EXHIBIT C TO
CREDIT AGREEMENT
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 30, 1997, made by each of the
signatories hereto (together with any other entity that may become a party
hereto, the "Pledgors"), in favor of THE CHASE MANHATTAN BANK, as
administrative agent (in such capacity, the "Administrative Agent") for the
lenders (the "Lenders") from time to time parties to the Credit Agreement,
dated as of July 30, 1997 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among Avis Rent A Car System, Inc., a
Delaware corporation (the "Borrower"), Avis Rent A Car, Inc., a Delaware
corporation ("Avis"), the Lenders, the Administrative Agent and Xxxxxx
Commercial Paper Inc., a Delaware corporation, as syndication agent for the
Lenders (the "Syndication Agent"), and the other Secured Parties (as defined
herein).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Pledgors (other than the Borrower) guarantee payment and performance of the
Borrower's obligations under the Credit Agreement and the other Credit
Documents; and
WHEREAS, in satisfaction of such condition, the Pledgors (other than
the Borrower) have entered into a Guarantee of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "Guarantee") for the
benefit of the Administrative Agent and the Secured Parties; and
WHEREAS, it is a further condition precedent to the obligation of the
Lenders to make their respective Loans to the Borrower under the Credit
Agreement that the Pledgors shall have executed and delivered this Security
Agreement to secure payment and performance of the Pledgors' obligations under
the Guarantee.
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective Loans to the Borrower, the Pledgors hereby
agree with the Administrative Agent, for the ratable benefit of the Secured
Parties, as follows:
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SECTION 1. Defined Terms.
A. Definitions. 1. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement and the following terms which are
defined in the Uniform Commercial Code in effect in the State of New
York on the date hereof are used herein as so defined: Accounts,
Chattel Paper, Documents, Farm Products, General Intangibles,
Instruments, and Proceeds.
2. The following terms shall have the following meanings:
"Agreement": this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section .
"Collateral Account": any collateral account established by the
Administrative Agent as provided in subsection or subsection .
"Contracts": the Franchise Agreements and each of the contracts
and agreements listed in Schedule 1, in each case as the same may be
amended, supplemented or otherwise modified from time to time,
including, without limitation, (a) all rights of such Pledgor to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of such Pledgor to damages arising out of or
for breach or default in respect thereof and (c) all rights of such
Pledgor to exercise all remedies thereunder.
"LP Interests": the limited partnership interests in AESOP
Leasing, including without limitation all present and future rights
(i) to receive any payment of money or other distribution or payment
on account of such limited partnership interests and (ii) under the
Partnership Agreement in respect of such limited partnership
interests.
"Obligations": as defined in the Guarantee.
"Partnership Agreement": the limited partnership agreement of
AESOP Leasing as the same may be further amended, supplemented or
modified from time to time.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule 3 hereto, and
(b) all applications for
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letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof, including,
without limitation, any thereof referred to in Schedule 3 hereto.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to such Pledgor of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 3.
"Receivable": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"Secured Obligations": with respect to any Pledgor, the
collective reference to (a) the Obligations and (b) all obligations
and liabilities of such Pledgor which may arise under or in connection
with this Agreement or any other Credit Document to which such Pledgor
is a party, whether on account of reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without
limitation, all reasonable fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by
such Pledgor pursuant to the terms of this Agreement or any other
Credit Document).
"Secured Parties" means the collective reference to the
Administrative Agent, the Syndication Agent, the Lenders (including,
without limitation, the CE Issuing Bank and the WC Issuing Bank).
"Securitization Collateral" means all of the assets, property and
interests in property of any kind or nature whatsoever in which a
security interest has been granted pursuant to any Related Documents
(as defined in Schedule 1 to the Amended and Restated Base Indenture,
dated as of July 30, 1997, between AESOP Funding II, L.L.C. and Xxxxxx
Trust and Savings Bank, as amended, supplemented or otherwise modified
from time to time).
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether 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, or
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otherwise, including, without limitation, any thereof referred to
in Schedule 3, and (b) all renewals thereof.
"Trademark License" means any agreement, written or oral,
providing for the grant by or to any Pledgor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 3.
B. Other Definitional Provisions. 1. The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section,
subsection and Schedule references are to this Agreement unless
otherwise specified.
2. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. Grant of Security Interest.
As collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Secured Obligations, each Pledgor hereby grants to the
Administrative Agent for the benefit of the Secured Parties a security interest
in all of the following property now owned or at any time hereafter acquired by
such Pledgor or in which such Pledgor now has or at any time in the future may
acquire any right, title or interest other than the Securitization Collateral
(collectively, the "Collateral"):
1. all Accounts;
2. all Chattel Paper;
3. all Contracts;
4. all Documents;
5. all General Intangibles, including, without limitation, the LP
Interests;
6. all Instruments;
7. all Patents;
8. all Patent Licenses;
9. all Trademarks;
10. all Trademark Licenses;
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11. all books and records pertaining to the Collateral; and
12. to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the
foregoing; provided that no security interest shall be granted in
the Securitization Collateral.
SECTION 3. Representations and Warranties.
Each Pledgor hereby represents and warrants that:
A. Power and Authority. Such Pledgor has the corporate power and
authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the Collateral
pursuant to, this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of, and grant of the security
interest in the Collateral pursuant to, this Agreement.
B. Chief Executive Office. On the date hereof, such Pledgor's
chief executive office or sole place of business is specified on Schedule 2.
C. Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
SECTION 4. Covenants.
Each Pledgor covenants and agrees with the Administrative Agent and
the Secured Parties that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have expired or otherwise been
terminated:
A. Further Documentation. At any time and from time to time, upon
the written request of the Administrative Agent, and at the sole expense of the
Pledgor, such Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code in effect in any jurisdiction with
respect to the security interests created hereby.
B. Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument (other than an
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Instrument that also constitutes Chattel Paper), such Instrument shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner
reasonably satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.
C. Changes in Locations, Name, etc. Such Pledgor will not:
1. change the location of its chief executive office from that
specified in subsection ; or
2. change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent
in connection with this Agreement would become seriously misleading,
unless in each case written above, it shall have given the
Administrative Agent and the Lenders at least 30 days' prior written
notice of such change.
D. Further Identification of Collateral. Such Pledgor will furnish to
the Administrative Agent and the Lenders from time to time statements and
schedules further identifying and describing any Collateral acquired after the
date hereof and such other reports in connection with such Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
E. Notices. Such Pledgor will advise the Administrative Agent and the
Lenders promptly, in reasonable detail, at their respective addresses for
notices provided for in the Credit Agreement about:
1. any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of the Collateral;
and
2. of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of
the Collateral or on the security interests created hereby.
F. Indemnification. Such Pledgor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all liabilities,
costs and expenses (including, without limitation, reasonable legal fees and
expenses) with respect to the execution, delivery, enforcement, performance and
administration of this Agreement ("indemnified liabilities"), provided that
such Pledgor shall have no obligation hereunder to the Administrative Agent or
any Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Administrative Agent or any such Lender
or (ii) legal proceedings commenced against the Administrative Agent or any
Lender by any security holder or creditor thereof
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arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such. The agreements in this subsection
shall survive repayment of the Loans and all other amounts payable under the
Credit Agreement and the other Credit Documents.
SECTION 5. Provisions Relating to Receivables.
A. Pledgor Remains Liable under Receivables. Anything herein to the
contrary notwithstanding, each Pledgor shall remain liable under each of such
Pledgor's Receivables to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, all in accordance with the terms
of any agreement giving rise to each such Receivable. Neither the
Administrative Agent nor any Lender shall have any obligation or liability
under any Receivable (or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Administrative Agent or any
Lender of any payment relating to such Receivable pursuant hereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform
any of the obligations of such Pledgor under or pursuant to any Receivable (or
any agreement giving rise thereto), to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Receivable (or any
agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time
or times.
B. Analysis of Receivables. If an Event of Default shall have occurred
and be continuing, the Administrative Agent shall have the right to make test
verifications of the Receivables in any manner and through any medium that it
reasonably considers advisable, and such Pledgor shall furnish all such
assistance and information as the Administrative Agent may require in
connection with such test verifications. At any time and from time to time,
upon the Administrative Agent's request and at the expense of such Pledgor,
such Pledgor shall cause independent public accountants or others satisfactory
to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial balances
for, the Receivables. The Administrative Agent in its own name or in the name
of others may at any time after the occurrence and during the continuance of an
Event of Default communicate with the obligors on the Receivables to verify
with them to the Administrative Agent's satisfaction the existence, amount and
terms of any Receivables.
C. Collections on Receivables. 1. The Pledgor shall collect the
Accounts in the ordinary course of its business, except that, if required
by the Administrative Agent, at any time after the occurrence and during
the continuance of an
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Event of Default, any payments of Receivables, when collected by such
Pledgor, (a) shall be forthwith (and, in any event, within two Business
Days) deposited by such Pledgor in the exact form received, duly indorsed
by such Pledgor to the Administrative Agent if required, in a Collateral
Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for
the account of the Lenders only as provided in subsection , and (b) until
so turned over, shall be held by such Pledgor in trust for the
Administrative Agent and the Secured Parties, segregated from other funds
of such Pledgor.
2. Each such deposit of Proceeds of Receivables shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.
3. At the Administrative Agent's request, such Pledgor shall deliver
to the Administrative Agent all original and other documents evidencing,
and relating to, the agreements and transactions which gave rise to the
Receivables, including, without limitation, all original orders, invoices
and shipping receipts.
D. Representations and Warranties. 1. No amount payable to such
Pledgor under or in connection with any Receivable is evidenced by any
Instrument (other than an Instrument that constitutes Chattel Paper) which
has not been delivered to the Administrative Agent.
2. The amounts represented by such Pledgor to the Lenders from time to
time as owing to such Pledgor in respect of the Receivables will at such
time be accurate.
E. Covenants. 1. Other than in the ordinary course of business
consistent with its past practice, such Pledgor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or
settle any Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any Receivable,
(iv) allow any credit or discount whatsoever on any Receivable, (v) amend,
supplement or modify any Receivable in any manner that could adversely
affect the value thereof or (vi) fail to exercise promptly and diligently
each and every material right which it may have under each agreement giving
rise to a Receivable (other than any right of termination).
2. At any time after the occurrence and during the continuance of an
Event of Default, such Pledgor will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it that
questions the
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validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.
SECTION 6. Provisions Relating to Contracts.
A. Pledgor Remains Liable under Contracts. Anything herein to the
contrary notwithstanding, each Pledgor shall remain liable under each of such
Pledgor's Contracts to observe and perform all the conditions and obligations
to be observed and performed by it thereunder, all in accordance with and
pursuant to the terms and provisions of such Contract. Neither the
Administrative Agent nor any Lender shall have any obligation or liability
under any Contract by reason of or arising out of this Agreement or the receipt
by the Administrative Agent or any such Secured Party of any payment relating
to such Contract pursuant hereto, nor shall the Administrative Agent or any
Secured Party be obligated in any manner to perform any of the obligations of
such Pledgor under or pursuant to any Contract, to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party under any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
B. Communication With Contracting Parties. The Administrative Agent in
its own name or in the name of others may at any time after the occurrence and
during the continuance of an Event of Default communicate with parties to the
Contracts to verify with them to the Administrative Agent's reasonable
satisfaction the existence, amount and terms of any Contracts.
C. Representations and Warranties. 1. No consent of any party (other
than such Pledgor) to any Contract is required, or purports to be required,
in connection with the execution, delivery and performance of this
Agreement.
2. Each Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of each Pledgor party thereto, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing.
3. No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery, performance, validity or enforceability of any of the
Contracts by any Pledgor party thereto other than those which have been
duly obtained, made or performed, are in
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full force and effect and do not subject the scope of any such
Contract to any material adverse limitation, either specific or general in
nature.
4. Neither such Pledgor nor (to the best of such Pledgors's knowledge)
any of the other parties to the Contracts is in default or is likely to
become in default in the performance or observance of any of the terms
thereof in any manner that, in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
5. Such Pledgor has fully performed all its obligations under each
Contract.
6. The right, title and interest of such Pledgor in, to and under the
Contracts are not subject to any defenses, offsets, counterclaims or claims
that, in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
7. Such Pledgor has delivered to the Administrative Agent a complete
and correct copy of each Contract, including all amendments, supplements
and other modifications thereto.
D. Covenants. 1. Such Pledgor will perform and comply in all material
respects with all its obligations under the Contracts.
2. Such Pledgor will not amend, modify, terminate or waive any
provision of any Contract in any manner which could reasonably be expected
to materially adversely affect the value of such Contract as Collateral.
3. Such Pledgor will exercise promptly and diligently each and every
material right which it may have under each Contract (other than any right
of termination).
4. Such Pledgor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it relating in any way
to any Contract that questions the validity or enforceability of such
Contract.
SECTION 7. Provisions Relating to Patents and Trademarks.
A. Representations and Warranties. 1. Schedule 3 includes all Patents
and Patent Licenses owned by each Pledgor in its own name on the date
hereof.
2. Schedule 3 includes all Trademarks and Trademark Licenses owned by
each Pledgor in its own name on the date hereof.
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3. To the best of each Pledgors's knowledge, each Patent and Trademark
of such Pledgor is on the date hereof valid, subsisting, unexpired,
enforceable and has not been abandoned.
4. Except as set forth in Schedule 3, none of such Patents and
Trademarks is on the date hereof the subject of any licensing or franchise
agreement.
5. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity
of any Patent or Trademark in any respect that could reasonably be expected
to have a Material Adverse Change.
6. No action or proceeding is pending on the date hereof (a) seeking
to limit, cancel or question the validity of any Patent or Trademark, or
(b) which, if adversely determined, would have a material adverse effect on
the value of any Patent or Trademark.
B. Covenants. 1. Each Pledgor, with respect to its own Patents and
Trademarks, covenants that it (either itself or through licensees) will (a)
continue to use each material Trademark on each and every trademark class
of goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such Trademark in
full force free from any claim of abandonment for non-use, (b) maintain as
in the past the quality of products and services offered under such
Trademark, (c) employ such Trademark with the appropriate notice of
registration, (d) not adopt or use any xxxx which is confusingly similar or
a colorable imitation of such Trademark unless the Administrative Agent,
for the ratable benefit of the Secured Parties, shall obtain a perfected
security interest in such xxxx pursuant to this Agreement, and (e) not (and
not permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby such Trademark may become invalidated.
2. Such Pledgor will not do any act, or omit to do any act, whereby
any material Patent may become abandoned or dedicated.
3. Such Pledgor will notify the Administrative Agent and the Secured
Parties immediately if it knows, or has reason to know, that any
application or registration relating to any material Patent or 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 the
Pledgors's ownership of any material Patent or Trademark or
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its right to register the same or to keep and maintain the same.
4. Whenever such Pledgor, either by itself or through any 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 Pledgor shall report such filing to
the Administrative Agent and the Secured Parties within five Business Days
after the last day of the fiscal quarter in which such filing occurs. Upon
request of the Administrative Agent, such Pledgor shall execute and deliver
any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative Agent's and
the Secured Parties' security interest in any Patent or Trademark and the
goodwill and general intangibles of the Pledgors relating thereto or
represented thereby.
5. Such Pledgor will 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 the material Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
6. In the event that any Patent or Trademark included in the
Collateral is infringed, misappropriated or diluted by a third party, such
Pledgor shall (i) take such actions as such Pledgor shall reasonably deem
appropriate under the circumstances to protect such Patent or Trademark and
(ii) if such Patent or Trademark is of material economic value, promptly
notify the Administrative Agent and the Secured Parties after it learns
thereof and xxx for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution.
SECTION 8. Remedies.
A. Notice to Obligors and Contract Parties. Upon the request of the
Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, such Pledgor shall notify obligors on
the Receivables that the Receivables have been assigned to the
Administrative Agent for the ratable benefit of the Secured Parties and
that payments in respect thereof shall be made directly to the
Administrative Agent.
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B. Proceeds to be Turned Over To Administrative Agent. In addition to
the rights of the Administrative Agent and the Lenders specified in subsection
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing all Proceeds received by any Pledgor consisting of cash, checks
and other near-cash items shall be held by such Pledgor in trust for the
Administrative Agent and the Secured Parties, segregated from other funds of
such Pledgor, and shall, forthwith upon receipt by such Pledgor, be turned over
to the Administrative Agent in the exact form received by such Pledgor (duly
indorsed by such Pledgor to the Administrative Agent, if required) and held by
the Administrative Agent in a Collateral Account maintained under the sole
dominion and control of the Administrative Agent. All Proceeds while held by
the Administrative Agent in a Collateral Account (or by such Pledgor in trust
for the Administrative Agent and the Secured Parties) shall continue to be held
as collateral security for all the Secured Obligations and shall not constitute
payment thereof until applied as provided in subsection 8.C.
C. Application of Proceeds. 1. At such intervals as may be agreed upon
by such Pledgor and the Administrative Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent may apply all or any part of
Proceeds held in any Collateral Account in payment of the Secured
Obligations, to the extent available for distribution, to be distributed by
the Administrative Agent in the following order of priority:
First: to the Administrative Agent for any unpaid fees and
expenses and then to any Secured Party which has theretofore advanced
or paid any such fees, an amount equal to the amount thereof so
advanced or paid by such Secured Party and for which such Secured
Party has not been reimbursed prior to such date, and, if such moneys
shall be insufficient to pay such amounts in full, then ratably
(without priority of any one over any other) to such Secured Parties
in proportion to the unpaid amounts thereof on such distribution date;
Second: to the Secured Parties in an amount equal to the unpaid
principal or face amount of, and unpaid interest on, and premium or
fees, if any, in respect of, the Secured Obligations then outstanding
whether or not then due and payable, including, without limitation,
the aggregate undrawn amounts available to be drawn (assuming
compliance with all conditions to drawing) under all Letters of
Credit, and, if such moneys shall be insufficient to pay such amounts
in full, then ratably (without priority of any one over any
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other) to the Secured Parties in proportion to the unpaid amounts
thereof on such date;
Third: to the Secured Parties, amounts equal to all other sums
which constitute Secured Obligations, including without limitation the
costs and expenses of the Secured Parties and their representatives
which are due and payable and which constitute Secured Obligations as
of such date, and, if such moneys shall be insufficient to pay such
sums in full, then ratably to the Secured Parties in proportion to
such sums; and
Fourth: any surplus then remaining shall be paid to the Obligors
or their successors or assigns or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction
may direct.
2. The term "unpaid" as used in clause Second of subsection 9.3(a)
refers:
(a) in the absence of a bankruptcy proceeding with respect to the
relevant Pledgor(s), to all amounts of Secured Obligations outstanding
as of a distribution date, whether or not such amounts are fixed or
contingent, and
(b) during the pendency of a bankruptcy proceeding with respect
to the relevant Pledgor(s), to all amounts allowed by the bankruptcy
court in respect of Secured Obligations, as a basis for distribution
(including estimated amounts, if any, allowed in respect of contingent
claims),
to the extent that prior distributions (whether actually distributed
or set aside pursuant to subsection 9.3(c)) have not been made in respect
thereof.
3. If any Secured Party shall be entitled to receive any moneys
pursuant to clause Second of subsection 9.3(a) in respect of the
unliquidated, unmatured or contingent portion of the outstanding Secured
Obligations (including, without limitation, obligations under then
outstanding Letters of Credit), then the Administrative Agent shall invest
such moneys in obligations of the kinds referred to in Permitted
Investments maturing within three months after they are acquired by the
Administrative Agent and shall hold all such amounts so distributable, and
all such investments and the net proceeds thereof, in trust solely for such
Secured Party and for no other purpose until (i) such Secured Party shall
have notified the Administrative Agent that all or part of
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such unliquidated, unmatured or contingent claim shall have become
matured or fixed, in which case the Administrative Agent shall distribute
from such investments and the proceeds thereof an amount equal to such
matured or fixed claim to such Secured Party for application to the payment
of such matured or fixed claim, and shall promptly give notice thereof to
the Borrower or (ii) all or part of such unliquidated, unmatured or
contingent claim shall have been extinguished, whether as the result of an
expiration without drawing of any Letter of Credit, payment of amounts
secured or covered by any Letter of Credit other than by drawing
thereunder, or otherwise, in which case (x) such Secured Party shall, as
soon as practicable thereafter, notify the Administrative Agent and (y)
such investments, and the proceeds thereof, shall be redistributed in
accordance with subsection 9.3(a) taking into account such extinguishment.
D. Code Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Secured Parties may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Pledgor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Secured
Party or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or any
Secured Party shall have the right upon any such public sale or sales, and, to
the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Pledgor, which right or equity is hereby waived or released.
Each Pledgor further agrees, at the Administrative Agent's request, to assemble
its Collateral and make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at such
Pledgors's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this subsection, after deducting
all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to
16
the Collateral or the rights of the Administrative Agent and the Secured
Parties hereunder, including, without limitation, reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the Secured
Obligations, as provided in subsection 9.3, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Administrative Agent account for the surplus, if any, to such
Pledgor. To the extent permitted by applicable law, each Pledgor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.
E. Waiver; Deficiency. Each Pledgor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the Code.
Each Pledgor shall remain liable for any deficiency if the proceeds of any sale
or other disposition of its Collateral are insufficient to pay the Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Administrative Agent or any Secured Party to collect such deficiency.
SECTION 9. Administrative Agent's Appointment as Attorney-in-Fact;
Administrative Agent's Performance of Pledgors's
Obligations.
X. Xxxxxx. Each Pledgor hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Pledgor and in the name of
such Pledgor or in its own name, from time to time in the Administrative
Agent's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, each Pledgor hereby gives the Administrative Agent the power and
right, on behalf of such Pledgor, without notice to or assent by such Pledgor,
to do any or all of the following:
1. in the name of such Pledgor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and
17
all such moneys due under any Receivable or Contract or with respect
to any other Collateral whenever payable;
2. in the case of any Patent or Trademark, execute and deliver any and
all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Secured
Parties' security interest in such Patent or Trademark and the goodwill and
general intangibles of such Pledgor relating thereto or represented
thereby;
3. pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by
the terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof;
4. execute, in connection with the sale provided for in subsection
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
5. (a) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (b) ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (c) sign
and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (d) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any Proceeds thereof and to enforce any other right in
respect of any Collateral; (e) defend any suit, action or proceeding
brought against such Pledgor with respect to any Collateral; (f) settle,
compromise or adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Administrative Agent
may deem appropriate; (g) assign any Patent or Trademark (along with the
goodwill of the business to which any such Patent or Trademark pertains),
throughout the world for such term or terms, on such conditions, and in
such manner, as the Administrative Agent shall in its sole discretion
determine; and (h) generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's option and
such Pledgor's expense, at any time, or from time to time, all acts and
things which the Administrative Agent deems
18
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Pledgor might do.
Anything in this subsection to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this subsection unless an Event of Default
shall have occurred and be continuing.
B. Performance by Administrative Agent of Pledgor's Obligations. If
any Pledgor fails to perform or comply with any of its agreements contained
herein, the Administrative Agent, at its option, but without any obligation so
to do, may perform or comply, or otherwise cause performance or compliance,
with such agreement.
C. Pledgors' Reimbursement Obligation. Each Pledgor agrees to pay on
demand the expenses of the Administrative Agent incurred in connection with
actions undertaken as provided in this Section, together with interest thereon
at a rate per annum equal to the rate per annum at which interest would then be
payable on past due ABR Loans under the Credit Agreement, from the date of
payment by the Administrative Agent to the date reimbursed by such Pledgor.
D. Ratification; Power Coupled With An Interest. Each Pledgor hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
SECTION 10. Duty of Administrative Agent.
The Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Administrative Agent deals with similar property for its own
account. Neither the Administrative Agent, any Secured Party nor any of their
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgors or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Administrative Agent and the Secured Parties hereunder
are solely to protect the Administrative Agent's and the Secured Parties'
interests in the Collateral and shall not impose any duty upon
19
the Administrative Agent or any Secured Party to exercise any such powers. The
Administrative Agent and the Secured Parties shall be accountable only for
amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, employees or agents
shall be responsible to any Pledgor for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.
SECTION 11. Execution of Financing Statements.
Pursuant to Section 9-402 of the Code, each Pledgor authorizes the
Administrative Agent, upon giving written notice to such Pledgor, to file
financing statements with respect to the Collateral without the signature of
such Pledgor in such form and in such filing offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of
the Administrative Agent under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
SECTION 12. Authority of Administrative Agent.
Each Pledgor acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
between the Administrative Agent and the Secured Parties, be governed by the
Credit Agreement and by such other agreements with respect thereto as may exist
from time to time among them, but, as between the Administrative Agent and the
Pledgors, the Administrative Agent shall be conclusively presumed to be acting
as agent for the Secured Parties with full and valid authority so to act or
refrain from acting, and the Pledgors shall be under no obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 13. Notices.
All notices, requests and demands to or upon the Administrative Agent
or any Pledgor hereunder shall be effected in the manner provided for in
subsection 11.01 of the Credit Agreement; provided that any such notice,
request or demand to or upon any Pledgor shall be addressed to such Pledgor at
its notice address set forth on Schedule 2.
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SECTION 14. Severability.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
SECTION 15. Amendments in Writing; No Waiver; Cumulative Remedies.
A. Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by
a written instrument executed by each affected Pledgor and the Administrative
Agent, provided that any provision of this Agreement imposing obligations on
any Pledgor may be waived by the Administrative Agent in a written instrument
executed by the Administrative Agent.
B. No Waiver by Course of Conduct. Neither the Administrative Agent
nor any Secured Party shall by any act (except by a written instrument pursuant
to subsection hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default. No failure to exercise, nor any delay in exercising, on
the part of the Administrative Agent or any Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Secured Party of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Administrative Agent or such Secured Party
would otherwise have on any future occasion.
C. Remedies Cumulative. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
SECTION 16. Section Headings.
The Section and subsection headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
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SECTION 17. Successors and Assigns.
This Agreement shall be binding upon the successors and assigns of
each Pledgor and shall inure to the benefit of the Administrative Agent and
Secured Parties and their successors and assigns.
SECTION 18. Governing Law.
This Agreement shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
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IN WITNESS WHEREOF, the undersigned have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
AVIS RENT A CAR, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Title: Executive Vice President and
Chief Financial Officer
AVIS RENT A CAR SYSTEM, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Title: Executive Vice President and
Chief Financial Officer
AVIS INTERNATIONAL, LTD.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Vice President and Treasurer
AVIS ASIA AND PACIFIC, LIMITED
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------------
Title: Vice Presdient and Tax Counsel
AVIS CARIBBEAN, LIMITED
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------------
Title: Vice Presdient and Tax Counsel
AVIS ENTERPRISES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Vice President and Treasurer
23
AVIS SERVICE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Vice President and Treasurer
AVIS LUBE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Title: Vice President and Treasurer
Schedule 1
CONTRACTS
Schedule 2
CHIEF EXECUTIVE OFFICE OR SOLE PLACE OF BUSINESS
Schedule 3
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
