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EXHIBIT C-5.
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of March
15, 1996 among PHONETEL TECHNOLOGIES, INC., an Ohio corporation (the
"BORROWER"), PUBLIC TELEPHONE CORPORATION, an Indiana corporation ("PUBLIC"),
WORLD COMMUNICATIONS, INC., a Missouri corporation ("WORLD"), NORTHERN FLORIDA
TELEPHONE CORPORATION, a Florida corporation ("NORTHERN"), and PARAMOUNT
COMMUNICATIONS SYSTEMS, INC., a Florida corporation ("PARAMOUNT"; Public,
World, Northern and Paramount are hereinafter referred to individually as a
"SUBSIDIARY" and, collectively, as the "SUBSIDIARIES"; Borrower and the
Subsidiaries are hereinafter referred to individually as a "GRANTOR" and
collectively as the "GRANTORS"), and INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION, a Delaware corporation ("ING"), as Agent (in such capacity, the
"AGENT") for itself and the other lenders (ING and such other lenders,
collectively, the "LENDERS") as are, or may from time to time become, parties
to the Credit Agreement (as defined below).
W I T N E S S E T H:
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RECITALS.
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A. Pursuant to a Credit Agreement, dated as of even date
herewith (as amended, restated, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, the Lenders and the Agent,
the Lenders will extend certain Loans to Borrower, as more specifically
described in the Credit Agreement; and
B. Pursuant to a Subsidiary Guaranty, dated as of even
date herewith (together with all amendments and other modifications, if any,
from time to time hereafter made thereto, the "SUBSIDIARY GUARANTY"), by the
Subsidiaries in favor of the Agent and the Lenders, the Subsidiaries have
guaranteed, jointly and severally, all of the Obligations of the Borrower under
the Credit Agreement, subject to the terms of the Subsidiary Guaranty; and
C. In order to induce the Lenders and the Agent to enter
into the Credit Agreement, and as a condition to the making of the Loans
thereunder, each of the Grantors has agreed to grant a continuing security
interest in and to the "Collateral" (as hereinafter defined) to secure the
"Secured Obligations" (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and
not otherwise defined herein, when used in this Agreement including its
preamble and Recitals, shall have the respective meanings provided for in the
Credit Agreement. The following additional terms (whether or not underscored),
when used in this Agreement, shall have the following meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC), now
or hereafter owned or acquired by a Person or in which a Person now or
hereafter has or acquires any rights, and, in any event, shall mean and
include, without limitation, (a) all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness owing to such Person
arising from the sale or lease of goods or other property by it or the
performance of services by it (including, without limitation, any such
obligation which might be characterized as an account, contract right or
general intangible under the Uniform Commercial Code in effect in any
jurisdiction, as well as any sums owed to such Person under any OSP
Agreements), (b) all of such Person's rights in, to and under all purchase and
sales orders for goods, services or other property, and all of such Person's
rights to any goods, services or other property represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights
of rescission, replevin, reclamation and rights to stoppage in transit), (c)
all monies due to or to become due to such Person under all contracts for the
sale, lease or exchange of goods or other property or the performance of
services by it (whether or not yet earned by performance on the part of such
Person), and (d) all collateral security and guarantees of any kind given by
such Person with respect to any of the foregoing, in each case whether now in
existence or hereafter arising or acquired.
"CHATTEL PAPER" means any "chattel paper" (as defined in the
UCC) now or hereafter owned or acquired by a Person or in which a Person now or
hereafter has or acquires any rights.
"COLLATERAL" means, collectively:
(i) Accounts;
(ii) Inventory;
(iii) Chattel Paper;
(iv) Documents;
(v) Equipment;
(vi) Instruments;
(vii) General Intangibles;
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(viii) the Collateral Account, all cash
deposited therein from time to time, any investments made with such
cash and other monies and property of any kind of any Grantor in the
possession or under the control of the Agent or any Lender;
(ix) All other goods and personal property,
whether tangible or intangible;
(x) All books and records pertaining to any of
the Collateral (including, without limitation, customer lists, credit
files, computer programs, printouts and other computer materials and
records); and
(xi) All products and Proceeds of all or any of
the Collateral described in clauses (i) through (x) hereof.
Notwithstanding the foregoing, Collateral shall not include any property that
is the subject of the Borrower Pledge Agreement and the Subsidiary Pledge
Agreement.
"COLLATERAL ACCOUNT" means any cash collateral account
established by a Grantor for the benefit of and under the exclusive dominion
and control of the Agent, including, without limitation the Blocked Accounts
and the Concentration Accounts referenced in Schedule 3 to the Credit
Agreement.
"DOCUMENTS" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods, now or hereafter
owned or acquired by a Person or in which a Person now or hereafter has or
acquires rights.
"EQUIPMENT" means all "equipment" (as defined in the UCC), now
or hereafter owned or acquired by a Person or in which a Person now or
hereafter has or acquires rights, and, in any event, shall mean and include,
without limitation, all telephones (whether coin operated, non-coin operated or
both coin operated and non-coin operated), cables, telephone components
(whether assembled or disassembled), handsets, cords, microprocessors,
machinery, equipment, furnishings, fixtures, vehicles and computers and other
electronic data processing and other office equipment and any and all
additions, substitutions and replacements of any of the foregoing, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto.
"GENERAL INTANGIBLES" means all "general intangibles" (as
defined in the UCC), now or hereafter owned or acquired by a Person or in which
a Person now or hereafter has or acquires any rights, and, in any event, shall
mean and include, without limitation, all obligations or indebtedness owing to
a Person (other than Accounts) from whatever source arising, including, without
limitation, rights to indemnification (including, without limitation, rights to
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indemnification under the Acquisition Agreements) and all other rights arising
under the Acquisition Agreements, and all rights, title and interest which a
Person may now or hereafter have in or under all contracts (in addition to
contracts described in the definition of Accounts), Telephone Placement
Agreements, causes of action, franchises, tax refund claims, customer lists,
Intellectual Property, license royalties, goodwill, trade secrets, proprietary
or confidential information, data bases, business records, data, skill,
expertise, experience, processes, models, drawings, materials and records,
permits and licenses, warranties, manuals, software and all other intangible
property of every kind and nature.
"INSTRUMENTS" means all "instruments" or "letters of credit"
(each as defined in the UCC), including, without limitation, instruments, and
letters of credit evidencing, representing, arising from or existing in respect
of, relating to, securing or otherwise supporting the payment of, any of the
Accounts, including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances, now or hereafter owned or acquired by a Person
or in which a Person now or hereafter has or acquires any rights.
"INTELLECTUAL PROPERTY" means, collectively, (a) all systems
software and applications software, including, but not limited to, source code,
object code, screen displays and formats, program structure, sequence and
organization, and audiovisual elements, all formulas, processes, ideas and
know-how embodied in any of the foregoing, and all documentation and program
materials, user manuals, operations manuals, flowcharts, programer's notes,
outlines and specifications created in connection with any of the foregoing,
whether or not patentable or copyrightable, (b) concepts, discoveries,
improvements and ideas, (c) patents, patent rights and patent applications,
copyrights and copyright applications, Trademarks, including, without
limitation, the names "PhoneTel" and "Teletalk" and all derivations thereof,
and (d) patent licenses, Trademark Licenses, copyright licenses and other
licenses to use any of the items described in the foregoing clauses (a), (b),
(c) and (d) or any other items of a Person necessary for the conduct of its
business.
"INVENTORY" means all "inventory" (as defined in the UCC), now
or hereafter owned or acquired by a Person or in which a Person now or
hereafter has or acquires any rights, wherever located, and, in any event,
shall mean and include, without limitation, all raw materials, inventory and
other materials and supplies, work-in-process, finished goods, and any products
made or processed therefrom and all substances, if any, commingled therewith or
added thereto.
"PERFECTION CERTIFICATE" means a certificate dated as of even
date herewith, setting forth the corporate names, chief ex-
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ecutive office or principal places of business in each State and other current
locations of the Grantors and such other information as the Agent deems
reasonably pertinent to the perfection of security interests, completed and
supplemented with the schedules and attachments contemplated thereby to the
satisfaction of the Agent, and duly executed by the chief executive and chief
financial Authorized Officer of each of such Persons.
"PERMITTED LIENS" means the Security Interests and the Liens
on the Collateral permitted to be created, to be assumed or to exist pursuant
to Section 6.2.3 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits,
rentals or receipts, in whatever form, arising from the collection, sale,
lease, exchange, assignment, licensing or other disposition of, or realization
upon, Collateral, including, without limitation all claims of a Person against
third parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance in respect
of, any Collateral, and any condemnation or requisition payments with respect
to any Collateral and the following types of property acquired with cash
proceeds: Accounts, Inventory, General Intangibles, Documents, Instruments and
Equipment.
"SECURED OBLIGATIONS" means (a) with respect to the Borrower,
the Obligations, including, without limitation (i) all principal of and
interest (including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower) on any Loan under,
any Note issued pursuant to, and any other amount due from the Borrower under,
the Credit Agreement, and (ii) all amounts payable by the Borrower to an
Interest Rate Contract Counterparty that is a Lender pursuant to the terms of
the Credit Agreement, and (iii) all other obligations (monetary or otherwise)
to be performed by the Borrower under the Credit Agreement or any other Loan
Document; (b) with respect to any Grantor that is a party to the Subsidiary
Guaranty, all amounts payable and all obligations (monetary or otherwise) to be
performed by such Grantor under the Subsidiary Guaranty, including, without
limitation, the "Guaranteed Obligations" (as such term is defined in the
Subsidiary Guaranty); and (c) all renewals or extensions of any of the
foregoing.
"SECURITY INTERESTS" means the security interests granted
pursuant to SECTION 3, as well as all other security interests created or
assigned as additional security for the Secured Obligations pursuant to the
provisions of this Agreement.
"TRADEMARK LICENSE" means any written agreement now or
hereafter in existence granting to a Person any right to use any Trademark,
including, without limitation, the agreements described in SCHEDULE I to the
Trademark Assignment.
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"TRADEMARKS" means all of the following: (i) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, other source or business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature, whether now existing or
hereafter adopted or acquired, all registrations and recordings thereof, (ii)
all applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including, without limitation, those described in SCHEDULE I to the Trademark
Assignment, and (iii) all reissues, extensions or renewals thereof.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of New York; PROVIDED that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, "UCC" means
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Grantor represents
and warrants as follows:
(a) Such Grantor has good and marketable title to all of
its Collateral, free and clear of any Liens other than the Permitted Liens.
Except as listed on EXHIBIT B attached hereto, none of such Collateral consists
of contracts, agreements or other documents which by their terms prohibit an
assignment or pledge of such Collateral nor is any Collateral subject to any
agreement which prohibits assignment or pledge of such Collateral by such
Grantor.
(b) Such Grantor has not performed any act or acts that
could prevent the Agent from enforcing any of the terms of this Agreement.
Other than financing statements or other similar or equivalent documents or
instruments with respect to Permitted Liens, to such Grantor's knowledge, no
financing statement, mortgage, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral is on file or
of record in any jurisdiction, and no Collateral is subject to any Lien other
than Permitted Liens. No Collateral is in the possession of a Person (other
than such Grantor) asserting any claim thereto or security interest therein,
except that the Agent or its designee may have possession of Collateral as
contemplated hereby or by the Borrower Pledge Agreement.
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(c) All of the information set forth in the Perfection
Certificate is true and correct as of the date hereof.
(d) (i) When the UCC financing statements in appropriate
form are filed in the offices specified in the Perfection Certificate,
the Security Interests shall constitute valid and perfected security
interests in the Collateral, prior to all other Liens and rights of
others therein except for the Permitted Liens, to the extent that a
security interest therein may be perfected by filing pursuant to the
UCC.
(ii) When the Trademark Assignment is filed with the
United States Patent and Trademark Office, the Security Interests
shall constitute valid and perfected security interests in all right,
title and interest of the Grantor in all Trademarks of such Grantor,
prior to all other Liens and rights of others therein except for the
Permitted Liens, to the extent that a security interest in such
Trademarks may be perfected by a filing in such office.
(e) The Inventory and Equipment are insured in accordance
with the requirements of the Credit Agreement.
SECTION 3. THE SECURITY INTERESTS. (a) In order to secure the full
and punctual payment and performance of its Secured Obligations in accordance
with the terms thereof, each Grantor hereby grants, pledges, assigns,
hypothecates, sets over and conveys to the Agent, for its benefit and the
benefit of the Lenders, a continuing security interest in and to all Collateral
now or hereafter owned or acquired by such Grantor or in which such Grantor now
has or hereafter has or acquires any rights, and wherever located, excluding
any collateral consisting of chattel paper and general intangibles that are now
held by a Grantor as licensee, lessee or otherwise and that is listed on the
annexed EXHIBIT B to the extent that (i) such chattel paper and general
intangibles are not assignable or capable of being encumbered as a matter of
law or under the terms of the license, lease or other agreement applicable
thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law), without the consent of the licensor or
lessor thereof or other applicable party thereto and (ii) such consent has not
been obtained; PROVIDED, HOWEVER, that the foregoing grant of security interest
shall extend to, and the term "Collateral" shall include, (A) any and all
proceeds of such chattel paper and general intangibles to the extent that the
assignment or encumbering of such proceeds is not so restricted and (B) upon
any such licensor, lessor other applicable party's consent with respect to any
such otherwise excluded chattel paper or general intangibles being
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obtained, thereafter such chattel paper or general intangibles as well as any
and all proceeds thereof that might have theretofore have been excluded from
such grant of a security interest and the term "Collateral".
(b) The Security Interests are granted as security only
and shall not subject the Agent or any Lender to, or transfer to the Agent or
any Lender, or in any way affect or modify, any obligation or liability of any
Grantor with respect to any Collateral or any transaction in connection
therewith.
SECTION 4. FURTHER ASSURANCES; COVENANTS.
(a) GENERAL.
(i) No Grantor will change the location of its
chief executive office or principal place of business in any state
unless it shall have given the Agent thirty (30) days prior notice
thereof, executed and delivered to the Agent all financing statements
and financing statement amendments which the Agent may request in
connection therewith and delivered an opinion of counsel with respect
thereto in accordance with SECTION 4(A)(VIII). No Grantor shall
change the locations, or establish new locations, where it keeps or
holds any Collateral or any records relating thereto from the
applicable locations described in the Perfection Certificate unless
the Grantor shall have given the Agent fifteen (15) days prior notice
of such change of location, executed and delivered to the Agent all
financing statements and financing statement amendments which the
Agent may request in connection therewith and delivered an opinion of
counsel with respect thereto in accordance with SECTION 4(A)(VIII),
and the Grantor shall have complied with any other requirement in this
Agreement or any other Loan Document relating to the location of any
Collateral, PROVIDED, HOWEVER, that the Grantor may keep Collateral
at, or in transit to, any location described in the Perfection
Certificate. No Grantor shall in any event change the location, or
establish new locations, of any Collateral if such change would cause
the Security Interests in such Collateral to lapse or cease to be a
perfected first priority Security Interest.
(ii) No Grantor will change its name, identity or
corporate structure in any manner unless it shall have given the Agent
thirty (30) days prior notice thereof, executed and delivered to the
Agent all financing statements and financing statement amendments
which the Agent may request in connection therewith and delivered an
opinion of counsel with respect thereto in accordance with SECTION
4(A)(VIII).
(iii) The Grantors will, from time to
time, at its expense, execute, deliver, file and record any
statement,
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assignment, instrument, document, agreement or other paper and take
any other action (including, without limitation, any filings with the
United States Patent and Trademark Office, Copyright or Patent filings
and any filings of financing or continuation statements under the UCC)
that from time to time may be necessary, or that the Agent may
request, in order to create, preserve, upgrade in rank (to the extent
required hereby), perfect, confirm or validate the Security Interests
or to enable the Agent and the Lenders to obtain the full benefits of
this Agreement, or to enable the Agent to exercise and enforce any of
its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by law, each Grantor hereby
authorizes the Agent to execute and file financing statements,
financing statement amendments or continuation statements without the
Grantor's signature appearing thereon. Each Grantor agrees that a
carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing
statement. The Grantors shall, jointly and severally, pay the costs
of, or incidental to, any recording or filing of any financing
statements, financing statement amendments or continuation statements
concerning the Collateral.
(iv) If any Grantor's Collateral exceeding in
value $50,000 in the aggregate is at any time in the possession or
control of any warehouseman, bailee (other than a carrier transporting
Inventory to a purchaser in the ordinary course of business) or any of
such Grantor's agents or processors, such Grantor shall notify in
writing such warehouseman, bailee, agent or processor of the Security
Interests created hereby, shall obtain such warehouseman's, bailee's,
agent's or processor's agreement in writing to hold all such
Collateral for the Agent's account subject to the Agent's
instructions, and shall cause such warehousemen, bailee, agent or
processor to issue and deliver to the Agent warehouse receipts, bills
of lading or any similar documents relating to such Collateral in the
Agent's name and in form and substance acceptable to the Agent.
(v) Each Grantor will immediately deliver and
pledge each Instrument to the Agent, appropriately endorsed to the
Agent, PROVIDED THAT so long as no Event of Default shall have
occurred and be continuing, such Grantor may retain for collection in
the ordinary course any Instruments (other than checks and drafts
constituting payments in respect of Accounts) received by it in the
ordinary course of business and the Agent shall, promptly upon request
of such Grantor, make appropriate arrangements for making any other
Instrument pledged by such Grantor available to it for purposes of
presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate to the Agent,
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against trust receipt or like document).
(vi) No Grantor will (A) sell, transfer, lease,
exchange, assign or otherwise dispose of, or grant any option, warrant
or other right with respect to, any Collateral except that, subject to
the rights of the Agent and the Lenders hereunder if an Event
of Default shall have occurred and be continuing, the Grantors may
dispose of assets if such disposition is permitted by Section 6.2.11
of the Credit Agreement, whereupon, in the case of such a disposition,
sale or exchange, the Security Interests created hereby in such item
(but not in any Proceeds arising from such disposition, sale or
exchange) shall cease immediately without any further action on the
part of the Agent; or (B) create, incur or suffer to exist any Lien
with respect to any Collateral, except for the Permitted Liens.
(vii) The Grantors will, promptly upon
request, provide to the Agent all information and evidence it may
reasonably request concerning the Collateral, to enable the Agent to
enforce the provisions of this Agreement.
(viii) Prior to each date on which any
Grantor proposes to take any action contemplated by SECTION 4(A)(I) or
SECTION 4(A)(II), upon request of the Required Lenders such Grantor
shall, at its cost and expense, cause to be delivered to the Agent and
the Lenders an opinion of counsel, satisfactory to the Agent, to the
effect that all financing statements and amendments or supplements
thereto, continuation statements and other documents required to be
recorded or filed in order to perfect and protect the Security
Interests and priority thereof against all creditors of and purchasers
from such Grantor have been filed in each filing office necessary for
such purposes and that all filing fees and taxes, if any, payable in
connection with such filings have been paid in full.
(b) ACCOUNTS, ETC.
(i) Each Grantor shall use all reasonable efforts
consistent with prudent business practice to cause to be collected
from its Account Debtors, as and when due, any and all amounts owing
under or on account of each Account (including, without limitation,
Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and apply forthwith upon
receipt thereof all such amounts as are so collected to the
outstanding balance of such Account. The costs and expenses
(including, without limitation, attorney's fees) of collection of
Accounts incurred by the Grantors or the Agent, shall be borne by the
Grantors, jointly and severally.
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(ii) Upon the occurrence and during the
continuance of any Event of Default, upon request of the Agent,
each Grantor will promptly notify (and each Grantor hereby authorizes
the Agent so to notify) each Account Debtor in respect of any Account
or Instrument that such Collateral has been assigned to the Agent
hereunder, and that any payments due or to become due in respect of
such Collateral are to be made directly to the Agent or its designee.
(iii) Each Grantor will perform and comply in all
material respects with all of its obligations in respect of Accounts,
Instruments and General Intangibles.
(c) INVENTORY, ETC. The Grantors shall notify
the Agent immediately of any additional location where Inventory is
stored which is not listed in the Perfection Certificate.
(d) EQUIPMENT, ETC. The Grantors shall, (i) within ten
(10) days after a request by the Required Lenders, in the case of Equipment now
owned, and (ii) following a request by the Required Lenders pursuant to
subclause (i) above, within ten (10) days after acquiring any other Equipment,
deliver to the Agent, for the benefit of itself and the Lenders, any and all
certificates of title, and applications therefor, if any, of such Equipment and
shall cause the Agent, for the benefit of itself and the Lenders, to be named
as lienholder on any such certificate of title and applications. The Grantors
shall promptly inform the Agent of any material additions to or deletions from
the Equipment and shall not permit any such items to become a fixture to real
estate or an accession to other personal property.
(e) PATENTS, TRADEMARKS, ETC. The Grantors shall notify
the Agent immediately (i) of its acquisition after the Closing Date of any
patent, patent license, Trademark or Trademark License and (ii) if it knows, or
has reason to know, that any application or registration relating to any patent
or Trademark owned by or licensed to the Grantors is reasonably likely to
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) regarding any Grantor's ownership of any patent or
Trademark, its right to register the same, or to keep and maintain the same.
In the event that any patent, patent license, Trademark or Trademark License is
infringed, misappropriated or diluted by a third party, the Grantors shall
notify the Agent promptly after they learn thereof and shall, unless the
Grantors shall reasonably determine that any such action would be of immaterial
economic value, promptly sue for infringement, misappropriation or dilution and
to recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as the Grantors shall reasonably deem
appropriate under the circumstances to protect such patent, patent
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license, Trademark or Trademark License. In no event shall the Grantors,
either themselves or through any agent, employee or licensee, file an
application for the registration of any patent or Trademark with the United
States Patent and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, unless not less than thirty (30)
days prior thereto it informs the Agent, and, upon issuance of such patent or
Trademark, executes and delivers any and all agreements, instruments, documents
and papers the Agent may reasonably request to evidence the Security Interests
in such patent or Trademark and the goodwill and general intangibles of the
Grantors relating thereto or represented thereby. Each Grantor hereby
constitutes the Agent its attorney-in-fact to execute and file all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed, and such power, being coupled with an interest, shall
be irrevocable until the Commitments have terminated and the Secured
Obligations are paid in full.
SECTION 5. REPORTING AND RECORDKEEPING. Each Grantor covenants and
agrees with the Agent and the Lenders that from and after the date of this
Agreement and until the Commitments have terminated, and all Secured
Obligations are paid in full.
(a) MAINTENANCE OF RECORDS GENERALLY. Such Grantor will
keep and maintain at its own cost and expense records of the Collateral,
complete in all material respects, including, without limitation, a record of
all payments received and all credits granted with respect to the Collateral
and all other dealings with the Collateral. Such Grantor will mark its books
and records pertaining to the Collateral to evidence this Agreement and the
Security Interests. All Chattel Paper will be marked with the following
legend: "This writing and the obligations evidenced or secured hereby are
subject to the security interest of Internationale Nederlanden (U.S.) Capital
Corporation, as Agent". For the Agent's and the Lenders' further security,
such Grantor agrees that the Agent and the Lenders shall have a security
interest in all of the Grantor's books and records pertaining to the Collateral
and, upon the occurrence and during the continuation of any Default or Event of
Default, the Grantor shall deliver and turn over full and complete copies of
any such books and records to the Agent or to its representatives at any time
on demand of the Agent. Prior to the occurrence of a Default or an Event of
Default and upon reasonable notice from the Agent, such Grantor shall permit
any representative of the Agent, at reasonable times and reasonable intervals
upon one Business Day's notice, to inspect such books and records and will
provide photocopies thereof to the Agent.
(b) SPECIAL PROVISIONS REGARDING MAINTENANCE OF RECORDS
AND REPORTING RE: ACCOUNTS, INVENTORY AND EQUIPMENT.
(i) Such Grantor shall keep complete and accurate
records of its Accounts. Upon the request of the
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Agent, such Grantor shall deliver to the Agent all documents,
including, without limitation, repayment histories, present status
reports, relating to the Accounts so scheduled and such other matters
and information relating to the status of then existing Accounts as
the Agent shall reasonably request.
(ii) In the event any amounts due and owing in
excess of $50,000 individually or $100,000 in the aggregate are in
dispute between any Account Debtor and such Grantor, such Grantor
shall provide the Agent with written notice thereof promptly after
such Grantor's learning thereof explaining in detail the reason for
the dispute, all claims related thereto and the amount in controversy.
(iii) Such Grantor shall maintain itemized
records, accurate in all material respects, itemizing and describing
the kind, type, quality, quantity, location and book value of its
Inventory and Equipment and shall furnish the Agent with a current
schedule containing the foregoing information and upon request by the
Required Lenders.
(iv) Such Grantor will promptly upon, but
in no event later than five (5) Business Days after:
(A) Such Grantor's learning thereof, inform the
Agent, in writing, of any material delay in the Grantor's
performance of any of its material obligations to any Account
Debtor and of any assertion of any material claims, offsets or
counterclaims by any Account Debtor and of any allowances,
credits and/or other monies granted by such Grantor to any
Account Debtor, in each case involving amounts in excess of
$50,000 for any single Account or Account Debtor or in excess
of $100,000 in the aggregate for all Accounts and Account
Debtors; and
(B) such Grantor's receipt or learning thereof,
furnish to and inform the Agent of all material adverse
information relating to the financial condition of any Account
Debtor with respect to Accounts exceeding $50,000 individually
or $100,000 in the aggregate.
(iv) Such Grantor will promptly notify the Agent
in writing if any Account, the face value of which exceeds $10,000,
arises out of a contract with the United States of America, or any
department, agency, subdivision or instrumentality thereof, or of any
state (or department, agency, subdivision or instrumentality thereof)
where such state has a state assignment of claims act or other law
comparable to the Federal Assignment of Claims Act, and will take any
action required or requested by the Agent to give notice of the
Agent's security interest in such Accounts under
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the provisions of the Federal Assignment of Claims Act or any
comparable law or act enacted by any state or local governmental
authority; and
(v) Such Grantor at its expense will cause
independent public accountants reasonably satisfactory to the Agent to
prepare and deliver to the Agent at any time and from time to time
promptly upon the Agent's reasonable request, the following reports:
(A) a reconciliation of all of its Accounts, (B) an aging of all of
its Accounts, (C) trial balances, and (D) a test verification of such
Accounts.
(c) FURTHER IDENTIFICATION OF COLLATERAL. Such Grantor
will if so requested by the Agent furnish to the Agent, as often as the Agent
reasonably requests, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in reasonable detail.
(d) NOTICES. In addition to the notices required by
SECTION 5(B) hereof, such Grantor will advise the Agent promptly, in reasonable
detail, (i) of any material Lien or claim made or asserted against any of the
Collateral, (ii) of any material adverse change in the composition of the
Collateral, and (iii) of the occurrence of any other event which would have a
material adverse effect on the aggregate value of the Collateral or on the
validity, perfection or priority of the Security Interests.
SECTION 6. COLLATERAL ACCOUNTS. In accordance with the terms of the
Credit Agreement, on or prior to April 15, 1996, each Grantor shall maintain
and abide by the cash management system described in Schedule 3 of the Credit
Agreement.
SECTION 7. GENERAL AUTHORITY. Each Grantor hereby irrevocably
appoints the Agent its true and lawful attorney, with full power of
substitution, in the name of such Grantor, the Agent, the Lenders or otherwise,
for the sole use and benefit of the Agent and the Lenders, but at such
Grantor's expense, to exercise, at any time from time to time all or any of the
following powers:
(i) to file the financing statements, financing
statement amendments and continuation statements referred to in
SECTION 4(A)(III),
(ii) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due with respect
to any Collateral or by virtue thereof,
(iii) to settle, compromise, compound,
prosecute or defend any action or proceeding with respect to any
Collateral,
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(iv) to sell, transfer, assign or otherwise deal
in or with the Collateral or the proceeds or avails thereof, as fully
and effectually as if the Agent were the absolute owner thereof, and
(v) to extend the time of payment of any or all
thereof and to make any allowance and other adjustments with reference
to the Collateral;
PROVIDED that the Agent shall not take any of the actions described in this
SECTION 7 except those described in clause (i) above unless an Event of Default
shall have occurred and be continuing.
SECTION 8. REMEDIES UPON EVENT OF DEFAULT.
(a) If any Event of Default has occurred and is
continuing, the Agent may exercise on behalf of the Lenders without further
notice, all rights and remedies under this Agreement, the Credit Agreement, the
Subsidiary Guaranty, any other Loan Document or that are available to a secured
creditor under the UCC or that are otherwise available at law or in equity, at
any time, in any order and in any combination, including the following (i) to
collect any and all Obligations from Borrower, (ii) to collect any and all
Guaranteed Obligations from any Subsidiaries under the Subsidiary Guaranty;
and, in addition, the Agent may (i) withdraw all cash, if any, in the
Collateral Account and investments made with amounts on deposit in the
Collateral Account, and apply such monies, investments and other cash, if any,
then held by it as Collateral as specified in SECTION 10 and (ii) sell the
Collateral or any part thereof at public or private sale, for cash, upon credit
or for future delivery, and at such price or prices as the Agent may deem
satisfactory. The Agent shall give each Grantor not less than ten days' prior
written notice of the time and place of any sale or other intended disposition
of such Grantor's Collateral, except any Collateral which is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Grantors agree that any such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the UCC (to
the extent such Section is applicable).
The Agent or any Lender may be the purchaser of any or all of the Collateral so
sold at any public sale (or, if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely distributed
standard price quotations or if otherwise permitted under applicable law, at
any private sale) and thereafter hold the same, absolutely, free from any right
or claim of whatsoever kind. The Grantors will execute and deliver such
documents and take such other action as the Agent deems necessary or advisable
in order that any such sale may be made in compliance with law. Upon any such
sale the Agent shall have the right to deliver, assign and transfer to the
purchaser
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thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely, free from any claim or right of any kind,
including any equity or right of redemption of the Grantors. To the extent
permitted by law, each Grantor hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale shall (1) in
case of a public sale, state the time and place fixed for such sale, and (2) in
the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix in the
notice of such sale. At any such sale the Collateral may be sold in one lot as
an entirety or in separate parcels, as the Agent may determine. The Agent
shall not be obligated to make any such sale pursuant to any such notice. The
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time
and place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the purchaser thereof,
but the Agent shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may again be sold upon like notice. The Agent,
instead of exercising the power of sale herein conferred upon it, may proceed
by a suit or suits at law or in equity to foreclose the Security Interests and
sell the Collateral, or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction. The Grantors shall remain liable,
jointly and severally, for any deficiency.
(b) For the purpose of enforcing any and all rights and
remedies under this Agreement, the Agent may (i) require the Grantors to, and
the Grantors agree that they will, at their expense and upon the request of the
Agent, forthwith assemble all or any part of the Collateral as directed by the
Agent and make it available at a place designated by the Agent which is, in the
Agent's opinion, reasonably convenient to the Agent and the Grantors, whether
at the premises of a Grantor or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of the
peace, any premise where any of the Collateral is or may be located and,
without charge or liability to the Agent, seize and remove such Collateral from
such premises, (iii) have access to and use the Grantors' books and records,
computers and software relating to the Collateral, (iv) prior to the
disposition of the Collateral, store or transfer such Collateral without charge
in or by means of any storage or transportation facility owned or leased by the
Grantors, process, repair or recondition such Collateral or otherwise prepare
it for disposition in any manner and to the extent the Agent deems ap-
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propriate and, in connection with such preparation and disposition, use without
charge any trademark, trade name, copyright, patent or technical process used
by the Grantors and (v) prior to the disposition of any pay phones, manage and
operate those pay phones, collect all payments, coins, income and profits from
those pay phones or that may otherwise relate to any Telephone Placement
Agreements, arrange for alternate telephone service with respect to any pay
phones and exercise any other right or remedy of a Grantor under, or with
respect to, any Telephone Placement Agreement (all at the expense of the
Grantors). Should the Agent (or any successor or assign of the Agent or any
agent or designee of any of the foregoing) notify any Person who is a party to
a Telephone Placement Agreement that an Event of Default has occurred and is
continuing, that Person is hereby irrevocably authorized and instructed to
follow any direction that it may receive in that notice (or any subsequent
notice) relating to that Telephone Placement Agreement and permit the Agent (or
any successor or assign or designee of Agent) to exercise all of any Grantor's
rights and remedies under that Telephone Placement Agreement as described
above.
(c) Without limiting the generality of the foregoing, if
any Event of Default has occurred and is continuing:
(i) the Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any patents or Trademarks included in the
Collateral throughout the world for such term or terms, on such
conditions and in such manner as the Agent shall in its sole
discretion determine;
(ii) the Agent may (without assuming any
obligations or liability thereunder), at any time and from time to
time, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of the Grantors
in, to and under any patent licenses or Trademark Licenses and take or
refrain from taking any action under any thereof, and each Grantor
hereby releases the Agent and each of the Lenders from, and agrees to
hold the Agent and each of the Lenders free and harmless from and
against any claims arising out of, any lawful action so taken or
omitted to be taken with respect thereto EXCEPT FOR the Agent's or
such Lender's bad faith, gross negligence or wilful misconduct as
determined by a final and nonappealable decision of a court of
competent jurisdiction; and
(iii) upon request by the Agent, the
Grantors will execute and deliver to the Agent powers of attorney, in
form and substance satisfactory to the Agent, for the implementation
of any lease, assignment, license, sublicense, grant of option, sale
or other disposition of a patent or Trademark. In the event of any
such disposition pursuant to
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this Section, the Grantors shall supply their know-how and expertise
relating to the manufacture and sale of the products bearing
Trademarks or the products or services made or rendered in connection
with patents, and its customer lists and other records relating to
such patents or Trademarks and to the distribution of said products,
to the Agent.
SECTION 9. LIMITATION ON DUTY OF AGENT IN RESPECT OF COLLATERAL.
Beyond reasonable care in the custody thereof, the Agent shall have no duty as
to any Collateral in its possession or control or in the possession or control
of any agent or bailee or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto. The Agent
shall be deemed to have exercised reasonable care in the custody of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property, and the Agent
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Agent in good faith.
SECTION 10. APPLICATION OF PROCEEDS. Upon the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral of any Grantor shall be
applied by the Agent in the following order of priorities:
FIRST, to payment of the reasonable out-of-pocket expenses of
such sale or other realization, including reasonable compensation to
agents and counsel for the Agent, and all reasonable out-of-pocket
expenses, liabilities and advances incurred or made by the Agent in
connection therewith, and any other unreimbursed expenses for which
the Agent or any Lender is to be reimbursed pursuant to Section 9.3 of
the Credit Agreement, or SECTION 13 hereof or any corresponding
provision of any of the other Loan Documents;
SECOND, to the ratable payment of accrued but unpaid interest
(including post-petition interest) and fees constituting Secured
Obligations of such Grantor;
THIRD, to the ratable payment of unpaid principal of the
Secured Obligations of such Grantor;
FOURTH, to the ratable payment of all other Secured
Obligations of such Grantor, until all such Secured Obligations shall
have been paid in full; and
FINALLY, to payment to such Grantor or its successors or
assigns, or as a court of competent jurisdiction
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may direct, of any surplus then remaining from such proceeds.
The Agent may make distributions hereunder in cash or in kind or, on a ratable
basis, in any combination thereof.
SECTION 11. CONCERNING THE AGENT. The provisions of Article 8 of the
Credit Agreement shall inure to the benefit of the Agent in respect of this
Agreement and shall be binding upon the parties to the Credit Agreement in such
respect. In furtherance and not in derogation of the rights, privileges and
immunities of the Agent therein set forth:
(a) The Agent is authorized to take all such action as is
provided to be taken by it as Agent hereunder or otherwise permitted under the
Credit Agreement and all other action reasonably incidental thereto. As to any
matters not expressly provided for herein or therein, the Agent may request
instructions from the Lenders and shall act or refrain from acting in
accordance with written instructions from the Required Lenders or, in the
absence of such instructions, in accordance with its discretion.
(b) The Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests, whether impaired by
operation of law or by reason of any action or omission to act on its part.
The Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement by the Grantors.
SECTION 12. APPOINTMENT OF CO-AGENTS. At any time or times, in order
to comply with any legal requirement in any jurisdiction, the Agent may appoint
another bank or trust company or one or more other Persons reasonably
acceptable to the Required Lenders, either to act as co-agent or co-agents,
jointly with the Agent, or to act as separate agent or agents on behalf of the
Agent and the Lenders with such power and authority as may be necessary for the
effectual operation of the provisions hereof and specified in the instrument of
appointment (which may, in the discretion of the Agent, include provisions for
the protection of such co-agent or separate agent similar to the provisions of
SECTION 11).
SECTION 13. EXPENSES. In the event that any Grantor fails to comply
with the provisions of the Credit Agreement, this Agreement or any other Loan
Document, such that the value of any Collateral or the validity, perfection,
rank or value of the Security Interests are thereby diminished or potentially
diminished or put at risk, the Agent if requested by the Required Lenders may,
but shall not be required to, effect such compliance on behalf of such Grantor,
and the Grantors shall reimburse the Agent, jointly and severally, for the
reasonable costs thereof on demand. All reasonable insurance expenses and all
reasonable expenses of
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protecting, storing, warehousing, appraising, insuring, handling, maintaining
and shipping the Collateral, any and all excise, stamp, intangibles, transfer,
property, sales, and use taxes imposed by any state, federal, or local
authority or any other Governmental Authority on any of the Collateral, or in
respect of periodic appraisals and inspections of the Collateral to the extent
the same may be requested by the Required Lenders from time to time (provided,
however, that unless an Event of Default has occurred and is continuing the
Required Lenders may only request two such appraisals and inspections during
any Fiscal Year), or in respect of the sale or other disposition thereof, shall
be borne and paid by the Grantors; and if the Grantors fail promptly to pay any
portion thereof when due, the Agent or any Lender may, at its option, but shall
not be required to, pay the same and charge the Grantors' accounts therefor,
and the Grantors agree to reimburse the Agent or such Lender therefor on
demand. All sums so paid or incurred by the Agent or any Lender for any of the
foregoing and any and all other sums for which the Grantors may become liable
hereunder and all reasonable costs and expenses (including attorneys' fees,
legal expenses and court costs) incurred by the Agent or any Lender in
enforcing or protecting the Security Interests or any of their rights or
remedies thereon shall be payable by the Grantors on demand and shall bear
interest (after as well as before judgment) until paid at the rate set forth in
Section 3.4.3 of the Credit Agreement and shall be additional Secured
Obligations hereunder.
SECTION 14. TERMINATION OF SECURITY INTERESTS; RELEASE OF COLLATERAL.
Upon the repayment in full of all Secured Obligations and the termination of
the Commitments, the Security Interests shall terminate and all rights to the
Collateral shall revert to the Grantors. At any time and from time to time
prior to such termination of the Security Interests, the Agent may release any
of the Collateral with the prior written consent of the Required Lenders;
PROVIDED, HOWEVER, that the Security Interest of the Agent in any Collateral
constituting an asset of which the Grantors may dispose under Section 6.2.11 of
the Credit Agreement shall automatically terminate and be released upon such
disposition by the Grantors without the necessity of any further action or
consent by the Agent or any Lender. Upon any such termination of the Security
Interests or release of Collateral, the Agent will, at the expense of the
Grantors, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request, including but not limited to a UCC-3 termination
statement, to evidence the termination of the Security Interests or the release
of such Collateral, as the case may be.
SECTION 15. NOTICES. All notices hereunder shall be in writing or by
telecopy and shall be sufficiently given to the Agent, the Lenders or the
Grantors if addressed or delivered to them at, in the case of the Borrower, the
Agent and the Lenders, their respective addresses and telecopier numbers
specified in
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Section 9.2 of the Credit Agreement (in each case with copies addressed as
provided in Section 9.2 of the Credit Agreement), and, in the case of the
Grantors that are Subsidiaries of the Borrower at, their respective addresses
and telecopier numbers specified in Section 15 of the Subsidiary Guaranty (in
each case with copies addressed as provided in Section 15 of the Subsidiary
Guaranty), or at such other address as any party may designate to any other
party by written notice. All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; when received if deposited in the mail, postage prepaid; when
transmission is verified, if telecopied; and on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
SECTION 16. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the part
of the Agent to exercise, and no delay in exercising and no course of dealing
with respect to, any right under the Credit Agreement, this Agreement or any
other Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise by the Agent or any Lender of any right under the Credit
Agreement, this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The rights in
this Agreement, the Credit Agreement and the other Loan Documents are
cumulative and are not exclusive of any other remedies provided by law. This
Agreement is a Loan Document executed pursuant to the Credit Agreement.
SECTION 17. SUCCESSORS AND ASSIGNS. This Agreement is for the
benefit of the Agent and the Lenders and their permitted successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the indebtedness
so assigned, may be transferred with such indebtedness. This Agreement shall
be binding on the Grantors and their successors and assigns; PROVIDED, HOWEVER,
that the Grantors may not assign any of their rights or obligations hereunder
without the prior written consent of the Agent and the Lenders.
SECTION 18. CHANGES IN WRITING. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Grantors and the Agent with the consent of the
Required Lenders.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND
CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW
YORK.
SECTION 20. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in
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full force and effect in such jurisdiction and shall be liberally construed in
favor of the Agent and the Lenders in order to carry out the intentions of the
parties hereto as nearly as may be possible; and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 21. SUPPLEMENT. In the event that any Subsidiary of the
Borrower is required, under the terms of the Credit Agreement or otherwise, to
grant a security interest in Collateral, such Subsidiary shall become a Grantor
hereunder and shall be bound by all of the terms and conditions hereof, upon
the delivery to the Agent of an executed counterpart of a Supplement to this
Security Agreement in the form of EXHIBIT A attached hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
PHONETEL TECHNOLOGIES, INC.
By: ______________________________
Peter G. Graf
Chairman and
Chief Executive Officer
Attest:_______________________________
Name:
Title:
[CORPORATE SEAL]
PUBLIC TELEPHONE CORPORATION
By: ______________________________
Peter G. Graf
Chief Executive Officer
Attest: ______________________________
Name:
Title:
[CORPORATE SEAL]
WORLD COMMUNICATIONS, INC.
By: ______________________________
Peter G. Graf
Chief Executive Officer
Attest: ______________________________
Name:
Title:
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[CORPORATE SEAL]
NORTHERN FLORIDA TELEPHONE CORPORATION
By: ______________________________
Peter G. Graf
Chief Executive Officer
Attest: ______________________________
Name:
Title:
[CORPORATE SEAL]
PARAMOUNT COMMUNICATIONS SYSTEMS, INC.
By: ______________________________
Peter G. Graf
Chief Executive Officer
Attest: ______________________________
Name:
Title:
[CORPORATE SEAL]
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, AS AGENT
By: ______________________________
James W. Latimer
Managing Director
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EXHIBIT A
---------
to
Security Agreement
------------------
SUPPLEMENT TO SECURITY AGREEMENT
--------------------------------
THIS SUPPLEMENT TO SECURITY AGREEMENT (this "SUPPLEMENT"),
dated as of _____________ __, ____, is executed by [_________________],
[__________] (the "SUPPLEMENTING PARTY"), in favor of INTERNATIONALE
NEDERLANDEN (U.S.) CAPITAL CORPORATION, a Delaware corporation ("ING"), as
Agent (in such capacity, the "AGENT") for itself and the other lenders (ING and
such other lenders, collectively, the "LENDERS") as are, or may from time to
time become, parties to the Credit Agreement (as defined below). Terms used
herein but not defined herein shall have the meaning defined for those terms in
the Security Agreement (as defined below).
W I T N E S S E T H:
--------------------
RECITALS.
- ---------
A. PhoneTel Technologies, Inc., an Ohio corporation (the
"BORROWER"), the Lenders and the Agent have entered into a certain Credit
Agreement, dated as of March 15, 1996 (as amended, restated, supplemented or
otherwise modified, the "CREDIT AGREEMENT"); and
B. The Supplementing Party has become a Subsidiary of
the Borrower and as such is required to become a party to the Subsidiary
Guaranty pursuant to the Credit Agreement and Section 9.14 of that certain
Subsidiary Guaranty, dated as of March 15, 1996 (as amended, restated,
supplemented or otherwise modified, the "SUBSIDIARY GUARANTY"), by the
Guarantors from time to time party thereto in favor of the Agent and the
Lenders; and
C. Additionally pursuant to the Credit Agreement and
Section 21 of the Security Agreement, the Supplementing Party is required to
execute and deliver to the Agent this Supplement in order to secure its
obligations under the Subsidiary Guaranty, and the Supplementing Party desires
to execute and deliver this Supplement to satisfy such requirement and
condition; and
NOW, THEREFORE, in consideration of the premises the
Supplementing Party hereby agrees as follows:
SECTION 1. ADDITIONAL SECURITY INTERESTS. As security
for the payment and performance of the "Secured Obligations" (as such term is
defined in the Security Agreement), the Supplementing Party hereby grants to
the Agent for its benefit
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and the benefit of the Lenders a continuing security interest in and to all
Collateral now or hereafter owned or acquired by such Grantor or in which such
Supplementing Party now has or hereafter has or acquires any rights, and
wherever located.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The
Supplementing Party, with respect to itself, hereby restates each
representation and warranty set forth in Section 2 of the Security Agreement as
of the date hereof.
SECTION 3. BINDING EFFECT. This Supplement shall become
effective when it shall have been executed by the Supplementing Party and
thereafter shall be binding upon the Supplementing Party and shall inure to the
benefit of the Agent and the Lenders. Upon the effectiveness of this
Supplement, this Supplement shall be deemed to be a part of and shall be
subject to all the terms and conditions of the Security Agreement. The
Supplementing Party shall not have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Lenders.
SECTION 4. GOVERNING LAW; TERMS. THIS SUPPLEMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY, THE INTERNAL LAWS OF THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Security
Agreement, terms defined in Article 9 of the UCC are used herein as therein
defined.
SECTION 5. EXECUTION IN COUNTERPARTS. This Supplement
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.
IN WITNESS WHEREOF, the Supplementing Party has caused this
Supplement to be duly executed and delivered by its dulyauthorized officer as
of the date first above written.
"Supplementing Party"
______________________________
By:_________________________
Name:
Title:
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Acknowledged and Agreed to:
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION, as Agent
By: ______________________________
Name:
Title:
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EXHIBIT B
---------
to
Security Agreement
------------------
COLLATERAL SUBJECT TO RESTRICTION ON ASSIGNMENT
-----------------------------------------------
[TO BE PROVIDED BY BORROWER]
1