01(n)(xvi) of the Credit Agreement shall provide for all
losses to be paid on behalf of the Collateral Agent and such Grantor as their
interests may appear, and each policy for property damage insurance shall
provide for all losses (except for losses of less than $250,000 per occurrence)
to be paid directly to the Collateral Agent. Each such policy shall in addition
(i) name such Grantor and the Collateral Agent as insured parties thereunder
(without any representation or warranty by or obligation upon the Collateral
Agent) as their interests may appear, (ii) contain the agreement by the insurer
that any loss thereunder shall be payable to the Collateral Agent
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (iii) provide that there shall be no recourse against the
Collateral Agent for payment of premiums or other amounts with respect thereto
and (iv) provide that at least 10 days' prior written notice of cancellation or
of lapse shall be given to the Collateral Agent by the insurer. Each Grantor
shall, if so requested by the Collateral Agent, deliver to the Collateral Agent
original or duplicate policies of such insurance and, as often as the Collateral
Agent may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, each Grantor shall, at the request of the
Collateral Agent, duly exercise and deliver instruments of assignment of such
insurance
15
12
policies to comply with the requirements of Section 10 and cause the insurers to
acknowledge notice of such assignment.
(b) In case of any loss involving damage to Equipment or Inventory
of any Grantor, such Grantor shall make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance properly received by or released to such Grantor shall be used by such
Grantor, except as otherwise required or permitted hereunder or by the Credit
Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.
(c) So long as no Event of Default shall have occurred and shall be
continuing, all insurance payments received by the Collateral Agent in
connection with any loss, damage or destruction of any Inventory or Equipment
shall be released by the Collateral Agent to the applicable Grantor for the
repair, replacement or restoration thereof. To the extent that (i) the amount of
any such insurance payments exceeds the cost of any such repair, replacement or
restoration, or (ii) such insurance payments are not otherwise required by the
applicable Grantor to complete any such repair, replacement or restoration
required hereunder, the Collateral Agent shall not be required to release the
amount thereof to such Grantor and may hold or continue to hold such amount in
the Cash Collateral Account as additional security for the Secured Obligations
of such Grantor (except that any such amount shall be released by the Collateral
Agent to such Grantor if no Event of Default has occurred and is then
continuing). If an Event of Default has occurred and is continuing, the
Collateral Agent may elect, in its sole and absolute discretion, to release any
such insurance payments for the purposes set forth in the first sentence of this
subparagraph (c), or to hold such insurance payments as additional Collateral
hereunder or apply the same as specified in the Credit Agreement.
SECTION 13. As to Receivables and Related Contracts. (a) Each
Grantor shall keep its chief place of business and chief executive office and
the office where it keeps its records concerning the Collateral of such Grantor,
and the originals of all Assigned Agreements, Related Contracts and all chattel
paper that evidences or constitutes Receivables (to the extent not required to
be delivered to the Collateral Agent hereunder), at the location therefor
specified in Section 9(e) or, upon 30 days' prior written notice to the
Collateral Agent, at such other locations in a jurisdiction where all actions
required by Section 10 shall have been taken with respect to the Collateral.
Each Grantor will hold and preserve such records, Assigned Agreements, Related
Contracts and chattel paper and will permit representatives of the Collateral
Agent at any time during normal business hours to inspect and make abstracts
from such records and other documents.
(b) Except as otherwise provided in this subsection (b), such
Grantor shall continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Receivables and Related Contracts. In
connection with such collections, such Grantor may take (and, at the Collateral
Agent's direction, shall take) such action as such Grantor or the Collateral
Agent may deem necessary or advisable to enforce collection of the Receivables
and the Related Contracts; provided, however, that the Collateral Agent shall
have the right upon the occurrence and during the continuance of a Default and
upon written notice to the Borrower of its intention to do so, to notify the
Obligors under any Receivables or Related Contracts of the assignment of such
Receivables or Related Contracts to the Collateral Agent and to direct such
Obligors to make payment of all amounts due or to become due to such Grantor
thereunder directly to the Collateral Agent and, upon such notification and at
the expense of such Grantor, to enforce collection of any such Receivables or
Related Contracts, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice from the Collateral Agent
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including instruments) received by such Grantor in respect of the
Receivables or the Related Contracts shall be received in trust for the benefit
of the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary indorsement) to
16
13
be deposited in the Cash Collateral Account and applied as provided by Section
20(b), and (ii) such Grantor shall not adjust, settle or compromise the amount
or payment of any Receivable or Related Contract, release wholly or partly any
Obligor thereon, or allow any credit or discount thereon. Anything contained
herein to the contrary notwithstanding, such Grantor shall not permit or agree
to subordination of its rights to payment under any of the Receivables to any
other indebtedness or obligations of the Obligor thereof.
SECTION 14. Voting Rights; Dividends; Etc. (a) So long as no Default
under Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall
have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose not inconsistent with the
terms of this Agreement or the other Loan Documents; provided, however,
that no Grantor shall exercise or refrain from exercising any such right
if, in the Collateral Agent's reasonable judgment, such action would have
a material adverse effect on the value of the Security Collateral or any
part thereof.
(ii) Each Grantor shall be entitled to receive and retain, and use
and commingle with its own funds free and clear of the Liens imposed under
this Agreement, any and all dividends, interest paid and other
distributions in respect of the Security Collateral of such Grantor if and
to the extent that the payment thereof is not otherwise prohibited by the
terms of the Loan Documents; provided, however, that any and all
(A) dividends and interest paid or payable other than in cash
in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Security Collateral,
(B) dividends and other distributions paid or payable in cash
in respect of any Security Collateral in connection with a partial
or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus,
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral, and
(D) cash dividends paid or payable in violation of the terms
of the Credit Agreement,
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Security Collateral and shall, if received by any Grantor, be received
in trust for the benefit of the Collateral Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to the
Collateral Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
(iii) The Collateral Agent shall execute and deliver (or cause to be
executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
17
14
(b) Upon the occurrence and during the continuance of any Default
under Section 6.01(a) or (f) of the Credit Agreement or Event of Default:
(i) All rights of each Grantor (A) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 14(a)(i) shall, upon notice to
such Grantor by the Collateral Agent, cease, and (B) to receive the
dividends, interest and other distributions that it would otherwise be
authorized to receive and retain pursuant to Section 14(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in
the Collateral Agent, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual
rights and to receive and hold as Security Collateral such dividends,
interest and other distributions.
(ii) All dividends, interest and other distributions that are
received by any Grantor contrary to the provisions of paragraph (i) of
this Section 14(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Collateral Agent as Security
Collateral in the same form as so received (with any necessary
indorsement).
SECTION 15. As to the Assigned Agreements. (a) Each Grantor shall at
its expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements to which it is a party in full force and effect, enforce the
Assigned Agreements in accordance with the terms thereof, in each case to
the extent required under the Credit Agreement, and take all such action
to such end as may be requested from time to time by the Collateral Agent
to the extent required under the Credit Agreement; and
(ii) furnish to the Collateral Agent promptly upon receipt thereof
copies of all notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreements to which it is a
party, and from time to time (A) furnish to the Collateral Agent such
information and reports regarding the Assigned Agreements and such other
Collateral of such Grantor as the Collateral Agent may reasonably request,
and (B) upon request of the Collateral Agent make to each other party to
any Assigned Agreement to which it is a party such demands and requests
for information and reports or for action as such Grantor is entitled to
make thereunder to the extent required under the Credit Agreement or, in
the case of any Bank Hedge Agreement to which such Grantor is a party,
only so long as an Event of Default shall have occurred and be continuing.
(b) Each Grantor agrees that it shall not cancel or terminate any
Assigned Agreement to which it is a party or consent to or accept any
cancellation or termination thereof, amend or otherwise modify any such Assigned
Agreement or give any consent, waiver or approval thereunder, waive any default
under or breach of any such Assigned Agreement, or take any other action in
connection with any such Assigned Agreement, in each case that would impair in
any material respect the value of the interest or rights of such Grantor
thereunder or that would impair in any material respect the interests or rights
of any Secured Party.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for the
ratable benefit of the Lender Parties of each Assigned Agreement to which it is
a party by any other Grantor hereunder.
SECTION 16. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it shall not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with
18
15
respect to, any of the Collateral of such Grantor (other than sales,
assignments, options and other dispositions permitted under the terms of the
Credit Agreement) or (ii) create or suffer to exist any Lien upon or with
respect to any of the Collateral of such Grantor, except for the Liens created
under the Collateral Documents or permitted by the Credit Agreement.
(b) Each Grantor agrees that it shall (i) cause each issuer of the
Pledged Shares owned by such Grantor not to issue any stock or other securities
in addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor, and (ii) subject to the provisos in Sections 1(a)(i) and
1(a)(v), pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of any Pledged Shares.
SECTION 17. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, from time to time in the Collateral
Agent's discretion, to take, upon the occurrence and during the continuance of
an Event of Default, any action and to execute any instrument that the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent pursuant to Section 12,
(b) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Assigned Agreement or the rights of
the Collateral Agent with respect to any of the Collateral.
SECTION 18. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Collateral Agent may, but without
any obligation to do so and without further notice, itself perform, or cause
performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by such Grantor under Section
22.
SECTION 19. The Collateral Agent's Duties, Etc. The powers conferred
on the Collateral Agent hereunder are solely to protect its and the other
Secured Parties' interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody and reasonable care
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Security Collateral, whether or not the Collateral Agent or any other Secured
Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property. Anything contained herein to the
contrary notwithstanding, the Collateral Agent may from time to time, when the
Collateral Agent reasonably deems it to be necessary, appoint one or
19
16
more subagents (each a "Subagent") for the Collateral Agent hereunder with
respect to all or any part of the Collateral. In the event that the Collateral
Agent so appoints any Subagent with respect to any Collateral, (1) the
assignment and pledge of such Collateral and the security interest granted in
such Collateral by each Grantor hereunder shall be deemed for purposes of this
Security Agreement to have been made to such Subagent for the ratable benefit of
the Lender Parties, as security for the Secured Obligations of such Grantor, (2)
such Subagent shall automatically be vested with all rights, powers, privileges,
interests and remedies of the Collateral Agent hereunder with respect to such
Collateral, and (3) the term "Collateral Agent," when used herein in relation to
any rights, powers, privileges, interests and remedies of the Collateral Agent
with respect to such Collateral, shall include such Subagent; provided, however,
that no such Subagent shall be authorized to take any action with respect to any
such Collateral unless and except to the extent expressly authorized in writing
by the Collateral Agent.
SECTION 20. Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the N.Y. Uniform Commercial Code, whether or not the Code
applies to the affected Collateral, and also may (i) require any Grantor
to, and each Grantor hereby agrees that it will at its expense and upon
request of the Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it available to
the Collateral Agent at a place and time to be designated by the
Collateral Agent which is reasonably convenient to both parties; (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable; (iii) occupy any premises owned or leased by any
Grantor where the Collateral or any part thereof is assembled or located
for a reasonable period in order to effectuate its rights and remedies
hereunder or under law, without obligation to such Grantor in respect of
such occupation; and (iv) exercise any and all rights and remedies of any
Grantor under or in connection with the Assigned Agreements, the
Receivables and the Related Contracts or otherwise in respect of the
Collateral, including, without limitation, any and all rights of such
Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements, the Receivables
and the Related Contracts. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to such
Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
The Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent
pursuant to Section 22) in whole or in part by the Collateral Agent in
accordance with clause (e) below or as otherwise permitted or required by
the Credit Agreement. Any surplus of such cash or cash proceeds held by
the Collateral Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to the Grantor or to whomsoever may
be lawfully entitled to receive such surplus.
20
17
(c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Collateral Agent and the other
Secured Parties, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Collateral Agent in the same form as
so received (with any necessary indorsement).
(d) The Collateral Agent may, without notice to the Borrower except
as required by law and at any time or from time to time, charge, set-off
and otherwise apply all or any part of the Secured Obligations against the
Cash Collateral Account, the L/C Cash Collateral Account, the Company
Account and the Escrow Account or any part thereof, in accordance with
clause (e) below.
(e) Any cash or cash proceeds referred to in Section 20(b), any
charge, set-off or other application referred to in Section 20(d) and any
other Collateral or proceeds thereof to be applied by the Collateral Agent
to the Secured Obligations shall be applied on the following order of
priority:
(i) first, to payment of any amounts payable to the Collateral
Agent pursuant to Section 22,
(ii) second, ratably to (A) the Term A Facility and to the
installments thereof in inverse order of maturity and (B) the
Revolving Credit Facility as set forth in Section 2.06(b)(v) of the
Credit Agreement,
(iii) third, to the Term B Facility and to the installments
thereof in inverse order of maturity, and
(iv) fourth, ratably to all other Secured Obligations.
SECTION 21. Registration Rights. So long as the High Yield Date
shall not have occurred, if the Collateral Agent shall determine to exercise its
right to sell all or any of the Security Collateral pursuant to Section 20, such
Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at
its own expense:
(a) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers thereof
to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or,
in the opinion of the Collateral Agent, advisable to register such
Security Collateral under the provisions of the Securities Act of 1933 (as
amended from time to time, the "Securities Act"), to cause the
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be
furnished and to make all amendments and supplements thereto and to the
related prospectus that, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Security Collateral under
the state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Security Collateral, as
requested by the Collateral Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy
the provisions of Section 11(a) of the Securities Act;
21
18
(d) provide the Collateral Agent with such other information and
projections as may be necessary or, in the opinion of the Collateral
Agent, advisable to enable the Collateral Agent to effect the sale of such
Security Collateral; and
(e) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Security Collateral or any part thereof
valid and binding and in compliance with applicable law.
The Collateral Agent is authorized, in connection with any sale of the Security
Collateral pursuant to Section 20, to deliver or otherwise disclose to any
prospective purchaser of the Security Collateral (i) any registration statement
or prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above, (ii) any information and projections provided to it pursuant
to clause (d) above and (iii) any other information in its possession relating
to the Security Collateral.
SECTION 22. Indemnity and Expenses. (a) Each Grantor agrees to
defend, protect, indemnify and hold harmless each Secured Party from and against
any and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from such Secured Party's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
(b) Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of the Collateral Agent or any
other Secured Party against such Grantor, or (iv) the failure by such Grantor to
perform or observe any of the provisions hereof.
SECTION 23. Amendments; Waivers; Etc. (a) No amendment or waiver of
any provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Collateral Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
(b) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit C hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor and each reference in
this Agreement to "Grantor" shall also mean and be a reference to such
Additional Grantor, and (ii) the annexes attached to each Security Agreement
Supplement shall be incorporated into and become a part of and supplement
Schedules I, II, III, IV and V hereto, and the Collateral Agent may attach such
annexes as supplements to such Schedules; and each reference to such Schedules
shall mean and be a reference to such Schedules as supplemented pursuant hereto.
SECTION 24. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic or telex communication) and, if to any Grantor, mailed, telecopied,
telegraphed, telexed or delivered to it, addressed to it at the address listed
for such Grantor on the signature pages hereof, and if to the Collateral Agent,
mailed, telecopied, telegraphed, telexed or
22
19
delivered to it, addressed to it at the address of the Collateral Agent
specified in the Credit Agreement, or as to any party at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 24. All such notices and
other communications shall, when mailed, telegraphed, telecopied or telexed,
respectively, be effective when deposited in the mails, delivered to the
telegraph company, transmitted by telecopier or confirmed by telex answerback,
respectively. Delivery by telecopier of an executed counterpart of any amendment
or waiver of any provision of this Agreement or of any Supplement or Schedule
hereto shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 25. Continuing Security Interest; Assignments. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the latest of the cash payment
in full of the Secured Obligations, the Termination Date and the termination or
expiration of all Bank Hedge Agreements, if any, (b) be binding upon each
Grantor, its successors and assigns and (c) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Secured
Parties and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Lender Party may assign
or otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitments, the Advances owing to it and the Note or Notes held by it) to any
other Person and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender Party herein or otherwise, in
each case as provided in Section 8.07 of the Credit Agreement. No Grantor shall
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Secured Parties.
SECTION 26. Release and Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral in accordance with the
terms of the Loan Documents (other than sales of Inventory in the ordinary
course of business), the Collateral Agent will, at any Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; provided, however, that (i) at
the time of such request and such release no Event of Default shall have
occurred and be continuing, (ii) the Borrower shall have delivered to the
Collateral Agent, at least ten Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, lease, transfer or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a form of release for execution by the Collateral Agent and a certification
by the Borrower to the effect that the transaction is in compliance with the
Loan Documents and as to such other matters as the Collateral Agent may request
and (iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied in accordance with Section 2.06(b) of the Credit
Agreement shall be paid to, or in accordance with the instructions of, the
Collateral Agent at the closing.
(b) Upon the latest of the cash payment in full of the Secured
Obligations, the Termination Date and the termination or expiration of all
Letters of Credit and all Bank Hedge Agreements, if any, the pledge, assignment
and security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Borrower. Upon any such termination, the
Collateral Agent will, at the Borrower's expense, execute and deliver to the
Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
SECTION 27. Security Interest Absolute. The Obligations of each
Grantor hereunder are independent of the Obligations of any other Loan Party
under the Loan Documents, and a separate action or actions may be brought or
prosecuted against each Grantor whether action is brought against any other Loan
Party or whether any other Loan Party is joined in any such action or actions.
All rights of the Collateral Agent and security interests hereunder, and all
obligations of each Grantor hereunder, shall be absolute and
23
20
unconditional, irrespective of, and each Grantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
circumstances described in the Guaranties or any other circumstance that might
constitute a discharge available to, or a discharge of, the Borrower or any
Guarantor.
This Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Secured Obligations is
rescinded or must otherwise be returned by any Secured Party or by any other
Person upon the insolvency, bankruptcy or reorganization of any Loan Party or
otherwise, all as though such payment had not been made.
SECTION 28. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 29. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to the lease of real property, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.
24
SECTION 30. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York.
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
APC HOLDING, INC.
By /s/ Xxxxx Xxxxxx
_______________________________
Title:
Address of Chief Executive Office:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
_______________________
AFA HOLDINGS CO.
By /s/ Xxxxx Xxxxxx
_______________________________
Title:
Address of Chief Executive Office:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
________________________
AFA PRODUCTS, INC.
By /s/ Xxxxx Xxxxxx
_______________________________
Title:
Address of Chief Executive Office:
000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
________________________
25
22
CONTINENTAL ACQUISITION CORP.
By /s/ Xxxxx Xxxxxx
_______________________________
Title:
Address of Chief Executive Office:
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
26
SCHEDULE I
INITIAL PLEDGED SHARES, PLEDGED DEBT AND OTHER INVESTMENT PROPERTY
Part I - Initial Pledged Shares
====================================================================================================
Percentage
of
Stock Certificate Number Outstanding
Stock Issuer Class of Stock Par Value No(s) of Shares Shares
-------------- --------- ------- --------- -------
====================================================================================================
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
====================================================================================================
Part II - Initial Pledged Debt
=============================================================================================
Original
Principal
Debt Issuer Description of Debt Debt Certificate No(s). Final Maturity Amount
----------- ------------------- ----------------------- -------------- ------
=============================================================================================
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
=============================================================================================
27
Part III - Other Investment Property
==============================================================================================
Securities
Issuer of Description of Securities Intermediary Account
Financial Asset Financial Asset (name and address) (number and location)
==============================================================================================
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
==============================================================================================
28
SCHEDULE II
ASSIGNED AGREEMENTS
1. Asset Purchase Agreement dated as of January 14, 1998, between
Continental Acquisition Corp., as purchaser, and Contico
International, Inc., as seller.
2. Capital Contribution Agreement dated as of February 4, 1998, by and
among the Parent, the Borrower, the Investors named therein,
NationsBridge and the Collateral Agent.
3. Capital Escrow Agreement dated as of February 4, 1998 among the
Borrower, the Parent, NMS and NationsCredit.
29
SCHEDULE III
LOCATIONS OF EQUIPMENT AND INVENTORY
30
SCHEDULE IV
TRADE NAMES
31
SCHEDULE V
PLEDGED ACCOUNTS
32
EXHIBIT A TO THE
SECURITY AGREEMENT
FORM OF PLEDGED ACCOUNT LETTER
_______________, ____
[Name and address
of Pledged Account Bank]
[Name of the Grantor]
Ladies and Gentlemen:
Reference is made to [lockbox no. __________ into which certain
monies, instruments and other properties are deposited from time to time and]
deposit account no. __________ (collectively, the "Pledged Account") maintained
with you by ____________________ (the "Grantor"). Pursuant to the Security
Agreement dated February 4, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Security Agreement"), the Grantor has granted to
NationsCredit Commercial Corporation ("NationsCredit"), as collateral agent
(together with any successor collateral agent, the "Collateral Agent") for the
Secured Parties referred to in the Credit Agreement dated as of February 4, 1998
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") with APC Holding, Inc., as Borrower, certain Lender Parties party
thereto, the Collateral Agent and NationsBridge, L.L.C., as administrative
agent, a security interest in certain property of the Grantor, including, among
other things, the following (the "Account Collateral"): the Pledged Account, all
funds held therein and all certificates and instruments, if any, from time to
time representing or evidencing the Pledged Account, all interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Account Collateral and all proceeds of any and all of the foregoing
Account Collateral and, to the extent not otherwise included, all (i) payments
under insurance (whether or not the Collateral Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Account Collateral and (ii)
cash. It is a condition to the continued maintenance of the Pledged Account with
you that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of, the Security Agreement and confirm to
the Collateral Agent that the description of the Pledged Account set forth on
Schedule V of the Security Agreement is correct and that you have received no
notice of any other pledge or assignment of the Pledged Account. Further, you
hereby agree with the Collateral Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Pledged Account, the Pledged Account is and will be
subject to the terms and conditions of the Security Agreement, will be
maintained solely for the benefit of the Collateral Agent, will be
entitled "NationsCredit Commercial Corporation, as Collateral Agent, Re:
[name of the Grantor]" and will be subject to written instructions only
from an officer of the Collateral Agent.
33
2
(b) You will collect mail from the Pledged Account on each of your
business days at times that coincide with the delivery of mail thereto.
(c) You will follow your usual operating procedures for the handling
of any remittance received in the Pledged Account that contains
restrictive endorsements, irregularities (such as a variance between the
written and numerical amounts), undated or postdated items, missing
signatures, incorrect payees, etc.
(d) You will endorse and process all eligible checks and other
remittance items not covered by paragraph (c) and deposit such checks and
remittance items in the Pledged Account.
(e) You will maintain a record of all checks and other remittance
items received in the Pledged Account and, in addition to providing the
Grantor with photostats, vouchers, enclosures, etc. of such checks and
remittance items on a daily basis, furnish to the Collateral Agent a
monthly statement of the Pledged Account, to be transmitted to the
Collateral Agent at: 1 Canterbury Green, X.X. Xxx 00000, Xxxxxxxx, XX
00000-0000, Attention: Xxxx Xxxxxxxx.
(f) You will transfer, in same day funds, on each of your business
days, all amounts collected from the Pledged Account on such day to the
following account (the "Cash Collateral Account"):
[Name of the Grantor]
APC Holding, Inc.
Account No. 375-100-8840
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Corporate Credit Services
Each such transfer of funds shall neither comprise only part of a
remittance nor reflect the rounding off of any funds so transferred.
(g) All transfers referred to in paragraph (f) above shall be made
by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from the Collateral Agent for any
reason any such payment once made.
(h) All service charges and fees with respect to the Pledged Account
shall be payable by the Grantor, and deposited checks returned for any
reason shall not be charged to the Pledged Account.
(i) The Collateral Agent shall be entitled to exercise any and all
rights of the Grantor in respect of the Pledged Account in accordance with
the terms of the Security Agreement, and the undersigned shall comply in
all respects with such exercise.
This letter agreement shall be binding upon you and your successors
and assigns and shall inure to the benefit of the Collateral Agent, the Lender
Parties and their successors, transferees and assigns. You may terminate this
letter agreement only upon thirty days' prior written notice to the Grantor and
the Collateral Agent. Upon such termination you shall close the Pledged Account
and transfer all funds in the Pledged Account to the Cash Collateral Account.
After any such termination, you shall nonetheless remain obligated promptly to
transfer to the Cash Collateral Account all funds and other property received in
respect of the Pledged Account.
34
3
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Very truly yours,
[NAME OF GRANTOR]
By ______________________________
Title:
NATIONSCREDIT COMMERCIAL
CORPORATION, as Collateral Agent
By ______________________________
Title:
Acknowledged and agreed to as of
the date first above written:
[NAME OF PLEDGED ACCOUNT BANK]
By ______________________________
Title:
35
EXHIBIT B TO THE SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the
terms and provisions of, the Security Agreement dated February 4, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Security
Agreement", the terms defined therein being used herein as therein defined) from
APC Holding, Inc. (the "Borrower") and certain other parties thereto (together
with the Borrower, the "Grantors") to NationsCredit Commercial Corporation, as
collateral agent (the "Collateral Agent") for the Secured Parties referred to
therein, and hereby agrees with the Collateral Agent that:
(a) Upon written notice from the Collateral Agent, the undersigned
will make all payments to be made by it under or in connection with the
__________ Agreement dated _______________, 19__ (the "Assigned
Agreement") between the undersigned and _____________ directly to the Cash
Collateral Account or otherwise in accordance with the instructions of the
Collateral Agent.
(b) All payments referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from any Secured Party for any reason
any such payment once made.
(c) The Collateral Agent shall be entitled to exercise any and all
rights and remedies of the Borrower under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned
shall comply in all respects with such exercise.
(d) The undersigned will not, without the prior written consent of
the Collateral Agent, (i) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof or (ii) amend
or otherwise modify the Assigned Agreement.
Each of the undersigned acknowledges and agrees that its obligations
under this Consent and Agreement and the Assigned Agreement or the Assigned
Agreements to which it is a party shall not be affected by any impossibility,
illegality, impracticability, frustration of purpose, force majeure, act of
government, the bankruptcy or insolvency of the Borrower, the Parent or any
other Loan Party, the failure or refusal of the undersigned to perform its
obligations hereunder, any dispute, set-off, counterclaim or any other defense
or right which the undersigned has or may have that might have the effect of
releasing the undersigned from such obligations (other than performance of such
obligations).
This Consent and Agreement shall be binding upon the undersigned and
its successors and assigns, and shall inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the other Secured Parties and their successors, transferees and assigns.
This Consent and Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent
and Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By ________________________________
Title:
36
EXHIBIT C TO THE SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
NationsCredit Commercial Corporation,
as Collateral Agent
under the Credit Agreement
referred to below
0 Xxxxxxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxxxx, XX 00000-0000
[Date]
Attention: ____________________
Security Agreement dated February 4, 1998
made by APC Holding, Inc. and the other Grantors
parties thereto to NationsCredit Commercial Corporation, as Collateral Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such
Security Agreement, as in effect on the date hereof and as it may hereafter be
amended, modified or otherwise supplemented from time to time, being the
"Security Agreement"). The terms defined in the Security Agreement (or in the
Credit Agreement referred to therein) and not otherwise defined herein are used
herein as therein defined.
The undersigned hereby agrees, as of the date first above written,
to become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Collateral Agent
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties as security for
the Secured Obligations a lien on and security interest in, all of the right,
title and interest of the undersigned, whether now owned or hereafter acquired,
in and to the Collateral owned by the undersigned, including, but not limited
to, the property listed on Annex I hereto. Schedules I, II, III, IV and V to the
Security Agreement are hereby supplemented by Annexes I, II, III, IV and V
hereto, respectively. The undersigned hereby certifies that such Annexes have
been prepared by the undersigned in substantially the form of Schedules I, II,
III, IV and V to the Security Agreement and are accurate and complete as of the
date hereof.
The undersigned hereby makes each representation and warranty set
forth in Section 9 of the Security Agreement (as supplemented by the attached
Annexes) to the same extent as each other Grantor and hereby agrees to be bound
as a Grantor by all of the terms and provisions of the Security Agreement to the
same extent as each other Grantor.
37
2
This Security Agreement Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
GRANTOR]
By _____________________________
Title:
Address of Chief Executive
Office and for Notices:
[Address]
