EXHIBIT 10.6
SECURITY AGREEMENT
Dated February 19, 2002
made by
THE GRANTORS REFERRED TO HEREIN,
as Grantors,
to
MADELEINE L.L.C.,
as Collateral Agent
TABLE OF CONTENTS
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<Caption>
Page
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Section 1. Definitions.....................................................................................2
Section 2. Grant of Security...............................................................................3
Section 3. Security for Obligations........................................................................6
Section 4. Grantors Remain Liable..........................................................................7
Section 5. Delivery and Control of Security Collateral.....................................................7
Section 6. Maintaining the Pledged Accounts................................................................8
Section 7. Investing of Amounts in the Cash Concentration Amounts.........................................10
Section 8. Maintaining Electronic Chattel Paper and Letter-of-Credit Rights and Giving
Notice of Commercial Tort Claims...............................................................10
Section 9. Representations and Warranties.................................................................10
Section 10. Further Assurances.............................................................................13
Section 11. Intellectual Property..........................................................................14
Section 12. Regulatory Approvals...........................................................................16
Section 13. As to Inventory and Equipment..................................................................17
Section 14. Insurance......................................................................................17
Section 15. Post-Closing Changes; Bailees; Collections on Assigned Agreements, Receivables
and Related Contracts..........................................................................18
Section 16. Voting Rights; Dividends; Etc..................................................................20
Section 17. As to Letter-of-Credit Rights..................................................................21
Section 18. Transfers and Other Liens; Additional Shares...................................................21
Section 19. Collateral Agent Appointed Attorney-in-Fact....................................................21
Section 20. Collateral Agent May Perform...................................................................22
Section 21. The Collateral Agent's Duties..................................................................22
Section 22. Remedies.......................................................................................23
Section 23. Indemnity and Expenses.........................................................................27
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(i)
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Section 24. Amendments; Waivers; Additional Grantors; Etc..................................................27
Section 25. Notices; Etc...................................................................................28
Section 26. Continuing Security Interest; Assignments under the Credit Agreement, Etc......................28
Section 27. Release; Termination...........................................................................28
Section 28. Execution in Counterparts......................................................................29
Section 29. Governing Law..................................................................................29
Section 30. Waiver of Jury Trial...........................................................................29
</Table>
Schedules
Schedule I - Pledged Shares and Pledged Debt
Schedule II - Locations of Inventory and Equipment
Schedule III - Location, Chief Executive Office,
Federal Tax Identification Number and
Organizational Identification Number
Schedule IV - Changes in Location of Equipment and
Inventory, Etc.
Schedule V - Pledged Accounts
Schedule VI - Permitted Unblocked Accounts
Schedule VII - Trade Names
Schedule VIII - Copyrights and Copyright Licenses
Schedule IX - Patents and Patent Licenses
Schedule X - Trademarks and Trademark Licenses
Schedule XI - Commercial Tort Claims
Exhibits
Exhibit A - Assignment for Security (Copyrights)
Exhibit B - Assignment for Security (Patents)
Exhibit C - Assignment for Security (Trademarks)
Exhibit D - Form of Security Agreement Supplement
Exhibit E - Form of Securities Account Control Agreement
(Securities Account)
(ii)
SECURITY AGREEMENT
SECURITY AGREEMENT dated February 19, 2002 made by the Persons
listed on the signature pages hereof and the Additional Grantors (as defined in
Section 24) (the Persons so listed and the Additional Grantors being,
collectively, the "Grantors"), to Madeleine L.L.C (the "Collateral Agent") for
the benefit of the Lenders (as defined in the Credit Agreement referred to
below).
RECITALS
(1) Davel Financing Company, LLC, a Delaware limited liability
company (the "Davel Borrower"), PhoneTel Technologies, Inc., an Ohio corporation
("PhoneTel"), Cherokee Communications, Inc., a Texas corporation ("Cherokee",
and together with PhoneTel, collectively the "PhoneTel Borrowers" and
individually a "PhoneTel Borrower"), Davel Communications, Inc., a Delaware
corporation (the "Davel Parent"), and each of the domestic subsidiaries of any
of the foregoing persons have entered into a Credit Agreement dated as of
February 19, 2002 (said Agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"Credit Agreement") with the Lenders (as defined therein).
(2) Pursuant to the Credit Agreement, the Grantors are
entering into this Agreement in order to grant to the Collateral Agent for the
ratable benefit of the Lenders a security interest in the Collateral (as
hereinafter defined).
(3) Each Grantor is the owner of the shares (the "Initial
Pledged Shares") of stock set forth opposite such Grantor's name on and as
otherwise described in Part A of Schedule I hereto and issued by the
corporations named therein and of the indebtedness (the "Initial Pledged Debt")
set forth opposite such Grantor's name on and as otherwise described in Part B
of Schedule I hereto and issued by the obligors named therein.
(4) Each of the Davel Borrower and the PhoneTel Borrowers
(collectively the "Borrowers" and individually a "Borrower) has opened a cash
concentration deposit account and securities account (a "Cash Concentration
Account"), with either PNC Bank, National Association or National City Bank, in
the name of such Borrower(s) but under the control of the Collateral Agent and
subject to the terms of this Agreement, as described in Part A of Schedule V.
(5) The Borrowers and certain of their subsidiaries have
opened other deposit accounts (the "Other Deposit Accounts") with banks, each in
the name of one of such Loan Parties and subject to the terms of this Agreement,
as described in Parts B and C of Schedule V and in Schedule VI.
(6) It is a condition precedent to the making of Loans by the
Lenders under the Credit Agreement that the Grantors shall have granted the
assignment and security interest and made the pledge and assignment contemplated
by this Agreement.
(7) Each Grantor will derive substantial direct and indirect
benefit from the transactions contemplated by the Loan Documents.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to make Loans under the Credit Agreement, each Grantor
hereby agrees with the Collateral Agent for the ratable benefit of the Lenders
as follows:
Section 1. Definitions.
(a) Terms defined in the Credit Agreement and not
otherwise defined in this Agreement are used in this Agreement as defined in the
Credit Agreement. Further, unless otherwise defined in this Agreement or in the
Credit Agreement, terms defined in Article 8 or 9 of the UCC and/or in the
Federal Book Entry Regulations are used in this Agreement as such terms are
defined in such Article 8 or 9 and/or the Federal Book Entry Regulations.
(b) In addition, as used in this Agreement, the
following terms shall have the respective meanings indicated below, such
meanings to be applicable equally to both the singular and plural of such terms:
"Copyright Licenses" means all licenses, contracts or
other agreements, whether written or oral, naming any Grantor as licensor, and
providing for the grant of any right to use or sell any works covered by any
Copyright including, without limitation, all Copyright Licenses referred to in
Schedule VIII hereto.
"Copyrights" means (i) all registered United States
copyrights in all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including without limitation, registrations, recordings and
applications in the United States Copyright Office, including, without
limitation, any Copyrights referred to in Schedule VIII hereto and (ii) all
reissues, divisions, continuations, continuations in part and extensions or
renewals thereof including, without limitation, any Copyrights referred to in
Schedule VIII hereto.
"Federal Book Entry Regulations" means (i) the
federal regulations contained in Subpart B ("Treasury/Reserve Automated Debt
Entry System (TRADES)") governing book-entry securities consisting of U.S.
Treasury bonds, notes and bills and Subpart D ("Additional Provisions") of 31
C.F.R. Part 357, 31 C.F.R. Section 357.2, Section 357.10 though Section 357.14
and Section 357.41 though Section 357.44 and (ii) to the extent substantially
identical to the federal regulations referred to in clause (i) above (as in
effect from time to time), the federal regulations governing other book-entry
securities.
"General Intangibles" means all "general intangibles"
(as defined in the UCC) of the Grantors, including, without limitation, all
right, title and interest which any Grantor may now or hereafter have in FCC
Licenses or State Licenses, subject, however, to the limitations set forth in
subsection 2(j).
"Licenses" means the Copyright Licenses, the
Trademark Licenses and the Patent Licenses.
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"Patent Licenses" means all licenses, contracts, or
other agreements, whether written or oral, providing for the grant by or to such
Grantor of any right to manufacture, use or sell any invention covered by a
Patent, including, without limitation, any Patent Licenses referred to in
Schedule IX hereto.
"Patents" means (i) all domestic or foreign letters
patent and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Schedule IX hereto and (ii) all domestic and foreign
letters patent and all divisions, continuations, and continuations in part
thereof, including, without limitation, any Patents referred to in Schedule IX
hereto.
"Trademark Licenses" means all licenses, contracts or
other agreements, whether written or oral, naming a Grantor as licensor, and
providing for the grant of any right concerning any Trademark, together with any
goodwill connected with and symbolized by any such Trademark Licenses and the
right to prepare for sale or lease and sell or lease any and all Inventory now
or hereafter owned by such Grantor and now or hereafter covered by such
licenses, including, without limitation, any Trademark Licenses referred to in
Schedule X hereto.
"Trademarks" means (i) all domestic and foreign
trademarks, service marks, collective marks, certifications marks, trade names,
business names, d/b/a's, Internet domain names, trade styles, designs, logos and
all general intangibles of like nature, now or hereafter owned, adopted,
acquired or used by a Grantor, all applications, registrations, and recordings
thereof, including, without limitation any Trademarks referred to in Schedule X
hereto and (ii) all renewals thereof, including, without limitation, any thereof
referred to in Schedule X hereto.
"UCC" means the Uniform Commercial Code as in effect,
from time-to-time, in the State of New York; provided that, if perfection or the
effect of perfection or non-perfection or the priority of any security interest
in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.
"Work" means any work which is subject to copyright
protection pursuant to Title 17 of the United States Code.
Section 2. Grant of Security. Each Grantor hereby assigns and
pledges to the Collateral Agent for the ratable benefit of the Lenders, and
hereby grants to the Collateral Agent for the ratable benefit of the Lenders a
security interest in, such Grantor's right, title and interest in and to 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 or arising (collectively, the "Collateral"):
(a) all inventory in all of its forms, (including,
without limitation, (i) raw materials and work in process therefor, finished
goods thereof and materials used or consumed in the manufacture, production,
preparation or shipping 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
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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");
(b) all accounts, chattel paper (including tangible
chattel paper and electronic chattel paper), instruments (including promissory
notes), deposit accounts, letter-of-credit rights, software, General Intangibles
(including payment intangibles) and other obligations of any kind, 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, and all rights
now or hereafter existing in and to all supporting obligations and in and to all
security agreements, mortgages, liens, leases and other contracts securing or
otherwise relating to the foregoing property (any and all of such accounts,
chattel paper, instruments, deposit accounts, letter-of-credit rights, software,
General Intangibles and other obligations, to the extent not referred to in
clause (c) or (d) below, being the "Receivables", and any and all such
supporting obligations, security agreements, mortgages, liens, leases and other
contracts being the "Related Contracts");
(c) all equipment of any kind and all parts thereof
and accessions thereto (any and all such equipment, parts and accessions being
the "Equipment");
(d) the following (the "Security Collateral"):
(i) (A) 100% (or, if less, the full amount
owned by such Grantor) of the Initial Pledged Shares of the Borrower and each
Domestic Subsidiary and (B) 65% (or, if less, the full amount owned by such
Grantor) of the Initial Pledged Shares of each Material First Tier Foreign
Subsidiary, including, without limitation, the certificates, if any,
representing the 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 the Initial Pledged
Shares;
(ii) (A) 100% (or, if less, the full amount
owned by such Grantor) of all other shares of stock, partnership interests,
member interests and other equity interests issued by any Domestic Subsidiary of
the Borrower or by any other Person that hereafter becomes a Domestic Subsidiary
and (B) 65% (or, if less, the full amount owned by such Grantor) of all other
shares of stock, partnership interests, member interests and other equity
interests issued by any Material First Tier Foreign Subsidiary of the Borrower
or by any other Person that hereafter becomes a Material First Tier Foreign
Subsidiary (all such shares, together with the Initial Pledged Shares, being the
"Pledged Shares"), including, without limitation, 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;
(iii) the Initial Pledged Debt and the
instruments, if any, evidencing the Initial Pledged Debt, and all interest,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Initial
Pledged Debt;
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(iv) all additional indebtedness from time
to time owed to such Grantor by any obligor of the Pledged Debt (such
indebtedness, together with the Initial Pledged Debt, being the "Pledged Debt")
and the instruments, if any, evidencing such indebtedness, and all interest,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
indebtedness; and
(v) all other investment property
(including, without limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements and (C) securities accounts) in which
such Grantor has now, or acquires from time to time hereafter, 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;
(e) the following (collectively, the "Account
Collateral"):
(i) each Cash Concentration Account, all
financial assets from time to time credited to such Cash
Concentration Account (including, without limitation, all Cash
Equivalents from time to time credited to such Cash
Concentration Account), 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 financial assets, and all
funds held therein and all certificates and instruments, if
any, from time to time representing or evidencing such Cash
Concentration Account;
(ii) the Regulatory Receipts Account, all
financial assets from time to time credited to the Regulatory
Receipts Account (including, without limitation, all Cash
Equivalents from time to time credited to the Regulatory
Receipts Account), 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 financial assets, and all funds held therein and
all certificates and instruments, if any, from time to time
representing or evidencing the Regulatory Receipts Account;
(iii) each Other Deposit Account, all
financial assets from time to time credited to such Other
Deposit Account (including, without limitation, all Cash
Equivalents from time to time credited to such Other Deposit
Account), 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 financial assets, and all funds held therein and all
certificates and instruments, if any, from time to time
representing or evidencing such Other Deposit Account;
(iv) all notes, certificates of deposit,
deposit accounts, checks and other instruments from time to
time delivered to or otherwise possessed by the Collateral
Agent for or on behalf of such Grantor, including, without
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limitation, those delivered or possessed in substitution for
or in addition to any or all of the then existing Account
Collateral; and
(v) all interest, dividends, cash,
instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account
Collateral;
(f) all commercial tort claims described in Schedule
XI (collectively the "Commercial Tort Claims Collateral");
(g) all books and records (including, without
limitation, customer lists, credit files, computer programs, software, printouts
and other computer materials and records) of such Grantor pertaining to any of
the Collateral;
(h) all Licenses, Copyrights, Patents and Trademarks;
(i) all FCC Licenses and State Licenses of such
Grantor and all goodwill and going concern value relating thereto; provided,
however, that such security interest does not include at any time any FCC
License of State License to the extent, but only to the extent, that such
Grantor is prohibited at that time from granting a security interest therein
pursuant to the Communications Law or State Communications Law, the policies and
regulations promulgated thereunder and all other applicable laws, but includes,
to the maximum permitted by applicable law, all rights incident or appurtenant
to any such FCC License or State License and the rights to receive all proceeds
derived from or in connection with the sale, assignment or transfer of any FCC
License or State License; and provided further, to the extent that such Grantor
is so prohibited from granting a security interest in any FCC License or State
License, such Grantor agrees that a security interest shall automatically attach
to any such FCC License or State License, all rights incident or appurtenant
thereto, and the rights to receive proceeds derived from or in connection with
the sale, assignment or transfer of any such FCC License or State License, at
such time that a security interest is permitted by applicable law; and
(j) all proceeds of, collateral for, and supporting
obligations relating to, any and all of the Collateral (including, without
limitation, proceeds, collateral and supporting obligations that constitute
property of the types described in clauses (a) though (i) of this Section 2 and
this clause (j)) 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, (ii) commercial
tort claims and (iii) cash.
The Grantors and the Collateral Agent, on behalf of the
Lenders, hereby acknowledge and agree that the security interest created hereby
in the Collateral (i) constitutes continuing collateral security for all Secured
Obligations (as defined in Section 3 herein), whether now existing or hereafter
arising and (ii) is not to be construed as an absolute assignment of any
Licenses, Copyrights, Patents, Trademarks, FCC Licenses or State Licenses.
Section 3. Security for Obligations. This Agreement secures,
in the case of each Grantor, the payment of all Obligations (as defined in the
Credit Agreement) of such Grantor, now existing or hereafter arising pursuant to
the Loan Documents, howsoever evidenced, created,
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incurred or acquired, whether primary, secondary, direct or indirect, absolute
or contingent, whether for principal, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations of all Grantors being the "Secured Obligations").
Section 4. Grantors Remain Liable. Anything herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in such Grantor's 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 the 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 5. Delivery and Control of Security Collateral. (a)
All certificates or instruments representing or evidencing Security 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, at any time, after and during the continuance of a
Default, in its discretion and without notice to any 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. In addition, after and during the continuance of
a Default, the Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations. Also, the
Collateral Agent shall have the right at any time to convert Security Collateral
consisting of financial assets credited to any securities account to Security
Collateral consisting of financial assets held directly by the Collateral Agent,
and to convert Security Collateral consisting of financial assets held directly
by the Collateral Agent to Security Collateral consisting of financial assets
credited to any securities account.
(b) With respect to any Security Collateral in which
any Grantor has any right, title or interest and that constitutes an
uncertificated security, such Grantor will cause the issuer thereof either (i)
to register the Collateral Agent as the registered owner of such security or
(ii) to agree in an authenticated record 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 authenticated record to be in form and substance satisfactory to
the Collateral Agent.
(c) With respect to any Security Collateral in which
any Grantor has any right, title or interest and that constitutes a security
entitlement, such Grantor will cause the securities intermediary with respect to
such security entitlement either (i) to identify in its records the Collateral
Agent as the entitlement holder of such security entitlement against such
securities intermediary or (ii) to agree in an authenticated record 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
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Agent without further consent of such Grantor, such authenticated record to be
in substantially the form of Exhibit C hereto or otherwise in form and substance
satisfactory to the Collateral Agent (such agreement being a "Securities Account
Control Agreement").
(d) No Grantor will change or add any securities
intermediary that maintains any securities account in which any of the
Collateral is credited or carried, or change or add any such securities account,
in each case without first complying with the above provisions of this Section 5
in order to perfect the security interest granted hereunder in such Collateral.
Section 6. Maintaining the Pledged Accounts. So long as any
Loan or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid or any Lender shall have any Commitment under the Credit
Agreement:
(a) Each Grantor will maintain deposit accounts
(collectively, including the Cash Concentration Accounts, the "Pledged
Accounts") only with banks listed on Schedule V hereto (the "Pledged
Account Banks"). Each Pledged Account Bank listed on Part A of Schedule
V hereto has agreed, and each Grantor will cause each Pledged Account
Bank listed on Part B of Schedule V hereto to agree, within 30 days of
the Closing Date, in each case in a record authenticated by such
Grantor, the Collateral Agent and such Pledged Account Bank, to (1)
comply with instructions originated by the Collateral Agent directing
the disposition of funds in the respective Pledged Accounts without the
further consent of such Grantor and (2) waive or subordinate in favor
of the Collateral Agent all claims of such Pledged Account Bank
(including claims by way of a security interest, right of setoff or
right of recoupment) to such Pledged Accounts, which authenticated
record shall be in form and substance satisfactory to the Collateral
Agent (a "Pledged Account Letter").
(b) Each Grantor will (i) immediately upon the
request of the Collateral Agent after the occurrence and during the
continuance of a Default, instruct each Person obligated at any time to
make any payment to such Grantor for any reason (an "Obligor") to make
such payment to a Pledged Account of such Grantor or to a Cash
Concentration Account and (ii) deposit in a Pledged Account of such
Grantor or a Cash Concentration Account or pay to the Collateral Agent
for deposit in a Cash Concentration Account, at the end of each
Business Day, all proceeds of Collateral and all other cash of such
Grantor.
(c) Concurrently with or promptly after entering into
a Pledged Account Letter with any Pledged Account Bank, each Grantor
will instruct such Pledged Account Bank to transfer to the applicable
Cash Concentration Account, at the end of each Business Day (or in the
case of Pledged Account Banks listed on Part C of Schedule V, each
week, or at such interval at set forth in Part C), in same day funds,
an amount equal to the credit balance of each Pledged Account (other
than a Cash Concentration Account) in such Pledged Account Bank. If any
Grantor shall fail to give any such instructions to any Pledged Account
Bank, the Collateral Agent may do so without further notice to any
Grantor.
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(d) Each Grantor agrees that it will not add any bank
as a Pledged Account Bank or add any account as a Pledged Account to
those listed in Schedule V hereto, unless the Collateral Agent shall
have received at least 10 days' prior written notice of such addition
and shall have received a Pledged Account Letter authenticated by such
new Pledged Account Bank and such Grantor or a supplement to an
existing Pledged Account Letter covering such new Pledged Account, as
the case may be (and, upon the receipt by the Collateral Agent of such
Pledged Account Letter or supplement thereto, Schedule V hereto shall
be automatically amended to include such Pledged Account Bank or
Pledged Account). Each Grantor agrees that it will not terminate any
bank as a Pledged Account Bank or terminate any account as a Pledged
Account, except that any Grantor may terminate a Pledged Account, and
terminate a bank as a Pledged Account Bank with respect to such Pledged
Account if it gives the Collateral Agent at least 10 days' prior
written notice of such termination (and, upon such termination,
Schedule V hereto shall be automatically amended to delete such Pledged
Account Bank or Pledged Account). Each Grantor agrees that it will not
amend, modify or supplement any standing instructions with any Pledged
Account Bank pursuant to which funds are transferred from any Pledged
Account maintained with such Pledged Account Bank without the prior
written approval of the Collateral Agent.
(e) 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 with respect
thereto, such Grantor will immediately notify all Obligors that were
making payments to such Pledged Account to make all future payments to
another Pledged Account listed in Schedule V or to a Cash Concentration
Account. Each Grantor agrees to terminate any or all Pledged Accounts
and Pledged Account Letters upon request by the Collateral Agent.
(f) So long as no Event of Default shall have
occurred and be continuing, (i) each Borrower will draw checks on, and
otherwise withdraw amounts only from a Cash Concentration Account in
such amounts as may be required in the ordinary course of business
(including, without limitation, withdrawals by Staffing Concepts of
Florida, Inc. acting on behalf of one or more Davel Credit Parties
pursuant to the employee leasing agreement and the Authorization
Agreement For Direct Deposits (ACH Debts), dated December 14, 2001,
between Staffing Concepts of Florida, Inc. and Telaleasing Enterprises,
Inc.) and (ii) the Collateral Agent will, to the extent funds are
available in a Cash Concentration Account, permit the transfer of
amounts on deposit in such Cash Concentration Account to the extent
necessary to pay all checks drawn on, and all amounts otherwise
withdrawn from, such Cash Concentration Account.
(g) Each Grantor agrees that it will not add any
account as an unblocked account to those listed in Schedule VI hereto
and will not terminate any account as an unblocked account, unless the
Collateral Agent shall have received at least 10 days' prior written
notice of such addition or termination (and, upon such addition or
termination, Schedule VI hereto shall be automatically amended to add
or delete such account, as applicable).
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(h) The Collateral Agent shall have sole right to
direct the disposition of funds with respect to each of the Cash
Concentration Accounts and the Other Deposit Accounts, subject to the
provisions of this Agreement.
Section 7. Investing of Amounts in the Cash Concentration
Accounts. The Collateral Agent will, subject to the provisions of Sections 6 and
21, from time to time (a) permit the investment of amounts received with respect
to any Cash Concentration Account in such Cash Equivalents credited to (i) such
Cash Concentration Account as the applicable Borrower may select and the
Collateral Agent may approve or (ii) in the case of Cash Equivalents consisting
of Securities Collateral, a securities account subject to a Securities Account
Control Agreement 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 credited in
the same manner. Interest and proceeds that are not invested or reinvested in
Cash Equivalents as provided above shall be deposited and held in the relevant
Cash Concentration Account. In addition, the Collateral Agent shall have the
right at any time to exchange such Cash Equivalents for similar Cash Equivalents
of smaller or larger denominations, or for other Cash Equivalents, credited to
the Cash Concentration Account.
Section 8. Maintaining Electronic Chattel Paper and
Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims. So long as
any Loan or any other Obligation shall remain unpaid or any Lender shall have
any Commitment under the Credit Agreement:
(a) each Grantor will maintain all electronic chattel
paper so that the Collateral Agent has control of the electronic
chattel paper in the manner specified in Section 9-105 of the UCC;
(b) each Grantor will maintain all letter-of-credit
rights assigned to the Collateral Agent so that the Collateral Agent
has control of the letter-of-credit rights in the manner specified in
Section 9-107 of the UCC; and
(c) each Grantor will immediately give notice to the
Collateral Agent of any commercial tort claim that may arise in the
future and will immediately execute or otherwise authenticate a
supplement to this Agreement, and otherwise take all necessary action,
to subject such commercial tort claim to the first priority lien of
this Agreement.
Section 9. Representations and Warranties. Each Grantor
represents and warrants as follows on behalf of itself and its Subsidiaries:
(a) Such Grantor's exact legal name, as defined in
Section 9-503(a) of the UCC, is correctly set forth on Schedule III of
this Agreement. Such Grantor is an organization of the type specified
on the first page of this Agreement and is organized under the laws of
the jurisdiction specified on the first page of this Agreement. During
the past five years, such Grantor has not previously changed its name,
identity or corporate structure, except as disclosed in Schedule IV
hereto.
(b) All of the Inventory and Equipment of such
Grantor is located at the places specified therefor in Schedule II
hereto, as such Schedule II may be amended from time to time pursuant
to Section 13. The chief executive office of such Grantor, and the
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original copies of each Related Contract to which such Grantor is a
party and all originals of all chattel paper that evidence Receivables
of such Grantor, are located at the address specified therefor in
Schedule III hereto. Such Grantor is located (within the meaning of
Section 9-307 of the UCC) in the state or jurisdiction set forth in
Schedule III hereto. Such Grantor's federal tax identification number
and organizational identification number are set forth opposite such
Grantor's name in Schedule III hereto. [Since January 1, 2001,] such
Grantor has not changed the location of its inventory, its chief
executive office, its location (within the meaning of Section 9-307 of
the UCC), its federal tax identification number and its organizational
identification number, except as disclosed in Schedule IV. All Security
Collateral consisting of certificated securities and instruments have
been delivered to the Collateral Agent.
(c) 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 security interest created
under this Agreement or permitted under the Credit Agreement. No filed
financing statement or other instrument similar in effect covering all
or any part of such Collateral or listing such Grantor or any trade
name of such Grantor 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 or as otherwise permitted under the
Credit Agreement. Such Grantor has the trade names listed on Schedule
VII hereto.
(d) Such Grantor has exclusive possession and control
of the Inventory other than Inventory stored at any leased premises or
warehouse for which a landlord's or warehouseman's agreement, in form
and substance satisfactory to the Collateral Agent, is in effect and
which leased premises or warehouse is so indicated by an asterisk on
Schedule II hereto, as such Schedule II may be amended from time to
time pursuant to Section 15.
(e) Other than Payphones in such Grantor's possession
pursuant to a contract for repair (to the extent such Payphones could
be characterized as Inventory), no Inventory is held by such Grantor
pursuant to consignment, sale or return, sale on approval or similar
arrangement.
(f) No Payphone of such Grantor that constitutes
Collateral is a Fixture.
(g) All of such Grantor's Equipment is in normal
operating condition or repair, ordinary wear and tear excepted, and is
suitable for the uses to which it is customarily put in the conduct of
such Grantor's business.
(h) The Pledged Shares pledged by such Grantor
hereunder have been duly authorized and validly issued and are fully
paid and non-assessable. The Pledged Debt pledged by such Grantor
hereunder has been duly authorized, authenticated or issued and
delivered, is the legal, valid and binding obligation of the issuers
thereof, may be evidenced by one or more promissory notes (which notes
have been delivered to the Collateral Agent) and is not in default.
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(i) The Initial Pledged Shares constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I hereto as of the Effective Date. The
Initial Pledged Debt constitutes all of the outstanding indebtedness
owed to such Grantor by the issuers thereof and is outstanding, as of
the Effective Date, in the principal amount indicated on Schedule I
hereto as of the Effective Date.
(j) All of the investment property owned by such
Grantor as of the Closing Date is listed on Schedule I hereto.
(k) Such Grantor has no Pledged Accounts or other
deposit accounts other than the Pledged Accounts listed on Schedule V
hereto, as such Schedule V may be amended from time to time pursuant to
Section 6(d) and the permitted unblocked accounts listed on Schedule VI
hereto, as such Schedule VI may be amended from time to time pursuant
to Section 6(g). Binding and enforceable Pledged Account Letters are in
effect for each Pledged Account, except to the extent such Pledged
Account Letters are not required by Section 5(a). Such Grantor has, to
the extent requested by the Collateral Agent, instructed all existing
Obligors to make all payments to a Pledged Account or a Cash
Concentration Account.
(l) All filings and other actions (including actions
necessary to obtain control of Collateral as provided in Section 9-104,
9-105, 9-106 and 9-107 of the UCC) necessary or desirable to perfect
and protect the security interest in the Collateral of such Grantor
created under this Agreement have been duly made or taken and are in
full force and effect, and this Agreement creates in favor of the
Collateral Agent for the benefit of the Lenders a valid and, together
with such filings and other actions, perfected first priority security
interest in the Collateral of such Grantor, securing the payment of the
Secured Obligations.
(m) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the grant
by such Grantor of the assignment, pledge and security interest granted
hereunder or for the execution, delivery or performance of this
Agreement by such Grantor, (ii) the perfection or maintenance of the
assignment, pledge and security interest created hereunder (including
the first priority nature of such assignment, pledge or security
interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code, which financing
statements have been duly filed and are in full force and effect, and
the actions described in Section 5 with respect to Security Collateral,
which actions have been taken and are in full force and effect, or
(iii) 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.
(n) The Inventory that has been produced or
distributed by such Grantor has been produced or distributed in
compliance with all requirements of applicable law, including, without
limitation, any Communications Law or State Communications Law.
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(o) Such Grantor shall not alter, modify or otherwise
take any action with respect to the Inventory that would affect the
rights of the Collateral Agent to sell, liquidate or otherwise dispose
of the Inventory.
(p) Intellectual Property.
(i) Schedules VIII, IX, and X hereto (as
updated from time to time) include all Licenses, Copyrights, Patents, Trademarks
(except for non-material unregistered trademarks and service marks, collectively
"Intellectual Property") owned by such Grantor in its own name as of the date
hereof.
(ii) To the best of such Grantor's
knowledge, all such Intellectual Property of such Grantor is valid, subsisting,
unexpired and enforceable.
(iii) Except as set forth in Schedules VIII,
IX, and X hereto, none of such Intellectual Property is the subject of any
licensing or franchise agreement.
(iv) All applications pertaining to the
Intellectual Property of such Grantor have been duly and properly filed, and all
registrations or letters pertaining to such Intellectual Property have been duly
and properly filed and issued, and all such Intellectual Property is valid and
enforceable, except as could not reasonably be expected to have a Material
Adverse Effect.
(v) Except for licenses to third parties in
the ordinary course of business, such Grantor has not made any assignment or
agreement in conflict with the security interest in the Intellectual Property of
any Grantor hereunder.
Section 10. Further Assurances. (a) Each Grantor agrees that
from time to time, at the request of the Collateral Agent and at the expense of
such Grantor, such Grantor will promptly execute and deliver, or otherwise
authenticate, all further instruments and documents, and take all further
action, that may be reasonably 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 by such
Grantor hereunder or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral of such Grantor.
Without limiting the generality of the foregoing, each Grantor will promptly
with respect to Collateral of such Grantor: (i) at the request of the Collateral
Agent, mark conspicuously each document included in Inventory and each of its
records pertaining to such Collateral with a legend, in form and substance
satisfactory to the Collateral Agent, indicating that such document or
Collateral is subject to the security interest granted hereby; (ii) if any such
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the Collateral Agent 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) execute or
authenticate 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 security interest granted or purported to be granted by such
Grantor hereunder; (iv) deliver and pledge to the Collateral Agent for benefit
of the Lenders certificates representing Security Collateral that
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constitutes certificated securities, accompanied by undated stock or bond powers
executed in blank; (v) take all action necessary to insure that the Collateral
Agent has control of Collateral consisting of deposit accounts, electronic
chattel paper, investment property and letter-of-credit rights as provided in
Sections 9-104, 9-105, 9-106 and 9-107 of the of the UCC; (vi) with regard to
Copyrights, execute an Assignment for Security (Copyrights) in the form of
Exhibit A attached hereto, (vii) with regard to Patents, execute an Assignment
for Security (Patents) with the United States Patent and Trademark Office in the
form of Exhibit B attached hereto; (viii) with regard to Trademarks, execute an
Assignment for Security (Trademarks) for filing with the United States Patent
and Trademark Office in the form of Exhibit C attached hereto; and (ix) deliver
to the Collateral Agent evidence that all other action that the Collateral Agent
may deem reasonably necessary or desirable in order to perfect and protect the
security interest created by such Grantor under this Agreement has been taken.
(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 of such Grantor 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 of such Grantor and such other reports in connection with such
Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.
(d) Each Grantor will allow the Collateral Agent or
its representatives to inspect the Collateral.
(e) With respect to new Copyrights, Patents,
Trademarks, each Grantor will promptly provide the Collateral Agent with (i) a
listing of all applications, if any, for new Copyrights, Patents or Trademarks
(together with a listing of the issuance of registrations or letters on present
applications), which new applications and issued registrations or letters shall
be subject to the terms and conditions hereunder, and (ii) (A) with respect to
Copyrights, a duly executed Assignment of Security (Copyrights), (B) with
respect to Patents, a duly executed Assignment of Security (Patents)s, (C) with
respect to Trademarks, a duly executed Assignment of Security (Trademarks) or
(D) such other duly executed documents as the Collateral Agent may request in a
form acceptable to counsel for the Collateral Agent and suitable for recording
to evidence the security interest in the Copyright, Patent or Trademark which is
the subject of such new application.
Section 11. Intellectual Property. So long as any Loan or any
other Obligation shall remain unpaid or any Lender shall have any Commitment
under the Credit Agreement, each Grantor shall:
(a) employ the Copyright for each Work with such
notice of copyright as may be required by law to secure copyright protection;
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(b) not do any act or knowingly omit to do any act
whereby any material Copyright may become invalidated and (i) not do any act, or
knowingly omit to do any act, whereby any material Copyright may become injected
into the public domain; (ii) notify the Collateral Agent immediately if it
knows, or has reason to know, that any material Copyright may become injected
into the public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or
development in, any court or tribunal in the United States or any other country)
regarding such Grantor's ownership of any such Copyright or its validity; (iii)
take all necessary steps as it shall deem appropriate under the circumstances,
to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of each material Copyright owned
by such Grantor including, without limitation, filing of applications for
renewal where necessary; and (iv) promptly notify the Collateral Agent of any
material infringement of any material Copyright of such Grantor of which it
becomes aware and take such actions as it shall reasonably deem appropriate
under the circumstances to protect such Copyright, including, where appropriate,
the bringing of suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement;
(c) not make any assignment or agreement in conflict
with the security interest in the Copyrights of such Grantor other than in the
ordinary course of business;
(d) subject to such Grantor's reasonable business
judgment or as permitted in the Credit Agreement, (i) continue to use each
material Trademark in order to maintain such Trademark in full force free from
any claim of abandonment for non-use, (ii) maintain as in the past the quality
of products and services offered under such Trademark, (iii) employ such
Trademark with the appropriate notice of registration, (iv) not adopt or use any
mark which is confusingly similar or a colorable imitation of such Trademark
unless the Collateral Agent, for the ratable benefit of the Lenders, shall
obtain a perfected security interest in such mark pursuant to this Security
Agreement, and (v) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby any material Trademark may
become invalidated;
(e) not do any act, or omit to do any act, whereby
any material Patent may become abandoned or dedicated;
(f) promptly notify the Collateral Agent if it knows,
or has reason to know, that any application or registration relating to any
material Patent or material Trademark may become abandoned or dedicated, or of
any adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office or any court or tribunal in any
country) regarding an Grantor's ownership of any such Patent or Trademark or its
right to register the same or to keep and maintain the same;
(g) if such Grantor, either by itself or through an
agent, employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report such filing to the
Collateral Agent within 10 Business Days after the last day of the fiscal
quarter in which such filing occurs, and
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upon request of the Collateral Agent, shall execute and deliver any and all
agreements, instruments and other documents as the Collateral Agent may
reasonably request to evidence the Collateral Agent's and the Lenders' security
interest in any Patent or Trademark and the goodwill and General Intangibles of
a Grantor relating thereto or represented thereby;
(h) take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue each application (and
to obtain the relevant registration) and to maintain each registration of all
material Patents and material Trademarks, including, without limitation, filing
of applications for renewal, affidavits of use and affidavits of
incontestability;
(i) promptly notify the Collateral Agent after it
learns that any material Patent or material Trademark included in the Collateral
is infringed, misappropriated or diluted by a third party and promptly sue for
infringement, misappropriation or dilution, seek injunctive relief where
appropriate and recover any and all damages for such infringement,
misappropriation or dilution, or take such other actions as it shall reasonably
deem appropriate under the circumstances to protect such Patent or Trademark;
and
(j) except for licenses to third parties in the
ordinary course of business, not make any assignment or agreement in conflict
with the security interest in the Patents or Trademarks, whether now or
hereafter existing, of such Grantor.
Section 12. Regulatory Approvals. So long as any Loan or any
other Obligation shall remain unpaid or any Lender shall have any Commitment
under the Credit Agreement, each Grantor shall promptly, and at its expense,
execute and deliver, or cause to be executed and delivered, all applications,
certificates, instruments, registration statements and all other documents the
Collateral Agent may reasonably request and as may be required by law in
connection with the obtaining of any FCC Consents, State Consents or the
consent, approval, registration, qualification or authorization of any other
Person necessary or deemed by the Collateral Agent to be appropriate for the
effective exercise of any of its rights under this Agreement. Without limiting
the generality of the foregoing, if an Event of Default shall have occurred and
be continuing, each Grantor shall take any action which the Collateral Agent may
reasonably request in order to transfer and assign to the Collateral Agent, or
to such one or more third parties as the Collateral Agent may designate, or to a
combination of the foregoing, each FCC License, State License or other
Government Approval of such Grantor. To enforce the provisions of this Section
12, upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent is empowered to request the appointment of a receiver from any
court of competent jurisdiction. Such receiver shall be instructed to seek from
the FCC or other Governmental Authority an involuntary transfer of control of
each such FCC License, State License or other Governmental Approval for the
purpose of seeking a bona fide purchaser to whom control will ultimately be
transferred. Each Grantor hereby agrees to authorize such an involuntary
transfer of control upon the request of the receiver so appointed, and, if such
Grantor shall refuse to authorize the transfer, its approval may be required by
the court. Upon the occurrence and continuance of an Event of Default, such
Grantor shall further use its reasonable best efforts to assist in obtaining FCC
Consents, State Consents or other governmental approvals, if required, for any
action or transaction contemplated by this Security Agreement, including,
without limitation, the preparation, execution and filing with the FCC or other
governmental authority of
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such Grantor's portion of any necessary or appropriate application for the
approval of the transfer or assignment of any portion of the assets (including
any FCC Licenses, State Licenses or other Governmental Approval) of such
Grantor. Because each Grantor agrees that the Collateral Agent's remedy at law
for failure of such Grantor to comply with the provisions of this Section 12
would be inadequate and that such failure would not be adequately compensable in
damages, such Grantor agrees that the covenants contained in this Section 12 may
be specifically enforced, and such Grantor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants.
Section 13. As to Inventory and Equipment. (a) Each Grantor
will keep the Inventory and Equipment of such Grantor (other than Inventory sold
in the ordinary course of business) at the places specified therefor in Section
9(b) or, upon 30 days' (or such lesser period as the Collateral Agent, in its
discretion, agrees) prior written notice to the Collateral Agent, at such other
places designated by such Grantor in such notice. Upon the giving of such
notice, Schedule II hereto shall be automatically amended to add any new
locations specified in the notice.
(a) Each Grantor will promptly furnish to the
Collateral Agent a statement respecting any material loss or damage to any of
the Inventory or Equipment of such Grantor.
(b) Each Grantor will pay promptly when due all
property and other taxes, assessments and governmental charges or levies imposed
upon, and all claims (including, without limitation, claims for labor, materials
and supplies) against, the Inventory or Equipment of such Grantor. In producing
or distributing its Inventory, each Grantor will comply with all requirements of
applicable law, including, without limitation, any Communications Law or State
Communications Law.
Section 14. Insurance. (a) Each Grantor will, at its own
expense and in addition to insurance required to be maintained by such Grantor
under the Credit Agreement, maintain insurance with respect to the Inventory and
Equipment of such Grantor 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 of each Grantor for liability insurance 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 to be paid directly to the Collateral Agent or deposited
directly into a Cash Concentration Account. 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
will, 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 will, at the request of the
Collateral Agent, duly
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execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 10 and cause the insurers to acknowledge
notice of such assignment.
(b) Reimbursement under any liability insurance
maintained by any Grantor pursuant to this Section 14 may be paid directly to
the Person who shall have incurred liability covered by such insurance. In case
of any loss involving damage to Inventory or Equipment when subsection (c) of
this Section 14 is not applicable, the applicable Grantor will make or cause to
be made the necessary repairs to or replacements of such Inventory or Equipment,
and any proceeds of insurance properly received by or released to such Grantor
shall be used by such Grantor, except as otherwise required hereunder or by the
Credit Agreement, to pay or as reimbursement for the costs of such repairs or
replacements.
(c) So long as no Default shall have occurred and be
continuing, all insurance payments received by the Collateral Agent in
connection with any loss, damage or destruction of any Inventory or Equipment
will be released by the Collateral Agent to the applicable Grantor for the
repair, replacement or restoration thereof, subject to such terms and conditions
with respect to the release thereof as the Collateral Agent may reasonably
require. 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 will not be required to release the amount thereof to such
Grantor and may hold or continue to hold such amount in the Collateral Account
as additional security for the Secured Obligations of such Grantor (except that
the Collateral Agent will direct the applicable Pledged Account Bank to release
to such Grantor any such amount if and to the extent that any prepayment of
Obligations is required under the Credit Agreement in connection with the
receipt of such amount and such prepayment has been made). Upon the occurrence
and during the continuance of any Default or the actual or constructive total
loss of any Inventory or Equipment, all insurance payments in respect of such
Inventory or Equipment shall be deposited directly into a Cash Concentration
Account or paid to the Collateral Agent and, if paid directly to the Collateral
Agent, shall, in the Collateral Agent's sole discretion, (i) be released to the
applicable Grantor to be applied as set forth in the first sentence of this
subsection (c) or (ii) be held as additional Collateral hereunder or applied as
specified in Section 22(b).
Section 15. Post-Closing Changes; Bailees; Collections on
Assigned Agreements, Receivables and Related Contracts. (a) No Grantor will
change its name, identity, corporate structure, federal tax identification
number, organizational identification number, or location from those set forth
in Section 9(a) and (b) without first giving at least 30 days' prior written
notice to the Collateral Agent and taking all action required by the Collateral
Agent for the purpose of perfecting or protecting the liens granted by this
Agreement. Each Grantor will not become bound by a security agreement signed or
authenticated by another Person (determined as provided in Section 9-203(d) of
the UCC) without giving the Collateral Agent 10 days' prior written notice
thereof and taking all action required by the Collateral Agent to insure that
the perfection and first priority nature of the Collateral Agent's lien on the
Collateral will be maintained. Each Grantor will also keep all originals of all
chattel paper that evidence Receivables of such Grantor, at the location
therefor specified in Section 9(b) or, upon 10 days' prior written notice to the
Collateral Agent, at such other location designated in such notice. Each Grantor
will hold and preserve its records relating to the Collateral and chattel paper
and
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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) If any of its Collateral is at any time in the
possession or control of a warehouseman, bailee or agent, or if the Collateral
Agent so requests such Grantor will (i) notify such warehouseman, bailee or
agent of the security interests, (ii) instruct such warehouseman, bailee or
agent to hold all such Collateral for the Collateral Agent's account subject to
the Collateral Agent's instructions (which shall permit such Collateral to be
removed by such Grantor in the ordinary course of business until the Collateral
Agent notifies such warehouseman, bailee or agent that an Event of Default has
occurred and is continuing), (iii) using commercially reasonable efforts, cause
such warehouseman, bailee or agent to authenticate a record acknowledging that
it holds possession of such Collateral for the Collateral Agent's benefit and
(iv) make such authenticated record available to the Collateral Agent.
(c) Except as otherwise provided in this subsection
(c), each Grantor will continue to collect, at its own expense, all amounts due
or to become due such Grantor under the Receivables (the "Pledged Receivables")
and the Related Contracts. In connection with such collections, such Grantor may
take (and, at the Collateral Agent's direction, will take) such action as such
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Pledged Receivables and the Related Contracts; provided,
however, that the Collateral Agent shall have the right at any time upon the
occurrence and during the continuance of a Default, upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Pledged
Receivables or Related Contracts of the assignment of such Pledged 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 Pledged 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, and to
otherwise exercise all rights with respect to such Pledged Receivables and
Related Contracts, including, without limitation, those set forth set forth in
Section 9-607 of the UCC. After receipt by any 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 Pledged Receivables and the Related Contracts of such Grantor 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 be deposited in the Collateral Account and either (A) released
to such Grantor so long as no Default shall have occurred and be continuing or
(B) if any Default shall have occurred and be continuing, applied as provided in
Section 22(b) and (ii) such Grantor will not adjust, settle or compromise the
amount or payment of any Receivable, or amount due on any Related Contract,
release wholly or partly any Obligor thereof, or allow any credit or discount
thereon. No Grantor will permit or consent to the subordination of its right to
payment under any of the Pledged Receivables and Related Contracts to any other
indebtedness or obligations of the Obligor thereof.
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Section 16. Voting Rights; Dividends; Etc. (a) So long as no
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 other
than to originate Entitlement Orders (as defined in any Securities
Account Control Agreement) with respect to any securities account;
provided, however, that such Grantor will not exercise or refrain from
exercising any such right if 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 any
and all dividends, interest and other distributions paid 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, interest and other distributions paid
or payable other than in cash in respect of, and instruments
and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security
Collateral,
(B) dividends and other distributions paid or payable
in cash in respect of any Security Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange
for, any Security Collateral
shall be, and shall be forthwith delivered to the Collateral Agent to
hold as, Security Collateral and shall, if received by such 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 will 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.
(b) Upon the occurrence and during the continuance of
a Default:
(i) All rights of each Grantor (x) to exercise or
refrain from exercising the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to Section 16(a)(i)
shall, upon notice to such Grantor by the Collateral Agent, cease and
(y) to receive the dividends, interest and other distributions that it
would otherwise be authorized to receive and retain pursuant to Section
16(a)(ii) shall
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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 16(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).
(iii) The Collateral Agent shall be authorized to
send to each Securities Intermediary as defined in and under any
Securities Account Control Agreement a Notice of Exclusive Control as
defined in and under such Securities Account Control Agreement.
Section 17. As to Letter-of-Credit Rights. (a) Each Grantor,
by granting a security interest in its Letter-of-Credit Rights to the Collateral
Agent, intends to (and hereby does) assign to the Collateral Agent its rights
(including its contingent rights) to the proceeds of all letters of credit of
which it is or hereafter becomes a beneficiary. Each Grantor will promptly cause
the issuer of such letter of credit and each nominated person (if any) with
respect thereto to consent to such assignment of the proceeds thereof and
deliver written evidence of such consent to the Collateral Agent.
(b) If an Event of Default shall have occurred and be
continuing, each Grantor will, promptly upon request by the Collateral Agent,
notify (and such Grantor hereby authorizes the Collateral Agent to notify) the
issuer and each nominated person with respect to each of its pledged letters of
credit that (i) the proceeds thereof have been assigned to the Collateral Agent
hereunder and (ii) any payments due or to become due in respect thereof are to
be made directly to the Collateral Agent or its designee.
Section 18. Transfers and Other Liens; Additional Shares. (a)
Each Grantor agrees that it will not (i) sell, assign or otherwise dispose of,
or grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, 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 pledge, assignment and security interest created under
this Agreement and Liens permitted under the Credit Agreement.
(b) Each Grantor agrees that it will (i) cause each
issuer of the Pledged Shares pledged 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) pledge hereunder, immediately
upon its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other securities of each issuer of the Pledged Shares.
Section 19. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full
-21-
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
any action and to execute any instrument that the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement. Such
actions shall include each of the following, but only after the occurrence and
during the continuance of an Event of Default.
(a) to obtain and adjust insurance required to be
paid to the Collateral Agent pursuant to Section 14,
(b) to ask for, demand, collect, sue 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 rights of the Collateral Agent with
respect to any of the Collateral.
Section 20. Collateral Agent May Perform. If any Grantor fails
to perform any agreement contained herein, the Collateral Agent may, as the
Collateral Agent deems necessary to protect the security interest granted
hereunder in the Collateral or to protect the value thereof, but without any
obligation to do so and without 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 23(b).
Section 21. The Collateral Agent's Duties. (a) The powers
conferred on the Collateral Agent hereunder are solely to protect the Lenders'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the exercise of reasonable care with respect to the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Collateral Agent shall have no duty or
liability as to any Collateral, as to ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not the Collateral Agent or any Lender 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.
(b) Anything contained herein to the contrary
notwithstanding, the Collateral Agent may from time to time, when the Collateral
Agent deems it to be necessary, appoint one or 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, (i) the assignment and pledge of such
Collateral and the security interest granted in such Collateral by each Grantor
hereunder shall be deemed for
-22-
purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent, for the ratable benefit of the Lenders, as
security for the Secured Obligations of such Grantor, (ii) such Subagent shall
automatically be vested, in addition to the Collateral Agent, with all rights,
powers, privileges, interests and remedies of the Collateral Agent hereunder
with respect to such Collateral and (iii) 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.
(c) Notwithstanding anything herein to the contrary,
to the extent this Security Agreement or any other Credit Document purports to
require any Grantor to grant to the Collateral Agent, on behalf of the Lenders,
a security interest in the FCC Licenses or State Licenses of such Grantor, the
Collateral Agent, on behalf of the Lenders, shall only have a security interest
in such licenses at such times and to the extent that a security interest in
such licenses is permitted under applicable law. In further recognition of
applicable FCC or State rules and policies, the parties hereto also agree that,
notwithstanding anything to the contrary contained in this Security Agreement or
any other Credit Document, the Collateral Agent, on behalf of the Lenders, will
not take any action pursuant to this Security Agreement or any other Credit
Document that would constitute or result in any assignment of a FCC License or a
State License or any transfer of control of a Grantor if such assignment of
license or transfer of control would require under then-existing law (including
any Communications Law or State Communications Law) prior FCC Consents or State
Consents without first obtaining such FCC Consents or State Consents.
(d) The Collateral Agent may release any of the
Collateral from this Agreement or may substitute any of the Collateral for other
Collateral without altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this Agreement as to any Collateral
not expressly released or substituted, and this Security Agreement shall
continue as a first priority lien, subject to Permitted Liens, on all Collateral
not expressly released or substituted.
Section 22. 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 UCC (whether or not the UCC
applies to the affected Collateral) and also may: (i) require each
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 that 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 of the Grantors 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
-23-
obligation to such Grantor in respect of such occupation; and (iv)
exercise any and all rights and remedies of any of the Grantors under
or in connection with the Collateral or otherwise in respect of the
Collateral, including, without limitation, (A) any and all rights of
such Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, the Pledged Receivables and
the Related Contracts and the other Collateral, (B) withdraw, or cause
or direct the withdrawal, of all funds with respect to the Account
Collateral and (C) exercise all other rights and remedies with respect
to the Pledged Receivables, the Related Contracts and the other
Collateral, including, without limitation, those set forth in Section
9-607 of the UCC. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least 10 days' notice to such Grantor
of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The 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 or on behalf of the Collateral Agent and
all cash proceeds received by or on behalf of 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 23) in whole or in part by
the Collateral Agent for the ratable benefit of the Lenders against,
all or any part of the Secured Obligations, in the following manner:
(i) first, to the payment of all of the fees,
indemnification payments, costs and expenses that are due and
payable to the Collateral Agent under or in respect of the
Loan Documents on such date;
(ii) second, to the payment of all of the
indemnification payments, fees, costs and expenses that are
due and payable to the Lenders under Section 23, Section 8.06
of the Credit Agreement and any similar section of any of the
other Loan Documents on such date, ratably based upon the
respective aggregate amounts of all such indemnification
payments, costs and expenses owing to the Lenders on such
date;
(iii) third, to the payment of all of the accrued and
unpaid interest on the Obligations (other than the Loans) that
is due and payable to the and the Lenders under Section 2.03
of the Credit Agreement on such date, ratably based upon the
respective aggregate amounts of all such interest owing to the
Lenders on such date;
(iv) fourth, to the payment of all of the accrued and
unpaid interest on the Loans that is due and payable to the
Lenders under Section 2.03 of the Credit Agreement on such
date, ratably based upon the respective aggregate amounts of
all such interest owing to the Lenders on such date;
-24-
(v) fifth, to the payment of the principal of all of
the outstanding Loans that is due and payable to the Lenders
on such date, ratably based upon the respective aggregate
amounts of all such principal owing to the Lenders on such
date; and
(vi) sixth, to the payment of all other Obligations
of the Loan Parties owing under or in respect of the Loan
Documents that are due and payable to the Lenders on such
date, ratably based upon the respective aggregate amounts of
all such Obligations owing to the Lenders on such date.
Any surplus of such cash or cash proceeds held by or on the behalf of the
Collateral Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the applicable Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) Unless the Collateral Agent has elected to retain
the Collateral pursuant to the applicable provisions of the UCC, in the
event that the proceeds of any sale, collection or realization are
insufficient to pay all amounts to which the Collateral Agent or the
Lenders are entitled as set forth above, the Grantors shall be jointly
and severally liable for the deficiency, together with interest thereon
at the rate specified in Section 2.03 of the Credit Agreement, together
with the costs of collection and the reasonable fees of any attorneys
employed by the Collateral Agent to collect such deficiency.
(d) All payments received by any Grantor in respect
of the Collateral 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 in the same
form as so received (with any necessary indorsement).
(e) The Collateral Agent may, without notice to any
Grantor 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 any funds held with respect to the Account
Collateral or in any other deposit account.
(f) If the Collateral Agent shall determine to
exercise its right to sell all or any of the Security Collateral of any
Grantor pursuant to this Section 22, each Grantor agrees that, upon
request of the Collateral Agent, such Grantor will, at its own expense:
(i) execute and deliver, and cause each
issuer of such 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;
-25-
(ii) 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 such Security Collateral, as requested by the
Collateral Agent;
(iii) cause each such issuer of such
Security Collateral 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;
(iv) 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
(v) do or cause to be done all such other
acts and things as may be necessary to make such sale of such
Security Collateral or any part thereof valid and binding and
in compliance with applicable law.
(g) The Collateral Agent is authorized, in connection
with any sale of the Security Collateral pursuant to this Section 22,
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 subsection
(f)(i) above; (ii) any information and projections provided to it
pursuant to subsection (f)(iv) above; and (iii) any other information
in its possession relating to such Security Collateral.
(h) Each Grantor acknowledges the impossibility of
ascertaining the amount of damages that would be suffered by the
Lenders by reason of the failure by such Grantor to perform any of the
covenants contained in subsection (f) above and, consequently, agrees
that, if such Grantor shall fail to perform any of such covenants, it
will pay, as liquidated damages and not as a penalty, an amount equal
to the value of the Security Collateral on the date the Collateral
Agent shall demand compliance with subsection (f) above.
(i) The Grantors recognize that the Collateral Agent
may deem it impracticable to effect a public sale of all or any part of
the Security Collateral and that the Collateral Agent may, therefore,
determine to make one or more private sales of any such Security
Collateral to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such Security Collateral for
their own account, for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges that any such
private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have
-26-
no obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933. Each
Grantor further acknowledges and agrees that any offer to sell Security
Collateral which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such
offer may be advertised without prior registration under the Securities
Act of 1933) or (ii) made privately in the manner described above shall
be deemed to involve a "public sale" under the UCC, notwithstanding
that such sale may not constitute a "public offering" under the
Securities Act of 1933, and the Collateral Agent may, in such event,
bid for the purchase of such Security Collateral.
Section 23. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the
Collateral Agent the amount of any and all reasonable expenses, including,
without limitation, 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 the other Lenders hereunder or (iv) the
failure by such Grantor to perform or observe any of the provisions hereof.
(c) The foregoing indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by a
Grantor, its directors, shareholders or creditors or an Indemnified Party or any
other Person.
Section 24. Amendments; Waivers; Additional Grantors; 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
or any Lender 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 or authentication
by any Person of a security agreement supplement in substantially the form of
Exhibit D hereto (each a "Security
-27-
Agreement Supplement"), (i) such Person shall be referred to as an "Additional
Grantor" and shall be and become a Grantor hereunder and each reference in this
Agreement and the other Loan Documents to "Grantor" shall also mean and be a
reference to such Additional Grantor, and (ii) the supplemental schedules
attached to each Security Agreement Supplement shall be incorporated into and
become a part of and supplement the corresponding Schedules hereto, and the
Collateral Agent may attach such supplemental schedules to such Schedules; and
each reference to such Schedules shall mean and be a reference to such Schedules
as supplemented pursuant to each Security Agreement Supplement.
Section 25. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied or delivered to, in the case of the Borrower or the
Parent, addressed to it at its address specified in the Credit Agreement and, in
the case of each Grantor other than the Borrower and the Parent, addressed to it
at its address set forth opposite such Grantor's name on the signature pages
hereto or on the signature page to the Security Agreement Supplement pursuant to
which it became a party hereto; or, as to any party, at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and other communications shall, when mailed or telecopied, be
effective when deposited in the mails or telecopied, respectively, addressed as
aforesaid, except that notices and other communications to the Collateral Agent
shall not be effective until received by the Collateral Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or of any Security Agreement Supplement or Schedule
hereto shall be effective as delivery of an original executed counterpart
thereof.
Section 26. Continuing Security Interest; Assignments under
the Credit Agreement, Etc. (a) This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the payment in full in cash of the Secured Obligations, (ii) be binding upon
each Grantor, its successors and assigns and (iii) inure, together with the
rights and remedies of the Collateral Agent hereunder, to the benefit of the
Lenders and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitments) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender herein or
otherwise, in each case as provided in Section 8.05(b)of the Credit Agreement.
None of the rights or obligations of any Grantor hereunder may be assigned or
otherwise transferred without the prior written consent of the Collateral Agent,
and any such assignment or transfer shall be null and void.
(b) This Agreement shall continue to be effective or
be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Collateral Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency
or similar law.
Section 27. Release; Termination. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any Grantor in
accordance with the terms of the Loan Documents (other than sales of Inventory
in the ordinary course of business), the Collateral
-28-
Agent will, at such 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 Default shall have occurred and be continuing, (ii) such Grantor shall have
delivered to the Collateral Agent, at least 10 days prior to the date of the
proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including, without limitation, the price thereof and any
expenses in connection therewith, together with a form of release for execution
by the Collateral Agent and a certificate of such Grantor 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, or any
payment to be made in connection therewith, in accordance with Section 2.04 of
the Credit Agreement shall, to the extent so required, be paid or made to, or in
accordance with the instructions of, the Collateral Agent when and as required
under Section 2.04 of the Credit Agreement.
(b) Upon the payment in full in cash of the Secured
Obligations (except in respect of indemnification that survives repayment of the
indebtedness), the pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the applicable
Grantor. Upon any such termination, the Collateral Agent will, at the applicable
Grantor's expense, execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.
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 an original
executed counterpart of this Agreement.
Section 29. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
Section 30. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
-29-
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.
Address for Notices: DAVEL FINANCING COMPANY, L.L.C.,
a Delaware limited liability company
- --------------------
By: DAVEL COMMUNICATIONS, INC.,
- -------------------- its sole managing member
By: /s/ Bruce W. Renard
--------------------------------
Name: Bruce W. Renard
Title: President
PHONETEL TECHNOLOGIES, INC.,
an Ohio corporation
By: /s/ John D. Chichester
--------------------------------
Name: John D. Chichester
Title: President & Chief
Executive Officer
CHEROKEE COMMUNICATIONS, INC.,
a Texas corporation
By: /s/ John D. Chichester
--------------------------------
Name: John D. Chichester
Title: President & Chief
Executive Officer
DAVEL COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Bruce W. Renard
---------------------------------
Name: Bruce W. Renard
Title: President
ADTEC COMMUNICATIONS, INC.,
a Florida corporation
CENTRAL PAYPHONE SERVICES, INC.,
a Georgia corporation
COMMUNICATIONS CENTRAL INC.,
a Georgia corporation
-30-
COMMUNICATIONS CENTRAL OF GEORGIA, INC.,
a Georgia corporation
DAVEL COMMUNICATIONS GROUP, INC.,
an Illinois corporation
DAVEL MEDIA, INC.,
a Delaware corporation
DAVEL MEXICO, LTD.,
an Illinois corporation
DAVELTEL, INC.,
An Illinois corporation
DF MERGER CORP.,
a Delaware corporation
INTERSTATE COMMUNICATIONS, INC.,
a Georgia corporation
INVISION TELECOM, INC.,
a Georgia corporation
PEOPLES ACQUISITION CORPORATION,
a Pennsylvania corporation
PEOPLES COLLECTORS, INC.,
a Delaware corporation
PEOPLES TELEPHONE COMPANY, INC.,
a New York corporation
PEOPLES TELEPHONE COMPANY, INC.,
a New Hampshire corporation
PT MERGER CORP.,
an Ohio corporation
PTC CELLULAR, INC.,
a Delaware corporation
PTC SECURITY SYSTEMS, INC.,
a Florida corporation
SILVERADO COMMUNICATIONS CORP.,
a Colorado corporation
-31-
TELALEASING ENTERPRISES, INC.,
an Illinois corporation
T.R.C.A., INC.,
an Illinois corporation
By: /s/ Bruce W. Renard
--------------------------------
Name: Bruce W. Renard
Title: President
-32-
SCHEDULE I TO THE
SECURITY AGREEMENT
PLEDGED SHARES AND PLEDGED DEBT
PART A
<Table>
<Caption>
STOCK PERCENTAGE OF
CERTIFICATE NUMBER OF OUTSTANDING
GRANTOR STOCK ISSUER CLASS OF STOCK PAR VALUE NO(S). SHARES SHARES
================== ================ ================ =============== ================ ================ ===============
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
- ------------------ ---------------- ---------------- --------------- ---------------- ---------------- ---------------
================== ================ ================ =============== ================ ================ ===============
</Table>
PART B
<Table>
<Caption>
DESCRIPTION OF DEBT CERTIFICATE OUTSTANDING
GRANTOR DEBT ISSUER DEBT NO(S). FINAL MATURITY PRINCIPAL AMOUNT
===================== ================== =================== ================== =================== ==================
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
===================== ================== =================== ================== =================== ==================
</Table>
SCHEDULE II TO THE
SECURITY AGREEMENT
LOCATIONS OF INVENTORY AND EQUIPMENT
[NAME OF GRANTOR]
LOCATIONS OF INVENTORY:
[NAME OF GRANTOR]
LOCATIONS OF INVENTORY:
[ETC.]
[NAME OF GRANTOR]
LOCATIONS OF EQUIPMENT:
[NAME OF GRANTOR]
LOCATIONS OF EQUIPMENT:
[ETC.]
SCHEDULE III TO THE
SECURITY AGREEMENT
LOCATION, CHIEF EXECUTIVE OFFICE,
FEDERAL TAX IDENTIFICATION NUMBER AND ORGANIZATIONAL
IDENTIFICATION NUMBER
<Table>
<Caption>
FEDERAL TAX ORGANIZATIONAL
GRANTOR LOCATION CHIEF EXECUTIVE OFFICE IDENTIFICATION NUMBER IDENTIFICATION NUMBER
- ---------------------- ---------------------- ---------------------- --------------------- ---------------------
</Table>
SCHEDULE IV TO THE
SECURITY AGREEMENT
CHANGES IN LOCATION OF EQUIPMENT AND INVENTORY, ETC.
CHANGES IN THE LOCATION OF EQUIPMENT AND INVENTORY
CHANGES IN THE NAME, IDENTITY OR CORPORATE STRUCTURE
CHANGES IN LOCATION
CHANGES IN THE CHIEF EXECUTIVE OFFICE
CHANGES IN THE FEDERAL TAX I.D. NO.
CHANGES IN THE ORGANIZATIONAL I.D. NO.
SCHEDULE V TO THE
SECURITY AGREEMENT
PLEDGED ACCOUNTS
<Table>
<Caption>
NAME AND ADDRESS OF
GRANTOR PLEDGED ACCOUNT BANK MAILING ADDRESS ACCOUNT NUMBER
=============================== ============================ ============================ ============================
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
=============================== ============================ ============================ ============================
</Table>
SCHEDULE VI TO THE
SECURITY AGREEMENT
PERMITTED UNBLOCKED ACCOUNTS
<Table>
<Caption>
NAME AND ADDRESS
GRANTOR OF BANK ACCOUNT NUMBER
=============================== ============================ ============================
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ----------------------------
=============================== ============================ ============================
</Table>
SCHEDULE VII TO THE
SECURITY AGREEMENT
TRADE NAMES
SCHEDULE VIII TO THE
SECURITY AGREEMENT
COPYRIGHTS AND COPYRIGHT LICENSES
SCHEDULE IX TO THE
SECURITY AGREEMENT
PATENTS AND PATENT LICENSES
Schedule X to the
Security Agreement
TRADEMARKS AND TRADEMARK LICENSES
SCHEDULE XI TO THE
SECURITY AGREEMENT
COMMERCIAL TORT CLAIMS
[Describe nature of claim(s)-see Comment 5 to UCC Section 9-108]
EXHIBIT A TO THE
SECURITY AGREEMENT
ASSIGNMENT FOR SECURITY
(COPYRIGHTS)
WHEREAS, _________________________(the "Assignor") holds all
right, title and interest in the copyrights listed on the annexed Schedule 1A,
which copyrights are registered in the United States Copyright Office (the
"Copyrights");
WHEREAS, the Assignor, together with certain of its
affiliates, has entered into a Security Agreement, dated February 19, 2002 (the
"Security Agreement"), in favor of Madeleine L.L.C., as Collateral Agent (the
"Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has
assigned to the Assignee and granted to the Assignee for the benefit of the
lenders a continuing security interest in all right, title and interest of the
Assignor in, to and under the Copyrights and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof (the
"Collateral"), to secure the payment, performance and observance of the Secured
Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor does
hereby pledge, convey, sell assign, transfer and set over unto the Assignee and
grants to the Assignee for the benefit of the lenders a continuing security
interest in the Collateral to secure the prompt payment, performance and
observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that
the rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
Exh. A-1
IN WITNESS WHEREOF, the Assignor has caused this Assignment to
be duly executed by its officer thereunto duly authorized as of __________ __,
200__.
[NAME OF GRANTOR]
By:
-----------------------------------------
Name:
Title:
Exh. A-2
STATE OF NEW YORK
ss.:
COUNTY OF NEW YORK
On this ____ day of _______________, 200__, before me
personally came ________________, to me known to be the person who executed the
foregoing instrument, and who, being duly sworn by me, did depose and say that
he is the ________________ of _________________________, a ___________
corporation, and that he executed the foregoing instrument in the firm name of
_________________________, and that he had authority to sign the same, and he
acknowledged to me that he executed the same as the act and deed of said firm
for the uses and purposes therein mentioned.
-----------------------------
Exh. A-3
SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(COPYRIGHTS AND COPYRIGHT APPLICATIONS)
Copyrights and Copyright Applications owned
by _______________________________
Exh. A-4
EXHIBIT B TO THE
SECURITY AGREEMENT
ASSIGNMENT FOR SECURITY
(PATENTS)
WHEREAS, ___________________________ (the "Assignor") holds
all right, title and interest in the letter patents, design patents and utility
patents listed on the annexed Schedule 1A, which patents are issued or applied
for in the United States Patent and Trademark Office (the "Patents");
WHEREAS, the Assignor, together with certain of its
affiliates, has entered into a Security Agreement, dated February 19, 2002 (the
"Security Agreement"), in favor of Madeleine L.L.C., as Collateral Agent (the
"Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has
assigned to the Assignee and granted to the Assignee for the benefit of the
lenders a continuing security interest in all right, title and interest of the
Assignor in, to and under the Patents and the applications and registrations
thereof, and all proceeds thereof, including, without limitation, any and all
causes of action which may exist by reason of infringement thereof (the
"Collateral"), to secure the payment, performance and observance of the Secured
Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor does
hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and
grants to the Assignee for the benefit of the lenders a continuing security
interest in the Collateral to secure the prompt payment, performance and
observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that
the rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
Exh. B-1
IN WITNESS WHEREOF, the Assignor has caused this Assignment to
be duly executed by its officer thereunto duly authorized as of __________ __,
200_.
[NAME OF GRANTOR]
By:
-----------------------------------------
Name:
Title:
Exh. B-2
STATE OF ____________
ss.:
COUNTY OF __________
On this ____ day of _______________, 200_, before me
personally came ________________, to me known to be the person who executed the
foregoing instrument, and who, being duly sworn by me, did depose and say that
he is the ________________ of
____________________________, a ____________________, and that
he executed the foregoing instrument in the firm name of
_______________________________________, and that he had
authority to sign the same, and he acknowledged to me that he executed the same
as the act and deed of said firm for the uses and purposes therein mentioned.
----------------------------------
Exh. B-3
SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(PATENTS AND PATENT APPLICATIONS)
Patents and Patent Applications Owned
by _____________________________
Exh. B-4
EXHIBIT C TO THE
SECURITY AGREEMENT
ASSIGNMENT FOR SECURITY
(TRADEMARKS)
WHEREAS, ____________________ (the "Assignor") has adopted,
used and is using, and holds all right, title and interest in and to, the
trademarks and service marks listed on the annexed Schedule 1(a), which
trademarks and service marks are registered or applied for in the United States
Patent and Trademark Office (the "Trademarks");
WHEREAS, the Assignor, together with certain of its
affiliates, has entered into a Security Agreement, dated February 19, 2002 (the
"Security Agreement"), in favor of Madeleine L.L.C., as Collateral Agent (the
"Assignee");
WHEREAS, pursuant to the Security Agreement, the Assignor has
assigned to the Assignee and granted to the Assignee for the benefit of the
lenders a continuing security interest in all right, title and interest of the
Assignor in, to and under the Trademarks, together with, among other things, the
good-will of the business symbolized by the Trademarks and the applications and
registrations thereof, and all proceeds thereof, including, without limitation,
any and all causes of action which may exist by reason of infringement thereof
and any and all damages arising from past, present and future violations thereof
(the "Collateral"), to secure the payment, performance and observance of the
Secured Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Assignor does
hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and
grants to the Assignee for the benefit of the lenders a continuing security
interest in the Collateral to secure the prompt payment, performance and for the
benefit of the lenders observance of the Obligations.
The Assignor does hereby further acknowledge and affirm that
the rights and remedies of the Assignee with respect to the Collateral are more
fully set forth in the Security Agreement, the terms and provisions of which are
hereby incorporated herein by reference as if fully set forth herein.
Exh. C-1
IN WITNESS WHEREOF, the Assignor has caused this Assignment to
be duly executed by its officer thereunto duly authorized as of _____________
__, 20__.
[NAME OF GRANTOR]
By:
-----------------------------------
Name:
Title:
Exh. C-2
STATE OF ____________
ss.:
COUNTY OF ___________
On this ____ day of _______________, 20__, before me
personally came ________________, to me known to be the person who executed the
foregoing instrument, and who, being duly sworn by me, did depose and say that
he is the ________________ of _______________________________________, a
____________________, and that he executed the foregoing instrument in the firm
name of _______________________________________, and that he had authority to
sign the same, and he acknowledged to me that he executed the same as the act
and deed of said firm for the uses and purposes therein mentioned.
----------------------------------
Exh. C-3
SCHEDULE 1A TO ASSIGNMENT FOR SECURITY
(TRADEMARKS AND TRADEMARK APPLICATIONS)
Trademarks and Trademark Applications Owned
by ______________________________
D-1
EXHIBIT D TO THE
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
[Date of Security Agreement Supplement]
Madeleine L.L.C.
as the Collateral Agent for the
Lenders referred to in the
Credit Agreement referred to below
450 Park Avenue, 28th Floor
New York, New York 10022
--------------------------------
Ladies and Gentlemen:
Reference is made to (i) the Credit Agreement dated as of
February 19, 2002 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Davel Financing
Company, LLC, PhoneTel Technologies, Inc. and Cherokee Communications, Inc., as
Borrowers, Davel Communications, Inc., certain subsidiaries of such persons, the
Lenders party thereto, and Madeleine L.L.C., as Collateral Agent on behalf of
the Lenders, and (ii) the Security Agreement dated February 19, 2002 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Security Agreement") made by the Grantors from time to time party
thereto in favor of the Collateral Agent for the Lenders. Terms defined in the
Credit Agreement or the Security Agreement and not otherwise defined herein are
used herein as defined in the Credit Agreement or the Security Agreement.
Section 1. Grant of Security. The undersigned hereby assigns
and pledges to the Collateral Agent for the ratable benefit of the Lenders, and
hereby grants to the Collateral Agent for the ratable benefit of the Lenders, a
security interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including, without limitation, the property and assets of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.
Section 2. Security for Obligations. The pledge and assignment
of, and the grant of a security interest in, the Collateral by the undersigned
under this Security Agreement Supplement and the Security Agreement secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations, interest,
premiums, penalties, fees, indemnifications, contract causes of action, costs,
expenses or otherwise. Without limiting the generality of the foregoing, this
Security Agreement Supplement and the Security Agreement secures the payment of
all amounts that constitute part of the Secured Obligations and that would be
owed by the undersigned to any Secured Party under the
D-1
Loan Documents but for the fact that such Secured Obligations are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.
Section 3. Supplements to Security Agreement Schedules. The
undersigned has attached hereto supplemental Schedules I, II, III, IV, V, VI,
VII, VIII, IX, X and XI to Schedules I, II, III, IV, V, VI, VII, VIII, IX, X and
XI, respectively, to the Security Agreement, and the undersigned hereby
certifies, as of the date first above written, that such supplemental schedules
have been prepared by the undersigned in substantially the form of the
equivalent Schedules to the Security Agreement and are complete and correct in
all material respects.
Section 4. Representations and Warranties. The undersigned
hereby makes each representation and warranty set forth in Section 9 of the
Security Agreement (as supplemented by the attached supplemental schedules) to
the same extent as each other Grantor.
Section 5. Obligations Under the Security Agreement. The
undersigned hereby agrees, as of the date first above written, to be bound as a
Grantor by all of the terms and provisions of the Security Agreement to the same
extent as each of the other Grantors. The undersigned further agrees, as of the
date first above written, that each reference in the Security Agreement to an
"Additional Grantor" or a "Grantor" shall also mean and be a reference to the
undersigned.
Section 6. Governing Law. 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 for notices:
-------------------------
-------------------------
-------------------------
D-2
EXHIBIT E TO THE
SECURITY AGREEMENT
FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT
(Securities Account)
CONTROL AGREEMENT dated as of ________, ___, among _________,
a ____________ (the "Grantor"), Madeleine L.L.C., as Collateral Agent (the
"Secured Party"), [_______, __________ as Control Agent (the "Control Agent")]
and __________, a __________ ("______________"), as securities intermediary (the
"Securities Intermediary").
PRELIMINARY STATEMENTS:
(1) The Grantor has granted the Secured Party a security
interest (the "Security Interest") in account no. ________________ maintained by
the Securities Intermediary for the Grantor (the "Account").
(2) 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 of the
mutual agreements contained herein, the parties hereto hereby agree as follows:
Section 1. The Account. The Securities Intermediary represents
and warrants to, and agrees with, the Secured Party that:
(a) The Securities Intermediary maintains the Account
for the Grantor, and all property held by the Securities Intermediary for the
account of the Grantor is, and will continue to be, credited to the Account.
(b) The Account is a securities account. The
Securities Intermediary is the securities intermediary with respect to the
property credited from time to time to the Account. The Grantor is the
entitlement holder with respect to the property credited from time to time to
the Account.
(c) The securities intermediary's jurisdiction with
respect to the Account is, and will continue to be for so long as the Security
Interest shall be in effect, the State of New York.
(d) Exhibit A attached hereto is a statement of the
property credited to the Account on the date hereof.
(e) The Securities Intermediary does not know of any
claim to or interest in the Account or any property credited to the Account,
except for claims and interests of the parties referred to in this Agreement.
E-1
Section 2. Control by [Secured Party] [Control Agent].
(a) The Securities Intermediary will comply with all
notifications it receives directing it to transfer or redeem any property in the
Account (each an "Entitlement Order") or other directions concerning the Account
(including, without limitation, directions to distribute to the Secured Party
proceeds of any such transfer or redemption or interest or dividends on property
in the Account) originated by the [Secured Party] [Control Agent] without
further consent by the Grantor or any other person.
(b) [The Control Agent hereby acknowledges that it
shall maintain and exercise control of the Account on behalf of the Secured
Party.]
Section 3. Grantor's Rights in Account.
(a) Except as otherwise provided in this Section 3,
the Securities Intermediary will comply with Entitlement Orders originated by
the Grantor without further consent by the [Secured Party] [Control Agent].
(b) Until the Securities Intermediary receives a
notice from the [Secured Party] [Control Agent] that the [Secured Party]
[Control Agent] will exercise exclusive control over the Account (a "Notice of
Exclusive Control"), the Securities Intermediary may distribute to the Grantor
all interest and regular cash dividends on property in the Account.
(c) The Securities Intermediary will not comply with
any Entitlement Order originated by the Grantor that would require the
Securities Intermediary to make a free delivery to the Grantor or any other
person.
(d) If the Securities Intermediary receives from the
[Secured Party] [Control Agent] a Notice of Exclusive Control, the Securities
Intermediary will cease:
(i) complying with Entitlement Orders or
other directions concerning the Account originated by the Grantor and
(ii) distributing to the Grantor interest
and dividends on property in the Account.
Section 4. Priority of Secured Party's Security Interest. (a)
The Securities Intermediary subordinates in favor of the Secured Party any
security interest, lien, or right of setoff it may have, now or in the future,
against the Account or property in the Account, except that the Securities
Intermediary will retain its prior lien on property in the Account to secure
payment for property purchased for the Account and normal commissions and fees
for the Account.
(b) The Securities Intermediary will not agree with
any Person not party to this Agreement that the Securities Intermediary will
comply with Entitlement Orders originated by such Person.
E-2
Section 5. Statements, Confirmations, and Notices of Adverse
Claims. (a) The Securities Intermediary will send copies of all statements and
confirmations for the Account simultaneously to the Grantor[, the Control Agent]
and the Secured Party.
(b) When the Securities Intermediary knows of any
claim or interest in the Account or any property credited to the Account other
than the claims and interests of the parties referred to in this Agreement, the
Securities Intermediary will promptly notify [the Control Agent,] the Secured
Party and the Grantor of such claim or interest.
Section 6. The Securities Intermediary's Responsibility. (a)
Except for permitting a withdrawal, delivery, or payment in violation of Section
3, the Securities Intermediary will not be liable to [the Control Agent or] the
Secured Party for complying with Entitlement Orders or other directions
concerning the Account from the Grantor that are received by the Securities
Intermediary before the Securities Intermediary receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.
(b) The Securities Intermediary will not be liable to
the Grantor or the Secured Party for complying with a Notice of Exclusive
Control or with an Entitlement Order or other direction concerning the Account
originated by the [Secured Party] [Control Agent], even if the Grantor notifies
the Securities Intermediary that the [Secured Party] [Control Agent] is not
legally entitled to issue the Notice of Exclusive Control or Entitlement Order
or such other direction unless the Securities Intermediary takes the action
after it is served with an injunction, restraining order, or other legal process
enjoining it from doing so, issued by a court of competent jurisdiction, and had
a reasonable opportunity to act on the injunction, restraining order or other
legal process.
(c) This Agreement does not create any obligation of
the Securities Intermediary except for those expressly set forth in this
Agreement and in Part 5 of Article 8 of the N.Y. Uniform Commercial Code. In
particular, the Securities Intermediary need not investigate whether the
[Secured Party] [Control Agent] is entitled under the [Secured Party's] [Control
Agent's] agreements with the Grantor [or Secured Party] to give an Entitlement
Order or other direction concerning the Account or a Notice of Exclusive
Control. The Securities Intermediary may rely on notices and communications it
believes given by the appropriate party.
Section 7. Indemnity. The Grantor will indemnify the
Securities Intermediary, its officers, directors, employees and agents against
claims, liabilities and expenses arising out of this Agreement (including,
without limitation, reasonable attorney's fees and disbursements), except to the
extent the claims, liabilities or expenses are caused by the Securities
Intermediary's gross negligence or willful misconduct as found by a court of
competent jurisdiction in a final, non-appealable judgment.
Section 8. Termination; Survival. (a) The Secured Party may
terminate this Agreement by notice to [the Control Agent,] the Securities
Intermediary and the Grantor. If the Secured Party notifies the Securities
Intermediary that the Security Interest has terminated, this Agreement will
immediately terminate.
E-3
(b) The Securities Intermediary may terminate this
Agreement on 60 days' prior notice to [the Control Agent,] the Secured Party and
the Grantor, provided that before such termination the Securities Intermediary
and the Grantor shall make arrangements to transfer the property in the Account
to another securities intermediary that shall have executed, together with [the
Control Agent and] the Grantor, a control agreement in favor of [the Control
Agent and] the Secured Party in respect of such property in substantially the
form of this Agreement or otherwise in form and substance satisfactory to the
Secured Party.
[(c) The Control Agent may terminate this agreement
on 60 days' written prior notice to the Securities Intermediary, the Secured
Party and the Grantor, provided that before such termination, the Securities
Intermediary, the Secured Party and the Grantor shall make arrangements for
another Person to assume the rights and obligations of the Control Agent
hereunder, and such Person shall have executed, together with the Securities
Intermediary, the Secured Party and the Grantor, a control agreement in favor of
such Person and the Secured Party in substantially the form of this Agreement or
otherwise in form and substance satisfactory to the Secured Party.]
[(c)] [(d)] Sections 6 and 7 will survive termination
of this Agreement.
E-4